Registration No. 333-17633
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
SEPARATE ACCOUNT I
of
THE EQUITABLE LIFE ASSURANCE James M. Benson, President
SOCIETY OF THE UNITED STATES The Equitable Life Assurance Society of
(Exact Name of Trust) the United States
THE EQUITABLE LIFE ASSURANCE 1290 Avenue of the Americas
SOCIETY OF THE UNITED STATES New York, New York 10104
(Exact Name of Depositor) (Name and Address of Agent for Service)
1290 Avenue of the Americas
New York, New York 10104
(Address of Depositor's Principal
Executive Offices)
---------------------------------------
Telephone Number, Including Area Code: (212) 554-1234
----------------------------------------
Please send copies of all communications to:
MARY P. BREEN, ESQ. with a copy to:
Vice President and Thomas C. Lauerman
Associate General Counsel Freedman, Levy, Kroll & Simonds
The Equitable Life Assurance 1050 Connecticut Avenue, N.W., Suite 825
Society of the United States Washington, D.C. 20036
1290 Avenue of the Americas
New York, New York 10104
----------------------------------------
Securities Being Registered: Units of Interest in Separate Account I
It is proposed that this filing will become effective (check appropriate line):
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on (May 1, 1997) pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on ( ) pursuant to paragraph (a) of Rule 485
Pursuant to Rule 24f-2(a)(1) under the Investment Company Act of 1940, the
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933. The Registrant filed the 24f-2 Notice for the year ended
December 31, 1996 on February 27, 1997.
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
VARIABLE LIFE INSURANCE POLICIES
FUNDED THROUGH SEPARATE ACCOUNT I
THE CHAMPION
SP-1
BASIC POLICY
EXPANDED POLICY
PROSPECTUS SUPPLEMENT DATED MAY 1, 1997
This prospectus supplement updates certain information in the prospectus you
received for your Equitable variable life insurance policy.* We also mailed to
you other prospectus supplements dated May 1, 1996 and January 1, 1997.
Capitalized terms used in this supplement have the same meanings as in the
prospectus. You should keep this supplement with your prospectus and your May 1,
1996 and January 1, 1997 supplements. We will send you another copy of any
prospectus or supplement, without charge, upon written request.
EQUITABLE. The information under the heading "EQUITABLE" in your prospectus is
updated as follows:
EQUITABLE. Equitable, a New York stock life insurance company, has been in
business since 1859. We are a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA), a French insurance holding company. As of December 31,
1996, AXA beneficially owned 63.8% of the outstanding shares of common stock of
the Holding Company (assuming conversion of the convertible preferred stock held
by AXA). Under its investment arrangements with Equitable and the Holding
Company, AXA is able to exercise significant influence over the operations and
capital structure of the Holding Company and its subsidiaries, including
Equitable. AXA is the holding company for an international group of insurance
and related financial services companies. Equitable, the Holding Company and
their subsidiaries managed approximately $239.8 billion of assets as of December
31, 1996, including third party assets of approximately $184.8 billion.
Equitable's home office is 1290 Avenue of the Americas, New York, New York
10104. We are licensed to do business in all 50 states, Puerto Rico, the Virgin
Islands and the District of Columbia. We maintain local offices throughout the
United States. At December 31, 1996, we had approximately $114.6 billion face
amount of variable life insurance in force, as compared to $103.9 billion at
December 31, 1995. Prior to January 1, 1997, Separate Account I policies were
issued by Equitable's wholly owned subsidiary, Equitable Variable Life Insurance
Company (Equitable Variable). Equitable Variable was merged into Equitable as of
January 1, 1997.
INVESTMENT PORTFOLIOS. The names of The Hudson River Trust ("HRT") investment
portfolios have been modified as follows, to include "Alliance" in their names:
o Alliance Money Market o Alliance Common Stock
o Alliance Intermediate o Alliance Aggressive Stock
Government Securities
o Alliance Balanced
o Alliance High Yield
PERFORMANCE INFORMATION. The performance information for The Hudson River Trust
rates of return in the prospectus and any illustrations of policy values based
on such information are deleted.
- -----------------------
* This supplement updates certain information contained in The Champion
Prospectuses dated September 30, 1987 and December 18, 1986; the SP-1
Prospectuses dated September 30, 1987, April 30, 1986 and January 1, 1984; and
the Basic and Expanded Prospectuses dated April 30, 1986 and March 26, 1985.
EVM-117
1
<PAGE>
DEDUCTIONS AND CHARGES
FROM THE TRUST.
o The Separate Account Funds purchase Class IA shares of corresponding
portfolios of the HRT at net asset value. That price reflects investment
management fees, indirect expenses, such as brokerage commissions, and
certain other operating expenses.
The Hudson River Trust. Effective May 1, 1997, a new investment advisory
agreement relating to each of the HRT portfolios was entered into between HRT
and Alliance, HRT's Investment Adviser. The table below shows (i) the
investment management fees paid by the HRT in 1996 and (ii) other expenses
deducted from HRT assets in 1996, both restated to reflect the fees and other
expenses that would have been paid by the portfolios if the present
investment advisory agreement had been in effect as of January 1, 1996. These
restated fees and expenses are based on average net assets for 1996. For
actual investment management fees and other expenses paid by HRT in 1996, see
the HRT prospectus. Investment management fees may increase or decrease based
on the level of portfolio net assets. These fees are subject to maximum
rates, as described in the attached HRT prospectus. Other HRT expenses are
likely to fluctuate from year to year. Both investment management fees and
other expenses are expressed in the table on the next page as an annual
percentage of each portfolio's daily average net assets:
<TABLE>
<CAPTION>
1996 FEES AND EXPENSES RESTATED AS IF SUBJECT TO 1997 ADVISORY AGREEMENT
-------------------------------------------------------------------------
RESTATED 1996 RESTATED 1996 RESTATED 1996
HRT PORTFOLIO MANAGEMENT FEE OTHER EXPENSES TOTAL EXPENSES*
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Money Market 0.35% 0.04% 0.39%
Alliance Intermediate Govt.
Securities 0.50% 0.09% 0.59%
Alliance High Yield 0.60% 0.06% 0.66%
Alliance Common Stock 0.38% 0.03% 0.41%
Alliance Aggressive Stock 0.55% 0.03% 0.58%
Alliance Balanced 0.42% 0.05% 0.47%
</TABLE>
---------------------------------
*Equitable credits the Separate Account Funds daily to offset
investment management fees and other expenses of the HRT which
exceed a 0.25% effective annual rate.
INVESTMENT PERFORMANCE. Footnote 7 to the Separate Account I financial
statements included herein contains information about the net return for each
Fund. The attached prospectus for The Hudson River Trust contains rates of
return and other portfolio performance information of the HRT for various
periods ended December 31, 1996. Remember, the changes in the Account/Cash Value
of your policy depend not only on the performance of the portfolios, but also on
the deductions and charges under your policy. To obtain the current index values
of the Separate Account Funds for Champion policies, call (212) 314-3310.
The index values and the information contained in footnote 7 are computed using
gross rates of return for the corresponding portfolios of the HRT, reduced by a
daily asset charge for investment management services of 0.25% and by the
mortality and expense risk charge.
DISTRIBUTION. Certain of the information presented under the caption
"DISTRIBUTION" in your prospectus is revised as follows:
EQ Financial Consultants, Inc. (EQF) is the principal underwriter of the HRT and
also a distributor of our variable life insurance policies and variable annuity
contracts. EQF's principal business address is 1755 Broadway, New York, NY
10019. EQF is registered with the SEC as a broker-dealer under the Securities
Exchange Act of 1934 (1934 Act) and is a member of the National Association of
Securities Dealers, Inc. In 1995 and 1996, Equitable Variable paid EQF a fee of
$325,380 annually for its services as distributor of its policies.
ILLUSTRATIONS OF POLICY BENEFITS. The tables in your prospectus have not been
restated to reflect a new portfolio expense assumption. For a personalized
illustration reflecting the fees and expenses under your policy, contact your
Equitable agent.
MANAGEMENT. A list of our directors and, to the extent they are responsible for
variable life insurance operations, our principal officers and a brief statement
of their business experience for the past five years is contained in Appendix A
to this supplement.
LONG-TERM MARKET TRENDS. Appendix B to this supplement presents historical
return trends for various types of securities which may be useful for
understanding how different investment strategies may affect long-term results.
FINANCIAL STATEMENTS. The financial statements of Separate Account I and
Equitable included in this prospectus supplement have been audited for the years
ended December 31, 1996, 1995 and 1994 by the accounting firm of Price
Waterhouse LLP, independent accountants, as stated in their reports. The
financial statements of Separate Account I and Equitable for the years ended
December 31, 1996, 1995 and 1994 included in this prospectus supplement have
been so included in reliance on the reports of Price Waterhouse LLP, given on
the authority of such firm as experts in accounting and auditing.
The financial statements of Equitable contained in this prospectus supplement
should be considered only as bearing upon the ability of Equitable to meet its
obligations under the policies. They should not be considered as bearing upon
the investment experience of the funds in the Separate Account. The financial
statements of Separate Account I include periods prior to the merger when
Separate Account I was part of Equitable Variable Life Insurance Company
("Equitable Variable"). As mentioned in a previously distributed supplement,
Equitable Variable was merged with and into Equitable on January 1, 1997.
2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants........................................................................................ FSA-2
Financial Statements:
Statements of Assets and Liabilities, December 31, 1996.......................................................... FSA-3
Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994.................................... FSA-4
Statements of Changes in Net Assets for the Years Ended December 31, 1996, 1995 and 1994......................... FSA-7
Notes to Financial Statements.................................................................................... FSA-10
<FN>
+ Formerly known as Equitable Variable Life Insurance Company Separate Account I.
</FN>
</TABLE>
FSA-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Policyowners of Separate Account I
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the Money Market Fund,
Intermediate Government Securities Fund, High Yield Fund, Balanced Fund, Common
Stock Fund and Aggressive Stock Fund, separate investment funds of The Equitable
Life Assurance Society of the United States ("Equitable Life") Separate Account
I (formerly Equitable Variable Life Insurance Company Separate Account I)at
December 31, 1996 and the results of each of their operations and changes in
each of their net assets for the years indicated, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of Equitable Life's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of shares in The Hudson River Trust at
December 31, 1996 with the transfer agent, provide a reasonable basis for the
opinion expressed above. The rates of return information presented in note 7 for
the year ended December 31, 1992, and for each of the periods indicated prior
thereto, were audited by other independent accountants whose report dated
February 16, 1993 expressed an unqualified opinion on the financial statements
containing such information.
PRICE WATERHOUSE LLP
New York, New York
February 10, 1997
FSA-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT HIGH
MARKET SECURITIES YIELD
FUND FUND FUND
------------ ---------------- -----------
<S> <C> <C> <C>
ASSETS
Investments in shares of The Hudson River Trust -- at market value
(Notes 2 and 6)
Cost: $66,401,674..................................................... $67,476,741
2,455,042..................................................... $2,446,690
9,342,140..................................................... $10,464,112
34,079,909.....................................................
317,825,084.....................................................
20,811,659.....................................................
Receivable for The Hudson River Trust shares sold.......................... -- -- 4,677
Receivable for policy related transactions................................. -- -- --
----------- ---------- -----------
Total Assets............................................................... 67,476,741 2,446,690 10,468,789
----------- ---------- -----------
LIABILITIES
Payable for The Hudson River Trust shares purchased........................ 42,198 762 --
Payable for policy related transactions.................................... 707,060 76,199 218,114
Amount retained by Equitable Life in Separate Account I (Note 4)........... 517,456 83,576 584,042
----------- ---------- -----------
Total Liabilities.......................................................... 1,266,714 160,537 802,156
----------- ---------- -----------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS.................................... $66,210,027 $2,286,153 $ 9,666,633
=========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
COMMON AGGRESSIVE
BALANCED STOCK STOCK
FUND FUND FUND
------------ -------------- ------------
<S> <C> <C> <C>
ASSETS
Investments in shares of The Hudson River Trust -- at market value
(Notes 2 and 6)
Cost: $66,401,674.....................................................
2,455,042.....................................................
9,342,140.....................................................
34,079,909..................................................... $40,158,726
317,825,084..................................................... $543,778,508
20,811,659..................................................... $30,076,602
Receivable for The Hudson River Trust shares sold.......................... 10,307 73,012 28,965
Receivable for policy related transactions................................. -- -- --
---------- ------------ -----------
Total Assets............................................................... 40,169,033 543,851,520 30,105,567
---------- ------------ -----------
LIABILITIES
Payable for The Hudson River Trust shares purchased........................ -- -- --
Payable for policy related transactions.................................... 609,416 8,079,776 451,346
Amount retained by Equitable Life in Separate Account I (Note 4)........... 657,588 4,700,784 466,191
---------- ------------ -----------
Total Liabilities.......................................................... 1,267,004 12,780,560 917,537
---------- ------------ -----------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS.................................... $38,902,029 $531,070,960 $29,188,030
=========== ============ ===========
<FN>
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account I.
</FN>
</TABLE>
FSA-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONEY MARKET FUND
--------------------------------------
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust................................................ $3,440,074 $3,738,980 $2,684,291
Expenses (Note 3):
Mortality and expense risk charges................................................... 337,817 347,935 355,911
---------- ---------- ----------
NET INVESTMENT INCOME..................................................................... 3,102,257 3,391,045 2,328,380
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.................................................... 82,253 31,732 52,117
Realized gain distribution from The Hudson River Trust................................. -- -- --
---------- ---------- ----------
NET REALIZED GAIN (LOSS).................................................................. 82,253 31,732 52,117
Unrealized appreciation / (depreciation) on investments:
Beginning of period.................................................................. 1,068,018 920,431 844,597
End of period........................................................................ 1,075,067 1,068,018 920,431
---------- ---------- ----------
Change in unrealized appreciation / (depreciation) during the period................... 7,049 147,587 75,834
---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.................................... 89,302 179,319 127,951
---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................... $3,191,559 $3,570,364 $2,456,331
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
SECURITIES FUND
----------------------------------
1996 1995 1994
---------- --------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust................................................ $136,334 $145,274 $ 199,648
Expenses (Note 3):
Mortality and expense risk charges................................................... 10,873 11,943 11,365
-------- -------- ---------
NET INVESTMENT INCOME..................................................................... 125,461 133,331 188,283
-------- -------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.................................................... (46,354) (94,891) (303,584)
Realized gain distribution from The Hudson River Trust................................. -- -- 157,383
-------- -------- ---------
NET REALIZED GAIN (LOSS).................................................................. (46,354) (94,891) (146,201)
Unrealized appreciation / (depreciation) on investments:
Beginning of period.................................................................. (7,887) (267,346) (100,844)
End of period........................................................................ (8,352) (7,887) (267,346)
-------- -------- ---------
Change in unrealized appreciation / (depreciation) during the period................... (465) 259,459 (166,502)
-------- -------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.................................... (46,819) 164,568 (312,703)
-------- -------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 78,642 $297,899 $(124,420)
======== ======== =========
<FN>
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account I.
</FN>
</TABLE>
FSA-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
HIGH YIELD FUND
--------------------------------------
1996 1995 1994
----------- ------------ -------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust.............................................. $ 952,760 $ 862,089 $ 806,574
Expenses (Note 3):
Mortality and expense risk charges................................................. 44,945 39,170 41,676
---------- ---------- -----------
NET INVESTMENT INCOME................................................................... 907,815 822,919 764,898
---------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.................................................. 15,812 (10,426) (94,683)
Realized gain distribution from The Hudson River Trust............................... 661,606 -- --
---------- ---------- -----------
NET REALIZED GAIN (LOSS)................................................................ 677,418 (10,426) (94,683)
Unrealized appreciation / (depreciation) on investments:
Beginning of period................................................................ 767,393 98,061 1,064,280
End of period...................................................................... 1,121,972 767,393 98,061
---------- ---------- -----------
Change in unrealized appreciation / (depreciation) during the period................. 354,579 669,332 (966,219)
---------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.................................. 1,031,997 658,906 (1,060,902)
---------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......................... $1,939,812 $1,481,825 $ (296,004)
========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
BALANCED FUND
--------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust.............................................. $1,225,630 $1,126,871 $ 1,006,200
Expenses (Note 3):
Mortality and expense risk charges................................................. 189,178 167,041 164,873
---------- ---------- ----------
NET INVESTMENT INCOME................................................................... 1,036,452 959,830 841,327
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.................................................. (82,952) (113,948) (379,076)
Realized gain distribution from The Hudson River Trust............................... 3,222,070 1,008,186 --
---------- ---------- ----------
NET REALIZED GAIN (LOSS)................................................................ 3,139,118 894,238 (379,076)
Unrealized appreciation / (depreciation) on investments:
Beginning of period................................................................ 6,183,884 2,080,968 5,526,191
End of period...................................................................... 6,078,817 6,183,884 2,080,968
---------- ---------- ----------
Change in unrealized appreciation / (depreciation) during the period................. (105,067) 4,102,916 (3,445,223)
---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.................................. 3,034,051 4,997,154 (3,824,299)
---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......................... $4,070,503 $5,956,984 $(2,982,972)
========== ========== ===========
<FN>
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account I.
</FN>
</TABLE>
FSA-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
STATEMENTS OF OPERATIONS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
COMMON STOCK FUND
-----------------------------------------------
1996 1995 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust..................................... $ 4,143,111 $ 5,978,397 $ 5,727,748
Expenses (Note 3):
Mortality and expense risk charges........................................ 2,447,308 2,095,213 1,942,844
------------ ------------ ------------
NET INVESTMENT INCOME.......................................................... 1,695,803 3,883,184 3,784,904
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......................................... 1,202,024 1,269,512 (328,604)
Realized gain distribution from The Hudson River Trust...................... 54,893,874 25,928,481 20,219,440
------------ ------------ ------------
NET REALIZED GAIN (LOSS)....................................................... 56,095,898 27,197,993 19,890,836
Unrealized appreciation / (depreciation) on investments:
Beginning of period....................................................... 177,639,703 92,693,149 126,545,990
End of period............................................................. 225,953,424 177,639,703 92,693,149
------------ ------------ ------------
Change in unrealized appreciation / (depreciation) during the period........ 48,313,721 84,946,554 (33,852,841)
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS......................... 104,409,619 112,144,547 (13,962,005)
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ $106,105,422 $116,027,731 $(10,177,101)
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE STOCK FUND
---------------------------------------
1996 1995 1994
------------ ----------- ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust..................................... $ 65,784 $ 57,627 $ 22,268
Expenses (Note 3):
Mortality and expense risk charges........................................ 135,068 102,259 89,577
---------- ----------- ----------
NET INVESTMENT INCOME.......................................................... (69,284) (44,632) (67,309)
---------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......................................... (104,890) 42,192 (226,938)
Realized gain distribution from The Hudson River Trust...................... 5,275,685 2,691,238 --
---------- ---------- ----------
NET REALIZED GAIN (LOSS)....................................................... 5,170,795 2,733,430 (226,938)
Unrealized appreciation / (depreciation) on investments:
Beginning of period....................................................... 9,098,725 6,102,433 6,618,938
End of period............................................................. 9,264,943 9,098,725 6,102,433
---------- ---------- ----------
Change in unrealized appreciation / (depreciation) during the period......... 166,218 2,996,292 (516,505)
---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS......................... 5,337,013 5,729,722 (743,443)
---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ $5,267,729 $5,685,090 $ (810,752)
========== ========== ==========
<FN>
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account I.
</FN>
</TABLE>
FSA-6
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONEY MARKET FUND
-----------------------------------------
1996 1995 1994
------------ ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income............................................................. $ 3,102,257 $ 3,391,045 $ 2,328,380
Net realized gain (loss).......................................................... 82,253 31,732 52,117
Change in unrealized appreciation / (depreciation) on investments................. 7,049 147,587 75,834
----------- ----------- -----------
Net increase (decrease) in net assets from operations............................. 3,191,559 3,570,364 2,456,331
----------- ----------- -----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 3)............................................................. 4,963,890 5,540,000 6,128,438
Benefits and other policy related transactions (Note 3)........................... (8,085,524) (8,585,006) (8,940,995)
Net transfers among funds......................................................... (2,603,630) (340,867) (1,904,223)
----------- ----------- -----------
Net increase (decrease) in net assets from policy related transactions............ (5,725,264) (3,385,873) (4,716,780)
----------- ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT I (Note 4).................................................... (160,954) (33,731) (22,105)
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO POLICYOWNERS....................... (2,694,659) 150,760 (2,282,554)
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, BEGINNING OF PERIOD......................... 68,904,686 68,753,926 71,036,480
----------- ----------- -----------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, END OF PERIOD............................... $66,210,027 $68,904,686 $68,753,926
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
SECURITIES FUND
--------------------------------------
1996 1995 1994
----------- ----------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income............................................................. $ 125,461 $ 133,331 $ 188,283
Net realized gain (loss).......................................................... (46,354) (94,891) (146,201)
Change in unrealized appreciation / (depreciation) on investments................. (465) 259,459 (166,502)
---------- ---------- ----------
Net increase (decrease) in net assets from operations............................. 78,642 297,899 (124,420)
---------- ---------- ----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 3)............................................................. 115,593 120,110 130,572
Benefits and other policy related transactions (Note 3)........................... (238,156) (292,199) (402,355)
Net transfers among funds......................................................... 177,990 (65,399) 606,857
---------- ---------- ----------
Net increase (decrease) in net assets from policy related transactions........... 55,427 (237,488) 335,074
---------- ---------- ----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT I (Note 4).................................................... (9,981) (12,591) 4,561
---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO POLICYOWNERS....................... 124,088 47,820 215,215
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, BEGINNING OF PERIOD......................... 2,162,065 2,114,245 1,899,030
---------- ---------- ----------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, END OF PERIOD............................... $2,286,153 $2,162,065 $2,114,245
========== ========== ==========
<FN>
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account I.
</FN>
</TABLE>
FSA-7
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
HIGH YIELD FUND
------------------------------------
1996 1995 1994
----------- ----------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income............................................................. $ 907,815 $ 822,919 $ 764,898
Net realized gain (loss).......................................................... 677,418 (10,426) (94,683)
Change in unrealized appreciation / (depreciation) on investments................. 354,579 669,332 (966,219)
---------- ---------- ----------
Net increase (decrease) in net assets from operations............................. 1,939,812 1,481,825 (296,004)
---------- ---------- ----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 3)............................................................. 846,420 821,557 852,874
Benefits and other policy related transactions (Note 3)........................... (1,604,859) (1,690,910) (1,525,854)
Net transfers among funds......................................................... 491,074 154,049 (38,627)
---------- ---------- ----------
Net increase (decrease) in net assets from policy related transactions............ (267,365) (715,304) (711,607)
---------- ---------- ----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT I (Note 4).................................................... (239,649) (96,346) 14,805
---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO POLICYOWNERS....................... 1,432,798 670,175 (992,806)
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, BEGINNING OF PERIOD......................... 8,233,835 7,563,660 8,556,466
---------- ---------- ----------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, END OF PERIOD............................... $9,666,633 $8,233,835 $7,563,660
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
BALANCED FUND
----------------------------------------
1996 1995 1994
------------- ------------ -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income............................................................. $ 1,036,452 $ 959,830 $ 841,327
Net realized gain (loss).......................................................... 3,139,118 894,238 (379,076)
Change in unrealized appreciation / (depreciation) on investments................. (105,067) 4,102,916 (3,445,223)
----------- ----------- -----------
Net increase (decrease) in net assets from operations............................. 4,070,503 5,956,984 (2,982,972)
----------- ----------- -----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 3)............................................................. 3,152,716 3,295,027 3,487,888
Benefits and other policy related transactions (Note 3)........................... (3,355,785) (3,348,951) (3,823,829)
Net transfers among funds......................................................... (512,979) (376,087) (3,406)
----------- ----------- -----------
Net increase (decrease) in net assets from policy related transactions............ (716,048) (430,011) (339,347)
----------- ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT I (Note 4).................................................... (294,944) (89,517) 42,214
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO POLICYOWNERS....................... 3,059,511 5,437,456 (3,280,105)
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, BEGINNING OF PERIOD......................... 35,842,518 30,405,062 33,685,167
----------- ----------- -----------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, END OF PERIOD............................... $38,902,029 $35,842,518 $30,405,062
=========== =========== ============
<FN>
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account I.
</FN>
</TABLE>
FSA-8
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
COMMON STOCK FUND
--------------------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................................................ $ 1,695,803 $ 3,883,184 $ 3,784,904
Net realized gain (loss)..................................................... 56,095,898 27,197,993 19,890,836
Change in unrealized appreciation / (depreciation) on investments............ 48,313,721 84,946,554 (33,852,841)
------------ ------------ ------------
Net increase (decrease) in net assets from operations........................ 106,105,422 116,027,731 (10,177,101)
------------ ------------ ------------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 3)........................................................ 21,081,997 22,520,480 24,056,215
Benefits and other policy related transactions (Note 3)...................... (53,186,448) (43,155,008) (44,688,333)
Net transfers among funds.................................................... 201,379 (27,413) 459,966
------------ ------------ ------------
Net increase (decrease) in net assets from policy related transactions...... (31,903,072) (20,661,941) (20,172,152)
------------ ------------ ------------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT I (Note 4)............................................... 775,149 (1,859,326) 149,257
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO POLICYOWNERS.................. 74,977,499 93,506,464 (30,199,996)
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, BEGINNING OF PERIOD.................... 456,093,461 362,586,997 392,786,993
------------ ------------ ------------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, END OF PERIOD.......................... $531,070,960 $456,093,461 $362,586,997
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE STOCK FUND
-----------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................................................ $ (69,284) $ (44,632) $ (67,309)
Net realized gain (loss)..................................................... 5,170,795 2,733,430 (226,938)
Change in unrealized appreciation / (depreciation) on investments............ 166,218 2,996,292 (516,505)
----------- ----------- -----------
Net increase (decrease) in net assets from operations........................ 5,267,729 5,685,090 (810,752)
----------- ----------- -----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 3)........................................................ 1,523,680 1,509,349 1,480,535
Benefits and other policy related transactions (Note 3)...................... (2,984,701) (2,642,068) (1,982,576)
Net transfers among funds.................................................... 2,246,166 655,717 1,279,484
----------- ----------- -----------
Net increase (decrease) in net assets from policy related transactions...... 785,145 (477,002) 777,443
----------- ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT I (Note 4)............................................... (83,646) (150,764) 20,425
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO POLICYOWNERS.................. 5,969,228 5,057,324 (12,884)
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, BEGINNING OF PERIOD.................... 23,218,802 18,161,478 18,174,362
----------- ----------- -----------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, END OF PERIOD.......................... $29,188,030 $23,218,802 $18,161,478
=========== =========== ===========
<FN>
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account I.
</FN>
</TABLE>
FSA-9
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. General
On September 19, 1996 the Board of Directors of The Equitable Life Assurance
Society of the United States ("Equitable Life") approved an Agreement and
Plan of Merger by and between Equitable Life and Equitable Variable Life
Insurance Company (the "Merger Agreement"). The merger was completed on
January 1, 1997. On that date, and in accordance with the provisions of the
Merger Agreement, the separate existence of Equitable Variable Life
Insurance Company ("Equitable Variable Life") ceased and Equitable Life
survived the merger. From January 1, 1997, Equitable Life is liable in place
of Equitable Variable Life for the liabilities and obligations of Equitable
Variable Life, including liabilities under policies and contracts issued by
Equitable Variable Life, and all of Equitable Variable Life's assets became
assets of Equitable Life.
Equitable Variable Life, a wholly-owned subsidiary of Equitable Life,
established Separate Account I (the Account) under New York insurance law to
support the operations of Equitable Variable Life's scheduled and single
premium variable life insurance policies (Policies). The Account is a unit
investment trust registered with the Securities and Exchange Commission
under the Investment Company Act of 1940. The Account consists of six
investment funds: the Money Market Fund, the Intermediate Government
Securities Fund, the High Yield Fund, the Balanced Fund, the Common Stock
Fund and the Aggressive Stock Fund. The assets in each Fund are invested in
Class IA shares of a designated portfolio (Portfolio) of a mutual fund, The
Hudson River Trust (the Trust). Each Portfolio has separate investment
objectives.
The assets of the Account are the property of Equitable Life. However, the
portion of the Account's assets equal to the reserves and other policy
liabilities with respect to the Account will not be chargeable with
liabilities arising out of any other business Equitable Life may conduct.
The net assets may not be less than the amount required under New York
insurance law to provide for death benefits (without regard to the minimum
death benefit guarantee) and other policy benefits. Additional assets are
held in Equitable Life's General Account to cover the contingency that the
guaranteed minimum death benefit might exceed the death benefit which would
have been payable in the absence of such guarantee.
2. Significant Accounting Policies
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investments made in shares of the Trust are valued at the net asset value
per share of the respective Portfolios. The net asset value is determined by
the Trust using the market or fair value of the underlying assets of the
Portfolios.
Investment transactions are recorded on the trade date. Realized gains and
losses include gains and losses on redemptions of the Trust's shares
(determined on the identified cost basis) and Trust distributions
representing the net realized gains on Trust investment transactions.
Dividends are recorded as income at the end of each quarter on the
ex-dividend date. Capital gains are distributed by the Trust at the end of
each year.
The operations of the Account are included in the consolidated Federal
income tax return of Equitable Life. Under the provisions of the Policies,
Equitable Life has the right to charge the Account for Federal income tax
attributable to the Account. No charge is currently being made against the
Account for such tax since, under current tax law, Equitable Life pays no
tax on investment income and capital gains reflected in variable life
insurance policy reserves. However, Equitable Life retains the right to
charge for any Federal income tax incurred which is attributable to the
Account if the law is changed. Charges for state and local taxes, if any,
attributable to the Account may also be made.
3. Asset Charges
Under the policies, Equitable Life assumes mortality and expense risks and,
to cover these risks, deducts a charge from the assets of the Account at an
annual rate of 0.50% of net assets attributable to policyowners.
Equitable Life makes certain deductions from net premiums before amounts are
allocated to the Account. The deductions are for (1) premiums for optional
benefits, (2) additional premiums for extra mortality risks, (3)
administrative expenses, (4) state premium taxes, and (5) except as to
single premium policies, a risk charge for the guaranteed minimum death
benefit.
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account I.
FSA-10
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
4. Amounts Retained by Equitable Life in Separate Account I
The amount retained by Equitable Life in the Account arises principally from
(1) mortality and other gains and losses resulting from the Account's
operations, (2) contributions from Equitable Life, and (3) that portion,
determined ratably, of the Account's investment results applicable to those
assets in the Account in excess of the net assets for the Policies. Amounts
retained by Equitable Life are not subject to charges for mortality and
expense risks.
Amounts retained by Equitable Life in the Account may be transferred at any
time by Equitable Life to its General Account.
The following table shows the surplus withdrawals by Equitable Life by
investment fund:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
INVESTMENT FUND 1996 1995 1994
--------------- ---- ---- ----
<S> <C> <C> <C>
Money Market...................................... $ 200,000 $ -- $ --
Intermediate Government Securities................ 35,000 -- --
High Yield........................................ 240,000 -- --
Balanced.......................................... 190,000 -- --
Common Stock...................................... 225,000 1,975,000 --
Aggressive Stock.................................. 150,000 100,000 --
Short-Term World Income........................... -- -- 119,356
----------- ----------- ---------
$ 1,040,000 $ 2,075,000 $ 119,356
=========== =========== =========
</TABLE>
Equitable Life credits the values of the Policies participating in the
Account to compensate policyowners for their share of the Trust expenses in
excess of (1) fees for advisory services at an annual rate equivalent to
0.25% of the average daily value of the aggregate net assets of the
Portfolios, and (2) the Trust income taxes, if any. For the Money Market
Fund and the Common Stock Fund, fees for advisory services in excess of an
annual rate equivalent to 0.25% of the average daily value of the aggregate
net assets of the related Trust Portfolios are refunded to the Funds. Excess
fees for advisory services for the Intermediate Government Securities Fund,
the High Yield Fund, the Balanced Fund and the Aggressive Stock Fund are
absorbed by Equitable Life's surplus account.
5. Distribution and Servicing Agreement
Equitable Life has entered into a Distribution and Servicing Agreement with
EQ Financial Consultants, Inc., whereby registered representatives of EQ
Financial Consultants, Inc., authorized as variable life insurance agents
under applicable state insurance laws, sell the Policies. The registered
representatives are compensated on a commission basis by Equitable Life.
6. Share Substitution
On February 22, 1994, Equitable Variable Life, the Account and the Trust
substituted shares of the Trust's Intermediate Government Securities
Portfolio for shares of the Trust's Short-Term World Income Portfolio. The
amount transferred to Intermediate Government Securities Portfolio was
$390,705. The statements of operations and statements of changes in net
assets for the Intermediate Government Securities Portfolio is combined with
the Short-Term World Income Portfolio for periods prior to the merger on
February 22, 1994. The Short-Term World Income Fund is not available for
future investment.
7. Investment Returns
The tables on the following page show the gross and net investment returns
with respect to the Funds for the periods shown. The net return for each
Fund is based upon net assets for a policy which commences with the
beginning date of such period and is not based on the average net assets in
the Fund during such period. Gross return is equal to the total return
earned by the underlying Trust investment.
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account I.
FSA-11
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT I+
NOTES TO FINANCIAL STATEMENTS -- (CONCLUDED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
RATES OF RETURN:
YEARS ENDED DECEMBER 31,
MONEY MARKET ----------------------------------------------------------------------------------------------
FUND(C) 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 5.33% 5.74% 4.02% 3.16% 3.75% 6.38% 8.44% 9.44% 7.56% 6.85%
Net return................ 4.99% 5.41% 3.68% 2.62% 3.23% 5.85% 7.90% 8.85% 7.02% 6.32%
<CAPTION>
APRIL 1(A) TO
INTERMEDIATE YEARS ENDED DECEMBER 31, DECEMBER 31,
GOVERNMENT -------------------------------------------------- ---------------
SECURITIES FUND 1996 1995 1994 1993 1992 1991
- --------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 3.78% 13.33% (4.37)% 10.87% 5.88% 12.51%
Net return................ 3.57% 13.12% (4.54)% 10.29% 5.35% 12.09%
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------
HIGH YIELD FUND 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 22.89% 19.92% (2.79)% 23.60% 12.69% 24.91% (0.75)% 5.52% 10.55% 5.30%
Net return................ 22.68% 19.74% (2.94)% 22.99% 12.13% 24.29% (1.25)% 4.99% 9.73% 4.77%
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------
BALANCED FUND 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 11.68% 19.75% (8.02)% 12.44% (2.68)% 41.52% 0.43 % 26.08% 13.84% (0.65)%
Net return................ 11.29% 19.33% (8.35)% 11.91% (3.17)% 40.81% (0.07)% 25.45% 12.99% (1.15)%
<CAPTION>
YEARS ENDED DECEMBER 31,
COMMON STOCK ----------------------------------------------------------------------------------------------
FUND 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ---------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 24.28% 32.45% (2.14)% 24.99% 3.36% 38.10% (7.95)% 25.82% 22.69% 7.71%
Net return................ 23.81% 31.97% (2.50)% 24.36% 2.84% 37.41% (8.41)% 25.19% 22.08% 7.17%
<CAPTION>
YEARS ENDED DECEMBER 31,
AGGRESSIVE -------------------------------------------------------------------------------------------------------
STOCK FUND 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ---------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 22.20% 31.63% (3.81)% 17.05% (2.91)% 87.41% 8.49% 43.93% 1.78% 7.69%
Net return................ 21.87% 31.29% (4.07)% 16.45% (3.40)% 86.47% 7.95% 43.21% 1.02% 7.15%
</TABLE>
(a) Date as of which net premiums under the Policies were first allocated to the
Fund. The gross return and the net return for the periods indicated are not
annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account I.
FSA-12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of The
Equitable Life Assurance Society of the United States and its subsidiaries
("Equitable Life") at December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of Equitable Life's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 2 to the consolidated financial statements, Equitable Life
changed its methods of accounting for long-duration participating life insurance
contracts and long-lived assets in 1996, for loan impairments in 1995 and for
postemployment benefits in 1994.
Price Waterhouse LLP
New York, New York
February 10, 1997
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value................. $ 18,077.0 $ 15,899.9
Mortgage loans on real estate................................. 3,133.0 3,638.3
Equity real estate............................................ 3,297.5 3,916.2
Policy loans.................................................. 2,196.1 1,976.4
Investment in and loans to affiliates......................... 685.0 636.6
Other equity investments...................................... 597.3 621.1
Other invested assets......................................... 288.7 706.1
----------------- -----------------
Total investments......................................... 28,274.6 27,394.6
Cash and cash equivalents....................................... 538.8 774.7
Deferred policy acquisition costs............................... 3,104.9 3,075.8
Amounts due from discontinued GIC Segment....................... 996.2 2,097.1
Other assets.................................................... 2,552.2 2,718.1
Closed Block assets............................................. 8,495.0 8,582.1
Separate Accounts assets........................................ 29,646.1 24,566.6
----------------- -----------------
TOTAL ASSETS.................................................... $ 73,607.8 $ 69,209.0
================= =================
LIABILITIES
Policyholders' account balances................................. $ 21,865.6 $ 21,911.2
Future policy benefits and other policyholders' liabilities..... 4,416.6 4,007.3
Short-term and long-term debt................................... 1,766.9 1,899.3
Other liabilities............................................... 2,785.1 3,380.7
Closed Block liabilities........................................ 9,091.3 9,221.4
Separate Accounts liabilities................................... 29,598.3 24,531.0
----------------- -----------------
Total liabilities......................................... 69,523.8 64,950.9
----------------- -----------------
Commitments and contingencies (Notes 10, 12, 13, 14 and 15)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares
authorized, issued and outstanding............................ 2.5 2.5
Capital in excess of par value.................................. 3,105.8 3,105.8
Retained earnings............................................... 798.7 788.4
Net unrealized investment gains................................. 189.9 396.5
Minimum pension liability....................................... (12.9) (35.1)
----------------- -----------------
Total shareholder's equity................................ 4,084.0 4,258.1
----------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY...................... $ 73,607.8 $ 69,209.0
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income................................................ $ 874.0 $ 788.2 $ 715.0
Premiums................................................ 597.6 606.8 625.6
Net investment income................................... 2,175.9 2,088.2 1,998.6
Investment (losses) gains, net.......................... (9.8) 5.3 91.8
Commissions, fees and other income...................... 1,081.8 897.1 847.4
Contribution from the Closed Block...................... 125.0 143.2 137.0
----------------- ----------------- -----------------
Total revenues.................................... 4,844.5 4,528.8 4,415.4
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.... 1,270.2 1,248.3 1,201.3
Policyholders' benefits................................. 1,317.7 1,008.6 914.9
Other operating costs and expenses...................... 2,048.0 1,775.8 1,857.7
----------------- ----------------- -----------------
Total benefits and other deductions............... 4,635.9 4,032.7 3,973.9
----------------- ----------------- -----------------
Earnings from continuing operations before Federal
income taxes, minority interest and cumulative
effect of accounting change........................... 208.6 496.1 441.5
Federal income taxes.................................... 9.7 120.5 100.2
Minority interest in net income of consolidated
subsidiaries.......................................... 81.7 62.8 50.4
----------------- ----------------- -----------------
Earnings from continuing operations before
cumulative effect of accounting change................ 117.2 312.8 290.9
Discontinued operations, net of Federal income taxes.... (83.8) - -
Cumulative effect of accounting change, net of Federal
income taxes.......................................... (23.1) - (27.1)
----------------- ----------------- -----------------
Net Earnings............................................ $ 10.3 $ 312.8 $ 263.8
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5
----------------- ----------------- -----------------
Capital in excess of par value, beginning of year as
previously reported......................................... 2,913.6 2,913.6 2,613.6
Cumulative effect on prior years of retroactive restatement
for accounting change....................................... 192.2 192.2 192.2
----------------- ----------------- -----------------
Capital in excess of par value, beginning of year as restated. 3,105.8 3,105.8 2,805.8
Additional capital in excess of par value..................... - - 300.0
----------------- ----------------- -----------------
Capital in excess of par value, end of year................... 3,105.8 3,105.8 3,105.8
----------------- ----------------- -----------------
Retained earnings, beginning of year as previously reported... 781.6 484.0 217.6
Cumulative effect on prior years of retroactive restatement
for accounting change....................................... 6.8 (8.4) (5.8)
----------------- ----------------- -----------------
Retained earnings, beginning of year as restated.............. 788.4 475.6 211.8
Net earnings.................................................. 10.3 312.8 263.8
----------------- ----------------- -----------------
Retained earnings, end of year................................ 798.7 788.4 475.6
----------------- ----------------- -----------------
Net unrealized investment gains (losses), beginning of year
as previously reported...................................... 338.2 (203.0) 131.9
Cumulative effect on prior years of retroactive restatement
for accounting change....................................... 58.3 (17.5) 12.7
----------------- ----------------- -----------------
Net unrealized investment gains (losses), beginning of
year as restated............................................ 396.5 (220.5) 144.6
Change in unrealized investment (losses) gains................ (206.6) 617.0 (365.1)
----------------- ----------------- -----------------
Net unrealized investment gains (losses), end of year......... 189.9 396.5 (220.5)
----------------- ----------------- -----------------
Minimum pension liability, beginning of year.................. (35.1) (2.7) (15.0)
Change in minimum pension liability........................... 22.2 (32.4) 12.3
----------------- ----------------- -----------------
Minimum pension liability, end of year........................ (12.9) (35.1) (2.7)
----------------- ----------------- -----------------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR....................... $ 4,084.0 $ 4,258.1 $ 3,360.7
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Net earnings.................................................. $ 10.3 $ 312.8 $ 263.8
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Interest credited to policyholders' account balances........ 1,270.2 1,248.3 1,201.3
Universal life and investment-type policy fee income........ (874.0) (788.2) (715.0)
Investment losses (gains)................................... 9.8 (5.3) (91.8)
Change in Federal income taxes payable...................... (197.1) 221.6 38.3
Other, net.................................................. 364.4 127.3 (19.4)
----------------- ----------------- -----------------
Net cash provided by operating activities..................... 583.6 1,116.5 677.2
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 2,275.1 1,897.4 2,323.8
Sales....................................................... 8,964.3 8,867.1 5,816.6
Return of capital from joint ventures and limited
partnerships.............................................. 78.4 65.2 39.0
Purchases................................................... (12,559.6) (11,675.5) (7,564.7)
Decrease (increase) in loans to discontinued GIC Segment.... 1,017.0 1,226.9 (40.0)
Other, net.................................................. 56.7 (624.7) (478.1)
----------------- ----------------- -----------------
Net cash (used) provided by investing activities.............. (168.1) (243.6) 96.6
----------------- ----------------- -----------------
Cash flows from financing activities:
Policyholders' account balances:
Deposits.................................................. 1,925.4 2,586.5 2,082.5
Withdrawals............................................... (2,385.2) (2,657.1) (2,864.4)
Net decrease in short-term financings....................... (.3) (16.4) (173.0)
Additions to long-term debt................................. - 599.7 51.8
Repayments of long-term debt................................ (124.8) (40.7) (199.8)
Proceeds from issuance of Alliance units.................... - - 100.0
Payment of obligation to fund accumulated deficit of
discontinued GIC Segment.................................. - (1,215.4) -
Capital contribution from the Holding Company............... - - 300.0
Other, net.................................................. (66.5) (48.4) 26.5
----------------- ----------------- -----------------
Net cash (used) by financing activities....................... (651.4) (791.8) (676.4)
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... (235.9) 81.1 97.4
Cash and cash equivalents, beginning of year.................. 774.7 693.6 596.2
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 538.8 $ 774.7 $ 693.6
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 109.9 $ 89.6 $ 34.9
================= ================= =================
Income Taxes (Refunded) Paid................................ $ (10.0) $ (82.7) $ 49.2
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") converted to a stock life insurance company on July 22, 1992 and
became a wholly owned subsidiary of The Equitable Companies Incorporated
(the "Holding Company"). Equitable Life's insurance business is
conducted principally by Equitable Life and its wholly owned life
insurance subsidiary, Equitable Variable Life Insurance Company
("EVLICO"). Effective January 1, 1997, EVLICO was merged into Equitable
Life, which will continue to conduct the Company's insurance business.
Equitable Life's investment management business, which comprises the
Investment Services segment, is conducted principally by Alliance
Capital Management L.P. ("Alliance"), Equitable Real Estate Investment
Management, Inc. ("EREIM") and Donaldson, Lufkin & Jenrette, Inc.
("DLJ"), an investment banking and brokerage affiliate. AXA-UAP ("AXA"),
a French holding company for an international group of insurance and
related financial services companies, is the Holding Company's largest
shareholder, owning approximately 60.8% at December 31, 1996 (63.6%
assuming conversion of Series E Convertible Preferred Stock held by AXA
and 54.4% if all securities convertible into, and options on, common
stock were to be converted or exercised).
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
-----------------------------------------------------
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles ("GAAP").
The accompanying consolidated financial statements include the accounts
of Equitable Life and its wholly owned life insurance subsidiaries
(collectively, the "Insurance Group"); non-insurance subsidiaries,
principally Alliance, an investment advisory subsidiary, and EREIM, a
real estate investment management subsidiary; and those partnerships and
joint ventures in which Equitable Life or its subsidiaries has control
and a majority economic interest (collectively, including its
consolidated subsidiaries, the "Company"). The Company's investment in
DLJ is reported on the equity basis of accounting. Closed Block assets
and liabilities and results of operations are presented in the
consolidated financial statements as single line items (see Note 6).
Unless specifically stated, all disclosures contained herein supporting
the consolidated financial statements exclude the Closed Block related
amounts.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
All significant intercompany transactions and balances have been
eliminated in consolidation other than intercompany transactions and
balances with the Closed Block and the discontinued Guaranteed Interest
Contract ("GIC") Segment (see Note 7).
The years "1996," "1995" and "1994" refer to the years ended December
31, 1996, 1995 and 1994, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1996 presentation.
F-6
<PAGE>
Closed Block
------------
As of July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain classes of individual participating policies for
which Equitable Life had a dividend scale payable in 1991 and which were
in force on that date. Assets were allocated to the Closed Block in an
amount which, together with anticipated revenues from policies included
in the Closed Block, was reasonably expected to be sufficient to support
such business, including provision for payment of claims, certain
expenses and taxes, and for continuation of dividend scales payable in
1991, assuming the experience underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the
holders of policies included in the Closed Block and will not revert to
the benefit of the Holding Company. The plan of demutualization
prohibits the reallocation, transfer, borrowing or lending of assets
between the Closed Block and other portions of Equitable Life's General
Account, any of its Separate Accounts or to any affiliate of Equitable
Life without the approval of the New York Superintendent of Insurance
(the "Superintendent"). Closed Block assets and liabilities are carried
on the same basis as similar assets and liabilities held in the General
Account. The excess of Closed Block liabilities over Closed Block assets
represents the expected future post-tax contribution from the Closed
Block which would be recognized in income over the period the policies
and contracts in the Closed Block remain in force.
Discontinued Operations
-----------------------
In 1991, the Company's management adopted a plan to discontinue the
business operations of the GIC Segment, consisting of the Group
Non-Participating Wind-Up Annuities ("Wind-Up Annuities") and Guaranteed
Interest Contract ("GIC") lines of business. The Company established a
pre-tax provision for the estimated future losses of the GIC line of
business and a premium deficiency reserve for the Wind-Up Annuities.
Subsequent losses incurred have been charged to the two loss provisions.
Management reviews the adequacy of the allowance and reserve each
quarter. During the fourth quarter 1996 review, management determined it
was necessary to increase the allowance for expected future losses of
the GIC Segment. Management believes the loss provisions for GIC
contracts and Wind-Up Annuities at December 31, 1996 are adequate to
provide for all future losses; however, the determination of loss
provisions continues to involve numerous estimates and subjective
judgments regarding the expected performance of discontinued operations
investment assets. There can be no assurance the losses provided for
will not differ from the losses ultimately realized (See Note 7).
Accounting Changes
------------------
In 1996, the Company changed its method of accounting for long-duration
participating life insurance contracts, primarily within the Closed
Block, in accordance with the provisions prescribed by Statement of
Financial Accounting Standards ("SFAS") No. 120, "Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance
Enterprises for Certain Long-Duration Participating Contracts". The
effect of this change, including the impact on the Closed Block, was to
increase earnings from continuing operations before cumulative effect of
accounting change by $19.2 million, net of Federal income taxes of $10.3
million for 1996. The financial statements for 1995 and 1994 have been
retroactively restated for the change which resulted in an increase
(decrease) in earnings before cumulative effect of accounting change of
$15.2 million, net of Federal income taxes of $8.2 million, and $(2.6)
million, net of Federal income tax benefit of $1.0 million,
respectively. Shareholder's equity increased $199.1 million as of
January 1, 1994 for the effect of retroactive application of the new
method. (See "Deferred Policy Acquisition Costs," "Policyholders'
Account Balances and Future Policy Benefits" and Note 6.)
The Company implemented SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," as of
January 1, 1996. The statement requires long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances
F-7
<PAGE>
indicate the carrying value of such assets may not be recoverable.
Effective with SFAS No. 121's adoption, impaired real estate is written
down to fair value with the impairment loss being included in investment
gains (losses), net. Before implementing SFAS No. 121, valuation
allowances on real estate held for the production of income were
computed using the forecasted cash flows of the respective properties
discounted at a rate equal to the Company's cost of funds. The adoption
of the statement resulted in the release of valuation allowances of
$152.4 million and recognition of impairment losses of $144.0 million on
real estate held and used. Real estate which management has committed to
disposing of by sale or abandonment is classified as real estate to be
disposed of. Valuation allowances on real estate to be disposed of
continue to be computed using the lower of estimated fair value or
depreciated cost, net of disposition costs. Implementation of the SFAS
No. 121 impairment requirements relative to other assets to be disposed
of resulted in a charge for the cumulative effect of an accounting
change of $23.1 million, net of a Federal income tax benefit of $12.4
million, due to the writedown to fair value of building improvements
relating to facilities being vacated beginning in 1996.
In the first quarter of 1995, the Company adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan". This statement
applies to all loans, including loans restructured in a troubled debt
restructuring involving a modification of terms. This statement
addresses the accounting for impairment of a loan by specifying how
allowances for credit losses should be determined. Impaired loans within
the scope of this statement are measured based on the present value of
expected future cash flows discounted at the loan's effective interest
rate, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. The Company provides for
impairment of loans through an allowance for possible losses. The
adoption of this statement did not have a material effect on the level
of these allowances or on the Company's consolidated statements of
earnings and shareholder's equity.
Beginning coincident with issuance of SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," implementation
guidance in November 1995, the Financial Accounting Standards Board
("FASB") permitted companies a one-time opportunity, through December
31, 1995, to reassess the appropriateness of the classification of all
securities held at that time. On December 1, 1995, the Company
transferred $4,794.9 million of securities classified as held to
maturity to the available for sale portfolio. As a result, consolidated
shareholder's equity increased by $149.4 million, net of deferred policy
acquisition costs ("DAC"), amounts attributable to participating group
annuity contracts and deferred Federal income taxes.
In the fourth quarter of 1994 (effective as of January 1, 1994), the
Company adopted SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," which required employers to recognize the obligation to
provide postemployment benefits. Implementation of this statement
resulted in a charge for the cumulative effect of accounting change of
$27.1 million, net of a Federal income tax benefit of $14.6 million.
New Accounting Pronouncements
-----------------------------
The FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation,"
which permits entities to recognize as expense over the vesting period
the fair value of all stock-based awards on the date of grant or,
alternatively, to continue to apply the provisions of Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. Companies which elect to
continue to apply APB Opinion No. 25 must provide pro forma net income
disclosures for employee stock option grants made in 1995 and future
years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Company accounts for stock option plans sponsored by the
Holding Company, DLJ and Alliance in accordance with the provisions of
APB Opinion No. 25 (see Note 21).
F-8
<PAGE>
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities".
SFAS No. 125 specifies the accounting and reporting requirements for
transfers of financial assets, the recognition and measurement of
servicing assets and liabilities and extinguishments of liabilities.
SFAS No. 125 is effective for transactions occurring after December 31,
1996 and is to be applied prospectively. In December 1996, the FASB
issued SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125," which defers for one year the
effective date of provisions relating to secured borrowings and
collateral and transfers of financial assets that are part of repurchase
agreements, dollar-roll, securities lending and similar transactions.
Management has not yet determined the effect of implementing SFAS No.
125.
Valuation of Investments
------------------------
Fixed maturities identified as available for sale are reported at
estimated fair value. The amortized cost of fixed maturities is adjusted
for impairments in value deemed to be other than temporary.
Mortgage loans on real estate are stated at unpaid principal balances,
net of unamortized discounts and valuation allowances. Effective with
the adoption of SFAS No. 114 on January 1, 1995, the valuation
allowances are based on the present value of expected future cash flows
discounted at the loan's original effective interest rate or the
collateral value if the loan is collateral dependent. However, if
foreclosure is or becomes probable, the measurement method used is
collateral value. Prior to the adoption of SFAS No. 114, the valuation
allowances were based on losses expected by management to be realized on
transfers of mortgage loans to real estate (upon foreclosure or
in-substance foreclosure), on the disposition or settlement of mortgage
loans and on mortgage loans management believed may not be collectible
in full. In establishing valuation allowances, management previously
considered, among other things the estimated fair value of the
underlying collateral.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired
in satisfaction of debt is valued at estimated fair value. Impaired real
estate is written down to fair value with the impairment loss being
included in investment gains (losses) net. Valuation allowances on real
estate available for sale are computed using the lower of current
estimated fair value or depreciated cost, net of disposition costs.
Prior to the adoption of SFAS No. 121, valuation allowances on real
estate held for the production of income were computed using the
forecasted cash flows of the respective properties discounted at a rate
equal to the Company's cost of funds.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which the Company does not
have control and a majority economic interest are reported on the equity
basis of accounting and are included either with equity real estate or
other equity investments, as appropriate.
Common stocks are carried at estimated fair value and are included in
other equity investments.
Short-term investments are stated at amortized cost which approximates
fair value and are included with other invested assets.
Cash and cash equivalents includes cash on hand, amounts due from banks
and highly liquid debt instruments purchased with an original maturity
of three months or less.
All securities are recorded in the consolidated financial statements on
a trade date basis.
Investment Results and Unrealized Investment Gains (Losses)
-----------------------------------------------------------
Net investment income and realized investment gains and losses
(collectively, "investment results") related to certain participating
group annuity contracts which are passed through to the contractholders
are reflected as interest credited to policyholders' account balances.
F-9
<PAGE>
Realized investment gains and losses are determined by specific
identification and are presented as a component of revenue. Valuation
allowances are netted against the asset categories to which they apply
and changes in the valuation allowances are included in investment gains
or losses.
Unrealized investment gains and losses on fixed maturities available for
sale and equity securities held by the Company are accounted for as a
separate component of shareholder's equity, net of related deferred
Federal income taxes, amounts attributable to the discontinued GIC
Segment, participating group annuity contracts, and DAC related to
universal life and investment-type products and participating
traditional life contracts.
Recognition of Insurance Income and Related Expenses
----------------------------------------------------
Premiums from universal life and investment-type contracts are reported
as deposits to policyholders' account balances. Revenues from these
contracts consist of amounts assessed during the period against
policyholders' account balances for mortality charges, policy
administration charges and surrender charges. Policy benefits and claims
that are charged to expense include benefit claims incurred in the
period in excess of related policyholders' account balances.
Premiums from participating and non-participating traditional life and
annuity policies with life contingencies generally are recognized as
income when due. Benefits and expenses are matched with such income so
as to result in the recognition of profits over the life of the
contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
For contracts with a single premium or a limited number of premium
payments due over a significantly shorter period than the total period
over which benefits are provided, premiums are recorded as income when
due with any excess profit deferred and recognized in income in a
constant relationship to insurance in force or, for annuities, the
amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over
the period to which the premiums relate in proportion to the amount of
insurance protection provided.
Deferred Policy Acquisition Costs
---------------------------------
The costs of acquiring new business, principally commissions,
underwriting, agency and policy issue expenses, all of which vary with
and are primarily related to the production of new business, are
deferred. DAC is subject to recoverability testing at the time of policy
issue and loss recognition testing at the end of each accounting period.
For universal life products and investment-type products, DAC is
amortized over the expected total life of the contract group (periods
ranging from 15 to 35 years and 5 to 17 years, respectively) as a
constant percentage of estimated gross profits arising principally from
investment results, mortality and expense margins and surrender charges
based on historical and anticipated future experience, updated at the
end of each accounting period. The effect on the amortization of DAC of
revisions to estimated gross profits is reflected in earnings in the
period such estimated gross profits are revised. The effect on the DAC
asset that would result from realization of unrealized gains (losses) is
recognized with an offset to unrealized gains (losses) in consolidated
shareholder's equity as of the balance sheet date.
For participating traditional life policies (substantially all of which
are in the Closed Block), DAC is amortized over the expected total life
of the contract group (40 years) as a constant percentage based on the
present value of the estimated gross margin amounts expected to be
realized over the life of the contracts using the expected investment
yield. At December 31, 1996, the expected investment yield ranged from
7.30% grading to 7.68% over 13 years. Estimated gross margin includes
anticipated premiums and investment results less claims and
administrative expenses, changes in the net level premium reserve and
expected annual policyholder dividends. Deviations of actual results
from estimated experience are reflected in earnings in the period such
deviations occur. The effect on the DAC asset that would result from
realization of unrealized gains (losses) is recognized with an offset to
unrealized gains (losses) in consolidated shareholder's equity as of the
balance sheet date.
F-10
<PAGE>
For non-participating traditional life and annuity policies with life
contingencies, DAC is amortized in proportion to anticipated premiums.
Assumptions as to anticipated premiums are estimated at the date of
policy issue and are consistently applied during the life of the
contracts. Deviations from estimated experience are reflected in
earnings in the period such deviations occur. For these contracts, the
amortization periods generally are for the total life of the policy.
For individual health benefit insurance, DAC is amortized over the
expected average life of the contracts (10 years for major medical
policies and 20 years for disability income ("DI") products) in
proportion to anticipated premium revenue at time of issue. In the
fourth quarter of 1996, the DAC related to DI contracts issued prior to
July 1993 was written off.
Policyholders' Account Balances and Future Policy Benefits
----------------------------------------------------------
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account
values represent an accumulation of gross premium payments plus credited
interest less expense and mortality charges and withdrawals.
For participating traditional life policies, future policy benefit
liabilities are calculated using a net level premium method on the basis
of actuarial assumptions equal to guaranteed mortality and dividend fund
interest rates. The liability for annual dividends represents the
accrual of annual dividends earned. Terminal dividends are accrued in
proportion to gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on
the basis of actuarial assumptions as to mortality, persistency and
interest established at policy issue. Assumptions established at policy
issue as to mortality and persistency are based on the Insurance Group's
experience which, together with interest and expense assumptions,
include a margin for adverse deviation. When the liabilities for future
policy benefits plus the present value of expected future gross premiums
for a product are insufficient to provide for expected future policy
benefits and expenses for that product, DAC is written off and
thereafter, if required, a premium deficiency reserve is established by
a charge to earnings. Benefit liabilities for traditional annuities
during the accumulation period are equal to accumulated contractholders'
fund balances and after annuitization are equal to the present value of
expected future payments. Interest rates used in establishing such
liabilities range from 2.25% to 11.5% for life insurance liabilities and
from 2.25% to 13.5% for annuity liabilities.
During the fourth quarter of 1996, a loss recognition study on
participating group annuity contracts and conversion annuities ("Pension
Par") was completed which included management's revised estimate of
assumptions, including expected mortality and future investment returns.
The study's results prompted management to establish a premium
deficiency reserve which decreased earnings from continuing operations
and net earnings by $47.5 million ($73.0 million pre-tax).
Individual health benefit liabilities for active lives are estimated
using the net level premium method, and assumptions as to future
morbidity, withdrawals and interest. Benefit liabilities for disabled
lives are estimated using the present value of benefits method and
experience assumptions as to claim terminations, expenses and interest.
During the fourth quarter of 1996, the Company completed a loss
recognition study of the DI business which incorporated management's
revised estimates of future experience with regard to morbidity,
investment returns, claims and administration expenses and other
factors. The study indicated DAC was not recoverable and the reserves
were not sufficient. Earnings from continuing operations and net
earnings decreased by $208.0 million ($320.0 million pre-tax) as a
result of strengthening DI reserves by $175.0 million and writing off
unamortized DAC of $145.0 million. The determination of DI reserves
requires making assumptions and estimates relating to a variety of
factors, including morbidity and interest rates, claims experience and
lapse
F-11
<PAGE>
rates based on then known facts and circumstances. Such factors as claim
incidence and termination rates can be affected by changes in the
economic, legal and regulatory environments and work ethic. While
management believes its DI reserves have been calculated on a reasonable
basis and are adequate, there can be no assurance reserves will be
sufficient to provide for future liabilities.
Claim reserves and associated liabilities for individual disability
income and major medical policies were $711.8 million and $639.6 million
at December 31, 1996 and 1995, respectively (excluding $175.0 million of
reserve strengthening in 1996). Incurred benefits (benefits paid plus
changes in claim reserves) and benefits paid for individual DI and major
medical policies (excluding $175.0 million of reserve strengthening in
1996) are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 189.0 $ 176.0 $ 188.6
Incurred benefits related to prior years........... 69.1 67.8 28.7
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 258.1 $ 243.8 $ 217.3
================= ================ =================
Benefits paid related to current year.............. $ 32.6 $ 37.0 $ 43.7
Benefits paid related to prior years............... 153.3 137.8 132.3
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 185.9 $ 174.8 $ 176.0
================= ================ =================
</TABLE>
Policyholders' Dividends
------------------------
The amount of policyholders' dividends to be paid (including those on
policies included in the Closed Block) is determined annually by
Equitable Life's Board of Directors. The aggregate amount of
policyholders' dividends is related to actual interest, mortality,
morbidity and expense experience for the year and judgment as to the
appropriate level of statutory surplus to be retained by Equitable Life.
Equitable Life is subject to limitations on the amount of statutory
profits which can be retained with respect to certain classes of
individual participating policies that were in force on July 22, 1992
which are not included in the Closed Block and with respect to
participating policies issued subsequent to July 22, 1992. Excess
statutory profits, if any, will be distributed over time to such
policyholders and will not be available to Equitable Life's shareholder.
Earnings in excess of limitations, if any, would be accrued as
policyholders' dividends.
At December 31, 1996, participating policies, including those in the
Closed Block, represent approximately 24.2% ($52.3 billion) of directly
written life insurance in force, net of amounts ceded.
Federal Income Taxes
--------------------
The Company files a consolidated Federal income tax return with the
Holding Company and its non-life insurance subsidiaries. Current Federal
income taxes were charged or credited to operations based upon amounts
estimated to be payable or recoverable as a result of taxable operations
for the current year. Deferred income tax assets and liabilities were
recognized based on the difference between financial statement carrying
amounts and income tax bases of assets and liabilities using enacted
income tax rates and laws.
Separate Accounts
-----------------
Separate Accounts are established in conformity with the New York State
Insurance Law and generally are not chargeable with liabilities that
arise from any other business of the Insurance Group. Separate Accounts
assets are subject to General Account claims only to the extent the
value of such assets exceeds the Separate Accounts liabilities.
F-12
<PAGE>
Assets and liabilities of the Separate Accounts, representing net
deposits and accumulated net investment earnings less fees, held
primarily for the benefit of contractholders, and for which the
Insurance Group does not bear the investment risk, are shown as separate
captions in the consolidated balance sheets. The Insurance Group bears
the investment risk on assets held in one Separate Account, therefore,
such assets are carried on the same basis as similar assets held in the
General Account portfolio. Assets held in the other Separate Accounts
are carried at quoted market values or, where quoted values are not
available, at estimated fair values as determined by the Insurance
Group.
The investment results of Separate Accounts on which the Insurance Group
does not bear the investment risk are reflected directly in Separate
Accounts liabilities. For 1996, 1995 and 1994, investment results of
such Separate Accounts were $2,970.6 million, $1,963.2 million and
$665.2 million, respectively.
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all Separate Accounts are
included in revenues.
F-13
<PAGE>
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------------- ----------------- ---------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1996
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 13,645.2 $ 451.5 $ 121.0 $ 13,975.7
Mortgage-backed.................... 2,015.9 11.2 20.3 2,006.8
U.S. Treasury securities and
U.S. government and
agency securities................ 1,539.4 39.2 19.3 1,559.3
States and political subdivisions.. 77.0 4.5 - 81.5
Foreign governments................ 302.6 18.0 2.2 318.4
Redeemable preferred stock......... 139.1 3.3 7.1 135.3
----------------- ----------------- ---------------- ---------------
Total Available for Sale............... $ 17,719.2 $ 527.7 $ 169.9 $ 18,077.0
================= ================= ================ ===============
Equity Securities:
Common stock......................... $ 98.7 $ 49.3 $ 17.7 $ 130.3
================= ================= ================ ===============
December 31, 1995
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 10,910.7 $ 617.6 $ 118.1 $ 11,410.2
Mortgage-backed.................... 1,838.0 31.2 1.2 1,868.0
U.S. Treasury securities and
U.S. government and
agency securities................ 2,257.0 77.8 4.1 2,330.7
States and political subdivisions.. 45.7 5.2 - 50.9
Foreign governments................ 124.5 11.0 .2 135.3
Redeemable preferred stock......... 108.1 5.3 8.6 104.8
----------------- ----------------- ---------------- ---------------
Total Available for Sale............... $ 15,284.0 $ 748.1 $ 132.2 $ 15,899.9
================= ================= ================ ===============
Equity Securities:
Common stock......................... $ 97.3 $ 49.1 $ 18.0 $ 128.4
================= ================= ================ ===============
</TABLE>
For publicly traded fixed maturities and equity securities, estimated
fair value is determined using quoted market prices. For fixed
maturities without a readily ascertainable market value, the Company has
determined an estimated fair value using a discounted cash flow
approach, including provisions for credit risk, generally based upon the
assumption such securities will be held to maturity. Estimated fair
value for equity securities, substantially all of which do not have a
readily ascertainable market value, has been determined by the Company.
Such estimated fair values do not necessarily represent the values for
which these securities could have been sold at the dates of the
consolidated balance sheets. At December 31, 1996 and 1995, securities
without a readily ascertainable market value having an amortized cost of
$3,915.7 million and $3,748.9 million, respectively, had estimated fair
values of $4,024.6 million and $3,981.8 million, respectively.
F-14
<PAGE>
The contractual maturity of bonds at December 31, 1996 is shown below:
AVAILABLE FOR SALE
------------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
---------------- -----------------
(IN MILLIONS)
Due in one year or less........... $ 539.6 $ 542.5
Due in years two through five..... 2,776.2 2,804.0
Due in years six through ten...... 6,044.7 6,158.1
Due after ten years............... 6,203.7 6,430.3
Mortgage-backed securities........ 2,015.9 2,006.8
---------------- -----------------
Total............................. $ 17,580.1 $ 17,941.7
================ =================
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher
than normal credit risks associated with such securities by monitoring
the total investments in any single issuer or total investment in a
particular industry group. Certain of these corporate high yield
securities are classified as other than investment grade by the various
rating agencies, i.e., a rating below Baa or National Association of
Insurance Commissioners ("NAIC") designation of 3 (medium grade), 4 or 5
(below investment grade) or 6 (in or near default). At December 31,
1996, approximately 14.20% of the $17,563.7 million aggregate amortized
cost of bonds held by the Insurance Group were considered to be other
than investment grade.
In addition to its holdings of corporate high yield securities, the
Insurance Group is an equity investor in limited partnership interests
which primarily invest in securities considered to be other than
investment grade.
The Company has restructured or modified the terms of certain fixed
maturity investments. The fixed maturity portfolio includes amortized
costs of $5.5 million and $15.9 million at December 31, 1996 and 1995,
respectively, of such restructured securities. These amounts include
fixed maturities which are in default as to principal and/or interest
payments, are to be restructured pursuant to commenced negotiations or
where the borrowers went into bankruptcy subsequent to acquisition
(collectively, "problem fixed maturities") of $2.2 million and $1.6
million as of December 31, 1996 and 1995, respectively. Gross interest
income that would have been recorded in accordance with the original
terms of restructured fixed maturities amounted to $1.4 million, $3.0
million and $7.5 million in 1996, 1995 and 1994, respectively. Gross
interest income on these fixed maturities included in net investment
income aggregated $1.3 million, $2.9 million and $6.8 million in 1996,
1995 and 1994, respectively.
F-15
<PAGE>
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 325.3 $ 284.9 $ 355.6
SFAS No. 121 release............................... (152.4) - -
Additions charged to income........................ 125.0 136.0 51.0
Deductions for writedowns and
asset dispositions............................... (160.8) (95.6) (121.7)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 137.1 $ 325.3 $ 284.9
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 50.4 $ 65.5 $ 64.2
Equity real estate............................... 86.7 259.8 220.7
----------------- ---------------- -----------------
Total.............................................. $ 137.1 $ 325.3 $ 284.9
================= ================ =================
</TABLE>
At December 31, 1996, the carrying values of investments held for the
production of income which were non-income producing for the twelve
months preceding the consolidated balance sheet date were $25.0 million
of fixed maturities and $2.6 million of mortgage loans on real estate.
At December 31, 1996 and 1995, mortgage loans on real estate with
scheduled payments 60 days (90 days for agricultural mortgages) or more
past due or in foreclosure (collectively, "problem mortgage loans on
real estate") had an amortized cost of $12.4 million (0.4% of total
mortgage loans on real estate) and $87.7 million (2.4% of total mortgage
loans on real estate), respectively.
The payment terms of mortgage loans on real estate may from time to time
be restructured or modified. The investment in restructured mortgage
loans on real estate, based on amortized cost, amounted to $388.3
million and $531.5 million at December 31, 1996 and 1995, respectively.
These amounts include $1.0 million and $3.8 million of problem mortgage
loans on real estate at December 31, 1996 and 1995, respectively. Gross
interest income on restructured mortgage loans on real estate that would
have been recorded in accordance with the original terms of such loans
amounted to $35.5 million, $52.1 million and $44.9 million in 1996, 1995
and 1994, respectively. Gross interest income on these loans included in
net investment income aggregated $28.2 million, $37.4 million and $32.8
million in 1996, 1995 and 1994, respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1996 1995
------------------- -------------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 340.0 $ 310.1
Impaired mortgage loans with no provision for losses............... 122.3 160.8
------------------- -------------------
Recorded investment in impaired mortgage loans..................... 462.3 470.9
Provision for losses............................................... 46.4 62.7
------------------- -------------------
Net Impaired Mortgage Loans........................................ $ 415.9 $ 408.2
=================== ===================
</TABLE>
Impaired mortgage loans with no provision for losses are loans where the
fair value of the collateral or the net present value of the expected
future cash flows related to the loan equals or exceeds the recorded
investment. Interest income earned on loans where the collateral value
is used to measure impairment is recorded on a
F-16
<PAGE>
cash basis. Interest income on loans where the present value method is
used to measure impairment is accrued on the net carrying value amount
of the loan at the interest rate used to discount the cash flows.
Changes in the present value attributable to changes in the amount or
timing of expected cash flows are reported as investment gains or
losses.
During 1996 and 1995, respectively, the Company's average recorded
investment in impaired mortgage loans was $552.1 million and $429.0
million. Interest income recognized on these impaired mortgage loans
totaled $38.8 million and $27.9 million for 1996 and 1995, respectively,
including $17.9 million and $13.4 million recognized on a cash basis.
The Insurance Group's investment in equity real estate is through direct
ownership and through investments in real estate joint ventures. At
December 31, 1996 and 1995, the carrying value of equity real estate
available for sale amounted to $345.6 million and $255.5 million,
respectively. For 1996, 1995 and 1994, respectively, real estate of
$58.7 million, $35.3 million and $189.8 million was acquired in
satisfaction of debt. At December 31, 1996 and 1995, the Company owned
$771.7 million and $862.7 million, respectively, of real estate acquired
in satisfaction of debt.
Depreciation of real estate is computed using the straight-line method
over the estimated useful lives of the properties, which generally range
from 40 to 50 years. Accumulated depreciation on real estate was $587.5
million and $662.4 million at December 31, 1996 and 1995, respectively.
Depreciation expense on real estate totaled $91.8 million, $121.7
million and $117.0 million for 1996, 1995 and 1994, respectively. As a
result of the implementation of SFAS No. 121, during 1996 no
depreciation expense has been recorded on real estate available for
sale.
F-17
<PAGE>
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information of real estate joint ventures
(34 and 38 individual ventures as of December 31, 1996 and 1995,
respectively) and of limited partnership interests accounted for under
the equity method, in which the Company has an investment of $10.0
million or greater and an equity interest of 10% or greater is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
FINANCIAL POSITION
Investments in real estate, at depreciated cost........................ $ 1,883.7 $ 2,684.1
Investments in securities, generally at estimated fair value........... 2,430.6 2,459.8
Cash and cash equivalents.............................................. 98.0 489.1
Other assets........................................................... 427.0 270.8
---------------- -----------------
Total assets........................................................... 4,839.3 5,903.8
---------------- -----------------
Borrowed funds - third party........................................... 1,574.3 1,782.3
Borrowed funds - the Company........................................... 137.9 220.5
Other liabilities...................................................... 415.8 593.9
---------------- -----------------
Total liabilities...................................................... 2,128.0 2,596.7
---------------- -----------------
Partners' Capital...................................................... $ 2,711.3 $ 3,307.1
================ =================
Equity in partners' capital included above............................. $ 806.8 $ 902.2
Equity in limited partnership interests not included above............. 201.8 212.8
Other.................................................................. 9.8 8.9
---------------- -----------------
Carrying Value......................................................... $ 1,018.4 $ 1,123.9
================ =================
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 348.9 $ 463.5 $ 537.7
Revenues of other limited partnership interests.... 386.1 242.3 103.4
Interest expense - third party..................... (111.0) (135.3) (114.9)
Interest expense - the Company..................... (30.0) (41.0) (36.9)
Other expenses..................................... (282.5) (397.7) (430.9)
----------------- ---------------- -----------------
Net Earnings....................................... $ 311.5 $ 131.8 $ 58.4
================= ================ =================
Equity in net earnings included above.............. $ 73.9 $ 49.1 $ 18.9
Equity in net earnings of limited partnerships
interests not included above..................... 35.8 44.8 25.3
Other.............................................. .9 1.0 1.8
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 110.6 $ 94.9 $ 46.0
================= ================ =================
</TABLE>
F-18
<PAGE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities.................... $ 1,307.4 $ 1,151.1 $ 1,036.5
Mortgage loans on real estate....... 303.0 329.0 385.7
Equity real estate.................. 442.4 560.4 561.8
Other equity investments............ 94.3 76.9 36.1
Policy loans........................ 160.3 144.4 122.7
Other investment income............. 217.4 273.0 322.4
----------------- ---------------- -----------------
Gross investment income........... 2,524.8 2,534.8 2,465.2
----------------- ---------------- -----------------
Investment expenses............... 348.9 446.6 466.6
----------------- ---------------- -----------------
Net Investment Income............... $ 2,175.9 $ 2,088.2 $ 1,998.6
================= ================ =================
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ 60.5 $ 119.9 $ (14.3)
Mortgage loans on real estate...................... (27.3) (40.2) (43.1)
Equity real estate................................. (79.7) (86.6) 20.6
Other equity investments........................... 18.9 12.8 75.9
Issuance and sales of Alliance Units............... 20.6 - 52.4
Other.............................................. (2.8) (.6) .3
----------------- ---------------- -----------------
Investment (Losses) Gains, Net..................... $ (9.8) $ 5.3 $ 91.8
================= ================ =================
</TABLE>
Writedowns of fixed maturities amounted to $29.9 million, $46.7 million
and $30.8 million for 1996, 1995 and 1994, respectively, and writedowns
of equity real estate subsequent to the adoption of SFAS No. 121
amounted to $23.7 million for the year ended December 31, 1996.
For 1996, 1995 and 1994, respectively, proceeds received on sales of
fixed maturities classified as available for sale amounted to $8,353.5
million, $8,206.0 million and $5,253.9 million. Gross gains of $154.2
million, $211.4 million and $65.2 million and gross losses of $92.7
million, $64.2 million and $50.8 million, respectively, were realized on
these sales. The change in unrealized investment (losses) gains related
to fixed maturities classified as available for sale for 1996, 1995 and
1994 amounted to $(258.0) million, $1,077.2 million and $(742.2)
million, respectively.
During each of 1995 and 1994, one security classified as held to
maturity was sold. During the eleven months ended November 30, 1995 and
the year ended December 31, 1994, respectively, twelve and six
securities so classified were transferred to the available for sale
portfolio. All actions were taken as a result of a significant
deterioration in creditworthiness. The aggregate amortized costs of the
securities sold were $1.0 million and $19.9 million with a related
investment gain of $-0- million and $.8 million recognized in 1995 and
1994, respectively; the aggregate amortized cost of the securities
transferred was $116.0 million and $42.8 million with gross unrealized
investment losses of $3.2 million and $3.1 million charged to
consolidated shareholder's equity for the eleven months ended November
30, 1995 and the year ended December 31,
F-19
<PAGE>
1994, respectively. On December 1, 1995, the Company transferred
$4,794.9 million of securities classified as held to maturity to the
available for sale portfolio. As a result, unrealized gains on fixed
maturities increased $395.6 million, offset by DAC of $126.5 million,
amounts attributable to participating group annuity contracts of $39.2
million and deferred Federal income taxes of $80.5 million.
For 1996, 1995 and 1994, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $136.7 million, $131.2
million and $175.8 million, respectively.
In 1996, Alliance acquired the business of Cursitor-Eaton Asset
Management Company and Cursitor Holdings Limited (collectively,
"Cursitor") for approximately $159.0 million. The purchase price
consisted of $94.3 million in cash, 1.8 million of Alliance's publicly
traded units ("Alliance Units"), 6% notes aggregating $21.5 million
payable ratably over four years, and substantial additional
consideration which will be determined at a later date. The excess of
the purchase price, including acquisition costs and minority interest,
over the fair value of Cursitor's net assets acquired resulted in the
recognition of intangible assets consisting of costs assigned to
contracts acquired and goodwill of approximately $122.8 million and
$38.3 million, respectively, which are being amortized over the
estimated useful lives of 20 years. The Company recognized an investment
gain of $20.6 million as a result of the issuance of Alliance Units in
this transaction. At December 31, 1996, the Company's ownership of
Alliance Units was approximately 57.3%.
In 1994, Alliance sold 4.96 million newly issued Alliance Units to third
parties at prevailing market prices. The Company continues to hold its
1% general partnership interest in Alliance. The Company recognized an
investment gain of $52.4 million as a result of these transactions.
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of equity and the changes for the
corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year as restated............. $ 396.5 $ (220.5) $ 144.6
Changes in unrealized investment (losses) gains.... (297.6) 1,198.9 (856.7)
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... - (78.1) 40.8
DAC............................................ 42.3 (216.8) 273.6
Deferred Federal income taxes.................. 48.7 (287.0) 177.2
----------------- ---------------- -----------------
Balance, End of Year............................... $ 189.9 $ 396.5 $ (220.5)
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains (losses) on:
Fixed maturities............................... $ 357.8 $ 615.9 $ (461.3)
Other equity investments....................... 31.6 31.1 7.7
Other, principally Closed Block................ 53.1 93.1 (5.1)
----------------- ---------------- -----------------
Total........................................ 442.5 740.1 (458.7)
Amounts of unrealized investment (gains)
losses attributable to:
Participating group annuity contracts........ (72.2) (72.2) 5.9
DAC.......................................... (52.0) (94.3) 122.4
Deferred Federal income taxes................ (128.4) (177.1) 109.9
----------------- ---------------- -----------------
Total.............................................. $ 189.9 $ 396.5 $ (220.5)
================= ================ =================
</TABLE>
F-20
<PAGE>
6) CLOSED BLOCK
Summarized financial information of the Closed Block follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1996 1995
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$3,820.7 and $3,662.8)...................................... $ 3,889.5 $ 3,896.2
Mortgage loans on real estate................................... 1,380.7 1,368.8
Policy loans.................................................... 1,765.9 1,797.2
Cash and other invested assets.................................. 336.1 440.9
DAC............................................................. 876.5 792.6
Other assets.................................................... 246.3 286.4
----------------- -----------------
Total Assets.................................................... $ 8,495.0 $ 8,582.1
================= =================
Liabilities
Future policy benefits and policyholders' account balances...... $ 8,999.7 $ 8,923.5
Other liabilities............................................... 91.6 297.9
----------------- -----------------
Total Liabilities............................................... $ 9,091.3 $ 9,221.4
================= =================
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 724.8 $ 753.4 $ 798.1
Investment income (net of investment
expenses of $27.3, $26.7 and $19.0).............. 546.6 538.9 523.0
Investment losses, net............................. (5.5) (20.2) (24.0)
----------------- ---------------- -----------------
Total revenues............................... 1,265.9 1,272.1 1,297.1
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,106.3 1,077.6 1,121.6
Other operating costs and expenses................. 34.6 51.3 38.5
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,140.9 1,128.9 1,160.1
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 125.0 $ 143.2 $ 137.0
================= ================ =================
</TABLE>
In the fourth quarter of 1996, the Company adopted SFAS No. 120, which
prescribes the accounting for individual participating life insurance
contracts, most of which are included in the Closed Block. The
implementation of SFAS No. 120 resulted in an increase (decrease) in the
contribution from the Closed Block of $27.5 million, $18.8 million and
$(14.0) million in 1996, 1995 and 1994, respectively.
The fixed maturity portfolio, based on amortized cost, includes $.4
million and $4.3 million at December 31, 1996 and 1995, respectively, of
restructured securities which includes problem fixed maturities of $.3
million and $1.9 million, respectively.
F-21
<PAGE>
During the eleven months ended November 30, 1995, one security
classified as held to maturity was sold and ten securities classified as
held to maturity were transferred to the available for sale portfolio.
All actions resulted from significant deterioration in creditworthiness.
The amortized cost of the security sold was $4.2 million. The aggregate
amortized cost of the securities transferred was $81.3 million with
gross unrealized investment losses of $.1 million transferred to equity.
At December 1, 1995, $1,750.7 million of securities classified as held
to maturity were transferred to the available for sale portfolio. As a
result, unrealized gains of $88.5 million on fixed maturities were
recognized, offset by DAC amortization of $52.6 million.
At December 31, 1996 and 1995, problem mortgage loans on real estate had
an amortized cost of $4.3 million and $36.5 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had an amortized cost of $114.2 million and $137.7 million,
respectively. At December 31, 1996 and 1995, the restructured mortgage
loans on real estate amount included $.7 million and $8.8 million,
respectively, of problem mortgage loans on real estate.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses......... $ 128.1 $ 106.8
Impaired mortgage loans with no provision for losses...... .6 10.1
---------------- -----------------
Recorded investment in impaired mortgages................. 128.7 116.9
Provision for losses...................................... 12.9 17.9
---------------- -----------------
Net Impaired Mortgage Loans............................... $ 115.8 $ 99.0
================ =================
</TABLE>
During 1996 and 1995, respectively, the Closed Block's average recorded
investment in impaired mortgage loans was $153.8 million and $146.9
million, respectively. Interest income recognized on these impaired
mortgage loans totaled $10.9 million and $5.9 million for 1996 and 1995,
respectively, including $4.7 million and $1.3 million recognized on a
cash basis.
Valuation allowances amounted to $13.8 million and $18.4 million on
mortgage loans on real estate and $3.7 million and $4.3 million on
equity real estate at December 31, 1996 and 1995, respectively.
Writedowns of fixed maturities amounted to $12.8 million, $16.8 million
and $15.9 million for 1996, 1995 and 1994, respectively. As of January
1, 1996, the adoption of SFAS No. 121 resulted in the recognition of
impairment losses of $5.6 million on real estate held and used.
Many expenses related to Closed Block operations are charged to
operations outside of the Closed Block; accordingly, the contribution
from the Closed Block does not represent the actual profitability of the
Closed Block operations. Operating costs and expenses outside of the
Closed Block are, therefore, disproportionate to the business outside of
the Closed Block.
F-22
<PAGE>
7) DISCONTINUED OPERATIONS
Summarized financial information of the GIC Segment follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1996 1995
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Mortgage loans on real estate........... $ 1,111.1 $ 1,485.8
Equity real estate...................... 925.6 1,122.1
Other invested assets................... 474.0 665.2
Other assets............................ 226.1 579.3
----------------- -----------------
Total Assets............................ $ 2,736.8 $ 3,852.4
================= =================
Liabilities
Policyholders' liabilities.............. $ 1,335.9 $ 1,399.8
Allowance for future losses............. 262.0 164.2
Amounts due to continuing operations.... 996.2 2,097.1
Other liabilities....................... 142.7 191.3
----------------- -----------------
Total Liabilities....................... $ 2,736.8 $ 3,852.4
================= =================
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Investment income (net of investment expenses
of $127.5, $153.1 and $183.3).................... $ 245.4 $ 323.6 $ 394.3
Investment (losses) gains, net..................... (18.9) (22.9) 26.8
Policy fees, premiums and other income............. .2 .7 .4
----------------- ---------------- -----------------
Total revenues..................................... 226.7 301.4 421.5
Benefits and other deductions...................... 250.4 326.5 443.2
Losses charged to allowance for future losses...... (23.7) (25.1) (21.7)
----------------- ---------------- -----------------
Pre-tax loss from operations....................... - - -
Pre-tax loss from strengthening of the
allowance for future losses...................... (129.0) - -
Federal income tax benefit......................... 45.2 - -
----------------- ---------------- -----------------
Loss from Discontinued Operations.................. $ (83.8) $ - $ -
================= ================ =================
</TABLE>
In 1991, management adopted a plan to discontinue the business
operations of the GIC Segment consisting of group non-participating
Wind-Up Annuities and the GIC lines of business. The loss allowance and
premium deficiency reserve of $569.6 million provided for in 1991 were
based on management's best judgment at that time.
The Company's quarterly process for evaluating the loss provisions
applies the current period's results of the discontinued operations
against the allowance, re-estimates future losses, and adjusts the
provisions, if appropriate. Additionally, as part of the Company's
annual planning process which takes place in the fourth quarter of each
year, investment and benefit cash flow projections are prepared. These
updated assumptions and estimates resulted in the need to strengthen the
loss provisions by $129.0 million, resulting in a post-tax charge of
$83.8 million to discontinued operations' results in the fourth quarter
of 1996.
F-23
<PAGE>
Management believes the loss provisions for Wind-Up Annuities and GIC
contracts at December 31, 1996 are adequate to provide for all future
losses; however, the determination of loss provisions continues to
involve numerous estimates and subjective judgments regarding the
expected performance of discontinued operations investment assets. There
can be no assurance the losses provided for will not differ from the
losses ultimately realized. To the extent actual results or future
projections of the discontinued operations differ from management's
current best estimates and assumptions underlying the loss provisions,
the difference would be reflected in the consolidated statements of
earnings in discontinued operations. In particular, to the extent
income, sales proceeds and holding periods for equity real estate differ
from management's previous assumptions, periodic adjustments to the loss
provisions are likely to result.
In January 1995, continuing operations transferred $1,215.4 million in
cash to the GIC Segment in settlement of its obligation to provide
assets to fund the accumulated deficit of the GIC Segment. Subsequently,
the GIC Segment remitted $1,155.4 million in cash to continuing
operations in partial repayment of borrowings by the GIC Segment. No
gains or losses were recognized on these transactions. Amounts due to
continuing operations at December 31, 1996, consisted of $1,080.0
million borrowed by the discontinued GIC Segment offset by $83.8 million
representing an obligation of continuing operations to provide assets to
fund the accumulated deficit of the GIC Segment.
Investment income included $88.2 million of interest income for 1994 on
amounts due from continuing operations. Benefits and other deductions
include $114.3 million, $154.6 million and $219.7 million of interest
expense related to amounts borrowed from continuing operations in 1996,
1995 and 1994, respectively.
Valuation allowances amounted to $9.0 million and $19.2 million on
mortgage loans on real estate and $20.4 million and $77.9 million on
equity real estate at December 31, 1996 and 1995, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in a release of
existing valuation allowances of $71.9 million on equity real estate and
recognition of impairment losses of $69.8 million on real estate held
and used. Writedowns of fixed maturities amounted to $1.6 million, $8.1
million and $17.8 million for 1996, 1995 and 1994, respectively and
writedowns of equity real estate subsequent to the adoption of SFAS No.
121 amounted to $12.3 million for 1996.
The fixed maturity portfolio, based on amortized cost, includes $6.2
million and $15.1 million at December 31, 1996 and 1995, respectively,
of restructured securities. These amounts include problem fixed
maturities of $.5 million and $6.1 million at December 31, 1996 and
1995, respectively.
At December 31, 1996 and 1995, problem mortgage loans on real estate had
amortized costs of $7.9 million and $35.4 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had amortized costs of $208.1 million and $289.3 million,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses....... $ 83.5 $ 105.1
Impaired mortgage loans with no provision for losses.... 15.0 18.2
---------------- -----------------
Recorded investment in impaired mortgages............... 98.5 123.3
Provision for losses.................................... 8.8 17.7
---------------- -----------------
Net Impaired Mortgage Loans............................. $ 89.7 $ 105.6
================ =================
</TABLE>
F-24
<PAGE>
During 1996 and 1995, the GIC Segment's average recorded investment in
impaired mortgage loans was $134.8 million and $177.4 million,
respectively. Interest income recognized on these impaired mortgage
loans totaled $10.1 million and $4.5 million for 1996 and 1995,
respectively, including $7.5 million and $.4 million recognized on a
cash basis.
At December 31, 1996 and 1995, the GIC Segment had $263.0 million and
$310.9 million, respectively, of real estate acquired in satisfaction of
debt.
8) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1996 1995
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Short-term debt.................................... $ 174.1 $ -
----------------- -----------------
Long-term debt:
Equitable Life:
6.95% surplus notes scheduled to mature 2005..... 399.4 399.3
7.70% surplus notes scheduled to mature 2015..... 199.6 199.6
Eurodollar notes, 10.5% due 1997................. - 76.2
Zero coupon note, 11.25% due 1997................ - 120.1
Other............................................ .5 16.3
----------------- -----------------
Total Equitable Life......................... 599.5 811.5
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 4.92% - 12.50% due through 2006.. 968.6 1,084.4
----------------- -----------------
Alliance:
Other............................................ 24.7 3.4
----------------- -----------------
Total long-term debt............................... 1,592.8 1,899.3
----------------- -----------------
Total Short-term and Long-term Debt................ $ 1,766.9 $ 1,899.3
================= =================
</TABLE>
Short-term Debt
---------------
Equitable Life has a $350.0 million bank credit facility available to
fund short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of
borrowing options with varying interest rates. The interest rates are
based on external indices dependent on the type of borrowing and at
December 31, 1996 range from 5.73% (the London Interbank Offering Rate
("LIBOR") plus 22.5 basis points) to 8.25% (the prime rate). There were
no borrowings outstanding under this bank credit facility at December
31, 1996.
F-25
<PAGE>
Equitable Life has a commercial paper program with an issue limit of
$500.0 million. This program is available for general corporate purposes
used to support Equitable Life's liquidity needs and is supported by
Equitable Life's existing $350.0 million five-year bank credit facility.
There were no borrowings outstanding under this program at December 31,
1996.
In February 1996, Alliance entered into a new $250.0 million five-year
revolving credit facility with a group of banks which replaced its
$100.0 million revolving credit facility and its $100.0 million
commercial paper back-up revolving credit facility. Under the new
revolving credit facility, the interest rate, at the option of Alliance,
is a floating rate generally based upon a defined prime rate, a rate
related to the LIBOR or the Federal Funds rate. A facility fee is
payable on the total facility. The revolving credit facility will be
used to provide back-up liquidity for commercial paper to be used under
Alliance's $100.0 million commercial paper program, to fund commission
payments to financial intermediaries for the sale of Class B and C
shares under Alliance's mutual fund distribution system, and for general
working capital purposes. As of December 31, 1996, Alliance had not
issued any commercial paper under its $100.0 million commercial paper
program and there were no borrowings outstanding under Alliance's
revolving credit facility.
At December 31, 1996, long-term debt expected to mature in 1997 totaling
$174.1 million was reclassified as short-term debt.
Long-term Debt
--------------
Several of the long-term debt agreements have restrictive covenants
related to the total amount of debt, net tangible assets and other
matters. The Company is in compliance with all debt covenants.
On December 18, 1995, Equitable Life issued, in accordance with Section
1307 of the New York Insurance Law, $400.0 million of surplus notes
having an interest rate of 6.95% scheduled to mature in 2005 and $200.0
million of surplus notes having an interest rate of 7.70% scheduled to
mature in 2015 (together, the "Surplus Notes"). Proceeds from the
issuance of the Surplus Notes were $596.6 million, net of related
issuance costs. The unamortized discount on the Surplus Notes was $1.0
million at December 31, 1996. Payments of interest on or principal of
the Surplus Notes are subject to prior approval by the Superintendent.
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $1,406.4 million and $1,629.7 million at December 31, 1996
and 1995, respectively, as collateral for certain long-term debt.
At December 31, 1996, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1997 and the succeeding
four years are $494.9 million, $316.7 million, $19.7 million, $5.4
million, $0 million, respectively, and $946.7 million thereafter.
9) FEDERAL INCOME TAXES
A summary of the Federal income tax expense (benefit) in the
consolidated statements of earnings is shown below:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current............................... $ 97.9 $ (11.7) $ 4.0
Deferred.............................. (88.2) 132.2 96.2
----------------- ---------------- -----------------
Total................................... $ 9.7 $ 120.5 $ 100.2
================= ================ =================
</TABLE>
F-26
<PAGE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings before
Federal income taxes and minority interest by the expected Federal
income tax rate of 35%. The sources of the difference and the tax
effects of each are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense..... $ 73.0 $ 173.7 $ 154.5
Non-taxable minority interest........... (28.6) (22.0) (17.6)
Differential earnings amount............ - - (16.8)
Adjustment of tax audit reserves........ 6.9 4.1 (4.6)
Equity in unconsolidated subsidiaries... (32.3) (19.4) (12.5)
Other................................... (9.3) (15.9) (2.8)
----------------- ---------------- -----------------
Federal Income Tax Expense.............. $ 9.7 $ 120.5 $ 100.2
================= ================ =================
</TABLE>
Prior to the date of demutualization, Equitable Life reduced its
deduction for policyholder dividends by the differential earnings
amount. This amount was computed, for each tax year, by multiplying
Equitable Life's average equity base, as determined for tax purposes, by
an estimate of the excess of an imputed earnings rate for stock life
insurance companies over the average mutual life insurance companies'
earnings rate. The differential earnings amount for each tax year was
subsequently recomputed when actual earnings rates were published by the
Internal Revenue Service. As a stock life insurance company, Equitable
Life no longer is required to reduce its policyholder dividend deduction
by the differential earnings amount, but differential earnings amounts
for pre-demutualization years were still being recomputed in 1994.
The components of the net deferred Federal income tax account are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 December 31, 1995
--------------------------------- ---------------------------------
ASSETS LIABILITIES Assets Liabilities
--------------- ---------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
DAC, reserves and reinsurance.......... $ - $ 166.0 $ - $ 304.4
Investments............................ - 328.6 - 326.9
Compensation and related benefits...... 259.2 - 293.0 -
Other.................................. - 1.8 - 32.3
--------------- ---------------- --------------- ---------------
Total.................................. $ 259.2 $ 496.4 $ 293.0 $ 663.6
=============== ================ =============== ===============
</TABLE>
The deferred Federal income taxes impacting operations reflect the net
tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. The sources of these temporary differences
and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
DAC, reserves and reinsurance......... $ (156.2) $ 63.3 $ 12.0
Investments........................... 78.6 13.0 89.3
Compensation and related benefits..... 22.3 30.8 10.0
Other................................. (32.9) 25.1 (15.1)
----------------- ---------------- -----------------
Deferred Federal Income Tax
(Benefit) Expense................... $ (88.2) $ 132.2 $ 96.2
================= ================ =================
</TABLE>
F-27
<PAGE>
The Internal Revenue Service is in the process of examining the Holding
Company's consolidated Federal income tax returns for the years 1989
through 1991. Management believes these audits will have no material
adverse effect on the Company's results of operations.
10) REINSURANCE AGREEMENTS
The Insurance Group assumes and cedes reinsurance with other insurance
companies. The Insurance Group evaluates the financial condition of its
reinsurers to minimize its exposure to significant losses from reinsurer
insolvencies. The effect of reinsurance (excluding group life and
health) is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums.................................... $ 461.4 $ 474.2 $ 476.7
Reinsurance assumed................................ 177.5 171.3 180.5
Reinsurance ceded.................................. (41.3) (38.7) (31.6)
----------------- ---------------- -----------------
Premiums........................................... $ 597.6 $ 606.8 $ 625.6
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 48.2 $ 44.0 $ 27.5
================= ================ =================
Policyholders' Benefits Ceded...................... $ 54.1 $ 48.9 $ 20.7
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 32.3 $ 28.5 $ 25.4
================= ================ =================
</TABLE>
Effective January 1, 1994, all in force business above $5.0 million was
reinsured. During 1996, the Company's retention limit on joint
survivorship policies was increased to $15.0 million. The Insurance
Group also reinsures the entire risk on certain substandard underwriting
risks as well as in certain other cases.
The Insurance Group cedes 100% of its group life and health business to
a third party insurance company. Premiums ceded totaled $2.4 million,
$260.6 million and $241.0 million for 1996, 1995 and 1994, respectively.
Ceded death and disability benefits totaled $21.2 million, $188.1
million and $235.5 million for 1996, 1995 and 1994, respectively.
Insurance liabilities ceded totaled $652.4 million and $724.2 million at
December 31, 1996 and 1995, respectively.
11) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified
part-time employees), managers and certain agents. The pension plans are
non-contributory. Equitable Life's and EREIM's benefits are based on a
cash balance formula or years of service and final average earnings, if
greater, under certain grandfathering rules in the plans. Alliance's
benefits are based on years of credited service, average final base
salary and primary social security benefits. The Company's funding
policy is to make the minimum contribution required by the Employee
Retirement Income Security Act of 1974.
Components of net periodic pension cost (credit) for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 33.8 $ 30.0 $ 30.3
Interest cost on projected benefit obligations..... 120.8 122.0 111.0
Actual return on assets............................ (181.4) (309.2) 24.4
Net amortization and deferrals..................... 43.4 155.6 (142.5)
----------------- ---------------- -----------------
Net Periodic Pension Cost (Credit)................. $ 16.6 $ (1.6) $ 23.2
================= ================ =================
</TABLE>
F-28
<PAGE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Actuarial present value of obligations:
Vested.................................................. $ 1,672.2 $ 1,642.4
Non-vested.............................................. 10.1 10.9
---------------- -----------------
Accumulated Benefit Obligation............................ $ 1,682.3 $ 1,653.3
================ =================
Plan assets at fair value................................. $ 1,626.0 $ 1,503.8
Projected benefit obligation.............................. 1,765.5 1,743.0
---------------- -----------------
Projected benefit obligation in excess of plan assets..... (139.5) (239.2)
Unrecognized prior service cost........................... (17.9) (25.5)
Unrecognized net loss from past experience different
from that assumed....................................... 280.0 368.2
Unrecognized net asset at transition...................... 4.7 (7.3)
Additional minimum liability.............................. (19.3) (51.9)
---------------- -----------------
Prepaid Pension Cost...................................... $ 108.0 $ 44.3
================ =================
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of projected benefit
obligations were 7.5% and 4.25%, respectively, at December 31, 1996 and
7.25% and 4.50%, respectively, at December 31, 1995. As of January 1,
1996 and 1995, the expected long-term rate of return on assets for the
retirement plan was 10.25% and 11%, respectively.
The Company recorded, as a reduction of shareholder's equity, an
additional minimum pension liability of $12.9 million and $35.1 million,
net of Federal income taxes, at December 31, 1996 and 1995,
respectively, representing the excess of the accumulated benefit
obligation over the fair value of plan assets and accrued pension
liability.
The pension plan's assets include corporate and government debt
securities, equity securities, equity real estate and shares of Group
Trusts managed by Alliance.
Prior to 1987, the qualified plan funded participants' benefits through
the purchase of non-participating annuity contracts from Equitable Life.
Benefit payments under these contracts were approximately $34.7 million,
$36.4 million and $38.1 million for 1996, 1995 and 1994, respectively.
The Company provides certain medical and life insurance benefits
(collectively, "postretirement benefits") for qualifying employees,
managers and agents retiring from the Company on or after attaining age
55 who have at least 10 years of service. The life insurance benefits
are related to age and salary at retirement. The costs of postretirement
benefits are recognized in accordance with the provisions of SFAS No.
106. The Company continues to fund postretirement benefits costs on a
pay-as-you-go basis and, for 1996, 1995 and 1994, the Company made
estimated postretirement benefits payments of $18.9 million, $31.1
million and $29.8 million, respectively.
F-29
<PAGE>
The following table sets forth the postretirement benefits plan's
status, reconciled to amounts recognized in the Company's consolidated
financial statements:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 5.3 $ 4.0 $ 3.9
Interest cost on accumulated postretirement
benefits obligation.............................. 34.6 34.7 28.6
Net amortization and deferrals..................... 2.4 (2.3) (3.9)
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 42.3 $ 36.4 $ 28.6
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefits obligation:
Retirees................................................ $ 381.8 $ 391.8
Fully eligible active plan participants................. 50.7 50.4
Other active plan participants.......................... 60.7 64.2
---------------- -----------------
493.2 506.4
Unrecognized prior service cost........................... 50.5 56.3
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions....... (150.5) (181.3)
---------------- -----------------
Accrued Postretirement Benefits Cost...................... $ 393.2 $ 381.4
================ =================
</TABLE>
At January 1, 1994, medical benefits available to retirees under age 65
are the same as those offered to active employees and medical benefits
will be limited to 200% of 1993 costs for all participants.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefits obligation was 9.5% in 1996,
gradually declining to 3.5% in the year 2009 and in 1995 was 10%,
gradually declining to 3.5% in the year 2008. The discount rate used in
determining the accumulated postretirement benefits obligation was 7.50%
and 7.25% at December 31, 1996 and 1995, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1996
would be increased 7%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 8%.
12) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
-----------
The Insurance Group primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce the Insurance Group's exposure to interest rate
fluctuations. Accounting for interest rate swap transactions is on an
accrual basis. Gains and losses related to interest rate swap
transactions are amortized as yield adjustments over the remaining life
of the underlying hedged security. Income and expense resulting from
interest rate swap activities are reflected in net investment income.
The notional amount of matched interest rate swaps outstanding at
December 31, 1996 was $649.9 million. The average unexpired terms at
December 31, 1996 range from 2.2 to 2.7 years. At December 31, 1996, the
cost of terminating outstanding matched swaps in a loss position was
$8.3 million and the unrealized gain on outstanding matched swaps in a
gain position was $11.4 million. The Company has no intention of
terminating these contracts prior to maturity. During 1996, 1995 and
1994, net gains (losses) of $.2 million, $1.4 million and $(.2) million,
respectively, were recorded in connection with
F-30
<PAGE>
interest rate swap activity. Equitable Life has implemented an interest
rate cap program designed to hedge crediting rates on interest-sensitive
individual annuities contracts. The outstanding notional amounts at
December 31, 1996 of contracts purchased and sold were $5,050.0 million
and $500.0 million, respectively. The net premium paid by Equitable Life
on these contracts was $22.5 million and is being amortized ratably over
the contract periods ranging from 3 to 5 years. Income and expense
resulting from this program are reflected as an adjustment to interest
credited to policyholders' account balances.
Substantially all of DLJ's business related to derivatives is by its
nature trading activities which are primarily for the purpose of
customer accommodations. DLJ's derivative activities consist primarily
of option writing and trading in forward and futures contracts.
Derivative financial instruments have both on-and-off balance sheet
implications depending on the nature of the contracts. DLJ's involvement
in swap contracts is not significant.
Fair Value of Financial Instruments
-----------------------------------
The Company defines fair value as the quoted market prices for those
instruments that are actively traded in financial markets. In cases
where quoted market prices are not available, fair values are estimated
using present value or other valuation techniques. The fair value
estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument,
including estimates of timing, amount of expected future cash flows and
the credit standing of counterparties. Such estimates do not reflect any
premium or discount that could result from offering for sale at one time
the Company's entire holdings of a particular financial instrument, nor
do they consider the tax impact of the realization of unrealized gains
or losses. In many cases, the fair value estimates cannot be
substantiated by comparison to independent markets, nor can the
disclosed value be realized in immediate settlement of the instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts.
Fair market value of off-balance-sheet financial instruments of the
Insurance Group was not material at December 31, 1996 and 1995.
Fair value for mortgage loans on real estate are estimated by
discounting future contractual cash flows using interest rates at which
loans with similar characteristics and credit quality would be made.
Fair values for foreclosed mortgage loans and problem mortgage loans are
limited to the estimated fair value of the underlying collateral if
lower.
The estimated fair values for the Company's liabilities under GIC and
association plan contracts are estimated using contractual cash flows
discounted based on the T. Rowe Price GIC Index Rate for the appropriate
duration. For durations in excess of the published index rate, the
appropriate Treasury rate is used plus a spread equal to the longest
duration GIC rate spread published.
The estimated fair values for those group annuity contracts which are
classified as universal life type contracts are measured at the
estimated fair value of the underlying assets. The estimated fair values
for single premium deferred annuities ("SPDA") are estimated using
projected cash flows discounted at current offering rates. The estimated
fair values for supplementary contracts not involving life contingencies
("SCNILC") and annuities certain are derived using discounted cash flows
based upon the estimated current offering rate.
Fair value for long-term debt is determined using published market
values, where available, or contractual cash flows discounted at market
interest rates. The estimated fair values for non-recourse mortgage debt
are determined by discounting contractual cash flows at a rate which
takes into account the level of current market interest rates and
collateral risk. The estimated fair values for recourse mortgage debt
are determined by discounting contractual cash flows at a rate based
upon current interest rates of other companies with credit ratings
similar to the Company. The Company's fair value of short-term
borrowings approximates their carrying value.
F-31
<PAGE>
The following table discloses carrying value and estimated fair value
for financial instruments not otherwise disclosed in Notes 3, 6 and 7:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------
1996 1995
--------------------------------- ---------------------------------
CARRYING ESTIMATED Carrying Estimated
VALUE FAIR VALUE Value Fair Value
--------------- ---------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Consolidated Financial Instruments:
-----------------------------------
Mortgage loans on real estate.......... $ 3,133.0 $ 3,394.6 $ 3,638.3 $ 3,973.6
Other joint ventures................... 467.0 467.0 492.7 492.7
Policy loans........................... 2,196.1 2,221.6 1,976.4 2,057.5
Policyholders' account balances:
Association plans.................... 78.1 77.3 101.0 100.0
Group annuity contracts.............. 2,141.0 1,954.0 2,335.0 2,395.0
SPDA................................. 1,062.7 1,065.7 1,265.8 1,272.0
Annuities certain and SCNILC......... 654.9 736.2 646.4 716.7
Long-term debt......................... 1,592.8 1,557.7 1,899.3 1,962.9
Closed Block Financial Instruments:
-----------------------------------
Mortgage loans on real estate.......... 1,380.7 1,425.6 1,368.8 1,461.4
Other equity investments............... 105.0 105.0 151.6 151.6
Policy loans........................... 1,765.9 1,798.0 1,797.2 1,891.4
SCNILC liability....................... 30.6 34.9 34.8 39.6
GIC Segment Financial Instruments:
----------------------------------
Mortgage loans on real estate.......... 1,111.1 1,220.3 1,485.8 1,666.1
Fixed maturities....................... 42.5 42.5 107.4 107.4
Other equity investments............... 300.5 300.5 455.9 455.9
Guaranteed interest contracts.......... 290.7 300.5 329.0 352.0
Long-term debt......................... 102.1 102.2 135.1 136.0
</TABLE>
13) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements
include commitments by the Company, under certain conditions: to make
capital contributions of up to $244.9 million to affiliated real estate
joint ventures; to provide equity financing to certain limited
partnerships of $205.8 million at December 31, 1996, under existing loan
or loan commitment agreements; and to provide short-term financing loans
which at December 31, 1996 totaled $14.6 million. Management believes
the Company will not incur any material losses as a result of these
commitments.
Equitable Life is the obligor under certain structured settlement
agreements which it had entered into with unaffiliated insurance
companies and beneficiaries. To satisfy its obligations under these
agreements, Equitable Life owns single premium annuities issued by
previously wholly owned life insurance subsidiaries. Equitable Life has
directed payment under these annuities to be made directly to the
beneficiaries under the structured settlement agreements. A contingent
liability exists with respect to these agreements should the previously
wholly owned subsidiaries be unable to meet their obligations.
Management believes the satisfaction of those obligations by Equitable
Life is remote.
At December 31, 1996, the Insurance Group had $51.6 million of letters
of credit outstanding.
F-32
<PAGE>
14) LITIGATION
A number of lawsuits has been filed against life and health insurers in
the jurisdictions in which Equitable Life and its subsidiaries do
business involving insurers' sales practices, alleged agent misconduct,
failure to properly supervise agents, and other matters. Some of the
lawsuits have resulted in the award of substantial judgments against
other insurers, including material amounts of punitive damages, or in
substantial settlements. In some states, juries have substantial
discretion in awarding punitive damages. Equitable Life, EVLICO and The
Equitable of Colorado, Inc. ("EOC"), like other life and health
insurers, from time to time are involved in such litigation. To date, no
such lawsuit has resulted in an award or settlement of any material
amount against the Company. Among litigations pending against Equitable
Life, EVLICO and EOC of the type referred to in this paragraph are the
litigations described in the following eight paragraphs.
An action entitled Golomb et al. v. The Equitable Life Assurance Society
of the United States was filed on January 20, 1995 in New York County
Supreme Court. The action purports to be brought on behalf of a class of
persons insured after 1983 under Lifetime Guaranteed Renewable Major
Medical Insurance Policies issued by Equitable Life (the "policies").
The complaint alleges that premium increases for these policies after
1983, all of which were filed with and approved by the New York State
Insurance Department and certain other state insurance departments,
breached the terms of the policies, and that statements in the policies
and elsewhere concerning premium increases constituted fraudulent
concealment, misrepresentations in violation of New York Insurance Law
Section 4226 and deceptive practices under New York General Business Law
Section 349. The complaint seeks a declaratory judgment, injunctive
relief restricting the methods by which Equitable Life increases
premiums on the policies in the future, a refund of premiums, and
punitive damages. Plaintiffs also have indicated that they will seek
damages in an unspecified amount. Equitable Life moved to dismiss the
complaint in its entirety on the grounds that it fails to state a claim
and that uncontroverted documentary evidence establishes a complete
defense to the claims. On May 29, 1996, the New York County Supreme
Court entered a judgment dismissing the complaint with prejudice.
Plaintiffs have filed a notice of appeal of that judgment.
In January 1996, separate actions were filed in Pennsylvania and Texas
state courts (entitled, respectively, Malvin et al. v. The Equitable
Life Assurance Society of the United States and Bowler et al. v. The
Equitable Life Assurance Society of the United States), making claims
similar to those in the New York action described above. The Texas
action also claims that Equitable Life misrepresented to Texas
policyholders that the Texas Insurance Department had approved Equitable
Life's rate increases. These actions are asserted on behalf of proposed
classes of Pennsylvania issued or renewed policyholders and Texas issued
or renewed policyholders, insured under the policies. The Pennsylvania
and Texas actions seek compensatory and punitive damages and injunctive
relief restricting the methods by which Equitable Life increases
premiums in the future based on the common law and statutes of those
states. On February 9, 1996, Equitable Life removed the Pennsylvania
action, Malvin, to the United States District Court for the Middle
District of Pennsylvania. Following the decision granting Equitable
Life's motion to dismiss the New York action (Golomb), on the consent of
the parties the District Court ordered an indefinite stay of all
proceedings in the Pennsylvania action, pending either party's right to
reinstate the proceeding, and ordered that for administrative purposes
the case be deemed administratively closed. On February 2, 1996,
Equitable Life removed the Texas action, Bowler, to the United States
District Court for the Northern District of Texas. On May 20, 1996, the
plaintiffs in Bowler amended their complaint by adding allegations of
misrepresentation regarding premium increases on other types of
guaranteed renewable major medical insurance policies issued by
Equitable Life up to and including 1983. On July 1, 1996, Equitable Life
filed a motion for summary judgment dismissing the first amended
complaint in its entirety. In August, 1996, the court granted plaintiffs
leave to file a supplemental complaint on behalf of a proposed class of
Texas policyholders claiming unfair discrimination, breach of contract
and other claims arising out of alleged differences between premiums
charged to Texas policyholders and premiums charged to similarly
situated policyholders in New York and certain other states. Plaintiffs
seek refunds of alleged overcharges, exemplary or additional damages
citing
F-33
<PAGE>
Texas statutory provisions which among other things, permit two times
the amount of actual damage plus additional penalties if the acts
complained of are found to be knowingly committed, and injunctive
relief. Equitable Life has also filed a motion for summary judgment
dismissing the supplemental complaint in its entirety. Plaintiffs also
obtained permission to add another plaintiff to the first amended and
supplemental complaints. Plaintiffs have opposed both motions for
summary judgment and requested that certain issues be found in their
favor. Equitable Life is in the process of replying.
On May 22, 1996, a separate action entitled Bachman v. The Equitable
Life Assurance Society of the United States, was filed in Florida state
court making claims similar to those in the previously reported Golomb
action. The Florida action is asserted on behalf of a proposed class of
Florida issued or renewed policyholders insured after 1983 under
Lifetime Guaranteed Renewable Major Medical Insurance Policies issued by
Equitable Life. The Florida action seeks compensatory and punitive
damages and injunctive relief restricting the methods by which Equitable
Life increases premiums in the future based on various common law
claims. On June 20, 1996, Equitable Life removed the Florida action to
Federal court. Equitable Life has answered the complaint, denying the
material allegations and asserting certain affirmative defenses. On
December 6, 1996, Equitable Life filed a motion for summary judgment and
plaintiff is expected to file its response to that motion shortly.
On November 6, 1996, a proposed class action entitled Fletcher, et al.
v. The Equitable Life Assurance Society of the United States, was filed
in California Superior Court for Fresno County, making substantially the
same allegations concerning premium rates and premium rate increases on
guaranteed renewable policies made in the Bowler action. The complaint
alleges, among other things, that differentials between rates charged
California policyholders and policyholders in New York and certain other
states, and the methods used by Equitable Life to calculate premium
increases, breached the terms of its policies, that Equitable Life
misrepresented and concealed the facts pertaining to such differentials
and methods in violation of California law, and that Equitable Life also
misrepresented that its rate increases were approved by the California
Insurance Department. Plaintiffs seek compensatory damages in an
unspecified amount, rescission, injunctive relief and attorneys' fees.
Equitable Life removed the action to Federal court; plaintiff has moved
to remand the case to state court. Although the outcome of any
litigation cannot be predicted with certainty, particularly in the early
stages of an action, the Company's management believes that the ultimate
resolution of the Golomb, Malvin, Bowler, Bachman and Fletcher
litigations should not have a material adverse effect on the financial
position of the Company. Due to the early stage of such litigations, the
Company's management cannot make an estimate of loss, if any, or predict
whether or not such litigations will have a material adverse effect on
the Company's results of operations in any particular period.
An action was instituted on April 6, 1995 against Equitable Life and its
wholly owned subsidiary, EOC, in New York state court, entitled Sidney
C. Cole et al. v. The Equitable Life Assurance Society of the United
States and The Equitable of Colorado, Inc., No. 95/108611 (N. Y.
County). The action is brought by the holders of a joint survivorship
whole life policy issued by EOC. The action purports to be on behalf of
a class consisting of all persons who from January 1, 1984 purchased
life insurance policies sold by Equitable Life and EOC based upon their
allegedly uniform sales presentations and policy illustrations. The
complaint puts in issue various alleged sales practices that plaintiffs
assert, among other things, misrepresented the stated number of years
that the annual premium would need to be paid. Plaintiffs seek damages
in an unspecified amount, imposition of a constructive trust, and seek
to enjoin Equitable Life and EOC from engaging in the challenged sales
practices. On June 28, 1996, the court issued a decision and order
dismissing with prejudice plaintiff's causes of action for fraud,
constructive fraud, breach of fiduciary duty, negligence, and unjust
enrichment, and dismissing without prejudice plaintiff's cause of action
under the New York State consumer protection statute. The only remaining
causes of action are for breach of contract and negligent
misrepresentation. Plaintiffs made a motion for reargument with respect
to this order, which was submitted to the court in October 1996. This
motion was denied by the court on December 16, 1996.
F-34
<PAGE>
On May 21, 1996, an action entitled Elton F. Duncan, III v. The
Equitable Life Assurance Society of the United States, was commenced
against Equitable Life in the Civil District Court for the Parish of
Orleans, State of Louisiana. The action is brought by an individual who
purchased a whole life policy. Plaintiff alleges misrepresentations
concerning the extent to which the policy was a proper replacement
policy and the number of years that the annual premium would need to be
paid. Plaintiff purports to represent a class consisting of all persons
who purchased whole life or universal life insurance policies from
Equitable Life from January 1, 1982 to the present. Plaintiff seeks
damages, including punitive damages, in an unspecified amount. On July
26, 1996, an action entitled Michael Bradley v. Equitable Variable Life
Insurance Company, was commenced in New York state court. The action is
brought by the holder of a variable life insurance policy issued by
EVLICO. The plaintiff purports to represent a class consisting of all
persons or entities who purchased one or more life insurance policies
issued by EVLICO from January 1, 1980. The complaint puts at issue
various alleged sales practices and alleges misrepresentations
concerning the extent to which the policy was a proper replacement
policy and the number of years that the annual premium would need to be
paid. Plaintiff seeks damages, including punitive damages, in an
unspecified amount and also seeks injunctive relief prohibiting EVLICO
from canceling policies for failure to make premium payments beyond the
alleged stated number of years that the annual premium would need to be
paid. On September 21, 1996 Equitable Life, EVLICO and EOC made a motion
to have this proceeding moved from Kings County Supreme Court to New
York County for joint trial or consolidation with the Cole action. The
motion was denied by the court on January 9, 1997. On January 10, 1997,
plaintiffs moved for certification of a nationwide class consisting of
all persons or entities who were sold one or more life insurance
products on a "vanishing premium" basis and/or were allegedly induced to
purchase additional policies from EVLICO, using the cash value
accumulated in existing policies, from January 1, 1980 through and
including December 31, 1996. Plaintiffs further moved to have Michael
Bradley designated as the class representative. Discovery regarding
class certification is underway.
On December 12, 1996, an action entitled Robert E. Dillon v. The
Equitable Life Assurance Society of the United States and The Equitable
of Colorado, was commenced in the United States District Court for the
Southern District of Florida. The action is brought by an individual who
purchased a joint whole life policy from EOC. The complaint puts at
issue various alleged sales practices and alleges misrepresentations
concerning the alleged impropriety of replacement policies issued by
Equitable Life and EOC and alleged misrepresentations regarding the
number of years premiums would have to be paid on the defendants'
policies. Plaintiff brings claims for breach of contract, fraud,
negligent misrepresentation, money had and received, unjust enrichment
and imposition of a constructive trust. Plaintiff purports to represent
two classes of persons. The first is a "contract class," consisting of
all persons who purchased whole or universal life insurance policies
from Equitable Life and EOC and from whom Equitable Life and EOC have
sought additional payments beyond the number of years allegedly promised
by Equitable Life and EOC. The second is a "fraud class," consisting of
all persons with an interest in policies issued by Equitable Life and
EOC at any time since October 1, 1986. Plaintiff seeks damages in an
unspecified amount, and also seeks injunctive relief attaching Equitable
Life's and EOC's profits from their alleged sales practices. Equitable
Life's and EOC's time to answer or move with respect to the complaint
has been extended until February 24, 1997. Although the outcome of
litigation cannot be predicted with certainty, particularly in the early
stages of an action, the Company's management believes that the ultimate
resolution of the Cole, Duncan, Bradley and Dillon litigations should
not have a material adverse effect on the financial position of the
Company. Due to the early stages of such litigations, the Company's
management cannot make an estimate of loss, if any, or predict whether
or not any such litigation will have a material adverse effect on the
Company's results of operations in any particular period.
On January 3, 1996, an amended complaint was filed in an action entitled
Frank Franze Jr. and George Busher, individually and on behalf of all
others similarly situated v. The Equitable Life Assurance Society of the
United States, and Equitable Variable Life Insurance Company, No.
94-2036 in the United States District Court for the Southern District of
Florida. The action was brought by two individuals who purchased
variable life insurance policies. The plaintiffs purport to represent a
nationwide class consisting of all persons who purchased variable life
insurance policies from Equitable Life and EVLICO since September 30,
1991. The basic allegation of the amended complaint is that Equitable
Life's and EVLICO's agents were trained not to
F-35
<PAGE>
disclose fully that the product being sold was life insurance.
Plaintiffs allege violations of the Federal securities laws and seek
rescission of the contracts or compensatory damages and attorneys' fees
and expenses. The court denied Equitable Life and EVLICO's motion to
dismiss the amended complaint on September 24, 1996. Equitable Life and
EVLICO have answered the amended complaint, denying the material
allegations and asserting certain affirmative defenses. Currently, the
parties are conducting discovery in connection with plaintiffs' attempt
to certify a class. On January 9, 1997, an action entitled Rosemarie
Chaviano, individually and on behalf of all others similarly situated v.
The Equitable Life Assurance Society of the United States, and Equitable
Variable Life Insurance Company, was filed in Massachusetts state court
making claims similar to those in the Franze action and alleging
violations of the Massachusetts securities laws. The plaintiff purports
to represent all persons in Massachusetts who purchased variable life
insurance contracts from Equitable Life and EVLICO from January 9, 1993
to the present. The Massachusetts action seeks rescission of the
contracts or compensatory damages, attorneys' fees, expenses and
injunctive relief. Although the outcome of any litigation cannot be
predicted with certainty, particularly in the early stages of an action,
the Company's management believes that the ultimate resolution of the
litigations discussed in this paragraph should not have a material
adverse effect on the financial position of the Company. Due to the
early stages of such litigation, the Company's management cannot make an
estimate of loss, if any, or predict whether or not any such litigation
will have a material adverse effect on the Company's results of
operations in any particular period.
Equitable Life recently responded to a subpoena from the U.S. Department
of Labor ("DOL") requesting copies of any third-party appraisals in
Equitable Life's possession relating to the ten largest properties (by
value) in the Prime Property Fund ("PPF"). PPF is an open-end,
commingled real estate separate account of Equitable Life for pension
clients. Equitable Life serves as investment manager in PPF and has
retained EREIM as advisor. In early 1995, the DOL commenced a national
investigation of commingled real estate funds with pension investors,
including PPF. The investigation now appears to be focused principally
on appraisal and valuation procedures in respect of fund properties. The
most recent request from the DOL seems to reflect, at least in part, an
interest in the relationship between the valuations for those properties
reflected in appraisals prepared for local property tax proceedings and
the valuations used by PPF for other purposes. At no time has the DOL
made any specific allegation that Equitable Life or EREIM has acted
improperly and Equitable Life and EREIM believe that any such allegation
would be without foundation. While the outcome of this investigation
cannot be predicted with certainty, in the opinion of management, the
ultimate resolution of this matter should not have a material adverse
effect on the Company's consolidated financial position or results of
operations in any particular period.
Equitable Casualty Insurance Company ("Casualty"), an indirect wholly
owned subsidiary of Equitable Life, is party to an arbitration
proceeding that commenced in August 1995. The proceeding relates to a
dispute among Casualty, Houston General Insurance Company ("Houston
General") and GEICO General Insurance Company ("GEICO General")
regarding the interpretation of a reinsurance agreement. The arbitration
panel issued a final award in favor of Casualty and GEICO General on
June 17, 1996. Casualty and GEICO General moved in the pending Texas
state court action, with Houston General's consent, for an order
confirming the arbitration award and entering judgment dismissing the
action. The motion was granted on January 29, 1997. The parties have
also stipulated to the dismissal without prejudice of a related Texas
Federal court action brought by Houston General against GEICO General
and Equitable Life. In connection with confirmation of the arbitration
award, Houston General paid to Casualty approximately $839,600 in
settlement of certain reimbursement claims by Casualty against Houston
General.
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint") was filed against the Alliance North American Government
Income Trust, Inc. (the "Fund"), Alliance and certain other defendants
affiliated with Alliance, including the Holding Company, alleging
violations of Federal securities laws, fraud and breach of fiduciary
duty in connection with the Fund's investments in Mexican and Argentine
securities. The Complaint, which seeks certification of a plaintiff
class of persons who purchased or owned Class A, B or C shares of the
Fund from March 27, 1992 through December 23, 1994, seeks an unspecified
amount of damages, costs, attorneys' fees and punitive damages. The
principal allegations of the Complaint are that the Fund purchased debt
securities issued by the Mexican and Argentine governments in amounts
that
F-36
<PAGE>
were not permitted by the Fund's investment objective, and that there
was no shareholder vote to change the investment objective to permit
purchases in such amounts. The Complaint further alleges that the
decline in the value of the Mexican and Argentine securities held by the
Fund caused the Fund's net asset value to decline to the detriment of
the Fund's shareholders. On September 26, 1996, the United States
District Court for the Southern District of New York granted the
defendants' motion to dismiss all counts of the complaint. On October
11, 1996, plaintiffs filed a motion for reconsideration of the court's
decision granting defendants' motion to dismiss the Complaint. On
November 25, 1996, the court denied plaintiffs' motion for
reconsideration. On October 29, 1996, plaintiffs filed a motion for
leave to file an amended complaint. The principal allegations of the
proposed amended complaint are that the Fund did not properly disclose
that it planned to invest in mortgage-backed derivative securities and
that two advertisements used by the Fund misrepresented the risks of
investing in the Fund. Plaintiffs also reiterated allegations in the
Complaint that the Fund failed to hedge against the risks of investing
in foreign securities despite representations that it would do so.
Alliance believes that the allegations in the Complaint are without
merit and intends to vigorously defend against these claims. While the
ultimate outcome of this matter cannot be determined at this time,
management of Alliance does not expect that it will have a material
adverse effect on Alliance's results of operations or financial
condition.
On January 26, 1996, a purported purchaser of certain notes and warrants
to purchase shares of common stock of Rickel Home Centers, Inc.
("Rickel") filed a class action complaint against Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") and certain other defendants
for unspecified compensatory and punitive damages in the United States
District Court for the Southern District of New York. The suit was
brought on behalf of the purchasers of 126,457 units consisting of
$126,457,000 aggregate principal amount of 13 1/2% senior notes due 2001
and 126,457 warrants to purchase shares of common stock of Rickel issued
by Rickel in October 1994. The complaint alleges violations of Federal
securities laws and common law fraud against DLJSC, as the underwriter
of the units and as an owner of 7.3% of the common stock of Rickel, Eos
Partners, L.P., and General Electric Capital Corporation, each as owners
of 44.2% of the common stock of Rickel, and members of the Board of
Directors of Rickel, including a DLJSC Managing Director. The complaint
seeks to hold DLJSC liable for alleged misstatements and omissions
contained in the prospectus and registration statement filed in
connection with the offering of the units, alleging that the defendants
knew of financial losses and a decline in value of Rickel in the months
prior to the offering and did not disclose such information. The
complaint also alleges that Rickel failed to pay its semi-annual
interest payment due on the units on December 15, 1995 and that Rickel
filed a voluntary petition for reorganization pursuant to Chapter 11 of
the United States Bankruptcy Code on January 10, 1996. DLJSC intends to
defend itself vigorously against all of the allegations contained in the
complaint. Although there can be no assurance, DLJ does not believe the
outcome of this litigation will have a material adverse effect on its
financial condition. Due to the early stage of this litigation, based on
the information currently available to it, DLJ's management cannot make
an estimate of loss, if any, or predict whether or not such litigation
will have a material adverse effect on DLJ's results of operations in
any particular period.
In October 1995, DLJSC was named as a defendant in a purported class
action filed in a Texas State Court on behalf of the holders of $550.0
million principal amount of subordinated redeemable discount debentures
of National Gypsum Corporation ("NGC") canceled in connection with a
Chapter 11 plan of reorganization for NGC consummated in July 1993. The
named plaintiff in the State Court action also filed an adversary
proceeding in the Bankruptcy Court for the Northern District of Texas
seeking a declaratory judgment that the confirmed NGC plan of
reorganization does not bar the class action claims. Subsequent to the
consummation of NGC's plan of reorganization, NGC's shares traded for
values substantially in excess of, and in 1995 NGC was acquired for a
value substantially in excess of, the values upon which NGC's plan of
reorganization was based. The two actions arise out of DLJSC's
activities as financial advisor to NGC in the course of NGC's Chapter 11
reorganization proceedings. The class action complaint alleges that the
plan of reorganization submitted by NGC was based upon projections by
NGC and DLJSC which intentionally understated forecasts, and provided
misleading and incorrect information in order to hide NGC's true value
and that defendants breached their fiduciary duties by, among other
things, providing false, misleading or incomplete information to
deliberately understate the value of NGC. The class action complaint
seeks compensatory and punitive damages purportedly sustained by the
class. The Texas State Court action, which
F-37
<PAGE>
had been removed to the Bankruptcy Court, has been remanded back to the
state court, which remand is being opposed by DLJSC. DLJSC intends to
defend itself vigorously against all of the allegations contained in the
complaint. Although there can be no assurance, DLJ does not believe that
the ultimate outcome of this litigation will have a material adverse
effect on its financial condition. Due to the early stage of such
litigation, based upon the information currently available to it, DLJ's
management cannot make an estimate of loss, if any, or predict whether
or not such litigation will have a material adverse effect on DLJ's
results of operations in any particular period.
In November and December 1995, DLJSC, along with various other parties,
was named as a defendant in a number of purported class actions filed in
the U.S. District Court for the Eastern District of Louisiana. The
complaints allege violations of the Federal securities laws arising out
of a public offering in 1994 of $435.0 million of first mortgage notes
of Harrah's Jazz Company and Harrah's Jazz Finance Corp. The complaints
seek to hold DLJSC liable for various alleged misstatements and
omissions contained in the prospectus dated November 9, 1994. DLJSC
intends to defend itself vigorously against all of the allegations
contained in the complaints. Although there can be no assurance, DLJ
does not believe that the ultimate outcome of this litigation will have
a material adverse effect on its financial condition. Due to the early
stage of this litigation, based upon the information currently available
to it, DLJ's management cannot make an estimate of loss, if any, or
predict whether or not such litigation will have a material adverse
effect on DLJ's results of operations in any particular period.
In addition to the matters described above, Equitable Life and its
subsidiaries and DLJ and its subsidiaries are involved in various legal
actions and proceedings in connection with their businesses. Some of the
actions and proceedings have been brought on behalf of various alleged
classes of claimants and certain of these claimants seek damages of
unspecified amounts. While the ultimate outcome of such matters cannot
be predicted with certainty, in the opinion of management no such matter
is likely to have a material adverse effect on the Company's
consolidated financial position or results of operations.
15) LEASES
The Company has entered into operating leases for office space and
certain other assets, principally data processing equipment and office
furniture and equipment. Future minimum payments under noncancelable
leases for 1997 and the succeeding four years are $113.7 million, $110.6
million, $100.3 million, $72.3 million, $59.3 million and $427.3 million
thereafter. Minimum future sublease rental income on these noncancelable
leases for 1997 and the succeeding four years are $9.8 million, $6.0
million, $4.5 million, $2.4 million, $.8 million and $.1 million
thereafter.
At December 31, 1996, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1997
and the succeeding four years are $263.0 million, $242.1 million, $219.8
million, $194.3 million, $174.6 million and $847.1 million thereafter.
F-38
<PAGE>
16) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Compensation costs................................. $ 647.3 $ 595.9 $ 687.5
Commissions........................................ 329.5 314.3 313.0
Short-term debt interest expense................... 8.0 11.4 19.0
Long-term debt interest expense.................... 137.3 108.1 98.3
Amortization of policy acquisition costs........... 405.2 317.8 313.4
Capitalization of policy acquisition costs......... (391.9) (391.0) (410.9)
Rent expense, net of sub-lease income.............. 113.7 109.3 116.0
Other.............................................. 798.9 710.0 721.4
----------------- ---------------- -----------------
Total.............................................. $ 2,048.0 $ 1,775.8 $ 1,857.7
================= ================ =================
</TABLE>
During 1996, 1995 and 1994, the Company restructured certain operations
in connection with cost reduction programs and recorded pre-tax
provisions of $24.4 million, $32.0 million and $20.4 million,
respectively. The amounts paid during 1996, associated with cost
reduction programs, totaled $17.7 million. At December 31, 1996, the
liabilities associated with cost reduction programs amounted to $44.5
million. The 1996 cost reduction program included restructuring costs
related to the consolidation of insurance operations' service centers.
The 1995 cost reduction program included relocation expenses, including
the accelerated amortization of building improvements associated with
the relocation of the home office. The 1994 cost reduction program
included costs associated with the termination of operating leases and
employee severance benefits in connection with the consolidation of 16
insurance agencies. Amortization of DAC included $145.0 million writeoff
of DAC related to DI contracts in the fourth quarter of 1996.
17) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as dividends
to the Holding Company. Under the New York Insurance Law, the
Superintendent has broad discretion to determine whether the financia1
condition of a stock life insurance company would support the payment of
dividends to its shareholders. For 1996, 1995 and 1994, statutory net
(loss) earnings totaled $(351.1) million, $(352.4) million and $67.5
million, respectively. No amounts are expected to be available for
dividends from Equitable Life to the Holding Company in 1997.
At December 31, 1996, the Insurance Group, in accordance with various
government and state regulations, had $21.9 million of securities
deposited with such government or state agencies.
F-39
<PAGE>
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from GAAP. The New York Insurance Department (the
"Department") recognizes only statutory accounting practices for
determining and reporting the financial condition and results of
operations of an insurance company, for determining its solvency under
the New York Insurance Law, and for determining whether its financial
condition warrants the payment of a dividend to its stockholders. No
consideration is given by the Department to financial statements
prepared in accordance with GAAP in making such determinations. The
following reconciles the Company's statutory change in surplus and
capital stock and statutory surplus and capital stock determined in
accordance with accounting practices prescribed by the Department with
net earnings and equity on a GAAP basis.
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Net change in statutory surplus and capital stock.. $ 56.0 $ 78.1 $ 292.4
Change in asset valuation reserves................. (48.4) 365.7 (285.2)
----------------- ---------------- -----------------
Net change in statutory surplus, capital stock
and asset valuation reserves..................... 7.6 443.8 7.2
Adjustments:
Future policy benefits and policyholders'
account balances............................... (298.5) (66.0) (5.3)
DAC.............................................. (13.3) 73.2 97.5
Deferred Federal income taxes.................... 108.0 (158.1) (58.7)
Valuation of investments......................... 289.8 189.1 45.2
Valuation of investment subsidiary............... (117.7) (188.6) 396.6
Limited risk reinsurance......................... 92.5 416.9 74.9
Contribution from the Holding Company............ - - (300.0)
Issuance of surplus notes........................ - (538.9) -
Postretirement benefits.......................... 28.9 (26.7) 17.1
Other, net....................................... 12.4 115.1 (44.0)
GAAP adjustments of Closed Block................. (9.8) 15.7 (9.5)
GAAP adjustments of discontinued GIC
Segment........................................ (89.6) 37.3 42.8
----------------- ---------------- -----------------
Net Earnings of the Insurance Group................ $ 10.3 $ 312.8 $ 263.8
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Statutory surplus and capital stock................ $ 2,258.9 $ 2,202.9 $ 2,124.8
Asset valuation reserves........................... 1,297.5 1,345.9 980.2
----------------- ---------------- -----------------
Statutory surplus, capital stock and asset
valuation reserves............................... 3,556.4 3,548.8 3,105.0
Adjustments:
Future policy benefits and policyholders'
account balances............................... (1,305.0) (1,006.5) (940.5)
DAC.............................................. 3,104.9 3,075.8 3,219.4
Deferred Federal income taxes.................... (306.1) (452.0) (29.4)
Valuation of investments......................... 286.8 417.7 (794.1)
Valuation of investment subsidiary............... (782.8) (665.1) (476.5)
Limited risk reinsurance......................... (336.5) (429.0) (845.9)
Issuance of surplus notes........................ (539.0) (538.9) -
Postretirement benefits.......................... (314.4) (343.3) (316.6)
Other, net....................................... 126.3 4.4 (79.2)
GAAP adjustments of Closed Block................. 783.7 830.8 740.4
GAAP adjustments of discontinued GIC
Segment........................................ (190.3) (184.6) (221.9)
----------------- ---------------- -----------------
Equity of the Insurance Group...................... $ 4,084.0 $ 4,258.1 $ 3,360.7
================= ================ =================
</TABLE>
F-40
<PAGE>
18) BUSINESS SEGMENT INFORMATION
The Company has two major business segments: Insurance Operations and
Investment Services. Interest expense related to debt not specific to
either business segment is presented as Corporate interest expense.
Information for all periods is presented on a comparable basis.
The Insurance Operations segment offers a variety of traditional,
variable and interest-sensitive life insurance products, disability
income, annuity products, mutual fund and other investment products to
individuals and small groups and administers traditional participating
group annuity contracts with conversion features, generally for
corporate qualified pension plans, and association plans which provide
full service retirement programs for individuals affiliated with
professional and trade associations. This segment includes Separate
Accounts for individual insurance and annuity products.
The Investment Services segment provides investment fund management,
primarily to institutional clients. This segment includes the Company's
equity interest in DLJ and Separate Accounts which provide various
investment options for group clients through pooled or single group
accounts.
Intersegment investment advisory and other fees of approximately $127.5
million, $124.1 million and $135.3 million for 1996, 1995 and 1994,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to the discontinued GIC
Segment of $15.7 million, $14.7 million and $27.4 million for 1996, 1995
and 1994, respectively, are eliminated in consolidation.
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Insurance operations............................... $ 3,742.9 $ 3,614.6 $ 3,507.4
Investment services................................ 1,126.1 949.1 935.2
Consolidation/elimination.......................... (24.5) (34.9) (27.2)
----------------- ---------------- -----------------
Total.............................................. $ 4,844.5 $ 4,528.8 $ 4,415.4
================= ================ =================
Earnings (loss) from continuing operations
before Federal income taxes, minority interest
and cumulative effect of accounting change
Insurance operations............................... $ (36.6) $ 303.1 $ 327.5
Investment services................................ 311.9 224.0 227.9
Consolidation/elimination.......................... .2 (3.1) .3
----------------- ---------------- -----------------
Subtotal..................................... 275.5 524.0 555.7
Corporate interest expense......................... (66.9) (27.9) (114.2)
----------------- ---------------- -----------------
Total.............................................. $ 208.6 $ 496.1 $ 441.5
================= ================ =================
</TABLE>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
Assets
Insurance operations........... $ 60,464.9 $ 56,720.5
Investment services............ 13,542.5 12,842.9
Consolidation/elimination...... (399.6) (354.4)
---------------- -----------------
Total.......................... $ 73,607.8 $ 69,209.0
================ =================
F-41
<PAGE>
19) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1996 and 1995, are summarized
below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
----------------- ----------------- ------------------ ------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1996
----
Total Revenues................ $ 1,169.7 $ 1,193.6 $ 1,193.6 $ 1,287.6
================= ================= ================== ==================
Earnings (Loss) from
Continuing Operations
before Cumulative Effect
of Accounting Change........ $ 94.8 $ 87.1 $ 93.2 $ (157.9)
================= ================= ================== ==================
Net Earnings (Loss)........... $ 71.7 $ 87.1 $ 93.2 $ (241.7)
================= ================= ================== ==================
1995
----
Total Revenues................ $ 1,079.1 $ 1,164.0 $ 1,138.8 $ 1,146.9
================= ================= ================== ==================
Net Earnings.................. $ 66.3 $ 101.7 $ 100.2 $ 44.6
================= ================= ================== ==================
</TABLE>
The quarterly results of operations for 1996 and 1995 have been restated
to reflect the Company's accounting change adopted in the fourth quarter
of 1996 for long-duration participating life contracts in accordance
with the provisions prescribed by SFAS No. 120. Net earnings for the
three months ended December 31, 1996 includes a charge of $339.3 million
related to writeoffs of DAC on DI contracts of $94.3 million, reserve
strengthening on DI business of $113.7 million, pension par of $47.5
million and the discontinued GIC Segment of $83.8 million.
20) INVESTMENT IN DLJ
On December 15, 1993, the Company sold a 61% interest in DLJ to the
Holding Company for $800.0 million in cash and securities. The excess of
the proceeds over the book value in DLJ at the date of sale of $340.2
million has been reflected as a capital contribution. In 1995, DLJ
completed the initial public offering ("IPO") of 10.58 million shares of
its common stock, which included 7.28 million of the Holding Company's
shares in DLJ, priced at $27 per share. Concurrent with the IPO, the
Company contributed equity securities to DLJ having a market value of
$21.2 million. Upon completion of the IPO, the Company's ownership
percentage was reduced to 36.1%. The Company's ownership interest will
be further reduced upon the issuance of common stock after the vesting
of forfeitable restricted stock units acquired by and/or the exercise of
options granted to certain DLJ employees. DLJ restricted stock units
represents forfeitable rights to receive approximately 5.2 million
shares of DLJ common stock through February 2000.
The results of operations of DLJ are accounted for on the equity basis
and are included in commissions, fees and other income in the
consolidated statements of earnings. The Company's carrying value of DLJ
is included in investment in and loans to affiliates in the consolidated
balance sheets.
F-42
<PAGE>
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 15,728.1 $ 10,821.3
Securities purchased under resale agreements........................... 20,598.7 18,748.2
Broker-dealer related receivables...................................... 16,525.9 13,023.7
Other assets........................................................... 2,651.0 1,983.3
---------------- -----------------
Total Assets........................................................... $ 55,503.7 $ 44,576.5
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 29,378.3 $ 26,744.8
Broker-dealer related payables......................................... 19,409.7 12,915.5
Short-term and long-term debt.......................................... 2,704.5 1,742.0
Other liabilities...................................................... 2,164.0 1,750.5
---------------- -----------------
Total liabilities...................................................... 53,656.5 43,152.8
Cumulative exchangeable preferred stock................................ - 225.0
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 -
Total shareholders' equity............................................. 1,647.2 1,198.7
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 55,503.7 $ 44,576.5
================ =================
DLJ's equity as reported............................................... $ 1,647.2 $ 1,198.7
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 23.9 40.5
The Holding Company's equity ownership in DLJ.......................... (590.2) (499.0)
Minority interest in DLJ............................................... (588.6) (324.3)
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 492.3 $ 415.9
================ =================
</TABLE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Commission, fees and other income...................................... $ 1,818.2 $ 1,325.9
Net investment income.................................................. 1,074.2 904.1
Dealer, trading and investment gains, net.............................. 598.4 528.6
---------------- -----------------
Total revenues......................................................... 3,490.8 2,758.6
Total expenses including income taxes.................................. 3,199.5 2,579.5
---------------- -----------------
Net earnings........................................................... 291.3 179.1
Dividends on preferred stock........................................... 18.7 19.9
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 272.6 $ 159.2
================ =================
DLJ's earnings applicable to common shares as reported................. $ 272.6 $ 159.2
Amortization of cost in excess of net assets acquired in 1985.......... (3.1) (3.9)
The Holding Company's equity in DLJ's earnings......................... (107.8) (90.4)
Minority interest in DLJ............................................... (73.4) (6.5)
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 88.3 $ 58.4
================ =================
</TABLE>
F-43
<PAGE>
21) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Holding Company sponsors a stock option plan for employees of
Equitable Life. DLJ and Alliance each sponsor their own stock option
plans for certain employees. The Company elected to continue to account
for stock-based compensation using the intrinsic value method prescribed
in APB Opinion No. 25. Had compensation expense of the Company's stock
option incentive plans for options granted after December 31, 1994 been
determined based on the estimated fair value at the grant dates for
awards under those plans, the Company's pro forma net earnings for 1996
and 1995 would have been as follows:
1996 1995
--------------- ---------------
(IN MILLIONS)
Net Earnings
As Reported......... $ 10.3 $ 312.8
Pro Forma........... $ 3.2 $ 311.3
The fair value of options and units granted after December 31, 1994,
used as a basis for the above pro forma disclosures, was estimated as of
the date of grants using Black-Scholes option pricing models. The option
and unit pricing assumptions for 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ ALLIANCE
------------------------- -------------------------- -----------------------------
1996 1995 1996 1995 1996 1995
----------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dividend yield........... 0.80% 0.96% 1.54% 1.85% 8.0% 8.0%
Expected volatility...... 20.00% 20.00% 25.00% 25.00% 23.00% 23.00%
Risk-free interest rate.. 5.92% 6.83% 6.07% 5.86% 5.80% 6.00%
Expected Life............ 5 YEARS 5 years 5 YEARS 5 years 7.43 YEARS 7.43 years
Weighted fair value
per option granted..... $6.94 $5.90 $9.35 - $2.69 $2.24
</TABLE>
F-44
<PAGE>
A summary of the Holding Company and DLJ stock option plans and
Alliance's Unit option plans are as follows:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ ALLIANCE
----------------------------- ----------------------------- -----------------------------
Options Options Options
Outstanding Outstanding Outstanding
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Units Exercise
(In Millions) Price (In Millions) Price (In Millions) Price
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1994........ 6.1 - 3.2
Granted................ .7 - 1.2
Exercised.............. - - (.5)
Forfeited.............. - - (.1)
------------- ------------- -------------
Balance as of
December 31, 1994...... 6.8 - 3.8
Granted................ .4 9.2 1.8
Exercised.............. (.1) - (.5)
Expired................ (.1) - -
Forfeited.............. (.3) - (.3)
------------- ------------- -------------
Balance as of
December 31, 1995...... 6.7 $20.27 9.2 $27.00 4.8 $17.72
Granted................ .7 $24.94 2.1 $32.54 .7 $25.12
Exercised.............. (.1) $19.91 - - (.4) $13.64
Expired................ (.6) $20.21 - - - -
Forfeited.............. - - (.2) $27.00 (.1) $19.32
------------- ------------- -------------
Balance as of
December 31, 1996...... 6.7 $20.79 11.1 $28.06 5.0 $19.07
============= ============= ============= ============= ============= =============
</TABLE>
F-45
<PAGE>
Information with respect to stock and unit options outstanding and
exercisable at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------------------------------------- --------------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices (In Millions) Life (Years) Price (In Millions) Price
--------------------- ----------------- --------------- ----------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
Holding
Company
---------------------
$18.125-$27.75 6.7 7.00 $20.79 3.4 $20.18
================= =============== ================= =================== ================
DLJ
---------------------
$27.00-$33.50 11.1 9.00 $28.06 - -
================= =============== ================= =================== ================
Alliance
---------------------
$ 6.0625-$15.9375 1.3 4.76 $12.97 1.2 $12.58
$16.3125-$19.75 1.1 8.19 $19.13 .2 $18.69
$19.875 -$19.875 1.0 7.36 $19.88 .4 $19.88
$20.75 -$24.375 .9 8.46 $22.05 .3 $21.84
$24.375 -$25.125 .7 9.96 $25.13 - -
----------------- -------------------
$ 6.0625-$25.125 5.0 7.43 $19.07 2.1 $15.84
================= =============== ================= =================== ================
</TABLE>
F-46
<PAGE>
APPENDIX A
MANAGEMENT
Here is a list of our directors and, to the extent they are responsible for
variable life insurance operations, our principal officers and a brief statement
of their business experience for the past five years. Unless otherwise noted,
their address is 1290 Avenue of the Americas, New York, New York 10104.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Claude Bebear Director of Equitable since July 1991. Chairman of the Board of the Holding Company
AXA-UAP (February 1996 - present) and a Director of other affiliates of Equitable. Chairman of the
23, Avenue Matignon Executive Board of AXA-UAP ("AXA-UAP") since January 1997. Prior thereto, he was Chairman
75008 Paris, France and Chief Executive Officer of AXA S.A. Chief Executive Officer of the AXA-UAP Group
(formerly known as the AXA Group) since 1974 and Chairman or Director of numerous
subsidiaries and affiliated companies of the AXA-UAP Group.
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Brocksom Director of Equitable since July 1992. Chief Executive Officer, AXA Equity & Law Life
AXA Equity & Law Assurance Society PLC ("AXA Equity & Law") and various directorships and officerships with
Elbury 9 AXA Equity & Law affiliated companies.
Weedon Lane
Buckinghamshire HP 6505
England
- ------------------------------------------------------------------------------------------------------------------------------------
Francoise Colloc'h Director of Equitable since July 1992. Senior Executive Vice President Human Resources and
AXA-UAP Communications of AXA-UAP, and various positions with AXA-UAP affiliated companies. Director
23, Avenue Matignon of the Holding Company.
75008 Paris, France
- ------------------------------------------------------------------------------------------------------------------------------------
Henri de Castries Director of Equitable since September 1993. Vice Chairman of the Board of the Holding
AXA-UAP Company since February 1996. Senior Executive Vice President Financial Services and Life
23, Avenue Matignon Insurance Activities of AXA-UAP since 1996. Also Director or Officer of various subsidiaries
75008 Paris, France and affiliates of the AXA-UAP Group. Director of the Holding Company and of other Equitable
affiliates. Previously held other officerships with the AXA Group.
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph L. Dionne Director of Equitable since May 1982. Chairman (since April 1988) and Chief Executive
The McGraw-Hill Companies Officer (since April 1983) of The McGraw-Hill Companies. Director of the Holding Company.
1221 Avenue of the Americas
New York, NY 10020
- ------------------------------------------------------------------------------------------------------------------------------------
William T. Esrey Director of Equitable since July 1986. Chairman (since April 1990) and Chief Executive
Sprint Corporation Officer (since 1985) of Sprint Corporation. Director of the Holding Company.
P.O. Box 11315
Kansas City, MO 64112
- ------------------------------------------------------------------------------------------------------------------------------------
Jean-Rene Fourtou Director of Equitable since July 1992. Chairman and Chief Executive Officer, Rhone-Poulenc
Rhone-Poulenc S.A. S.A. since 1986. Member of the Supervisory Board of AXA-UAP. Director of the Holding
25, Quai Paul Doumer Company.
92408 Courbevoie Cedex
France
- -----------------------------------------------------------------------------------------------------------------------------------
Norman C. Francis Director of Equitable since March 1989. President, Xavier University of Louisiana.
Xavier University of Louisiana
7325 Palmetto Street
New Orleans, LA 70125
- ------------------------------------------------------------------------------------------------------------------------------------
Donald J. Greene Director of Equitable since July 1991. Partner, LeBoeuf, Lamb, Greene & MacRae since 1965.
LeBouef, Lamb, Greene & MacRae Director of the Holding Company.
125 West 55th Street
New York, NY 10019-4513
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
John T.Hartley Director of Equitable since August 1987. Retired Chairman and Chief Executive Officer of
Harris Corporation Harris Corporation (retired since July 1995); previously held other officerships with Harris
1025 NASA Boulevard Corporation. Director of the Holding Company.
Melbourne, FL 32919
- ------------------------------------------------------------------------------------------------------------------------------------
John H.F. Haskell, Jr. Director of Equitable since July 1992. Managing Director of Dillon, Read & Co., Inc. since
Dillon, Read & Co., Inc. 1975 and member of its Board of Directors. Director of the Holding Company.
535 Madison Avenue
New York, NY 10022
- ------------------------------------------------------------------------------------------------------------------------------------
Mary R. (Nina) Henderson Director of Equitable since December 1996. President of CPC Specialty Markets Group of CPC
CPC Specialty Markets Group International, Inc. since 1993. Prior thereto, President of CPC Specialty Products and Best
700 Sylvan Avenue Foods Exports. Director of the Holding Company.
Englewood Cliffs, NJ 07632
- ------------------------------------------------------------------------------------------------------------------------------------
W. Edwin Jarmain Director of Equitable since July 1992. President of Jarmain Group Inc. since 1979; also an
Jarmain Group Inc. Officer or Director of several affiliated companies. Chairman and Director of FCA
121 King Street West International Ltd. Director of various AXA affiliated companies. Previously held other
Suite 2525, Box 36 officerships with FCA International. Director of the Holding Company.
Toronto, Ontario M5H 3T9,
Canada
- ------------------------------------------------------------------------------------------------------------------------------------
G. Donald Johnston, Jr. Director of Equitable since January 1986. Retired Chairman and Chief Executive Officer, JWT
184-400 Ocean Road Group, Inc. and J. Walter Thompson Company.
John's Island
Vero Beach, FL 32963
- ------------------------------------------------------------------------------------------------------------------------------------
Winthrop Knowlton Director of Equitable since October 1973. Chairman of the Board of Knowlton Brothers, Inc.
Knowlton Brothers, Inc. since May 1989; also President of Knowlton Associates, Inc. since September 1987; Director
530 Fifth Avenue of the Holding Company.
New York, NY 10036
- ------------------------------------------------------------------------------------------------------------------------------------
Arthur L. Liman Director of Equitable since March 1984. Partner, Paul, Weiss, Rifkind, Wharton & Garrison
Paul, Weiss, Rifkind, since 1966. Director of the Holding Company.
Wharton and Garrison
1285 Avenue of the Americas
New York, NY 10019
- ------------------------------------------------------------------------------------------------------------------------------------
George T. Lowy Director of Equitable since July 1992. Partner, Cravath, Swaine & Moore since 1965.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
- ------------------------------------------------------------------------------------------------------------------------------------
Didier Pineau-Valencienne Director of Equitable since February 1996. Chairman and Chief Executive Officer of
Schneider S.A. Schneider S.A. since 1981 and Chairman or Director of numerous subsidiaries and affiliated
64-70, Avenue Jean-Baptiste Clement companies of Schneider. Director of AXA-UAP and the Holding Company.
92646 Boulogne-Billancourt Cedex
France
- ------------------------------------------------------------------------------------------------------------------------------------
George J. Sella, Jr. Director of Equitable since May 1987. Retired Chairman and Chief Executive Officer of
P.O. Box 397 American Cyanamid Company (until April 1993); previously held other officerships with
Newton, NJ 07860 American Cyanamid. Director of the Holding Company.
- ------------------------------------------------------------------------------------------------------------------------------------
Dave H. Williams Director of Equitable since March 1991. Chairman and Chief Executive Officer of Alliance
Alliance Capital Management since 1977 and Chairman or Director of numerous subsidiaries and affiliated companies of
Corporation Alliance. Director of the Holding Company.
1345 Avenue of the Americas
New York, NY 10105
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS and DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
William T. McCaffrey Director, Senior Executive Vice President and Chief Operating Officer of Equitable (all
since February 1996). Executive Vice President and Chief Administrative Officer (since
February 1994) of the Holding Company. Director of various Equitable affiliated companies.
Previously held other officerships with Equitable and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph J. Melone Chairman, Chief Executive Officer and President of Equitable. Chief Executive Officer of the
Holding Company since February 1996 and Director and President of the Holding Company since
May 1992. Director of various Equitable and AXA-UAP affiliated companies.
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
A. Frank Beaz Senior Vice President, Equitable. Executive Vice President, EQ Financial Consultants, Inc.
("EQF") (since May 1995). Director, Equitable Realty Assets Corporation since December 1996.
Previously held other officerships with Equitable.
- ------------------------------------------------------------------------------------------------------------------------------------
Leon B. Billis Senior Vice President, Equitable. Previously held other officerships with Equitable.
- ------------------------------------------------------------------------------------------------------------------------------------
Harvey Blitz Senior Vice President and Deputy Chief Financial Officer, Equitable. Senior Vice President,
the Holding Company; Vice President and Director, EQ Advisors Trust (EQAT); Chairman of
Frontier Trust Company and Director of various Equitable affiliated companies. Previously
held other officerships with Equitable and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin R. Byrne Vice President and Treasurer, Equitable and the Holding Company; Treasurer, EquiSource and
Frontier Trust Company. Vice President and Treasurer, Equitable Casualty Insurance Company
and EQAT. Previously held other officerships with Equitable and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Jerry M. de St. Paer Executive Vice President, Equitable. Senior Executive Vice President (since May 1996) and
Chief Financial Officer (since May 1992) of the Holding Company. Executive Vice President
and Chief Operating Officer (since September 1994) of Equitable Investment Corporation.
Director of various Equitable affiliated companies. Previously held various officerships
with Equitable and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Gordon G. Dinsmore Senior Vice President, Equitable. Executive Vice President, EQF. Vice President, EQAT.
Director of other Equitable affiliated companies. Previously held other officerships with
Equitable and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Alvin H. Fenichel Senior Vice President and Controller, Equitable and the Holding Company. Previously held
other officerships with Equitable and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Paul J. Flora Senior Vice President and Auditor, Equitable. Vice President and Auditor, Holding Company
(since September 1994). Vice President/Auditor, National Westminster Bank (November 1984 to
June 1993).
- ------------------------------------------------------------------------------------------------------------------------------------
Robert E. Garber Executive Vice President and General Counsel, Equitable and the Holding Company. Previously
held other officerships with Equitable and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Donald R. Kaplan Vice President and Chief Compliance Officer, Equitable. Previously held other officerships
with Equitable.
- ------------------------------------------------------------------------------------------------------------------------------------
Michael S. Martin Senior Vice President, Equitable. Chairman and Chief Executive Officer, EQF. Vice President,
EQAT and HRT. Director, Equitable Underwriting and Sales Agency (Bahamas), Ltd. (since May
1996) and Colorado (since January 1995). Previously held other officerships with Equitable
and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Peter D. Noris Executive Vice President and Chief Investment Officer, Equitable. Executive Vice President
(since May 1995) and Chief Investment Officer (since July 1995), Holding Company. Trustee,
HRT and President and Trustee, EQAT. Director of Alliance and Equitable Real Estate.
Executive Vice President EQF. Prior to May 1995, Vice President/Manager, Insurance Companies
Investment Strategies Group, Salomon Brothers, Inc. Prior to November 1992, with Morgan
Stanley & Co., Inc., as Principal, Fixed Income Insurance Group.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Anthony C. Pasquale Senior Vice President, Equitable. Director of Equitable Agri-Business, Inc. Previously held
other officerships with Equitable and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Michael J. Rich Senior Vice President, Equitable. Prior to October 1994, Vice President of Underwriting,
John Hancock Mutual Life Insurance Co.
- ------------------------------------------------------------------------------------------------------------------------------------
Pauline Sherman Vice President, Secretary and Associate General Counsel, Equitable and the Holding Company,
both since September 1995. Previously held other officerships with Equitable.
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel B. Shlesinger Senior Vice President and Actuary, Equitable. Director, Chairman and Chief Executive
Officer, The Equitable of Colorado, Inc. since 1985. Vice President, HRT and EQAT.
Previously held other officerships with Equitable and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Jose S. Suquet Executive Vice President and Chief Agency Officer, Equitable, since August 1994. Prior
thereto, with Equitable as Sales/Agency Manager.
- ------------------------------------------------------------------------------------------------------------------------------------
Stanley B. Tulin Senior Executive Vice President and Chief Financial Officer, Equitable since April 1996.
Executive Vice President, Holding Company. Vice President, EQAT. Prior thereto, Chairman,
Insurance Consulting and Actuarial Practice, Coopers & Lybrand.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE>
APPENDIX B
COMMUNICATING PERFORMANCE DATA
In reports or other communications to policyowners or in advertising material,
we may describe general economic and market conditions affecting the Separate
Account and the Trusts and may compare the performance or ranking of the
Separate Account Funds and the Trusts' portfolios with (1) that of other
insurance company separate accounts or mutual funds included in the rankings
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or similar
investment services that monitor the performance of insurance company separate
accounts or mutual funds, (2) other appropriate indices of investment securities
and averages for peer universes of funds, or (3) data developed by us derived
from such indices or averages. Advertisements or other communications furnished
to present or prospective policyowners may also include evaluations of a
Separate Account Fund or Trust portfolio by financial publications that are
nationally recognized such as Barron's, Morningstar's Variable Annuities / Life,
Business Week, Forbes, Fortune, Institutional Investor, Money, Kiplinger's
Personal Finance, Financial Planning, Investment Adviser, Investment Management
Weekly, Money Management Letter, Investment Dealers Digest, National
Underwriter, Pension & Investments, USA Today, Investor's Daily, The New York
Times, The Wall Street Journal, the Los Angeles Times and the Chicago Tribune.
Performance data for peer universes of funds with similar investment objectives
are compiled by Lipper Analytical Services, Inc. (Lipper) in its Lipper Variable
Insurance Products Performance Analysis Service (Lipper Survey) and Morningstar,
Inc. in the Morningstar Variable Annuity / Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 funds
underlying variable annuity and life insurance products. The Lipper Survey
divides these actively managed funds into 25 categories by portfolio objectives.
The Lipper Survey contains two different universes, which differ in terms of the
types of fees reflected in performance data. The "Separate Account" universe
reports performance data net of investment management fees, direct operating
expenses and asset-based charges applicable under variable insurance and annuity
contracts. The "Mutual Fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects
asset-based charges that relate only to the underlying mutual fund.
The Morningstar Report consists of over 700 variable life and annuity funds, all
of which report their data net of investment management fees, direct operating
expenses and separate account level charges.
LONG-TERM MARKET TRENDS
As a tool for understanding how different investment strategies may affect
long-term results, it may be useful to consider the historical returns on
different types of assets. The following chart presents historical return trends
for various types of securities. The information presented, while not directly
related to the performance of the Funds of the Separate Account or the Trusts'
portfolios, may help to provide a perspective on the potential returns of
different asset classes over different periods of time. By combining this
information with your knowledge of your own financial needs, you may be able to
better determine how you wish to allocate your premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long or short-term debt securities, although
common stocks have been subject to more dramatic changes in value over short
periods of time. The Common Stock Fund of the Separate Account may, therefore,
be a desirable selection for policyowners who are willing to accept such risks.
Policyowners who have a need to limit short-term risk, may find it preferable to
allocate a smaller percentage of their net premiums to those funds that invest
primarily in common stock. Any investment in securities, whether equity or debt,
involves varying degrees of potential risk, in addition to offering varying
degrees of potential reward.
The chart on page B-2 illustrates the average annual compound rates of return
over selected time periods between December 31, 1926 and December 31, 1996 for
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds and Treasury Bills. The Consumer Price Index
is shown as a measure of inflation for comparison purposes. The average annual
returns assume the reinvestment of dividends, capital gains and interest.
The information presented is an historical record of unmanaged groups of
securities and is neither an estimate nor a guarantee of future results. In
addition, investment management fees and expenses and charges associated with a
variable life insurance policy, are not reflected.
The rates of return illustrated do not represent returns of the Separate Account
or the Trusts and do not constitute a representation that the performance of the
Separate Account Funds or the Trusts' portfolios will correspond to rates of
return such as those illustrated in the chart. For a comparative illustration of
performance results of the portfolios of The Hudson River Trust, see page B-1 of
the HRT prospectus.
B-1
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RATES OF RETURN
FOR THE
FOLLOWING LONG-TERM LONG-TERM INTERMEDIATE- U.S. CONSUMER
PERIODS ENDING COMMON GOVERNMENT CORPORATE TERM GOV'T TREASURY PRICE
12/31/96: STOCKS BONDS BONDS BONDS BILLS INDEX
- -------- ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
1 year.................. 23.07% -0.93% 1.40% 2.10% 5.21% 3.58%
3 years................. 19.66 6.36 6.72 4.19 4.90 2.93
5 years................. 15.20 8.98 8.52 6.17 4.22 2.89
10 years................. 15.28 9.39 9.48 7.77 5.46 3.70
20 years................. 14.55 9.54 9.71 9.14 7.28 5.15
30 years................. 11.85 7.75 8.24 8.27 6.73 5.39
40 years................. 11.18 6.51 6.99 7.08 5.80 4.47
50 years................. 12.59 5.33 5.76 5.89 4.89 4.08
60 years................. 11.19 5.06 5.38 5.32 4.10 4.13
Since 1926............... 10.71 5.08 5.64 5.21 3.74 3.12
Inflation Adjusted
Since 1926............... 7.36 1.90 2.44 2.02 0.60
- ----------------------------
</TABLE>
*Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 1997
YEARBOOK,(TM) Ibbotson Associates, Inc., Chicago. All rights reserved.
Common Stocks (S&P 500) -- Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
Long-term Government Bonds -- Measured using a one-bond portfolio constructed
each year containing a bond with approximately a twenty-year maturity and a
reasonably current coupon.
Long-term Corporate Bonds -- For the period 1969 - 1996, represented by the
Salomon Brothers Long-Term, High-Grade Corporate Bond Index; for the period
1946 - 1968, the Salomon Brothers' Index was backdated using Salomon Brothers'
monthly yield data and a methodology similar to that used by Salomon for 1969 -
1996; for the period 1926 - 1945, the Standard and Poor's monthly High-Grade
Corporate Composite yield data were used, assuming a 4 percent coupon and a
twenty-year maturity.
Intermediate-term Government Bonds -- Measured by a one-bond portfolio
constructed each year containing a bond with approximately a five-year
maturity.
U.S. Treasury Bills -- Measured by rolling over each month a one-bill portfolio
containing, at the beginning of each month, the bill having the shortest
maturity not less than one month.
Inflation -- Measured by the Consumer Price Index for all Urban Consumers
(CPI-U), not seasonally adjusted.
B-2
<PAGE>
VARIABLE LIFE INSURANCE POLICY
[THE CHAMPION LOGO]
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO]
VM 372 PROSPECTUS DATED SEPTEMBER 30, 1987
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST
PRINCIPAL OFFICE LOCATED AT:
787 SEVENTH AVENUE
NEW YORK, N.Y. 10019
HRT 102 PROSPECTUS DATED SEPTEMBER 30, 1987
<PAGE>
[THE CHAMPION LOGO]
A VARIABLE LIFE INSURANCE POLICY
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE LOGO]
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
NEW YORK, N.Y.
PROSPECTUS DATED SEPTEMBER 30, 1987
- --------------------------------------------------------------------------------
In this prospectus, "Equitable Variable", "we", "our", and "us" mean Equitable
Variable Life Insurance Company. We are a wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States, a New York mutual life
insurance company (Equitable).
"You" and "your" mean the policyowner. We refer to the person who is covered by
the policy as the "insured", because the policyowner may be someone other than
the insured.
- --------------------------------------------------------------------------------
The Champion(TM) (Policy Form No. 85-11) is a scheduled premium variable whole
life insurance policy with a level face amount. The Death Benefit, Account Value
and Cash Surrender Value of a policy may vary based on the investment experience
of the assets supporting the policy; however, a policy's Death Benefit will
never be less than its face amount.
You direct the allocation of your premiums, net of certain deductions, among one
or more of the investment divisions of Equitable Variable's Separate Account I.
The assets in each division are invested in corresponding portfolios of The
Hudson River Trust. The Trust is the successor to The Hudson River Fund, Inc.
pursuant to an Agreement and Plan of Reorganization dated September 30, 1987.
The prospectus for the Trust, attached to this prospectus, describes the
investment objectives, policies and risks of each of the Trust's Portfolios.
Currently, High Yield, Aggressive Stock, Common Stock, Balanced and Money Market
Portfolios are available under the Champion.
This is a permanent life insurance policy which provides insurance coverage and
requires periodic premium payments over time. When purchasing this policy, you
should consider your ability to pay these premiums on a periodic schedule.
During the policy's early years, if you fail to pay premiums or surrender your
policy you will incur a significant surrender charge.
A policy is serviced through the regional Life Insurance Center listed on page 3
of the policy when issued. Equitable Variable's Home Office is 787 Seventh
Avenue, New York, N.Y. 10019, telephone (212) 714-5289.
You have the right to examine this policy and return it to us for a refund.
Read this prospectus carefully and keep it for future reference. This prospectus
is not valid unless attached to a current prospectus for The Hudson River Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Replacing existing insurance with the policy described in this prospectus may
not be to your advantage. We recommend that you consult with your Equitable
agent or financial adviser to determine if replacement would be to your
advantage.
- --------------------------------------------------------------------------------
M-372
Copyright 1987 Equitable Variable Life Insurance Company. All rights reserved.
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
PART 1 -- SUMMARY 1
- --------------------------------------------------------------------------------
FEATURES OF THE CHAMPION 1
-------------------------------------------------------------------------
USING YOUR ACCOUNT VALUE 1
-------------------------------------------------------------------------
INVESTMENT CHOICES OF THE CHAMPION 2
-------------------------------------------------------------------------
DEDUCTIONS AND CHARGES 2
-------------------------------------------------------------------------
ADDITIONAL INFORMATION 3
-------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION 4
-------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATIONS 5
- --------------------------------------------------------------------------------
PART 2 -- DETAILED INFORMATION ABOUT EQUITABLE VARIABLE AND THE TRUST 6
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE 6
-------------------------------------------------------------------------
EQUITABLE 6
-------------------------------------------------------------------------
Equitable's Investment In Equitable Variable 6
----------------------------------------------------------------------
Donaldson, Lufkin & Jenrette, Inc. 6
-------------------------------------------------------------------------
INVESTMENT CHOICES 6
-------------------------------------------------------------------------
THE SEPARATE ACCOUNT AND ITS DIVISIONS 6
-------------------------------------------------------------------------
A Unit Investment Trust 6
----------------------------------------------------------------------
The Investment Divisions Of The Separate Account 6
----------------------------------------------------------------------
Other Policies Use The Separate Account 7
----------------------------------------------------------------------
We Own The Assets Of The Separate Account 7
-------------------------------------------------------------------------
THE TRUST 7
-------------------------------------------------------------------------
PREDECESSORS OF THE TRUST 7
-------------------------------------------------------------------------
INVESTMENT OBJECTIVES OF THE PORTFOLIOS 8
-------------------------------------------------------------------------
THE TRUST'S INVESTMENT ADVISER 8
- --------------------------------------------------------------------------------
PART 3 -- DETAILED INFORMATION ABOUT THE CHAMPION 9
- --------------------------------------------------------------------------------
PREMIUMS 9
- --------------------------------------------------------------------------------
You Direct The Investment Of Your Premiums 9
----------------------------------------------------------------------
Premium Reductions For Non-Smokers 9
----------------------------------------------------------------------
Illustration Of Premium Rates 9
-------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUMS 10
-------------------------------------------------------------------------
Annual Administrative Charge 10
----------------------------------------------------------------------
Additional First Year Administrative Charge 10
----------------------------------------------------------------------
Risk Charge 10
----------------------------------------------------------------------
Front-End Sales Load 10
----------------------------------------------------------------------
State Premium Tax Charge 10
----------------------------------------------------------------------
Example of Deductions From Premiums 11
-------------------------------------------------------------------------
SURRENDER CHARGE 11
-------------------------------------------------------------------------
CHARGES AGAINST THE SEPARATE ACCOUNT 12
-------------------------------------------------------------------------
Cost of Insurance 12
----------------------------------------------------------------------
Charges For Mortality And Expense Risks 12
----------------------------------------------------------------------
Expenses Of The Trust 12
-------------------------------------------------------------------------
DEATH BENEFITS 12
-------------------------------------------------------------------------
VARIABLE ADJUSTMENT AMOUNT 13
-------------------------------------------------------------------------
The Variable Adjustment Amount Is Cumulative 14
----------------------------------------------------------------------
Net Return 14
----------------------------------------------------------------------
How The Death Benefit Varies 14
-------------------------------------------------------------------------
ACCOUNT VALUES AND CASH SURRENDER VALUES 15
-------------------------------------------------------------------------
How We Determine Account Value 15
----------------------------------------------------------------------
How We Determine Cash Surrender Value 15
-------------------------------------------------------------------------
POLICY LOANS 15
-------------------------------------------------------------------------
How To Request A Loan 16
----------------------------------------------------------------------
Repayment 16
----------------------------------------------------------------------
Policy Loan Interest 16
----------------------------------------------------------------------
The Effect Of A Policy Loan 16
----------------------------------------------------------------------
Additional Information About Adjustable Rates 17
-------------------------------------------------------------------------
OTHER POLICY TRANSACTIONS 17
-------------------------------------------------------------------------
Returning The Policy For Cash 17
----------------------------------------------------------------------
Transfers Among Investment Choices 18
----------------------------------------------------------------------
When A Division Becomes Inactive 18
-------------------------------------------------------------------------
YOUR RIGHT TO EXAMINE THE POLICY 18
-------------------------------------------------------------------------
YOUR RIGHT TO EXCHANGE THE POLICY 18
-------------------------------------------------------------------------
YOUR POLICY CAN LAPSE 19
-------------------------------------------------------------------------
OPTIONS ON LAPSE 19
-------------------------------------------------------------------------
Payment Of Cash Option 19
----------------------------------------------------------------------
Continued Insurance Option 19
----------------------------------------------------------------------
Reinstatement Option 20
-------------------------------------------------------------------------
POLICY PERIODS, ANNIVERSARIES, DATES AND AGES 20
-------------------------------------------------------------------------
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY 21
-------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE CHAMPION 21
-------------------------------------------------------------------------
When We Pay Proceeds 21
----------------------------------------------------------------------
Your Payment Options 21
----------------------------------------------------------------------
Additional Benefits You May Get By Rider 22
----------------------------------------------------------------------
Beneficiary 23
----------------------------------------------------------------------
Assignment 23
----------------------------------------------------------------------
Premium Payments By Salary Allotment 23
----------------------------------------------------------------------
Employee Benefit Plans 23
----------------------------------------------------------------------
You Will Receive Periodic Reports 23
----------------------------------------------------------------------
Dividends 23
- --------------------------------------------------------------------------------
PART 4 -- ADDITIONAL INFORMATION 24
- --------------------------------------------------------------------------------
TAX EFFECTS 24
-------------------------------------------------------------------------
Policy Proceeds 24
----------------------------------------------------------------------
Pension And Profit Sharing Plans 24
----------------------------------------------------------------------
Our Income Taxes 25
----------------------------------------------------------------------
Tax Reform 25
----------------------------------------------------------------------
Income Tax Withholding 25
-------------------------------------------------------------------------
YOUR VOTING PRIVILEGES 25
-------------------------------------------------------------------------
General 25
----------------------------------------------------------------------
Voting Privileges Of Others 26
----------------------------------------------------------------------
Determining Your Vote 26
----------------------------------------------------------------------
Law Changes May Affect Your Voting Privileges 27
-------------------------------------------------------------------------
OUR RIGHTS 27
-------------------------------------------------------------------------
Substitution of Trust Shares 27
-------------------------------------------------------------------------
SALES AND OTHER AGREEMENTS 27
-------------------------------------------------------------------------
Sales By Agents Of Equitable 27
----------------------------------------------------------------------
Commission Schedule 28
----------------------------------------------------------------------
Sales By Brokers 28
----------------------------------------------------------------------
Applications 28
----------------------------------------------------------------------
Joint Services Agreement 28
-------------------------------------------------------------------------
REGULATION 28
-------------------------------------------------------------------------
LEGAL PROCEEDINGS 28
-------------------------------------------------------------------------
LEGAL MATTERS 28
-------------------------------------------------------------------------
FINANCIAL AND ACTUARIAL EXPERTS 29
-------------------------------------------------------------------------
ADDITIONAL INFORMATION 29
-------------------------------------------------------------------------
MANAGEMENT 29
- --------------------------------------------------------------------------------
PART 5 -- ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH
SURRENDER VALUES, AND ACCUMULATED PREMIUMS 32
- --------------------------------------------------------------------------------
PART 6 -- FINANCIAL STATEMENTS 39
- --------------------------------------------------------------------------------
THE PURPOSE OF THE POLICY WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION FOR
A POLICY'S BENEFICIARY. WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY SIMILAR TO
OR COMPARABLE TO A MUTUAL FUND'S SYSTEMATIC INVESTMENT PLAN.
- --------------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFERING OF THE CHAMPION OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS OR ANY SUPPLEMENT HERETO OR IN ANY SUPPLEMENTAL
SALES MATERIAL AUTHORIZED BY EQUITABLE VARIABLE.
- --------------------------------------------------------------------------------
i
<PAGE>
- --------------------------------------------------------------------------------
PART 1 -- SUMMARY
- --------------------------------------------------------------------------------
The summary contained in this Part 1 is qualified in its entirety by the more
detailed information and financial statements appearing elsewhere in this
prospectus. Unless indicated otherwise, this prospectus assumes that all
premiums are paid on time and there is no outstanding policy loan. The
description of The Champion in this prospectus is subject to the terms of the
policy you buy and any supplement or endorsement to it. You may review a copy of
our policy and any supplement or endorsement to it on request.
- --------------------------------------------------------------------------------
FEATURES OF
THE CHAMPION
PREMIUMS. This policy requires premium payments on a regular basis (monthly,
quarterly, semi-annually or annually) for life. We guarantee that a premium will
not increase once it has been determined. The size of an annual premium depends
on the initial face amount and the insured's risk class, age and sex. The
initial face amount must be at least $50,000. Failure to pay premiums will
result in the lapse of your policy. See "Surrender Charge" in Part 3.
For non-smokers who meet our requirements we reduce our premiums by
approximately 7% for policies with face amounts under $200,000 and approximately
9% for larger policies.
DEATH BENEFIT. The Death Benefit under the policy may increase or decrease if
the investment experience of the division or divisions of the Separate Account
into which you choose to put your net annual premiums varies from the assumed
investment return of 4-1/2%. The Death Benefit is adjusted annually on each
policy anniversary. However, if the Account Value at the date of death,
considered as a single premium, can buy more Death Benefit, then the Death
Benefit will be this higher amount. The guaranteed minimum Death Benefit is the
face amount of the policy regardless of the investment experience of the
divisions of the Separate Account. See "Death Benefits" in Part 3.
ACCOUNT VALUE. We put your annual premiums, net of certain deductions, in one or
more of the investment divisions of Equitable Variable's Separate Account I (the
Separate Account). You decide whether your policy's net annual premium will be
put entirely in one division or whether you want a percentage in two or more
divisions.
The Account Value of a policy may vary daily to reflect the investment
experience of the divisions of the Separate Account in which you have value. The
Account Value is the tabular Account Value specified in the policy (based on a
constant net investment return of 4-1/2% a year), adjusted for investment
experience. Unlike the Death Benefit, which has a guaranteed minimum, we do not
guarantee a minimum Account Value. You will bear the entire market risk for
Account Value. You may request that all or part of your Account Value be
transferred among the divisions of the Separate Account. See "Other Policy
Transactions -- Transfers Among Investment Choices" in Part 3.
- --------------------------------------------------------------------------------
USING YOUR
ACCOUNT VALUE
POLICY LOANS. You may borrow up to 90% of your policy's loan value during the
first ten years and 100% thereafter. The loan value is based on your adjusted
Cash Surrender Value. The Cash Surrender Value is the difference between the
Account Value and the surrender charge which applies during the first ten policy
years. Loans are available at a fixed interest rate of 5-1/2% or at an
adjustable rate. The portion of your Cash Surrender Value equal to the amount
you borrow is transferred out of the Separate Account and, therefore, is not
affected by investment experience. You will, however, earn interest on amounts
set aside to secure your loan. For a loan at a fixed interest rate of 5-1/2%, we
will credit the assumed interest rate of 4-1/2%. For a loan at an adjustable
rate, we will credit the adjustable loan interest rate less 0.75% (and less any
charge for taxes) on the borrowed amounts. See "Policy Loans" in Part 3.
SURRENDERING YOUR POLICY FOR CASH. If you surrender your policy for cash, we
will pay you the Cash Surrender Value less any outstanding loan and loan
interest due. Subject to certain conditions, you may split your policy into two
policies and return one for cash. See "Other Policy Transactions -- Returning
The Policy For Cash" in Part 3.
TRANSFERS AMONG INVESTMENT CHOICES. You may transfer your Account Value among
the divisions of the Separate Account up to four times in a policy year. See
"Other Policy Transactions -- Transfers Among Investment Choices" in Part 3.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT CHOICES
OF THE CHAMPION
THE TRUST. Each division of the Separate Account invests in a corresponding
portfolio (Portfolio) of The Hudson River Trust (the Trust), a "series" type
mutual fund. Each Portfolio has different investment objectives. Currently, the
following Portfolios are available for investment by the corresponding divisions
of the Separate Account:
o High Yield
o Aggressive Stock
o Common Stock
o Balanced
o Money Market
INVESTMENT ADVISERS. Equitable Capital Management Corporation (Equitable
Capital) is the investment adviser of the Trust. Equitable Capital is registered
with the Securities and Exchange Commission (SEC) as an investment adviser under
the Investment Advisers Act of 1940. The maximum effective annual rate at which
the Trust pays advisory fees is 0.55% of the average daily value of a
Portfolio's aggregate net assets. HOWEVER, WE CREDIT THE CHAMPION POLICIES SO
THAT THE TRUST'S ADVISORY FEES DO NOT EXCEED A 0.25% EFFECTIVE ANNUAL RATE.
For a full description of the Trust, see the attached Trust prospectus and the
Trust's Statement of Additional Information referred to therein.
- --------------------------------------------------------------------------------
DEDUCTIONS AND
CHARGES
DEDUCTIONS FROM PREMIUMS. Your net annual premium is put into the Separate
Account each year. Deductions are made from your payments for any optional
insurance benefits, a front-end sales load at a maximum of 5% per year, state
premium taxes, annual administrative expenses and a risk charge for the
guaranteed minimum Death Benefit. In the first policy year we also deduct a
fixed charge for expenses incurred in issuing the policy. See "Deductions From
Premiums" in Part 3.
Commissions and other sales expenses in any year are paid by Equitable Variable.
They do not represent a charge against your premiums. During the early policy
years, these sales expenses will be considerably higher than the sales charges
that will be collected for those years. See "Sales And Other Agreements" in Part
4.
CHARGES AGAINST THE SEPARATE ACCOUNT. The amount in the divisions of the
Separate Account credited to your policy is decreased by the cost of your
insurance protection. Also, the investment experience of the Separate Account
reflects a daily charge we make at an effective annual rate of 0.50% of the
value of the policy assets of the Separate Account for certain mortality and
expense risks. In addition, we reserve the right to make a charge in the future
for taxes or provisions made for taxes. Any charges against the divisions will
have an impact on whether the divisions earn more than the assumed rate of
4-1/2% and whether your policy's Death Benefit increases above the guaranteed
minimum. See "Charges Against The Separate Account" in Part 3.
EXPENSES OF THE TRUST. Shares of the Trust are purchased and redeemed at their
net asset value which reflects management fees and other expenses already
deducted from the assets of the Trust. The Trust does not impose a sales charge.
See "The Trust" in Part 2.
SURRENDER CHARGE. If you surrender your policy or allow it to lapse before its
tenth anniversary you will incur a surrender charge. The charge is a maximum of
22-1/2% of the premiums paid if the surrender is during the first policy year.
Thereafter the percentage of total premiums declines until it reaches zero at
the end of the tenth policy year. See "Surrender Charge" and "Your Policy Can
Lapse" in Part 3.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL
INFORMATION
YOUR RIGHT TO EXAMINE THE POLICY. You have a limited right to return your policy
for cancellation and a full refund of premiums paid. Your request must be
postmarked by the latest of
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
Also, within 24 months of a policy's issue date, you may exchange it for a fixed
whole life policy issued by us on the life of the insured without submitting
proof of insurability.
INCOME TAXES. Generally, the Death Benefit paid to the beneficiary of this
policy is not subject to Federal income tax. In addition, under current Federal
tax law, you do not have to pay income tax on any increase in your Account Value
unless the policy is surrendered or allowed to lapse. See "Tax Effects" in Part
4.
YOUR POLICY CAN LAPSE. This policy will remain in force for the life of the
insured person unless you fail to pay premiums or unless the unpaid portion of
any policy loan plus unpaid loan interest exceeds the Cash Surrender Value of
your policy. See "Your Policy Can Lapse" in Part 3.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
CONDENSED
FINANCIAL
INFORMATION
The effective annual net rates of return for the Common Stock Division from the
date on which premiums were first allocated to its predecessor, January 13,
1976, to December 31, 1986 was 14.36%. For the same period ended December 31,
1986, the average annual increase for the Standard and Poor's 500 Stock Index
with dividends reinvested was 14.06%. (Standard and Poor's is an unmanaged index
of groups of common stocks.)
The effective annual net rates of return for the Money Market Division from the
date on which premiums were first allocated to its predecessor, August 21, 1981,
to December 31, 1986 was 9.60%.
The tables below show the actual net returns of the Common Stock and Money
Market Divisions of the Separate Account, as if the Reorganization discussed
under "Predecessors Of The Trust" in Part 2 had always been in effect. The
tables show the actual net returns of the predecessors of the Common Stock and
Money Market Divisions operating as management investment companies prior to the
Reorganization. The same results would have been achieved if the Separate
Account had operated as a unit investment trust investing in the Trust for all
the periods shown with the operations of the Trust having been as currently
reported in the Trust's separate Prospectus and Statement of Additional
Information. The tables break the net return into its component parts. The
tables reflect mortality and expense risk charges but do not reflect cost of
insurance charges. See "Charges Against the Separate Account."
When you examine the tables, remember that the percentages apply to a policy
with its policy year starting on the first day of the periods shown and apply to
a policy that would have been in force throughout the periods shown. Because
they are determined each December 31, the percentages do not reflect the average
net assets in the Common Stock and Money Market Divisions during those periods.
To get a more complete picture of the Separate Account and its divisions, refer
to the financial statements and related notes in the Statement of Additional
Information for the Trust.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK DIVISION January 13,
Year Ended December 31, 1976 to
---------------------------------------------------------------------------------------------- December 31,
1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976(a)(b)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income(c) 1.55 % 2.92 % 3.22 % 2.65 % 4.64 % 4.02 % 4.35 % 3.91 % 4.06 % 3.49 % 2.63 %
Net realized and
unrealized gain
(loss) on
investments 16.04 % 30.91 % (4.68)% 24.06 % 13.58 % (9.40)% 46.48 % 26.56 % 4.72 % (12.26)% 7.00 %
----- ----- ---- ----- ----- ---- ----- ----- ---- ----- ----
Gross Return 17.59 % 33.83 % (1.46)% 26.71 % 18.22 % (5.38)% 50.83 % 30.47 % 8.78 % (8.77)% 9.63 %
Expense charges(c) (.59)% (.74)% (.74)% (.94)% (.95)% (.70)% (1.13)% (.98)% (.81)% (.69)% (.77)%
----- ----- ---- ----- ----- ---- ----- ----- ---- ----- ----
Net Return 17.00 % 33.09 % (2.20)% 25.77 % 17.27 % (6.08)% 49.70 % 29.49 % 7.97 % (9.46)% 8.86 %
===== ===== ==== ===== ===== ==== ===== ===== ==== ===== ====
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET DIVISION Year Ended December 31, August 21, 1981
------------------------------------------ to December 31,
1986 1985(d) 1984 1983 1982 1981(a)(b)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income(c) 6.83 % 8.65 % 11.00 % 9.56 % 13.53% 5.46 %
Net realized and unrealized gain (loss) on investments 0.03 % (.09)% .42 % (.06)% .03% .06 %
---- ---- ----- ---- ----- ----
Gross Return 6.86 % 8.56 % 11.42 % 9.50 % 13.56% 5.52 %
Expense charges(c) (.55)% (.60)% (.84)% (.83)% (.84)% (.35)%
---- ---- ----- ---- ----- ----
Net Return 6.31 % 7.96 % 10.58 % 8.67 % 12.72% 5.17 %
==== ==== ===== ==== ===== ====
- --------------------------------------------------------------------------------
<FN>
S(a) Date as of which net premiums under variable life policies were first
allocated to the predecessor of the division.
(b) The gross return and the net return for the periods indicated are not annual
rates of return.
(c) Subsequent to March 22, 1985, the advisory service fees have been deducted
in arriving at income rather than as an expense charge.
(d) Net return for 1985 has been adjusted to reflect a recalculation of the net
return of the division.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
HYPOTHETICAL
ILLUSTRATIONS
The following illustrations are based on the assumptions that since January 1,
1976 The Champion policy had been available and the Separate Account and the
Trust had been operating in the same manner as they now operate.
Each of these examples of past investment performance is for a specific age,
sex, risk class, premium amount and policy anniversary. The benefits illustrated
under this policy are calculated on the policy anniversary and do not represent
the average net investment performance of our pre-Reorganization Separate
Accounts during the policy year. The guaranteed minimum Death Benefit is the
face amount of the policy and does not vary based on investment performance. The
difference between the Account Value and the Cash Surrender Value is the
surrender charge. These examples assume that net premiums and related Account
Values and Cash Surrender Values are 100% in the respective divisions of the
Separate Account for the entire period illustrated. PAST INVESTMENT RESULTS
SHOULD NOT BE DEEMED A REPRESENTATION OF FUTURE INVESTMENT EXPERIENCE OF THE
DIVISIONS OF THE SEPARATE ACCOUNT OR INVESTMENT PERFORMANCE OF THE TRUST.
For illustrations based on various constant hypothetical annual investment
returns, see "Illustrations Of Death Benefits, Account Values And Cash Surrender
Values, And Accumulated Premiums" in Part 5.
COMMON STOCK DIVISION. The following example shows how the net return of the
Common Stock Division would have affected the Death Benefits, Account Values and
Cash Surrender Values of an annual premium policy dated January 1, 1976. Assume
a premium of $500 and that the insured was a 25 year old male on January 1,
1976.
THE CHAMPION
- --------------------------------------------------------------------------------
VARIABLE WHOLE LIFE INSURANCE POLICY
($53,427 Face Amount Standard Risk)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Cash Guaranteed
Policy Anniversary Account Surrender Death Minimum
on January 1 of Value Value Benefit Death Benefit
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1977 $ 184 $ 81 $53,496 $53,427
1978 448 310 53,427 53,427
1979 859 686 53,427 53,427
1980 1,510 1,307 54,732 53,427
1981 2,881 2,651 60,033 53,427
1982 3,006 2,758 58,209 53,427
1983 3,817 3,560 59,947 53,427
1984 5,316 5,095 64,871 53,427
1985 5,465 5,341 62,905 53,427
1986 7,783 7,783 70,973 53,427
1987 9,625 9,625 76,259 53,427
- -------------------------------------------------------------------------------------------------
</TABLE>
This example reflects net investment income credited at the assumed rate of
4-1/2% from January 1, 1976 to January 12, 1976, and an actual rate of return
for the Common Stock Division assuming the investment performance of the Trust's
Common Stock Portfolio was the same as that of our pre-Reorganization Separate
Account I starting January 13, 1976.
MONEY MARKET DIVISION. The following example shows how the net return of the
Money Market Division would have affected the Death Benefits, Account Values and
Cash Surrender Values of an annual premium policy dated January 1, 1982. Assume
a premium of $500 and that the insured was a 25 year old male on January 1,
1982.
THE CHAMPION
- --------------------------------------------------------------------------------
VARIABLE WHOLE LIFE INSURANCE POLICY
($53,427 Face Amount Standard Risk)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Cash Guaranteed
Policy Anniversary Account Surrender Death Minimum
on January 1 of Value Value Benefit Death Benefit
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1983 $ 195 $ 91 $53,562 $53,427
1984 573 436 53,721 53,427
1985 1,004 831 54,076 53,427
1986 1,444 1,242 54,357 53,427
1987 1,890 1,660 54,548 53,427
- -------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
PART 2 -- DETAILED INFORMATION ABOUT EQUITABLE VARIABLE
AND THE TRUST
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE
Equitable Variable, a wholly-owned subsidiary of Equitable, was organized in
1972 in New York State as a stock life insurance company. We are licensed to do
business in all 50 states, Puerto Rico, the Virgin Islands and the District of
Columbia.
We sell both traditional and innovative forms of life insurance designed to give
policyowners maximum choice and flexibility. In 1976 we began selling variable
life insurance policies with death benefits that varied with the experience of
each policy's investment account. In 1983 we began selling variable life
insurance policies which could be purchased with a single premium payment. In
1986, we began selling an individual flexible premium variable life policy
designed to provide insurance coverage with flexibility in death benefits and
premium payments. We also sell single premium annuity contracts, fixed life
insurance, term life insurance and universal life insurance.
At the end of 1986, we had approximately $9.7 billion face amount of variable
life insurance in force and $47.1 billion face amount of fixed life insurance in
force. We also had $1.9 billion of fixed annuity payment obligations.
Our financial statements and those of the Separate Account are in Part 6.
- --------------------------------------------------------------------------------
EQUITABLE
Equitable is a New York mutual life insurance company that has its home office
at 787 Seventh Avenue, New York, New York 10019.
Equitable has been in business since 1859. Its total assets make it the third
largest life insurance company in the United States. On December 31, 1986, these
assets were approximately $55 billion. Equitable is also one of the largest
managers of pension fund assets in the United States. On December 31, 1986,
Equitable and its subsidiaries were managing pension fund assets of $66.2
billion and total assets of $102.7 billion. These assets include amounts in our
General Account, Equitable's General Account and separate accounts, and other
accounts managed by Equitable and Equitable Capital.
On December 31, 1986, Equitable Capital was managing approximately $30 billion
in assets. Equitable Capital acts as an investment adviser to various separate
accounts and general accounts of Equitable and other affiliated insurance
companies. Equitable Capital also provides management and consulting services to
mutual funds, endowment funds, insurance companies, foreign entities, and
non-tax-qualified corporate funds, pension and profit-sharing plans, foundations
and tax-exempt organizations.
EQUITABLE'S INVESTMENT IN EQUITABLE VARIABLE. Between the time Equitable
Variable was organized and December 31, 1986, Equitable invested over $570
million in us. We have used the money to help meet operational costs and policy
reserve requirements. Equitable will probably invest more money in us in the
future, although it has no legal obligation to do so. Equitable's assets do not
back the benefits that we pay under our policies.
DONALDSON, LUFKIN & JENRETTE, INC. Donaldson, Lufkin & Jenrette, Inc. (DLJ) is a
wholly-owned subsidiary of Equitable. DLJ and its subsidiaries offer investment
banking and securities services, market independently originated research to
institutions and supply correspondent services, including order execution,
securities clearance and other centralized financial services, to approximately
300 independent regional securities firms and 100 banks. To the extent permitted
by law, we and our separate accounts, Equitable and its separate accounts, and
companies affiliated with us, including the Trust, may engage in securities or
other transactions with DLJ and its subsidiaries, including buying shares of
affiliated investment companies.
- --------------------------------------------------------------------------------
INVESTMENT
CHOICES
After making certain deductions from premiums, we put your net annual premiums
in one or more of the divisions of the Separate Account. You decide how your
policy's net annual premiums will be allocated. See "Premiums -- You Direct The
Investment Of Your Premiums" in Part 3. The Separate Account also invests income
or capital gains dividends received from the Fund in shares of the Fund.
- --------------------------------------------------------------------------------
THE SEPARATE
ACCOUNT AND ITS
DIVISIONS
A UNIT INVESTMENT TRUST. The Separate Account is registered as a unit investment
trust with the SEC under the Investment Company Act of 1940. This registration
does not involve any supervision by the SEC of the management or investment
policy of the Separate Account. A unit investment trust is a type of investment
company.
THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT. The Separate Account has five
investment divisions, each of which invests in shares of a corresponding
Portfolio of the Trust. Currently, the Separate Account consists of High Yield,
Aggressive Stock, Common Stock, Balanced and Money Market Divisions.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
THE SEPARATE
ACCOUNT AND ITS
DIVISIONS
(continued)
OTHER POLICIES USE THE SEPARATE ACCOUNT. Owners of policies other than The
Champion who have our variable life policies on a single premium basis, as well
as on a periodic premium basis, also have monies placed in the Separate Account.
We may also permit charges owed to us to stay in the Separate Account. Thus, we
may also participate proportionately in the Separate Account. These accumulated
amounts belong to us and we may transfer them from the Separate Account to our
General Account.
WE OWN THE ASSETS OF THE SEPARATE ACCOUNT. Under New York law, we own the assets
of the Separate Account and use them to support your policy and other variable
life policies. The portion of the Separate Account's assets supporting these
policies may not be used to satisfy liabilities arising out of any other
business of ours. Under certain unlikely circumstances, one division of the
Separate Account may be liable for claims relating to the operations of another
division.
- --------------------------------------------------------------------------------
THE TRUST
The Trust is an open-end diversified management investment company, more
commonly called a mutual fund. As a "series" type of mutual fund, it issues
several different "series" of stock, each of which relates to a different Trust
Portfolio. The Trust does not impose a sales charge or "load" for buying and
selling its shares. The Trust's shares are bought and sold by the Separate
Account at net asset value. The Trust's custodian is The Chase Manhattan Bank,
N.A.
The Trust sells its shares to separate accounts of insurance companies, both
affiliated and not affiliated with Equitable. We currently do not foresee any
disadvantages to our policyowners arising out of this. However, if we ever
believe that any of the Trust's Portfolios is so large as materially to impair
the investment performance of a Portfolio or the Trust, we will examine other
investment options.
More detailed information about the Trust, its investment policies, risks,
expenses and all other aspects of its operations, appears in its prospectus,
which is attached to this prospectus, and in its Statement of Additional
Information referred to therein.
- --------------------------------------------------------------------------------
PREDECESSORS OF
THE TRUST
Pursuant to a Plan of Reorganization (Reorganization) approved at a meeting of
our policyowners held on February 14, 1985, effective as of March 22, 1985, we
restructured our Separate Accounts I and II into one separate account in unit
investment trust form. To accomplish this restructuring, we converted our then
existing Separate Account I, a Common Stock Account, and Separate Account II, a
Money Market Account, into our continuing Separate Account I with two investment
divisions: the Common Stock Division and the Money Market Division.
Our pre-Reorganization Separate Account I was established on June 28, 1973 and
our pre-Reorganization Separate Account II was established on December 12, 1980.
Both pre-Reorganization Separate Accounts were established under the insurance
law of New York State as separate investment accounts.
On March 22, 1985, all of the assets and related liabilities of our former
Separate Accounts I and II were transferred to the Common Stock and Money Market
Portfolios of The Hudson River Fund, Inc., respectively, in exchange for shares
in the Portfolios, and we ceased to be an investment adviser of our continuing
Separate Account. The Separate Account no longer requires an investment adviser.
The Reorganization did not change the policy values of then outstanding
policies.
On September 30, 1987, pursuant to an Agreement and Plan of Reorganization
approved by policyowners, The Hudson River Fund, Inc., a Maryland corporation,
was reorganized as a Massachusetts business trust and its name was changed to
The Hudson River Trust. Refer to the prospectus for the Trust for further
information.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT
OBJECTIVES OF THE
PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve by
following separate investment policies. The objectives and policies of each
Portfolio will affect its return and its risks. Remember that the investment
experience of the divisions of the Separate Account depends on the performance
of the corresponding Portfolios. The policies and objectives of the Portfolios
corresponding to the divisions available for investment under The Champion are
as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Investment Policy Objective
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
High Yield Primarily a diversified mix of high yield, High return by maximizing current income and, to
fixed income securities involving greater the extent consistent with that objective, capital
volatility of price and risk of principal and appreciation
income than high quality fixed income securities
Aggressive Stock Primarily common stocks and other Long-term growth of capital
equity-type securities issued by medium and
smaller sized companies with strong growth
potential
Common Stock Primarily common stock and other equity-type Long-term growth of capital and increasing income
instruments
Balanced Common stocks, publicly-traded debt securities High return through a combination of current
and high quality money market instruments income and capital appreciation
Money Market Primarily high quality short-term money market High level of current income while preserving
instruments assets and maintaining liquidity
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There is no guarantee that these objectives will be achieved.
- --------------------------------------------------------------------------------
THE TRUST'S
INVESTMENT ADVISER
The Trust is advised by Equitable Capital, a wholly-owned subsidiary of
Equitable. Equitable Capital is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940. Equitable Capital's address is 1285
Avenue of the Americas, New York, New York 10019.
We credit the divisions of the Separate Account daily to offset investment
advisory fees of the Trust which exceed a 0.25% effective annual rate and all
other Trust expenses except (a) all brokers' commissions, transfer taxes and
other fees and expenses for services relating to purchases and sales of
Portfolio investments and (b) any Trust income tax liabilities. Equitable
capital provides services pursuant to an investment advisory agreement for a fee
based on the following maximum effective annual percentages of the average daily
value of the aggregate net assets of each of the Portfolios. These annual
percentages for the Portfolios corresponding to the divisions available for
investment under The Champion are: 0.40% for the Common Stock, Balanced and
Money Market Portfolios, 0.50% for the Aggressive Stock Portfolio and 0.55% for
the High Yield Portfolio.
- --------------------------------------------------------------------------------
8
<PAGE>
PART 3 -- DETAILED INFORMATION ABOUT THE CHAMPION
- --------------------------------------------------------------------------------
PREMIUMS
The size and frequency of your premium payments depend on the initial face
amount, the mode of payment selected, and your risk class, age and sex. We will
charge an additional premium if an extra mortality risk is involved or if you
want certain optional insurance benefits. In general, premium rates for females
will be lower than those for males. In Montana there will be no distinctions
based on sex. The minimum face amount of a policy you may apply for is $50,000.
The policy may be issued to age 75. Before issuing any policy, we require
satisfactory evidence of insurability. If we do not issue a policy, we will
refund any premium that has been paid. (Equitable guarantees the refund.)
Your premium is due on or before the due date shown in the policy and may be
paid annually, semiannually, quarterly or monthly. Monthly payments may be made
through a direct automatic payment plan arranged with your bank. You may request
a change in the frequency of your premium payment by writing to your regional
Life Insurance Center. Regardless of the frequency of your premium payment, your
net annual premium is put into the Separate Account on your policy anniversary.
Premiums are payable over time for the insured's lifetime. However, we guarantee
that your premium will not increase once it has been determined. Premiums are
not affected by the investment experience of the Separate Account. If you fail
to pay your premiums your policy will lapse. See "Your Policy Can Lapse".
YOU DIRECT THE INVESTMENT OF YOUR PREMIUMS. You direct how your net annual
premiums will be applied to the divisions of the Separate Account. You can put
your whole net annual premiums in one or more divisions of the Separate Account.
Percentages cannot be fractions and must add up to 100.
You make your initial decision on the application for your policy. You may write
to your regional Life Insurance Center at any time requesting to change your
decision. Regardless of when you make your request, changes go into effect only
on the next policy anniversary because we allocate net annual premiums to the
Separate Account only on policy anniversaries. It may not always be possible to
make a change that is received less than seven days before a policy
anniversary. In this case, the change will not go into effect until the policy
anniversary following the entire next policy year.
PREMIUM REDUCTIONS FOR NON-SMOKERS. We offer premium reductions that vary with
age, sex and face amount if the insured is a standard risk and meets additional
requirements as to smoking habits. The reduction will be approximately 7% for
policies with face amounts under $200,000 and approximately 9% for larger
policies. Non-smoker rates are available for ages 20 and over.
ILLUSTRATION OF PREMIUM RATES. The following table shows premium rates for each
$1,000 of face amount for a $50,000 policy, which is the minimum, and for a
$200,000 policy, which is the amount where our rates per $1,000 go down.
- --------------------------------------------------------------------------------
ILLUSTRATIVE TABLE OF ANNUAL PREMIUM
FOR EACH $1,000 FACE AMOUNT
- --------------------------------------------------------------------------------
Male $50,000 FACE AMOUNT $200,000 FACE AMOUNT
Issue ---------------------------- ----------------------------
Age Standard Risk Non-Smoker Standard Risk Non-Smoker
- --------------------------------------------------------------------------------
10 $ 5.73 n.a. $ 5.00 n.a.
25 9.41 $ 8.80 8.68 $ 7.92
40 17.63 16.43 16.88 15.38
- --------------------------------------------------------------------------------
9
<PAGE>
PREMIUMS
(continued)
Premiums for semi-annual, quarterly and monthly periods will be higher per year
than the annual premium. This is due to a charge for loss of interest and added
billing and collection costs. The following table compares annual and monthly
premiums for standard risks:
- --------------------------------------------------------------------------------
COMPARATIVE TABLE OF ANNUAL AND MONTHLY PREMIUMS
FOR EACH $1,000 FACE AMOUNT
- --------------------------------------------------------------------------------
Male
Issue % Excess Of Total
Age Initial Monthly Premiums
(Standard Face Annual Monthly For Policy Year Over
Risk) Amount Basis Basis Annual Premiums
- --------------------------------------------------------------------------------
10 $ 50,000 $ 5.73 $ .52 8.9%
200,000 5.00 .44 5.6
25 50,000 9.41 .84 7.1
200,000 8.68 .76 5.1
40 50,000 17.63 1.55 5.5
200,000 16.88 1.46 3.8
- --------------------------------------------------------------------------------
DEDUCTIONS FROM
PREMIUMS
ANNUAL ADMINISTRATIVE CHARGE. We charge $40 in each policy year for
administrative expenses. The charge is designed to cover the continuing costs of
maintaining your policy, such as premium billing and collection, claim
processing, policy transactions, recordkeeping, communicating with policyowners,
and other expenses and overhead.
ADDITIONAL FIRST YEAR ADMINISTRATIVE CHARGE. In the first policy year we make a
one-time administrative charge of $3.00 for each $1,000 of initial face amount
of a policy with a face amount under $200,000. This charge is $.50 for each
$1,000 of initial face amount for larger policies. This first year
administrative charge is applied to the cost of processing applications,
conducting medical examinations, establishing policy records, and determining
insurability and assigning the insured to a risk class.
RISK CHARGE. We charge 2% of the basic annual premium to provide for the
possibility that an insured will die at a time when, based on the investment
experience of the Separate Account, the Death Benefit that would ordinarily be
paid is less than the guaranteed minimum Death Benefit of the policy. The basic
annual premium is the total annual premium for a standard mortality risk policy
minus the $40 annual administrative charge and minus the premiums for any
optional insurance benefits you take.
FRONT-END SALES LOAD. We make a charge that can be considered a "sales load".
Our front-end sales load will not be more than 5% of the basic annual premium
for each year. Commissions and other sales expenses in any year are paid by
Equitable Variable. They do not represent a charge against premiums. During the
early policy years, these sales expenses are considerably higher than the
front-end sales load charged against the premium for that year. See "Sales And
Other Agreements" in Part 4. We expect to recover our total sales expenses over
the lifetimes of the insureds partly from the front-end sales load and partly
from the surrender charge. To the extent sales expenses are not covered by such
sources, we will cover them from other funds.
STATE PREMIUM TAX CHARGE. We deduct 2% of the annual premium for the risk class
of the insured to cover state premium taxes payable by us. These taxes vary from
state to state and the 2% rate is an average.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
DEDUCTIONS FROM
PREMIUMS
(continued)
EXAMPLE OF DEDUCTIONS FROM PREMIUMS. The following example (using the policies
shown in "Illustrations Of Death Benefits, Account Values And Cash Surrender
Values, And Accumulated Premiums" in Part 5) shows what amount of net annual
premium would be put into the Separate Account at the start of each policy year.
The net annual premium is the basic annual premium less the additional first
year administrative charge, risk charge, front-end sales load and state premium
tax charge.
- --------------------------------------------------------------------------------
ILLUSTRATIVE TABLE OF DEDUCTIONS FROM PREMIUMS
- --------------------------------------------------------------------------------
Male Male Male
Beginning of Issue Age 10 Issue Age 25 Issue Age 40
Policy Year Standard Risk Standard Risk Standard Risk
- --------------------------------------------------------------------------------
$300 Annual $500 Annual $1,000 Annual
Premium Premium Premium
------- ------- -------
POLICIES UNDER $200,000
(Initial Face Amount) ($52,739) ($53,427) ($57,041)
1st Year 78.58 258.59 702.75
2nd Year and later 236.80 418.87 873.87
$1,000 Annual $2,000 Annual $4,000 Annual
Premium Premium Premium
------- ------- -------
POLICIES $200,000 AND OVER
(Initial Face Amount) ($200,000) ($231,133) ($237,411)
1st Year 774.00 1,668.78 3,485.19
2nd Year and later 874.00 1,784.35 3,603.90
- --------------------------------------------------------------------------------
SURRENDER CHARGE
There is a difference between the Account Value and the Cash Surrender Value of
our policy in the first ten policy years. This difference is a surrender charge,
a contingent deferred sales load against your Account Value. It is designed to
recover expenses of distributing policies which are terminated in their early
years.
The surrender charge does not affect Account Value transfers among divisions of
the Separate Account, Separate Account investment experience, Death Benefits or
the 24-month exchange right to fixed life insurance.
The surrender charge is a maximum of 22-1/2% of the basic annual premiums (as
defined in "Deductions From Premiums -- Risk Charge") paid if the policy lapses
or is surrendered during the first policy year. Thereafter, the surrender charge
is a percentage of all basic annual premiums paid. This percentage declines
until it reaches zero at the end of the tenth policy year. The following table
shows the maximum surrender charge assuming the surrender occurs at the end of a
policy year.
- --------------------------------------------------------------------------------
TABLE OF SURRENDER CHARGES
- --------------------------------------------------------------------------------
End of Maximum End of Maximum
Policy Year Surrender Charge Policy Year Surrender Charge
- --------------------------------------------------------------------------------
1 22-1/2% 6 9%
2 15 7 8
3 12-1/2 8 6
4 11 9 3
5 10 10 0
- --------------------------------------------------------------------------------
If you surrender your policy or allow it to lapse in the first ten years and
receive its net Cash Surrender Value, you will incur the surrender charge.
Options available on lapse of a policy, whether taken as cash or placed on an
insurance option on lapse, are also based on its net Cash Surrender Value.
Since the loan of value of the policy is based on the amount of Cash Surrender
Value rather than on the Account Value, the surrender charge has the effect of
reducing the amount available for a policyowner to borrow under a policy.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
CHARGES AGAINST
THE SEPARATE
ACCOUNT
We support the operations of a policy by putting the net annual premium (see
"Deductions From Premiums") into the division or divisions of the Separate
Account which the policyowner chooses. We do this when the policy is issued and,
after that, at the beginning of each policy year. Even though the gross premium
will be higher for an insured who is a high risk than the gross premium for an
insured who is a standard risk, any Account Value that may build up on a policy
covering a high risk insured will be the same as the Account Value that would
build up on a policy covering a standard risk insured of the same age and sex,
for the same amount, and having the same date of issue and allocation to the
divisions of the Separate Account. This is also true for an insured who is a
non-smoker, even though the gross premium for a non-smoker insured will be lower
than the gross premium for an insured who is a standard risk but not a
non-smoker.
The policy is designed so that the net annual premium put in the divisions of
the Separate Account does not vary with the risk class of the insured.
Therefore, we charge a higher gross premium for an insured who is a high risk to
cover the extra risk of mortality. We charge a lower gross premium for
non-smokers because of the expected lower mortality.
COST OF INSURANCE. Once the net annual premium is placed into the divisions of
the Separate Account we charge for the cost of insurance based on the sex and
attained age for the amount at risk without regard to differences in risk class.
The amount at risk on policy anniversaries is the Death Benefit payable less the
amounts in the divisions of the Separate Account in which a policy participates
(adjusted for any loans). The cost of insurance is based on the 1980
Commissioner's Standard Ordinary Mortality Table, and generally increases with
attained age. The cost of insurance differs in each year because, based on this
mortality table, the probability of death generally increases with attained age
and the amount at risk is different year by year. The dollar amount of the cost
of insurance also depends on investment experience of the divisions of the
Separate Account in which a policy participates. The cost of insurance for
females will generally be less than that for males. In Montana, there will be no
distinctions based on sex.
The amount in the divisions of the Separate Account in which your policy
participates is further decreased (after the cost of your insurance protection)
by the following charges.
CHARGES FOR MORTALITY AND EXPENSE RISKS. We charge the Separate Account for the
mortality and expense risks we assume. The mortality risk we assume is that
insureds may live for shorter periods of time than we estimated. If this occurs,
we have to pay a greater amount of Death Benefits than we expected in relation
to the premiums we received. The expense risk we assume is that our costs of
issuing and administering policies may be more than we estimated.
The charge is made daily at an effective annual rate of 0.50% of the value of
the assets of each division of the Separate Account that are attributable to
variable life policies. The money we collect from this charge may exceed the
amount needed to cover benefits and expenses and would be our gain.
EXPENSES OF THE TRUST. The Separate Account purchases shares of the Trust at
their net value which reflects the management fees and other expenses deducted
from the assets of the Trust. The Trust does not impose a sales charge. See "The
Trust" in Part 2.
- --------------------------------------------------------------------------------
DEATH BENEFITS
We pay a Death Benefit (net of indebtedness) to the beneficiary of this policy
when the insured dies. All or part of the Death Benefit can be paid in cash or
applied under one or more of our payment options described under "Additional
Information About The Champion -- Your Payment Options".
The Death Benefit will at least equal the face amount of the policy. Whether the
Death Benefit is higher than this guaranteed minimum depends on the investment
experience of the divisions of the Separate Account in which a policy
participates. See "Illustrations Of Death Benefits, Account Values And Cash
Surrender Values, And Accumulated Premiums" in Part 5.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFITS
(continued)
The Death Benefit will be the greater of (i) the guaranteed minimum Death
Benefit, plus the sum (if positive) of the variable adjustment amounts
(determined annually) in the divisions of the Separate Account in which you have
Account Value, or (ii) the insurance coverage that can be purchased by the
Account Value at the date of death.
The percentage change in the Death Benefit for any year is not the same as the
net return for the preceding year and it is not necessarily related to current
or future rates of inflation. In any year that the sum of the variable
adjustment amounts increases (and is positive), the Death Benefit will increase.
If the sum of the variable adjustment amounts is negative, investment experience
cannot increase the Death Benefit above the guaranteed minimum until it has
increased the variable adjustment amount of at least one division of the
Separate Account so that the sum is positive. In any year that the sum of the
variable adjustment amounts for the divisions decreases, the Death Benefit will
decrease, unless it is already at the guaranteed minimum. See "Variable
Adjustment Amount".
There is no guarantee that the investment experience of a division of the
Separate Account, which will reflect the investment performance of the
corresponding Portfolio of the Fund, will be sufficient to result in an increase
in Death Benefits. However, the historical pattern of stock market investment
performance has been one of long-range growth, and money market investments in
recent years have returned more than 4-1/2%.
The amount of Death Benefit actually paid to the insured's beneficiary will be
adjusted as of the date of the insured's death to reflect:
o any policy loans together with accrued interest;
o part of any unpaid premium due if the insured dies during the grace period;
o any premium paid for a period beyond the policy month in which the insured
dies; and
o any insurance added to the policy by a rider.
In addition, we may challenge the validity of the policy based on material
misstatement in the application or if the insured commits suicide within two
years after the policy's date of issue. See "Limits On Our Right To Challenge
The Policy".
If you have submitted an application and paid the first premium, we may, subject
to certain conditions, provide a limited amount of temporary insurance on the
person proposed to be insured. You may review a copy of our Temporary Insurance
Agreement on request. Except as stated in the Temporary Insurance Agreement, no
insurance will take effect: (a) until a policy is delivered and the full first
premium for it is paid while the person proposed to be insured is living; (b)
before the register date; and (c) unless the information in the application
continues to be true and complete, without material change, as of the time the
premium is paid.
- --------------------------------------------------------------------------------
VARIABLE
ADJUSTMENT
AMOUNT
The variable adjustment amount for each division of the Separate Account is the
amount of the Death Benefit that results from all past investment experience of
that division. In the first policy year, the variable adjustment amount in each
division of the Separate Account is zero. After that, the variable adjustment
amount is the amount of insurance purchased by the difference between the actual
rate of return and 4-1/2%. Therefore, a division's variable adjustment amount
will not change in any year that the division's gross return minus the charges
to that division results in a net return of 4-1/2%. If the net return is more
than 4-1/2%, the variable adjustment amount will increase. The variable
adjustment amount will increase because additional amounts of paid-up life
insurance are purchased. If the net return is less than 4-1/2%, it will
decrease. The variable adjustment amount will decrease because these additional
amounts of paid-up life insurance are lost. The rates at which these additional
amounts of paid-up life insurance are purchased or lost are based on sex and
attained age and are guaranteed. These rates are specified in your policy when
issued and generally increase with the attained age of the insured. The rates
for females are generally lower than those for males; however, there will be no
distinctions based on sex in Montana.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE
ADJUSTMENT
AMOUNT
(continued)
The variable adjustment amount for each division of the Separate Account is set
on each policy anniversary. Once set, it remains the same for the following
policy year. If it is set above the guaranteed minimum, we will be responsible
for keeping it at that level until the next policy anniversary. You will bear
the risk that it could drop on the next policy anniversary (but not below the
guaranteed minimum).
THE VARIABLE ADJUSTMENT AMOUNT IS CUMULATIVE. Increases and decreases in the
variable adjustment amount are carried into each succeeding year. The variable
adjustment amount for a division of the Separate Account can be positive or
negative. If it is positive, good investment experience will produce a larger
variable adjustment amount. If it is negative, good investment experience must
first offset the current negative variable adjustment amount before there can be
a positive amount.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
variable whole life policy with a $500 annual premium (standard rates). Assume a
hypothetical gross annual investment return of 0% for the first 9 policy years.
This results in a negative variable adjustment amount. A net return of
approximately 31.3% in the 10th policy year would affect the cumulative negative
variable adjustment amount so that it would equal zero. Any net return above
that would produce a positive variable adjustment amount. On the other hand, the
negative variable adjustment amount may be offset over a number of years. Thus,
if the gross return in the 10th policy year was 8% (net return of 7.19%), a net
return of 7.19% in each of the seven following policy years would be required to
produce a positive variable adjustment amount by the 18th policy year.
For a given net return, the greater the Account Value is in a division of the
Separate Account, the greater the effect of investment experience on the
variable adjustment amount. Therefore, in later policy years, when your total
Account Value may be greater, investment experience may have a greater effect on
the Death Benefit.
NET RETURN. The Death Benefit based on the net return of a division of the
Separate Account is set on each policy anniversary. The net return depends on
the division's investment experience from the first day of that policy year to
the first day of the next policy year. It takes into account investment income,
capital gains and capital losses (whether realized or unrealized) with respect
to Trust shares owned by the division of the Separate Account and gains
resulting from the reimbursement by us to the division of amounts corresponding
to certain Trust expenses. The charges against the division are then deducted to
determine the net return. The net return on a date during a policy year depends
on the investment experience of the division from the first day of that policy
year to that date and can effect Account Values, Cash Surrender Values and Death
Benefits.
The net return of each division of the Separate Account is determined at the end
of each business day. Generally, a business day is any day that we are open and
the New York Stock Exchange is open. However, we are closed on Martin Luther
King Day and the Friday after Thanksgiving Day.
The assets of each division of the Separate Account are valued by multiplying
the number of Trust shares in each Division by the net asset value of such
shares and is adjusted by the charge for mortality and expense risks. See the
financial statements for the Separate Account in this prospectus.
The net return for a policy year is not the same as for a calendar year unless
the policy anniversary is January 1.
A statement of the method we use to calculate net return is an exhibit to the
Registration Statement we filed with the SEC. It will be furnished on request.
HOW THE DEATH BENEFIT VARIES. The following example shows how the Death Benefit
varies from the guaranteed minimum as a result of investment experience. Assume
that the insured was a 25 year old male when the policy was issued, that he has
a variable whole life policy
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE
ADJUSTMENT
AMOUNT
(continued)
with a $500 annual premium (standard rates) and that the gross annual return for
each of the first six policy years was 8% for each division or their combination
(which is equal to a net return of 7.19%). Use the amounts from the
"Illustrations Of Death Benefits, Account Values And Cash Surrender Values, And
Accumulated Premiums" in Part 5.
- --------------------------------------------------------------------------------
Variable
Guaranteed Adjustment Death
Minimum + Amount = Benefit
- --------------------------------------------------------------------------------
End of policy year 5 $53,427 $ 775 $54,202
Increase -- 322 322(0.6%)
- --------------------------------------------------------------------------------
End of policy year 6 $53,427 $ 1,097 $54,524
- --------------------------------------------------------------------------------
If the gross annual return in the sixth policy year had been 0% (equal to a net
return of -.75%), the Death Benefit would have been $53,373 (a 1.2% decrease).
This reflects a decrease in the variable adjustment amount of $629.
- --------------------------------------------------------------------------------
ACCOUNT VALUES
AND CASH
SURRENDER VALUES
HOW WE DETERMINE ACCOUNT VALUE. Your Account Value is the sum on any date of
your Account Values in each division of the Separate Account in which your
policy participates. There is no guaranteed minimum Account Value. If no premium
is due and unpaid, your Account Value in a division equals the tabular Account
Value (stated in the policy as of the end of each policy year) multiplied by the
allocation percentage in effect, increased or decreased by the aggregate net
single premium specified in the policy for the variable adjustment amount for
that division.
The tabular Account Value is what the Account Value for the policy would be if
all of the divisions of the Separate Account in which you had funds had a
constant net investment return of 4-1/2% a year. The premium allocation
percentage is the percentage of your current net annual premium allocated to
each of the divisions. The net single premium is the one-time net cost at your
sex and attained age to purchase one dollar of Death Benefit, as specified in
your policy.
Adjustments during a year reflect a division's investment experience, the cost
of insurance, premium payments, any indebtedness and any Account Value
transfers. The Account Values for substandard risk policies and non-smoker
policies are the same as for comparable standard risk policies.
HOW WE DETERMINE CASH SURRENDER VALUE. Your policy's Cash Surrender Value will
vary daily with investment experience. There is no guaranteed minimum Cash
Surrender Value. Cash Surrender Value is the same as Account Value except in the
first ten years of the policy. During the first ten policy years the Cash
Surrender Value on any date will equal the tabular cash value (which is stated
in your policy) increased or decreased by the net single premium for the
variable adjustment amount for that division of the Separate Account. After the
tenth policy year, the Cash Surrender Value will equal the Account Value. The
difference between the Cash Surrender Value and the Account Value is a surrender
charge. See "Surrender Charge".
- --------------------------------------------------------------------------------
POLICY LOANS
You may borrow money, using only your policy as security, up to the loan value
of your policy. The loan value is a percentage of your Cash Surrender Value on
the next premium due date with two adjustments. The first adjustment assumes
that the net investment return is exactly 4-1/2% a year from the date of the
loan to the next premium due date. The second adjustment is a discount at 5-1/2%
a year from that due date back to the loan date.
The maximum percentage of your adjusted Cash Surrender Value that you may borrow
is 90% during the first ten policy years. It is 100% after the tenth policy
year. If the policy has lapsed and is continued under either the fixed or
variable reduced paid-up option on lapse, you may borrow up to 100% of the
adjusted cash value.
If you borrow your policy's entire loan value, you increase your risk of having
your policy end. This might happen if the combination of policy loan interest
(as it builds up), the cost of
- --------------------------------------------------------------------------------
15
<PAGE>
POLICY LOANS
(continued)
insurance, asset charges against the Separate Account, and investment experience
of the divisions of the Separate Account where you have Cash Surrender Value
uses up the remaining value. See "Your Policy Can Lapse".
Unless it is being used to pay premiums, we will not grant a loan that is not at
least $100 more than any outstanding loan with accrued interest. The amount of
your premium will not be affected by the fact you have a loan or by how you
repay the loan. If a loan is made after the due date of a premium, that premium
will be subtracted from the loan proceeds. If you request a loan in order to pay
a premium, we will charge loan interest from the date we make the loan even if
it is before the premium due date.
HOW TO REQUEST A LOAN. You may request a loan by contacting our regional Life
Insurance Center. We allocate a loan based on the net Cash Surrender Value in
each division of the Separate Account on the date the loan is made. We
reallocate loans if you transfer Account Value. Whenever the loan with accrued
interest from one division equals or exceeds the Account Value in that division,
that division will become inactive for your policy. We will transfer the total
Account Value and loan allocation to the other divisions. See "Other Policy
Transactions -- When A Division Becomes Inactive".
REPAYMENT. You may repay all or part of any outstanding loan with accrued
interest at any time while the policy is in effect and the insured is alive.
Your repayment, whether full or partial, will be allocated among the divisions
of the Separate Account in proportion to the loan allocation to each division at
the time of repayment. The amount of any outstanding loan with accrued interest
will be deducted from the Death Benefit or Cash Surrender Value proceeds.
POLICY LOAN INTEREST. You decide whether interest on your policy loan will be
charged at a fixed rate of 5-1/2% or an adjustable loan interest rate. The
adjustable rate is determined as of the beginning of each policy year, and will
apply to any new or outstanding loan during that year. The adjustable rate will
be the greater of (i) 5-1/2%, or (ii) the Monthly Average Corporate yield shown
in the Corporate Bond Yield Averages published by Moody's Investors Services,
Inc., for the month ending two months before the beginning of the policy year.
However, if you have elected an adjustable loan interest rate, it will be the
same for a policy year after the first as it was for the immediately preceding
policy year if the formula above would produce a change of less than 1/2 of 1%
from the rate applicable to your policy for the preceding year.
Interest is charged daily and is payable by the policyowner on each anniversary.
However, if it is not paid, it will be compounded on the policy anniversary
because it will be added to the loan principal. As to the deductibility of loan
interest, see "Tax Effects -- Policy Proceeds" in Part 4.
THE EFFECT OF A POLICY LOAN. A loan against your policy will have a permanent
effect on your Death Benefit, Account Value and Cash Surrender Value under this
policy, even if the loan is repaid. When you take out a loan, we transfer part
of the Cash Surrender Value equal to the amount of the loan from the divisions
of the Separate Account in which your policy participates to our General
Account. This amount is set aside as security for your loan. In addition, unpaid
interest on the policy loan will be transferred to our General Account from time
to time. The amount taken out of the divisions of the Separate Account will
neither be affected by the divisions' investment experience nor be subject to
the charges described in "Charges Against The Separate Account", while the loan
is outstanding. However, you will earn a return on this amount.
If you have chosen the fixed interest rate alternative, we will credit your
policy with a 4-1/2% annual return on any amount transferred to our General
Account as a result of your policy loan. This can protect Cash Surrender Value
and Death Benefits from decreasing if investment experience is below 4-1/2%. It
will also prevent them from increasing if investment experience is above 4-1/2%.
If you have chosen an adjustable loan interest rate, we will credit your policy
with a rate of return which is 0.75% below the interest rate that is charged as
a result of your policy loan,
- --------------------------------------------------------------------------------
16
<PAGE>
POLICY LOANS
(continued)
minus any charges for taxes or amounts set aside as a provision for taxes. (We
are not making charges for taxes or provisions for taxes now but we may make
such charges in the future. See "Tax Effects -- Our Income Taxes" in Part 4.)
For example, if the adjustable loan interest rate were 10%, the credit rate
would be 9.25%. If the adjustable loan interest rate were below 5-1/2%, the
actual interest rate would be 5-1/2% and the credit rate would be 4.75%. Any
amounts credited over 4-1/2% will increase your policy's Death Benefit, Account
Value and Cash Surrender Value. If you elect the adjustable loan interest rate,
you will bear the additional risk connected with changes in the annual credit
rate. If the adjustable loan interest rate less 0.75% (and less any charge for
taxes or provision for taxes) is greater than the net return for that year of
the divisions of the Separate Account in which you have Account Value, then the
Death Benefit and Cash Surrender Value for that year will be greater than if no
loan were made. The reverse would also be true.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
variable whole life insurance policy with a $500 annual premium (standard
rates). Use the illustration in Part 5, and assume an 8% gross annual investment
return for each Division or their combination (which is a net return of 7.19%).
Assume that at the beginning of the 10th policy year the Adjustable Loan
Interest Rate is 9.79% (the actual rate for June, 1986). If you take a loan for
$3,000 at the beginning of the 10th policy year, it will affect the Death
Benefit, Account Value and Cash Surrender Value (before subtracting the amount
of the loan with loan interest) in the 10th policy year as follows:
- --------------------------------------------------------------------------------
With Loan With Loan
Without Loan (Fixed Rate) (Applicable Rate)
- --------------------------------------------------------------------------------
Death Benefit $56,372 $55,999 $56,628
Account Value 4,615 4,534 4,670
Cash Surrender Value 4,615 4,534 4,670
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT ADJUSTABLE RATES. We will notify you of the initial
interest rate at the time a loan is made under the adjustable loan interest rate
election. Initial loan interest rates are also available on request. We will
also notify you in advance of each policy anniversary of the interest rate for
the following policy year.
You may cancel your election of the adjustable loan interest rate in writing at
any time, but the request will not take effect until the next policy
anniversary. When the cancellation takes effect, the loan rate will revert to
the fixed rate of 5-1/2%. Election or re-election of the adjustable loan
interest rate may be made in writing at any time but will not take effect until
the next policy anniversary even if no loan is outstanding.
Not all states have laws permitting adjustable policy loan interest rates. Some
states permit adjustable rates but set maximums. Some states do not permit
cancellation of an adjustable loan interest rate provision, and there are other
variations from state to state. For details about the policy loan interest rate
laws in your state, contact your agent or your regional Life Insurance Center.
- --------------------------------------------------------------------------------
OTHER POLICY
TRANSACTIONS
RETURNING THE POLICY FOR CASH. During the insured's lifetime, and subject to our
rules, your policy can be returned for payment of the Cash Surrender Value net
of any indebtedness. The amount payable will be based on the net Cash Surrender
Value next computed after we receive your signed request for payment of the Cash
Surrender Value at your regional Life Insurance Center, accompanied by your
policy. The insurance coverage will end on the date you send us the policy and
your request.
As an alternative to surrendering your policy, you may request to split your
policy into two policies. You may then return one policy for cash and continue
the other based on the new initial face amount.
If you split a policy, each policy we continue must have a face amount of at
least $50,000. The premium for the policy that continues will be based on the
new initial face amount but the same age, sex and risk class as the original
policy.
These are our current procedures, which may change.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
OTHER POLICY
TRANSACTIONS
(continued)
TRANSFERS AMONG INVESTMENT CHOICES. You may transfer Account Value among the
divisions by contacting our regional Life Insurance Center. You may transfer all
or part of your Account Value among the divisions of the Separate Account up to
four times in a policy year. A transfer will go into effect on the day we
receive your request. When Account Value is transferred a portion of the net
annual premium is transferred as well. We reallocate loans if you transfer
Account Value.
WHEN A DIVISION BECOMES INACTIVE. If you have a policy loan allocated to a
division of the Separate Account and your Account Value plus remaining net
annual premium less your loan (including accrued loan interest) in that division
reaches zero, that division will become inactive for your policy. We will
reallocate the loan to the other divisions of the Separate Account based on the
proportions that your unloaned amounts in each of the other divisions bears to
the unloaned amount of your total Account Value. A division will also become
inactive for your policy if you transfer its entire Account Value to the other
divisions. We will notify you when a division becomes inactive.
If a division of the Separate Account becomes inactive, the future variable
adjustment amount, Account Value and net return will be affected. We will assume
that you do not want to put any part of future net annual premiums into the
inactive division. You can request us to put any part of a future net annual
premium into the inactive division effective on the next policy anniversary
after your request is received. You may also transfer Account Value into an
inactive division from the other divisions.
- --------------------------------------------------------------------------------
YOUR RIGHT TO
EXAMINE THE
POLICY
You have a right to examine the policy. If for any reason you are not satisfied
with it, you may cancel it by returning the policy to your regional Life
Insurance Center with a written request for cancellation. We will give you a
full refund (guaranteed by Equitable) of the premiums paid if your request and
policy are postmarked by the latest of the following:
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
Insurance coverage ends when you send your request.
- --------------------------------------------------------------------------------
YOUR RIGHT TO
EXCHANGE THE
POLICY
You may exchange The Champion policy for a fixed whole life insurance policy on
the life of the insured. The new policy will be our Life Account(TM) policy on a
level premium whole life plan with premiums payable for life. You have this
right for 24 months from the date your policy is issued, but only if no premium
remains due and unpaid. The exchange will be effective when we receive your
request, accompanied by your policy and an application for the fixed policy.
We will not require evidence of the insured's insurability before an exchange.
The new policy's face amount will be the same as the initial face amount of The
Champion policy. It will also have the same register date, date of issue and
risk class. The premium for the new policy will be that in effect on the
register date for the same sex, age and risk class.
There will be a cash adjustment on exchange. The adjustment will reflect the
difference in premiums between the two policies. Since the exchange is based on
premiums, the surrender charge will have no effect. There will also be an
adjustment for the difference in the rates of return credited to the two
policies because the Life Account policy has declared rates of return. We will
refund or bill you for any amount due. We have filed a description of the method
we use to calculate the adjustment with the appropriate state insurance
officials.
Any policy loan with accrued interest must be repaid before the exchange. The
exchange is also subject to limits described in the policy.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
YOUR POLICY
CAN LAPSE
Your policy can lapse if you fail to pay premiums or if the unpaid portion of
any amount you have borrowed under your policy plus any unpaid loan interest
exceeds the Cash Surrender Value of your policy. If your policy lapses within
the first ten policy years you will incur a surrender charge. See "Surrender
Charge".
We allow a grace period of 31 days to pay each premium after the first one.
Insurance will continue during the grace period, but we will deduct one month's
premium from the Death Benefit if the insured dies during the grace period. If a
premium has not been paid by the end of the 31-day grace period, the policy will
lapse as of the date the premium was due. When a policy lapses, any riders will
end. All insurance may end unless the policy's net Cash Surrender Value is used
under a continued insurance option on lapse.
Whenever the unpaid portion of any amount you have borrowed under your policy
plus unpaid loan interest exceeds the Cash Surrender Value of your policy, we
will send a notice to you and to anyone to whom you told us you assigned the
policy. The policy will end 31 days after we send the notice unless you make a
repayment during the 31-day period that is large enough to reduce your
outstanding loan with accrued interest to below the total Cash Surrender Value
of your policy.
- --------------------------------------------------------------------------------
OPTIONS ON
LAPSE
If a policy lapses because a premium remains due and unpaid beyond its 31-day
grace period, you may use one of the following options. A key element in these
options is your policy's net Cash Surrender Value on any day for a period of up
to three months after the unpaid premium was due. If you elect the reduced
paid-up variable insurance option, the Cash Surrender Value used is on the date
of lapse. Net Cash Surrender Value is Cash Surrender Value minus any policy
loans with accrued interest on the date an option is used. If your policy has no
net Cash Surrender Value, you cannot use the options.
PAYMENT OF CASH OPTION. You can withdraw the net Cash Surrender Value and
receive payment in cash.
CONTINUED INSURANCE OPTION. Within three months from the date a policy lapses
(which is the date the unpaid premium was due), you can use its net Cash
Surrender Value to obtain one of two types of fixed life insurance plans. These
are fixed reduced paid-up insurance or extended term insurance. If it is at
least $5,000, you may also use your policy's net Cash Surrender Value to obtain
a variable life insurance plan. This plan is variable reduced paid-up insurance.
You will not have to pay any additional premium on any option because you are,
in effect, using the net Cash Surrender Value of your variable life policy to
buy continued life coverage.
If we do not receive a written request to use the fixed or variable reduced
paid-up insurance option within three months after lapse, extended term
insurance will automatically go into effect. The extended term insurance option
may not be available under your policy if the insured's risk class is not at
least standard. If so, that fact will be stated on page 3 of the policy and
fixed reduced paid-up insurance will apply instead. If the insured dies after
the grace period but within three months of the date of lapse, the fixed
continued insurance option that would provide the greater benefit will
automatically apply, regardless of any restriction stated on page 3 of the
policy.
Here are details on the three types of plans offered under our continued
insurance option.
o REDUCED PAID-UP VARIABLE INSURANCE. You may use the net Cash Surrender Value
to buy reduced paid-up variable whole life insurance. The net Cash Surrender
Value available to purchase this option must be at least $5,000. The net Cash
Surrender Value determines the face amount that can be purchased at the
insured's age at the time of purchase.
Reduced paid-up variable insurance has cash value. The cash value and death
benefit will go up or down depending on the investment experience of the
divisions of the Separate Account where you have cash value. The death benefit
under this option has no guaranteed minimum. You may use the net cash value
during the insured's lifetime for a loan or for cash payment. You may transfer
cash value among the divisions up to four times in one year.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS ON
LAPSE
(continued)
EXAMPLE: You are a 30 year old male. Your variable life policy was issued when
you were 25 and you have paid five $2,000 annual premiums. Use the illustration
in Part 5, and assume a 4% gross annual investment return for each division of
the Separate Account or their combination. At the end of the fifth policy year,
your net Cash Surrender Value could buy reduced paid-up variable whole life
insurance with an initial face amount of $36,318. After the fifth policy year,
the face amount will continue to vary depending on the investment experience of
the divisions in which the cash value is invested. There is no guaranteed
minimum Death Benefit or Cash Value.
o REDUCED PAID-UP FIXED INSURANCE. You may use the net Cash Surrender Value to
buy reduced paid-up fixed whole life insurance. The net Cash Surrender Value
determines the face amount that can be purchased at the insured's age at the
time of purchase. Paid-up insurance has cash value. You may use the net cash
value during the insured's lifetime for a loan or for cash payment.
EXAMPLE: You are a 30 year old male. Your variable life policy was issued when
you were 25 and you have paid five $500 annual premiums. Use the illustration in
Part 5, and assume a 4% gross annual investment return for each division of the
Separate Account or their combination. At the end of the fifth policy year, your
net Cash Surrender Value could buy reduced paid-up fixed whole life insurance
with a face amount of $7,705 for life.
o EXTENDED TERM INSURANCE. If the insured's risk class is at least standard, you
may use the net Cash Surrender Value to buy extended term insurance. The face
amount will equal the Death Benefit under your variable life policy on the
date of lapse minus any unpaid loan with accrued interest. The net Cash
Surrender Value determines how long coverage will last at the insured's then
attained age. It will last at least 90 days if the premium has been paid on
the variable life policy for three months before lapse and there is no policy
loan. Extended term coverage has cash value, but it cannot be used for a loan.
EXAMPLE: Assume the same facts as in the previous example. At the end of the
fifth policy year, your net Cash Surrender Value could buy fixed extended term
insurance with a face amount of $53,427 for a term of 11 years and 125 days.
REINSTATEMENT OPTION. You may request that we reinstate the policy during the
insured's lifetime. You must make this request within five years after lapse. We
will not reinstate the policy if it has been returned for its net Cash Surrender
Value.
Before we will reinstate, we must receive evidence satisfactory to us of the
insured's insurability. We must also receive the larger of all due and unpaid
premiums with interest at 6% a year; or an amount equal to:
o the Cash Surrender Value just after reinstatement, MINUS
o the cash value of the option just before reinstatement, and further MINUS
o any policy loan with accrued interest at the annual loan interest rate
compounded daily to the date of reinstatement, TIMES
o 110%.
If we do reinstate, the policy will have the same variable adjustment amount and
premium allocation between the divisions of the Separate Account as if there had
been no lapse.
If a policy has enough Cash Surrender Value at the time it lapses, it might be
possible to reinstate it by requesting a policy loan for that purpose.
- --------------------------------------------------------------------------------
POLICY PERIODS,
ANNIVERSARIES,
DATES AND AGES
Policy years and policy anniversaries are measured from the register date shown
on page 3 of the policy when issued.
The register date is the day the net annual premiums you allocate to the
divisions of the Separate Account first become subject to charges and begin to
vary with the investment experience of the divisions. As to when insurance
coverage under a policy starts, see "Death Benefits". The time between
submission of an application and the register date will vary, depending on the
underwriting and other requirements for issuing a particular policy. The
register date will be the application date if the full first premium is paid
with the application and no medical evidence is required. Otherwise the register
date will normally be the date we receive the latest of the application, the
full first premium and any required medical evidence.
The issue date, shown on page 3 of the policy when issued, is the date your
policy is actually issued. Both the contestibility and suicide exclusion periods
are measured from the issue date. See "Limits On Our Right To Challenge The
Policy".
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20
<PAGE>
- --------------------------------------------------------------------------------
LIMITS ON OUR
RIGHT TO
CHALLENGE
THE POLICY
We can challenge the validity of your insurance policy based on material
misstatements in the application. However, we cannot challenge the validity of
the policy after it has been in effect during the insured's lifetime for two
years from the date of issue or reinstatement (unless another date is required
by law). We can challenge at any time any rider that provides benefits in the
event of total disability. If death occurs within the time we can challenge
validity, our payment will generally be delayed while we determine whether to
make such a challenge.
If the insured's age or sex is misstated in the policy application, the Death
Benefit will be what the premium paid would have purchased based on the
insured's true age and sex.
If the insured commits suicide within two years from the date the policy was
issued or reinstated (or less where required by law), the Death Benefit will be
limited to the sum of all premiums paid minus outstanding policy loans with loan
interest.
- --------------------------------------------------------------------------------
ADDITIONAL
INFORMATION ABOUT
THE CHAMPION
WHEN WE PAY PROCEEDS. Payment of the Death Benefit, Cash Surrender Value (net of
indebtedness) or loan proceeds will be made within seven days after we receive
the required form or request (and other documents that may be required for
payment of the Death Benefit) at your regional Life Insurance Center. The Death
Benefit is determined as of the date of death and will not be affected by the
subsequent investment experience of the divisions of the Separate Account. We
pay interest from the date of death to the date of payment at an annual rate
greater than or equal to the rate we are paying under the deposit option
described in "Payment Options" below. If an Equitable agent is assisting the
beneficiary in preparing the documents required for payment of the Death
Benefit, we will send the check to the agent within seven days after we receive
all required documents. The agent will then deliver the check to the
beneficiary. But we can delay payment if:
o we contest the policy;
o it is not reasonably practicable to determine the amount because the New York
Stock Exchange is closed, trading is restricted by the SEC, or the SEC
declares that an emergency exists; or
o the SEC, by order, permits us to delay to protect our policyowners.
If your policy is being continued as fixed reduced paid-up or extended term
insurance, we can delay payment of a loan or cash value for up to six months.
We will pay at least 3% interest a year if we delay paying the Cash Surrender
Value or loan proceeds more than 30 days.
YOUR PAYMENT OPTIONS. The Death Benefit or the Cash Surrender Value may be paid
(net of indebtedness) in one sum or you may choose another form of payment for
all or part of the money. Payments under these options are not affected by the
investment experience of any investment division of the Separate Account.
Instead, interest accrues pursuant to the options chosen. If you do not arrange
for a specific form of payment before the insured dies, the beneficiary will
have this choice. However, if you do make an arrangement with us for how the
money will be paid, the beneficiary cannot change the choice after the insured
dies. Payment options will also be subject to our rules at the time of
selection. Currently, these alternate payment options are only available if the
proceeds applied are $2500 or more and if any periodic payment will be at least
$25.
You have the following payment options:
o DEPOSIT OPTION: The money will stay on deposit with us for a period agreed
upon. You will receive interest on the money at a declared interest rate.
o INSTALLMENT PAYMENT OPTIONS: There are two ways that we pay installments:
FIXED PERIOD: We will pay the amount applied in equal installments plus
applicable interest, for a specific number of years (not more than 30).
FIXED AMOUNT: We will pay the sum in installments in an amount agreed upon.
We will pay the installments until we pay the original amount, together with
any interest earned.
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21
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL
INFORMATION ABOUT
THE CHAMPION
(continued)
o MONTHLY LIFE INCOME OPTION: We will pay the money as monthly income for life.
You may choose any one of three ways to receive the income: We will guarantee
payments for at least 10 years (called "10 Years Certain"); at least 20 years
(called "20 Years Certain"); or until the payments we make equal the original
sum (called "Refund Certain").
o OTHER: You may ask us to apply the money under any option that we make
available at the time the Death Benefit or Cash Surrender Value is paid.
We guarantee interest under the Deposit Option at the rate of 3% a year, and
under either Installment Option at 3-1/2% a year. We may also credit interest
under the Deposit Option and under either Installment Option at a rate that is
above the guaranteed rate.
The beneficiary or any other person who is entitled to receive payment may name
a successor to receive any amount that we would otherwise pay to that person's
estate if that person died. The person who is entitled to receive payment may
change the successor at any time.
We must approve any arrangements that involve more than one of the payment
options, or a payee who is not a natural person (for example, a corporation), or
a payee who is a fiduciary. Also, the details of all arrangements will be
subject to our rules at the time the arrangements take effect. This includes
rules on the minimum amount we will pay under an option, minimum amounts for
installment payments, withdrawal or commutation rights (your rights to receive
payments over time, for which we may offer a lump sum payment), the naming of
people who are entitled to receive payment and their successors, and the ways of
proving age and survival.
You will make a choice of payment option (or any later changes) and your choice
will take effect in the same way as it would if you were changing a beneficiary.
(See "Beneficiary" below). Any amounts that we pay under the payment options
will not be subject to the claims of creditors or to legal process, to the
extent that the law provides.
ADDITIONAL BENEFITS YOU MAY GET BY RIDER. Your policy can include additional
benefits that we approve based on our standards for issuing insurance and
classifying risks. An additional benefit requires an additional premium. An
additional benefit is provided by a rider that is subject to the terms of the
policy. The following riders are available.
o WAIVER OF PREMIUM RIDER. With this rider, we will waive the premium if the
insured person becomes totally disabled and the disability continues for six
months. The disability must start before the policy anniversary nearest the
insured's 60th birthday. If disability starts after that, we will waive the
premium only up to the policy anniversary nearest the insured's 65th birthday.
o ACCIDENTAL DEATH BENEFIT RIDER. With this rider, we will pay a benefit if the
insured dies from an accidental bodily injury before the policy anniversary
nearest his or her 70th birthday.
o OPTION TO PURCHASE ADDITIONAL INSURANCE RIDER. With this rider, you have the
right to buy additional insurance on the life of the insured at certain future
dates. We will not require evidence of the insured's insurability when you use
your right to buy additional insurance.
o SUPPLEMENTAL PROTECTIVE BENEFIT RIDER. With this rider, we will waive the
premium if the insured is a child under age 15 on the date of issue and:
the person who applied for the policy dies; or
the person who applied for the policy is totally disabled for at least six
months before the policy anniversary nearest his or her 60th birthday.
We will waive the premium only while the disability continues. In any case, we
will not waive the premium that is due after the policy anniversary nearest the
insured's 25th birthday.
o TERM INSURANCE RIDER. Several types of riders are available that provide for
term insurance on the life of the insured or an additional insured.
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22
<PAGE>
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ADDITIONAL
INFORMATION ABOUT
THE CHAMPION
(continued)
BENEFICIARY. You name your beneficiary when you apply for your policy. You may
change the beneficiary during the insured's lifetime by writing to your regional
Life Insurance Center. If no beneficiary is living when the insured dies, the
Death Benefit will be paid in equal shares to the insured's surviving children.
If there is no surviving child, the Death Benefit will be paid to the insured's
estate.
ASSIGNMENT. You may assign the policy as collateral for a loan or other
obligation. We are not responsible for any payment we make or action we take
before we receive a copy of the assignment at your regional Life Insurance
Center.
PREMIUM PAYMENTS BY SALARY ALLOTMENT. If your employer permits you to pay
insurance premiums by deduction from your salary, and you choose to do so, we
may offer you temporary fixed insurance in the amount applied for (subject to a
maximum of $250,000). This insurance will be without charge (except that a
premium will be deducted from any fixed death benefit). Once we receive the
first payment from your employer, the fixed insurance will be discontinued and
The Champion policy will begin.
EMPLOYEE BENEFIT PLANS. Employers and employee organizations should consider, in
consultation with counsel, the impact of Title VII of the Civil Rights Act of
1964 on the purchase of The Champion in connection with an employment-related
insurance or benefit plan. The United States Supreme Court held, in a 1983
decision, that, under Title VII, optional annuity benefits under a deferred
compensation plan could not vary on the basis of sex.
YOU WILL RECEIVE PERIODIC REPORTS. As a policyowner, you will receive an annual
statement about your policy giving you the status as of the first day of the
current policy year of:
o the way the net annual premium is divided among the divisions of the Separate
Account;
o the Death Benefit;
o the Account Value and Cash Surrender Value; and
o your outstanding policy loans.
Notice will also be sent to your for policy issuance, transfers of funds among
divisions of the Separate Account and certain other policy transactions.
We will not send you an annual statement for any year your policy is in effect
under extended term insurance or reduced paid-up fixed insurance.
You will receive a billing notice each year showing accrued interest for the
past policy year if you have a policy loan outstanding.
We will also send you semiannual and annual reports with financial information
on the Separate Account and the Trust (including a list of the investments held
by each Portfolio in which the divisions of the Separate Account invest) as
required by the 1940 Act.
DIVIDENDS. No dividends will be paid on The Champion policy.
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23
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PART 4 -- ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
TAX EFFECTS
POLICY PROCEEDS. The Tax Reform Act of 1984 (1984 Act) includes a definition of
life insurance for tax purposes. Generally, The Champion policy meets this
definition of life insurance and receives the same Federal income tax treatment
as fixed benefit life insurance. Thus:
o Death Benefits under The Champion policy will generally be excludable from the
gross income of the beneficiary under Section 101(a)(1) of the Internal
Revenue Code (Code) and
o the policyowner will not generally be considered to have received any
increases in the Account Value due to interest or investment experience before
a surrender or lapse of the policy.
In general, if you surrender your policy or allow it to lapse, you will not be
taxed on the amount you receive, except for the portion that, together with any
unpaid loan and loan interest, exceeds the premiums you have paid.
A split of the policy into two policies followed by a return of one for cash, or
an exchange referred to under "Your Right To Exchange The Policy" in Part 3, may
result in taxable income to the policyowner depending on the circumstances. We
suggest you consult your tax adviser.
The 1984 Act also gives the Secretary of the Treasury authority to set standards
for diversification of the investments underlying variable life insurance
policies in order for such policies to be treated as life insurance. On
September 15, 1986, Treasury issued temporary regulations regarding the
diversification requirements. Failure to meet these diversification requirements
would disqualify The Champion as a variable life insurance policy under Section
7702 of the Code. If this were to occur, you would be taxed on the amount your
Account Value exceeds the premiums you have paid. We believe that the
investments underlying The Champion are in compliance with the requirements. We
do not anticipate any problems with the investments continuing to meet the
requirements.
You will not be taxed on amounts transferred among investment choices within
your Policy Account. We also believe that loans received under the policies will
be treated as indebtedness of the policyowner, and that no part of any loan
under a policy will constitute income to the owner. Generally, a portion of the
interest on loans under life insurance policies (other than single premium
policies) is deductible subject to certain limitations. For future years, most
policy loan interest will no longer be deductible. See "Tax Reform" below.
Death Benefits under The Champion policy will generally be includable in the
estate of the insured for purposes of Federal estate tax. Federal estate tax is
integrated with Federal gift tax under a unified gift rate schedule. Federal
estate tax is imposed on distributions at graduated rates from 37% to 55% (with
the maximum rate applying to distributions in excess of $3,000,000). In general,
estates not in excess of $600,000 are exempt from Federal estate tax. In
addition, an unlimited marital deduction applies for Federal estate tax
purposes.
The individual situation of each policyowner or beneficiary will determine how
ownership or receipt of policy proceeds will be treated for purposes of Federal
estate tax as well as state and local estate, inheritance and other taxes.
Again, we suggest you consult your tax adviser.
See the prospectus for the Trust for a discussion of the Trust's tax aspects,
including the diversification requirements.
PENSION AND PROFIT-SHARING PLANS. If policies are purchased by a trust which
forms part of a pension or profit sharing plan qualified under Section 401(a) of
the Code for the benefit of participants covered under the plan, the Federal
income tax treatment of such policies will be somewhat different from that
described above. We suggest you consult your legal or tax adviser.
If purchased as part of a pension or profit-sharing plan, the current cost of
insurance for the net amount at risk is treated as a "current fringe benefit"
and is required to be included annually in the plan participant's gross income.
This cost (generally referred to as the "P.S. 58" cost) is reported to the
participant annually as an addition to wages and salaries on the Form W-2
furnished by the employer who is maintaining the plan.
Second, if the plan participant dies while covered by the plan and the policy
proceeds are paid to the participant's beneficiary, then the excess of the Death
Benefits over the Account Value will not be subject to Federal income tax.
However, the Account Value will be taxable to the extent it exceeds the sum of
$5,000 plus the participant's cost basis in the policy. The participant's cost
basis will include the costs of insurance previously reported on the
participant's Form W-2. Special rules may apply if the participant had borrowed
from his policy or was an owner-employee under the plan.
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24
<PAGE>
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There are limits on the amount of life insurance that may be purchased on behalf
of a participant in a pension or profit-sharing plan. Complex rules, in addition
to those discussed above, apply whenever life insurance is purchased by a tax
qualified plan. We suggest you consult your legal or tax adviser prior to
purchase of this policy by a pension or profit-sharing plan.
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TAX EFFECTS
(continued)
OUR INCOME TAXES. Under the life insurance company tax provisions of the Code,
as amended by the 1984 Act, variable life insurance is treated in a manner
consistent with fixed life insurance. The operations of the Separate Account are
included in the Federal income tax return of Equitable Variable. Under current
tax law, Equitable Variable pays no tax on investment income and capital gains
reflected in variable life insurance policy reserves. Consequently, no charge is
currently being made to the divisions of the Separate Account for our Federal
income taxes. We reserve the right, however, to make such a charge in the
future, if the law changes and we incur Federal income tax which is attributable
to the Separate Account. If such a charge is made, it would be set aside as a
provision for taxes which we would keep in the affected Division rather than in
our general account. We anticipate that our variable life policyowners will
benefit from any investment earnings that are not needed to maintain this
provision.
We may have to pay state and local taxes (in addition to premium taxes) in
several states. At present, these taxes are not substantial. If they increase,
however, charges may be made for such taxes when they are attributable to the
Separate Account.
TAX REFORM. Under the Tax Reform Act of 1986, the deduction for policy loan
interest is being phased out over a five year period (35% of such interest would
not be deductible in 1987, 60% in 1988, 80% in 1989, 90% in 1990 and 100% in
1991). Interest on loans taken under policies purchased or carried as part of a
trade or business is subject to special rules.
INCOME TAX WITHHOLDING. Federal tax law requires us to withhold income tax from
any portion of your surrender proceeds that is subject to tax, unless you
request us not to withhold.
If you surrender your policy and do not advise us in writing that you do not
want us to withhold Federal income tax before the date payment must be made, we
are required by law to withhold tax from the surrender payment.
If you elect not to have tax withheld from the surrender payment, or if the
mount of Federal income tax withheld is insufficient, you may be responsible for
payment of tax. You may incur penalties under the tax rules if your withholding
and estimated tax payments are not sufficient. You may wish to consult you tax
adviser.
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YOUR VOTING
PRIVILEGES
GENERAL. As we have already said, all assets held in the divisions of the
Separate Account are invested in shares of the corresponding Portfolios of the
Trust. We are the legal owners of those shares and as such have the right to
vote upon certain matters at any meeting of the Trust's shareholders that may be
held. Among other things, we may vote on any matters described in the Trust's
prospectus or Statement of Additional Information that require a shareholder
vote or requiring a vote by shareholders under the Investment Company Act of
1940.
However, in accordance with our view of current Federal securities law
requirements, we will offer you the opportunity to instruct us as to how Trust
shares allocable to your policy and held by us in the Separate Account will be
voted on these matters. We will vote the shares of the Trust at meetings of
shareholders of the Trust in accordance with your instructions. Thus, you will
have the right to have a voice in the affairs of the Trust. Trust shares held in
each division of the Separate Account for which no timely instructions from
policyowners are received will be voted by us in the same proportion as shares
in that division for which instructions are received. We will also vote any
Trust shares that we are entitled to vote directly due to amounts we have
accumulated in the Separate Account in the same proportions that all
policyowners vote, including those who participate in other Separate Accounts.
See "Your Voting Privileges -- Voting Privileges of Others".
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25
<PAGE>
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YOUR VOTING
PRIVILEGES
(continued)
Each policy having a voting interest will be sent proxy material and a form for
giving voting instructions. If required by state insurance officials, we may
disregard voting instructions if those instructions would require shares to be
voted so as to cause a change in the investment objectives or policies of one or
more of the Trust's Portfolios, or to approve or disapprove an investment policy
or investment adviser of one or more of the Trust's Portfolios. In addition, we
may disregard voting instructions in favor of changes initiated by a policyowner
or the Trust's Board of Trustees in the investment policy or the investment
adviser of a Portfolio, provided that our disapproval of the change is
reasonable and is based on a good faith determination that the change would be
contrary to state law, the proposed advisory fee would be higher than we are
permitted to pay by the terms of our variable life policies, or the charge would
lead to an adverse effect on our general account because it would result in
unsound or overly speculative investments. We will advise policyowners if we do
disregard voting instructions, and give our reasons for such actions in the next
semiannual report we send to policyowners.
All Trust shares of whatever class are entitled to one vote, and the votes of
all classes are cast on an aggregate basis, except on matters where the
interests of the Portfolios differ. In such a case, the voting is on a
Portfolio-by-Portfolio basis. Approval or disapproval by the shareholders in one
Portfolio on such a matter would not generally be a prerequisite of approval or
disapproval by shareholders in another Portfolio; and shareholders in a
Portfolio not affected by a matter generally would not be entitled to vote on
that matter. Examples of matters which would require a Portfolio-by-Portfolio
vote are changes in the fundamental investment policy or restrictions of a
particular Portfolio and approval of the investment advisory agreement.
VOTING PRIVILEGES OF OTHERS. Currently, we control the Trust. Trust shares are
held by other separate accounts of ours and by separate accounts of insurance
companies affiliated or unaffiliated with us. Shares held by these separate
accounts will probably be voted according to the instructions of the owners of
insurance policies and contracts issued by those insurance companies. While this
will dilute the effect of the voting instructions of owners of The Champion, we
currently do not foresee any disadvantages to our policyowners arising out of
this. The Trust's Board of Trustees intends to monitor events in order to
identify any material irreconcilable conflicts that possibly may arise and to
determine what action, if any, should be taken in response. If we believe that
the Trust's response to any of those events insufficiently protects our
policyowners, we will see to it that appropriate action is taken to protect our
policyowners.
DETERMINING YOUR VOTE. If all your Account Value is in one division of the
Separate Account, you can only participate in the voting of the shares in the
Portfolio that corresponds to that division. If your Account Value is divided
among the divisions, you are entitled to participate in the voting of the shares
of each of the Portfolios which correspond to those divisions.
The number of Trust shares held in each division of the Separate Account
attributable to your policy for purposes of your voting privilege will be
determined by dividing your policy's Account Value (less any policy
indebtedness) allocable to that division by the net asset value of one share of
the corresponding Portfolio as of the record date for the Trust's shareholder
meeting. The record date for this purpose will not be more than 90 days before
the meeting of the Trust. Fractional shares are counted.
EXAMPLE: Your policy has an Account Value of $3,000, 50% of which is
attributable to the Common Stock Division and 50% of which is attributable to
the Money Market Division. Assuming the net asset value of one share in each
Trust Portfolio is $100, you would have the privilege of voting 30 shares. You
will have the privilege of instructing us regarding 15 votes in each of these
divisions.
EXAMPLE (ASSUMING AN OUTSTANDING LOAN): Assuming the same facts as in the
preceding example and also that you have a $1,000 loan (including interest)
equally allocated between the Common Stock and Money Market Divisions, you would
be entitled to 10 votes in each of these Divisions, or an aggregate of 10 fewer
votes.
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26
<PAGE>
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YOUR VOTING
PRIVILEGES
(continued)
LAW CHANGES MAY AFFECT YOUR VOTING PRIVILEGES. The Separate Account is required
by Federal securities laws or regulations as currently interpreted to have
policyowners instruct us as to the Trust's voting rights. However, if amendments
to or interpretations of those laws or regulations change what must be voted on,
or restrict the matters for which policyowners are given the opportunity to
provide voting instructions, we will in turn change what is submitted to
policyowners.
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OUR RIGHTS
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. We will always attempt to comply
with applicable laws before we take any of these actions. If necessary, we will
seek approval by policyowners.
Specifically, we reserve the right to:
o add divisions to or remove divisions from the Separate Account;
o combine any two or more divisions within the Separate Account;
o transfer assets of the variable life policy offered by this prospectus, as
well as the assets of our other variable life policies, from one division to
another (if we do, we will withdraw proportional amounts of each investment in
the division, but we will also make whatever adjustments are needed to avoid
odd lots and fractions);
o operate the Separate Account as a management investment company under the 1940
Act, or in any other form the law allows (if we do, we may invest the assets
in any legal investments and we or one of our affiliates, such as Equitable
Capital, will serve as investment adviser and charge the Separate Account an
advisory fee);
o end the registration of the Separate Account under the 1940 Act;
o operate the Separate Account under the general supervision of a committee made
up of individuals all of whom may be, under the 1940 Act, interested persons
of us or of Equitable or discharge such committee.
SUBSTITUTION OF TRUST SHARES. Although we believe it to be highly unlikely, it
is possible that, in our judgment, one or more of the Portfolios of the Trust
may become unsuitable for investment by the Separate Account because, for
example, of a change in investment policy, or a change in the tax laws, or
because the shares are no longer available for investment. For those or other
reasons, we may seek to substitute the shares of another Portfolio or of an
entirely different mutual fund. Before we can do this, we would obtain the
approval of the SEC, and possibly one or more state insurance departments, to
the extent legally required.
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SALES AND OTHER
AGREEMENTS
Equitable Variable and Integrity Life Insurance Company, a wholly-owned
subsidiary of Equitable, are the principal underwriters for the Trust pursuant
to a Distribution Agreement. Under the Distribution Agreement, we have entered
into a Sales Agreement with Equitable by which Equitable will distribute our
policies.
Both Equitable Variable and Equitable are registered with the SEC as
broker-dealers under the Securities Exchange Act of 1934 and we are each a
member of the National Association of Securities Dealers, Inc. We are also the
principal underwriter for our policies funded through our Separate Account I and
our other policies funded through our Separate Account FP, which is also a
registered investment company. (Equitable may also be deemed a principal
underwriter for our policies.)
SALES BY AGENTS OF EQUITABLE. We sell The Champion policy through agents who are
licensed by state insurance officials to sell our variable life policies. These
agents are also registered representatives of Equitable.
Under the Sales Agreement, agents receive commissions from Equitable for selling
our policies. We reimburse Equitable for these commissions. We also reimburse
Equitable for other expenses incurred in marketing and selling our policies.
These expenses include agency and district managers' compensation, agents'
training allowance, deferred compensation, insurance benefits of agents and
agency and district managers, and agency clerical and advertising expenses.
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27
<PAGE>
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SALES AND OTHER
AGREEMENTS
(continued)
COMMISSION SCHEDULE. Agents receive the equivalent of up to 50% of the premium
payable in the first policy year. In the second policy year, agents receive up
to 10% of the premium paid for that year. In the third, fourth and fifth policy
years, agents receive up to 8% of the premium paid in each year. In the sixth
through tenth policy years, agents receive up to 5% of the premium paid in each
year. After that, agents receive up to 2% of the premium paid in each year.
Agents with less than three full years of service with Equitable may be paid
differently.
Agents who meet certain production and persistency standards in selling our
policies and Equitable policies will be eligible for added compensation. Agents
who meet certain lifetime production standards will be eligible to receive
increased fees for servicing our policies. Agents also are eligible for added
compensation for servicing our policies when there is no assigned soliciting
agent.
SALES BY BROKERS. We also sell The Champion policy through independent brokers
who are licensed by state insurance officials to sell our variable life
policies. They will also be registered representatives either of Equitable or of
another company registered with the SEC as a broker-dealer under the Securities
Exchange Act of 1934. The commissions for independent brokers will be no more
than those for agents. Commissions will be paid through the registered
broker-dealer.
APPLICATIONS. When an application for The Champion policy is completed, it is
submitted to us. Based on the information in the application and our standards
for issuing insurance and classifying risks, a policy may be issued. If a policy
is not issued, we will refund any premium that has been paid. (Equitable
guarantees the refund.)
JOINT SERVICES AGREEMENT. In addition to acting as distributor for The Champion
policy, Equitable performs certain other sales and administrative duties for us.
Equitable does this pursuant to a written agreement. The agreement is
automatically renewed each year, unless either party terminates.
Under this agreement, we pay Equitable for salary costs and other services and
an amount for indirect costs incurred through our use of Equitable personnel and
facilities. We also reimburse Equitable for sales expenses related to business
other than variable life policies. The amounts paid or accrued to Equitable by
us under sales and joint services agreements totalled approximately $249.4
million in 1986, $225.7 million in 1985 and $164.8 million in 1984.
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REGULATION
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to insurance laws and regulations in every jurisdiction
where we sell our policies. We submit annual reports on our operations and
finances to insurance officials in these jurisdictions. The officials are
responsible for reviewing our reports to be sure we are financially sound and
that we are complying with applicable laws and regulations.
The Champion has been approved in each of the 50 states, Puerto Rico and the
Virgin Islands.
We are also subject to various Federal securities laws and regulations.
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LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
- --------------------------------------------------------------------------------
LEGAL MATTERS
The legal validity of the policies described in this prospectus has been passed
on by Herbert P. Shyer, who is Executive Vice President and General Counsel of
Equitable.
The Washington, D.C. law firm of Freedman, Levy, Kroll & Simonds has advised
Equitable Variable with respect to certain matters relating to Federal
securities laws.
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28
<PAGE>
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FINANCIAL AND
ACTUARIAL EXPERTS
The financial statements of the Separate Account and of Equitable Variable in
this prospectus have been examined by the accounting firm of Deloitte Haskins &
Sells, our independent auditors, to the extent stated in their opinions, and
their opinions on them are part of this prospectus. We have relied on the
opinions of Deloitte Haskins & Sells given upon their authority as experts in
accounting and auditing.
Actuarial matters in this prospectus have been examined by Joseph O. North, Jr.,
F.S.A., M.A.A.A., who is Vice President and Actuary of Equitable Variable and a
Vice President and Actuary of Equitable. His opinion on actuarial matters is
filed as an exhibit to the Registration Statement we filed with the SEC.
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ADDITIONAL
INFORMATION
We have filed with the SEC a Registration Statement relating to the Separate
Account and the variable life policy described in this prospectus. The
Registration Statement, which is required by the Securities Act of 1933,
includes additional information that is not required in this prospectus under
the rules and regulations of the SEC. If you would like the additional
information, you may obtain copies of that document from the SEC's main office
in Washington, D.C. You will have to pay a fee for the material.
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MANAGEMENT
Here is a list of our directors and officers and a brief statement of their
business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Harry Douglas Garber...................... Vice Chairman of the Board, Equitable, since February 1984; prior thereto, Executive
Vice President and Chief Financial Officer. Director, Equitable Investment Corporation
(EIC) and Genesco, Inc. Former Chairman and Chief Executive Officer, Equitable Variable.
Glenn Howard Gettier, Jr. ................ Executive Vice President and Chief Financial Officer, Equitable, since December 1984;
prior thereto, Partner, Peat, Marwick, Mitchell & Co.
Richard Hampton Jenrette.................. Vice Chairman, Chief Investment Officer and Director, Equitable. Chairman, Donaldson,
Lufkin and Jenrette, Inc., since February 1985; prior thereto, Chairman and Chief
Executive Officer. Director, Equitable Capital Management Corporation (Equitable
Capital) and various other Equitable subsidiaries.
William Thomas McCaffrey.................. Executive Vice President, Equitable, since March 1986; prior thereto, various other
Equitable positions.
Francis Helmut Schott..................... Senior Vice President and Chief Economist, Equitable.
Leo Martin Walsh, Jr. .................... Senior Executive Vice President, Director and Chief Operating Officer, Equitable, since
July 1986; prior thereto, Executive Vice President, Director and Chief Investment
Officer. Chairman, EIC since July 1986; prior thereto, President and Chief Executive
Officer. Director, Equitable Capital and various other Equitable subsidiaries.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Peter Rawlinson Wilde..................... Executive Vice President, Equitable, since July 1984. Director, Integrity Life
Insurance Company (Integrity) and National Integrity Life Insurance Company (National
Integrity). Chairman and Chief Executive Officer, Equitable Variable, from November
1984 to December 1986. Chief Financial Officer, CIGNA Corporation, from April 1983 to
June 1984; prior thereto, Senior Vice President.
Brian Fredrick Wruble..................... Chairman, President and Chief Executive Officer, Equitable Capital. Executive Vice
President, Equitable, since September 1984; prior thereto, various other Equitable
positions.
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICER -- DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Robert Wayne Barth........................ Chairman and Chief Executive Officer, Equitable Variable, since December 1986;
President and Chief Operating Officer, from December 1985 to December 1986. Executive
Vice President, Equitable, since June 1985; Senior Vice President since September 1984;
prior thereto, Vice President since April 1984.
Thomas Michael Kirwan..................... President and Chief Operating Officer, Equitable Variable, since December 1986.
Executive Vice President and Chief Financial Officer, EIC, since March 1985; prior
thereto, President, Columbia Group -- CBS, Inc. Director, Equitable Capital and various
other Equitable subidiaries.
Robert Seymour Jones...................... Senior Vice President, Equitable Variable, since February 1986. Senior Vice President,
Equitable, since June 1985; prior thereto, Vice President.
Michael Searle Martin..................... Senior Vice President, Equitable Variable, since February 1986. Senior Vice President,
Equitable, since June 1985; prior thereto, Vice President.
Stanley Julian Rispler.................... Senior Vice President, Equitable Variable, since February 1986. Senior Vice President,
Equitable, since October 1984; prior thereto, Vice President.
Samuel Barry Shlesinger................... Senior Vice President and Actuary, Equitable Variable, since February 1986. Senior Vice
President and Actuary, Equitable; prior thereto Vice President and Actuary.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
James Thomas Liddle, Jr. ................. Senior Vice President and Chief Financial Officer, Equitable Variable, since February
1986. Vice President and Actuary, Equitable.
Richard Marshall Stenson.................. Senior Vice President, Equitable Variable, since December 1981. Senior Vice President,
Equitable, since October 1984; prior thereto, Vice President and Actuary, Integrity.
William Arnold Canfield................... Vice President and Chief Underwriting Officer, Equitable Variable. Vice President,
2 Penn Plaza Equitable.
New York, New York 10121
Franklin Kennedy, III..................... Vice President, Equitable Variable, since August 1981. Senior Vice President, Equitable
1221 Avenue of the Americas Capital since January 1987. Managing Director and Chief Investment Officer, Equitable
New York, New York 10020 Investment Management Corporation, from November 1983 to January 1987. Vice President,
Equitable.
Donald Anthony King....................... Vice President, Equitable Variable, since February 1986. Vice President, Integrity,
1285 Avenue of the Americas since April 1984. Vice President, Equitable, since January 1976. Executive Vice
New York, New York 10020 President, Equitable Capital.
Joseph Oswell North, Jr. ................. Vice President and Actuary, Equitable Variable, since February 1984. Vice President and
2 Penn Plaza Actuary, Equitable, since October 1984; prior thereto, Assistant Vice President and
New York, New York 10121 Actuary, since April 1982.
Stephen Anthony Scarpati.................. Vice President and Controller, Equitable Variable, since June 1986. Vice President,
2 Penn Plaza Equitable, since December 1985. Vice President and Controller, EIC, from November 1984
New York, New York 10121 to December 1985; prior thereto, Division Controller, Colgate-Palmolive Company.
Larry Kenneth Mills....................... Treasurer, Equitable Variable, Integrity and National Integrity, since February 1986.
Vice President and Treasurer, Equitable, since March 1986; prior thereto, Vice
President.
Theodore Edward Plucinski, M.D. .......... Chief Medical Director, Equitable Variable, Integrity and National Integrity. Chief
2 Penn Plaza Medical Director, Equitable since September 1985; prior thereto, Chief Medical
New York, New York 10121 Director, MONY.
Kevin Brian Keefe......................... Secretary, Equitable Variable, Integrity, National Integrity and The Hudson River
Trust, Vice President and Assistant Secretary, Equitable, since June 1986; prior
thereto, Assistant Vice President and Assistant Secretary.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
- --------------------------------------------------------------------------------
PART 5 -- ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER
VALUES, AND ACCUMULATED PREMIUMS
To help you get a picture of how the key financial elements of our policy work,
we have prepared a series of tables.
The tables show how Death Benefits, Account Values and Cash Surrender Values of
policies with premiums of $300, $500, $1,000 (for policies with face amounts
under $200,000) and $1,000, $2,000, and $4,000 (for policies with face amounts
at least $200,000) could vary over an extended period of time if the divisions
of the Separate account had CONSTANT hypothetical gross annual investment
returns of 0%, 4%, 8% or 12% over the years covered by each table. The Death
Benefits, Account Values and Cash Surrender Values would differ from those shown
in the tables if the annual investment returns did not remain absolutely
constant. Thus, the figures would be different if the return AVERAGED 0%, 4%, 8%
or 12% over a period of years but went above or below those figures in
individual policy years. The Death Benefits, Account Values and Cash Surrender
Values would also differ, depending on the investment allocations made to the
divisions, if the actual rates of investment return averaged 0%, 4%, 8% or 12%,
but went above or below those figures for individual divisions. The tables are
for standard policies. The difference between the Account Value and the Cash
Surrender Value in the first ten years is the surrender charge.
The Account Values and Cash Surrender Values in the tables are related to the
annual premiums shown in "Premiums -- Illustration of Premium Rates" in Part 3.
The amounts of Death Benefits, Account Values and Cash Surrender Values shown in
the tables for the end of each policy year take into account a daily charge
against each division of the Separate Account that is equivalent to an annual
charge of 0.75% at the beginning of each year. This charge is the 0.50% charge
against the Separate Account for mortality and expense risks and a 0.25% charge
for investment advisory services. The effect of these adjustments is that on a
0% actual rate of return the net rate of return would be -0.75%, on 4% it would
be 3.22%, on 8% it would be 7.19% and on 12% it would be 11.16%.
The hypothetical returns shown in the tables do not reflect any charges for
Trust expenses in addition to the 0.25% investment advisory fee charge, because
the divisions of the Separate Account will generally be reimbursed for such
expenses. See "The Trust's Investment Adviser" in Part 2.
The tables reflect the fact that we do not currently charge the divisions of the
Separate Account for Federal income tax. However, if we do make such a charge in
the future, it would take a higher rate of return to produce after-tax returns
of 0%, 4%, 8% or 12% than it does now.
The second and third columns of each table show what would happen if an amount
equal to the total premium were invested to earn interest, after taxes, of 4% or
5% compounded annually. These tables show that if a policy is returned in its
very early years for payment of its Cash Surrender Value, the Cash Surrender
Value will be low in comparison to the premium accumulated with interest. This
means that the cost of owning your policy for a relatively short time will be
high.
If you request, we will furnish you with a comparable illustration based on the
proposed insured's sex and age and an initial face amount or premium amount of
your choice. A specific illustration will assume that the insured is a standard
risk and that the premium will be paid on an annual basis. In addition, if you
do purchase a policy, we will deliver a specific illustration that reflects how
the premium will actually be paid and to what risk class the insured has been
assigned.
We have also prepared special illustrations showing the effects of policy loans
on a planned basis. These are available on request.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
OF ILLUSTRATIONS
Page
----
$ 300 annual premium Male Age 10 33
$ 500 annual premium Male Age 25 34
$1,000 annual premium Male Age 40 35
$1,000 annual premium Male Age 10 36
$2,000 annual premium Male Age 25 37
$4,000 annual premium Male Age 40 38
The first three illustrations show values based on policies with face amounts
under $200,000 and the second three for policies with face amounts at least
$200,000.
- --------------------------------------------------------------------------------
32
<PAGE>
THE CHAMPION
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $52,739
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 10 ANNUAL PREMIUM $300(2)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY -------------------------- ------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $52,739 $52,739 $ 52,761 $ 52,793
2 636 646 52,739 52,739 52,838 52,985
3 974 993 52,739 52,739 52,968 53,319
4 1,325 1,358 52,739 52,739 53,152 53,796
5 1,690 1,741 52,739 52,739 53,387 54,420
6 2,070 2,143 52,739 52,739 53,673 55,193
7 2,464 2,565 52,739 52,739 54,006 56,118
8 2,875 3,008 52,739 52,739 54,388 57,199
9 3,302 3,473 52,739 52,739 54,816 58,441
10 3,746 3,962 52,739 52,739 55,291 59,849
11 4,208 4,475 52,739 52,739 55,811 61,431
12 4,688 5,014 52,739 52,739 56,377 63,197
13 5,188 5,580 52,739 52,739 56,991 65,155
14 5,707 6,174 52,739 52,739 57,651 67,316
15 6,247 6,797 52,739 52,739 58,360 69,694
16 6,809 7,452 52,739 52,739 59,117 72,298
17 7,394 8,140 52,739 52,739 59,924 75,144
18 8,001 8,862 52,739 52,739 60,782 78,245
19 8,633 9,620 52,739 52,739 61,690 81,617
20 9,291 10,416 52,739 52,739 62,651 85,275
55 (Age 65) 59,642 85,905 52,739 52,739 135,015 640,103
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 38 $ 41 $ 44 $ 47 $ 0 $ 0 $ 2 $ 5
232 246 261 275 153 168 183 197
419 453 487 523 322 355 390 426
599 659 723 792 485 545 609 677
769 864 967 1,081 639 734 837 950
929 1,066 1,219 1,392 789 926 1,079 1,252
1,080 1,266 1,480 1,728 935 1,120 1,335 1,583
1,223 1,464 1,751 2,091 1,098 1,339 1,626 1,966
1,360 1,663 2,035 2,488 1,289 1,593 1,965 2,418
1,494 1,866 2,335 2,922 1,494 1,866 2,335 2,922
1,625 2,074 2,654 3,401 1,625 2,074 2,654 3,401
1,757 2,289 2,995 3,931 1,757 2,289 2,995 3,931
1,891 2,513 3,361 4,518 1,891 2,513 3,361 4,518
2,028 2,747 3,755 5,172 2,028 2,747 3,755 5,172
2,165 2,990 4,178 5,896 2,165 2,990 4,178 5,896
2,307 3,245 4,635 6,702 2,307 3,245 4,635 6,702
2,450 3,510 5,126 7,597 2,450 3,510 5,126 7,597
2,596 3,787 5,653 8,591 2,596 3,787 5,653 8,591
2,742 4,074 6,217 9,692 2,742 4,074 6,217 9,692
2,889 4,371 6,822 10,912 2,889 4,371 6,822 10,912
5,619 17,920 74,624 362,630 5,619 17,920 74,624 362,630
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$153 semi-annually, $77 quarterly or $27 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
33
<PAGE>
THE CHAMPION
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $53,427
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 25 ANNUAL PREMIUM $500(2)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY -------------------------- ------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $53,427 $53,427 $53,471 $53,537
2 1,061 1,076 53,427 53,427 53,570 53,787
3 1,623 1,655 53,427 53,427 53,725 54,184
4 2,208 2,263 53,427 53,427 53,936 54,734
5 2,816 2,901 53,427 53,427 54,202 55,444
6 3,449 3,571 53,427 53,427 54,524 56,322
7 4,107 4,275 53,427 53,427 54,902 57,374
8 4,791 5,013 53,427 53,427 55,337 58,608
9 5,503 5,789 53,427 53,427 55,826 60,031
10 6,243 6,603 53,427 53,427 56,372 61,653
11 7,013 7,459 53,427 53,427 56,974 63,481
12 7,813 8,356 53,427 53,427 57,631 65,526
13 8,646 9,299 53,427 53,427 58,344 67,797
14 9,512 10,289 53,427 53,427 59,112 70,307
15 10,412 11,329 53,427 53,427 59,936 73,066
16 11,349 12,420 53,427 53,427 60,815 76,087
17 12,323 13,566 53,427 53,427 61,750 79,384
18 13,336 14,770 53,427 53,427 62,741 82,971
19 14,389 16,033 53,427 53,427 63,788 86,864
20 15,485 17,360 53,427 53,427 64,890 91,079
40 (Age 65) 49,413 63,420 53,427 53,427 99,610 283,063
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 160 $ 170 $ 180 $ 190 $ 56 $ 66 $ 76 $ 87
481 514 549 583 343 376 411 446
801 871 945 1,022 628 698 772 849
1,121 1,241 1,370 1,510 918 1,039 1,168 1,307
1,439 1,623 1,827 2,052 1,209 1,393 1,596 1,821
1,755 2,017 2,315 2,652 1,507 1,769 2,067 2,404
2,068 2,422 2,836 3,317 1,810 2,165 2,578 3,059
2,377 2,839 3,392 4,052 2,156 2,618 3,171 3,831
2,682 3,266 3,984 4,863 2,558 3,142 3,860 4,740
2,982 3,704 4,615 5,760 2,982 3,704 4,615 5,760
3,277 4,151 5,284 6,748 3,277 4,151 5,284 6,748
3,566 4,609 5,995 7,838 3,566 4,609 5,995 7,838
3,848 5,075 6,749 9,038 3,848 5,075 6,749 9,038
4,124 5,549 7,548 10,358 4,124 5,549 7,548 10,358
4,392 6,031 8,394 11,811 4,392 6,031 8,394 11,811
4,651 6,520 9,288 13,405 4,651 6,520 9,288 13,405
4,902 7,016 10,233 15,158 4,902 7,016 10,233 15,158
5,144 7,517 11,231 17,083 5,144 7,517 11,231 17,083
5,378 8,025 12,286 19,196 5,378 8,025 12,286 19,196
5,603 8,539 13,399 21,516 5,603 8,539 13,399 21,516
8,079 19,251 52,618 157,225 8,079 19,251 52,618 157,225
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $129 quarterly or $44 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
34
<PAGE>
THE CHAMPION
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $57,041
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 40 ANNUAL PREMIUM $1,000(2)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY -------------------------- ------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $57,041 $57,041 $57,111 $ 57,214
2 2,122 2,153 57,041 57,041 57,250 57,566
3 3,246 3,310 57,041 57,041 57,459 58,103
4 4,416 4,526 57,041 57,041 57,735 58,828
5 5,633 5,802 57,041 57,041 58,078 59,747
6 6,898 7,142 57,041 57,041 58,486 60,866
7 8,214 8,549 57,041 57,041 58,961 62,194
8 9,583 10,027 57,041 57,041 59,500 63,737
9 11,006 11,578 57,041 57,041 60,104 65,505
10 12,486 13,207 57,041 57,041 60,772 67,506
11 14,026 14,917 57,041 57,041 61,503 69,752
12 15,627 16,713 57,041 57,041 62,299 72,253
13 17,292 18,599 57,041 57,041 63,158 75,021
14 19,024 20,579 57,041 57,041 64,080 78,070
15 20,825 22,658 57,041 57,041 65,066 81,414
16 22,697 24,840 57,041 57,041 66,115 85,066
17 24,645 27,132 57,041 57,041 67,227 89,045
18 26,671 29,539 57,041 57,041 68,402 93,366
19 28,778 32,066 57,041 57,041 69,641 98,048
20 30,969 34,719 57,041 57,041 70,944 103,113
25 (Age 65) 43,312 50,114 57,041 57,041 78,433 134,982
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ------------------------------------------------------ -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- ------- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 521 $ 549 $ 577 $ 605 $ 305 $ 333 $ 361 $ 389
1,196 1,280 1,366 1,455 908 992 1,078 1,167
1,854 2,022 2,199 2,386 1,494 1,662 1,839 2,026
2,493 2,773 3,076 3,403 2,070 2,350 2,653 2,980
3,115 3,535 4,001 4,518 2,634 3,055 3,521 4,038
3,717 4,305 4,975 5,738 3,198 3,786 4,457 5,220
4,303 5,085 6,002 7,075 3,765 4,548 5,465 6,538
4,870 5,875 7,084 8,538 4,409 5,414 6,623 8,077
5,419 6,674 8,225 10,140 5,160 6,415 7,966 9,881
5,951 7,481 9,426 11,894 5,951 7,481 9,426 11,894
6,464 8,297 10,690 13,814 6,464 8,297 10,690 13,814
6,958 9,119 12,019 15,912 6,958 9,119 12,019 15,912
7,430 9,944 13,413 18,204 7,430 9,944 13,413 18,204
7,880 10,772 14,874 20,704 7,880 10,772 14,874 20,704
8,305 11,598 16,402 23,429 8,305 11,598 16,402 23,429
8,706 12,424 18,000 26,398 8,706 12,424 18,000 26,398
9,084 13,247 19,671 29,633 9,084 13,247 19,671 29,633
9,440 14,069 21,419 33,157 9,440 14,069 21,419 33,157
9,773 14,889 23,247 36,997 9,773 14,889 23,247 36,997
10,087 15,708 25,159 41,182 10,087 15,708 25,159 41,182
11,304 19,694 36,009 68,254 11,304 19,694 36,009 68,254
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$509 semi-annually, $257 quarterly or $87 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
35
<PAGE>
THE CHAMPION
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $200,000
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 10 ANNUAL PREMIUM $1,000(2)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $200,000 $200,000 $200,218 $ 200,542
2 2,122 2,153 200,000 200,000 200,642 201,612
3 3,246 3,310 200,000 200,000 201,268 203,226
4 4,416 4,526 200,000 200,000 202,094 205,398
5 5,633 5,802 200,000 200,000 203,114 208,138
6 6,898 7,142 200,000 200,000 204,324 211,458
7 8,214 8,549 200,000 200,000 205,718 215,368
8 9,583 10,027 200,000 200,000 207,292 219,888
9 11,006 11,578 200,000 200,000 209,042 225,034
10 12,486 13,207 200,000 200,000 210,966 230,830
11 14,026 14,917 200,000 200,000 213,066 237,310
12 15,627 16,713 200,000 200,000 215,340 244,506
13 17,292 18,599 200,000 200,000 217,792 252,456
14 19,024 20,579 200,000 200,000 220,422 261,204
15 20,825 22,658 200,000 200,000 223,236 270,796
16 22,697 24,840 200,000 200,000 226,234 281,280
17 24,645 27,132 200,000 200,000 229,420 292,710
18 26,671 29,539 200,000 200,000 232,798 305,142
19 28,778 32,066 200,000 200,000 236,370 318,636
20 30,969 34,719 200,000 200,000 240,140 333,254
55 (Age 65) 198,805 286,348 200,000 200,000 520,190 2,527,266
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- --------------------------------------------------------- ---------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- -------- ---------- ------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 620 $ 650 $ 680 $ 712 $ 404 $ 434 $ 464 $ 496
1,328 1,418 1,512 1,608 1,040 1,130 1,224 1,320
2,016 2,196 2,386 2,586 1,656 1,836 2,026 2,226
2,668 2,968 3,292 3,642 2,246 2,546 2,870 3,220
3,288 3,736 4,232 4,784 2,808 3,256 3,752 4,304
3,872 4,494 5,202 6,012 3,354 3,976 4,684 5,494
4,420 5,244 6,208 7,340 3,882 4,706 5,670 6,802
4,938 5,986 7,250 8,776 4,478 5,526 6,790 8,316
5,434 6,734 8,346 10,342 5,174 6,474 8,086 10,082
5,920 7,496 9,504 12,064 5,920 7,496 9,504 12,064
6,400 8,272 10,732 13,956 6,400 8,272 10,732 13,956
6,880 9,078 12,046 16,050 6,880 9,078 12,046 16,050
7,366 9,918 13,456 18,372 7,366 9,918 13,456 18,372
7,862 10,792 14,974 20,950 7,862 10,792 14,974 20,950
8,364 11,704 16,606 23,812 8,364 11,704 16,606 23,812
8,880 12,662 18,364 26,998 8,880 12,662 18,364 26,998
9,404 13,658 20,254 30,532 9,404 13,658 20,254 30,532
9,936 14,696 22,284 34,456 9,936 14,696 22,284 34,456
10,468 15,772 24,458 38,804 10,468 15,772 24,458 38,804
11,004 16,886 26,784 43,618 11,004 16,886 26,784 43,618
20,922 67,682 287,900 1,432,354 20,922 67,682 287,900 1,432,354
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$509 semi-annually, $257 quarterly or $87 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
36
<PAGE>
THE CHAMPION
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $231,133
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 25 ANNUAL PREMIUM $2,000(2)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 2,080 $ 2,100 $231,133 $231,133 $231,419 $ 231,842
2 4,243 4,305 231,133 231,133 231,941 233,164
3 6,493 6,620 231,133 231,133 232,702 235,129
4 8,833 9,051 231,133 231,133 233,703 237,764
5 11,266 11,604 231,133 231,133 234,944 241,099
6 13,797 14,284 231,133 231,133 236,425 245,165
7 16,428 17,098 231,133 231,133 238,150 249,993
8 19,166 20,053 231,133 231,133 240,114 255,616
9 22,012 23,156 231,133 231,133 242,319 262,072
10 24,973 26,414 231,133 231,133 244,765 269,394
11 28,052 29,834 231,133 231,133 247,450 277,627
12 31,254 33,426 231,133 231,133 250,377 286,810
13 34,584 37,197 231,133 231,133 253,543 296,989
14 38,047 41,157 231,133 231,133 256,950 308,213
15 41,649 45,315 231,133 231,133 260,595 320,535
16 45,395 49,681 231,133 231,133 264,480 334,007
17 49,291 54,265 231,133 231,133 268,606 348,694
18 53,342 59,078 231,133 231,133 272,972 364,656
19 57,556 64,132 231,133 231,133 277,581 381,965
20 61,938 69,439 231,133 231,133 282,432 400,694
40 (Age 65) 197,653 253,680 231,133 231,133 434,432 1,250,452
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,238 $ 1,305 $ 1,370 $ 1,437 $ 797 $ 864 $ 929 $ 996
2,595 2,782 2,976 3,175 2,008 2,195 2,389 2,588
3,952 4,317 4,703 5,112 3,217 3,582 3,968 4,377
5,304 5,905 6,559 7,266 4,442 5,043 5,697 6,404
6,649 7,546 8,547 9,661 5,669 6,566 7,567 8,681
7,985 9,240 10,673 12,312 6,927 8,182 9,615 11,253
9,305 10,978 12,941 15,245 8,207 9,880 11,843 14,147
10,613 12,767 15,365 18,492 9,672 11,827 14,425 17,552
11,903 14,602 17,945 22,075 11,374 14,073 17,415 21,546
13,174 16,484 20,691 26,037 13,174 16,484 20,691 26,037
14,422 18,407 23,607 30,400 14,422 18,407 23,607 30,400
15,645 20,372 26,707 35,213 15,645 20,372 26,707 35,213
16,842 22,373 29,994 40,512 16,842 22,373 29,994 40,512
18,007 24,412 33,477 46,344 18,007 24,412 33,477 46,344
19,140 26,480 37,159 52,753 19,140 26,480 37,159 52,753
20,238 28,581 41,058 59,803 20,238 28,581 41,058 59,803
21,296 30,708 45,172 67,541 21,296 30,708 45,172 67,541
22,320 32,864 49,524 76,045 22,320 32,864 49,524 76,045
23,307 35,044 54,117 85,378 23,307 35,044 54,117 85,378
24,257 37,251 58,968 95,624 24,257 37,251 58,968 95,624
34,646 83,235 229,933 695,234 34,646 83,235 229,933 695,234
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$1,019 semi-annually, $515 quarterly or $173 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
37
<PAGE>
THE CHAMPION
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $237,411
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 40 ANNUAL PREMIUM $4,000(2)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- ------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 4,160 $ 4,200 $237,411 $237,411 $237,757 $238,272
2 8,486 8,610 237,411 237,411 238,393 239,882
3 12,986 13,241 237,411 237,411 239,315 242,258
4 17,665 18,103 237,411 237,411 240,516 245,423
5 22,532 23,208 237,411 237,411 241,995 249,400
6 27,593 28,568 237,411 237,411 243,747 254,217
7 32,857 34,196 237,411 237,411 245,772 259,903
8 38,331 40,106 237,411 237,411 248,066 266,491
9 44,024 46,312 237,411 237,411 250,627 274,019
10 49,945 52,827 237,411 237,411 253,455 282,526
11 56,103 59,669 237,411 237,411 256,548 292,055
12 62,507 66,852 237,411 237,411 259,905 302,656
13 69,168 74,395 237,411 237,411 263,526 314,379
14 76,094 82,314 237,411 237,411 267,410 327,278
15 83,298 90,630 237,411 237,411 271,557 341,413
16 90,790 99,361 237,411 237,411 275,968 356,847
17 98,582 108,530 237,411 237,411 280,643 373,646
18 106,685 118,156 237,411 237,411 285,581 391,884
19 115,112 128,264 237,411 237,411 290,783 411,639
20 123,877 138,877 237,411 237,411 296,250 432,997
25 (Age 65) 173,247 200,454 237,411 237,411 327,643 567,305
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,727 $ 2,865 $ 3,003 $ 3,143 $ 1,837 $ 1,975 $ 2,112 $ 2,253
5,500 5,894 6,298 6,713 4,313 4,707 5,111 5,526
8,202 8,964 9,771 10,624 6,716 7,478 8,285 9,137
10,830 12,079 13,435 14,904 9,088 10,336 11,692 13,162
13,382 15,232 17,295 19,588 11,402 13,252 15,315 17,608
15,856 18,420 21,357 24,714 13,717 16,281 19,218 22,575
18,259 21,651 25,642 30,331 16,041 19,434 23,425 28,114
20,590 24,921 30,160 36,480 18,688 23,019 28,259 34,578
22,846 28,230 34,918 43,215 21,777 27,162 33,850 42,147
25,030 31,575 39,932 50,589 25,030 31,575 39,932 50,589
27,133 34,951 45,207 58,654 27,133 34,951 45,207 58,654
29,161 38,353 50,753 67,476 29,161 38,353 50,753 67,476
31,098 41,772 56,572 77,111 31,098 41,772 56,572 77,111
32,943 45,198 62,671 87,621 32,943 45,198 62,671 87,621
34,685 48,619 69,048 99,076 34,685 48,619 69,048 99,076
36,333 52,040 75,724 111,561 36,333 52,040 75,724 111,561
37,878 55,449 82,697 125,160 37,878 55,449 82,697 125,160
39,336 58,854 89,995 139,979 39,336 58,854 89,995 139,979
40,701 62,249 97,623 156,126 40,701 62,249 97,623 156,126
41,986 65,639 105,607 173,720 41,986 65,639 105,607 173,720
46,957 82,139 150,910 287,568 46,957 82,139 150,910 287,568
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$2,036 semi-annually, $1,027 quarterly or $345 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
38
<PAGE>
[EDGARIZER'S NOTE:]
[THE CHAMPION PROSPECTUS ENDS HERE; THE SP-1 PROSPECTUS FOLLOWS]
<PAGE>
- --------------------------------------------------------------------------------
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
LEVEL FACE AMOUNT
[SP-1 LOGO]
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO - 1987 VERSION]
- --------------------------------------------------------------------------------
VM 371 Prospectus Dated September 30, 1987
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST
PRINCIPAL OFFICE LOCATED AT:
787 Seventh Avenue, New York, New York 10019
- --------------------------------------------------------------------------------
HRT 102 PROSPECTUS DATED SEPTEMBER 30, 1987
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
LEVEL FACE AMOUNT
[VARIABLE LIFE INSURANCE LOGO]
[SP LOGO]
- --------------------------------------------------------------------------------
PROSPECTUS DATED
SEPTEMBER 30, 1987
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO - 1987 VERSION]
- --------------------------------------------------------------------------------
This prospectus describes a variable life insurance policy being offered by
Equitable Variable. Your net premium is invested among one or more of the
Divisions of Equitable Variable's Separate Account I.
Each policy owner decides in which Divisions the premium for his or her policy
will be put, after certain deductions have been made.
The Separate Account has the following Divisions:
o Aggressive Stock
o High Yield
o Common Stock
o Balanced
o Money Market
The assets in each Division are invested in shares of corresponding Portfolios
of The Hudson River Trust. The Trust is the successor to The Hudson River Fund,
Inc. pursuant to an Agreement and Plan of Reorganization dated September 30,
1987.
The prospectus for the Trust, which is attached to this prospectus, describes
the investment objectives and policies of each of the Trust Portfolios, as well
as the risks relating to investments in the Trust.
The Death Benefit, Account Value, and Cash Surrender Value of a policy will vary
up or down depending on investment experience of the Divisions, which in turn
depends on the investment performance of the corresponding Portfolios. While
there is no guaranteed minimum Account Value or Cash Surrender Value for a
policy, Equitable Variable guarantees that a policy's Death Benefit will never
be less than its face amount as long as there is no outstanding policy loan.
A policy is serviced through a regional Life Insurance Center. This is the
Administrative Office shown on page 3 of a policy when it is issued. Equitable
Variable's Home Office is 787 Seventh Avenue, New York, New York. Telephone
(212) 714-4643.
REPLACING EXISTING INSURANCE WITH THE POLICY DESCRIBED IN THIS PROSPECTUS MAY
NOT BE TO YOUR ADVANTAGE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS FOR DETAILS ON THE POLICY BEING OFFERED AND KEEP IT
FOR FUTURE REFERENCE. IT IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS
FOR THE HUDSON RIVER TRUST.
- --------------------------------------------------------------------------------
VM-371
Copyright 1987 Equitable Variable Life Insurance Company. All rights reserved.
<PAGE>
- --------------------------------------------------------------------------------
THE PURPOSE OF THE POLICY WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION FOR
A POLICY'S BENEFICIARY.
WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY SIMILAR TO OR COMPARABLE TO A
MUTUAL FUND.
Because we want you to have as much information as possible about our variable
life policy before you buy one, we urge you to examine this prospectus
carefully, and we also urge you to read the attached Trust prospectus. Unless
otherwise stated, this prospectus assumes that there is no outstanding policy
loan.
The first Part of this prospectus contains a summary that will introduce us and
our variable life policy to you. You will find more detailed information in Part
2 and financial statements in Part 3.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART 1 -- SUMMARY
- --------------------------------------------------------------------------------
THE ISSUING COMPANY
We are Equitable Variable Life Insurance Company (Equitable Variable) a New York
stock life insurance company.
- --------------------------------------------------------------------------------
OUR PARENT, EQUITABLE
We are a wholly-owned subsidiary of The Equitable Life Assurance Society of the
United States (Equitable), a New York mutual life insurance company.
- --------------------------------------------------------------------------------
THE POLICY
By this prospectus we are offering a single premium variable life insurance
policy with a level face amount. This is SP-1(TM), Policy Number 85-09.
We also offer, through separate prospectuses, three periodic premium variable
life policies and a flexible premium variable life policy. The net premiums for
SP-1 are invested in our Separate Account I (Separate Account), which in turn
buys shares in The Hudson River Trust (Trust).
- --------------------------------------------------------------------------------
WHY VARIABLE LIFE VARIES
This variable life policy is first and foremost a whole life insurance policy
with Death Benefits, Account Values, Cash Surrender Values and loan privileges
traditionally associated with whole life insurance. It is called "variable"
because, unlike the fixed death benefits of an ordinary single premium whole
life policy, the Death Benefits, Account Values and Cash Surrender Values may
increase or decrease. They do so because your net premium is put into one or
more of the Divisions of our Separate Account. The assets in each Division buy
shares in a corresponding Trust Portfolio. The Separate Account's investment
experience will vary over the years reflecting the investment performance of the
Trust's Portfolios in which it invests.
When the Separate Account's net investment return is greater than the assumed
investment return of 4%, additional amounts of paid-up life insurance are
purchased. This results in additional Death Benefit, Account Value and Cash
Surrender Value. If the Separate Account's net investment return is less than
the assumed investment return, this additional paid-up life insurance may be
lost, resulting in smaller Account Value, Cash Surrender Value and Death
Benefit, but the Death Benefit will never be less than the guaranteed minimum.
- --------------------------------------------------------------------------------
THE SEPARATE ACCOUNT, ITS
INVESTMENTS AND ITS INVESTMENT
EXPERIENCE
Our Separate Account is registered with the 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. For state law purposes the
Separate Account is treated as part of us.
After making certain deductions from premiums, we put the net premium in one or
more of the Divisions of the Separate Account. You decide in which Divisions
your policy's net premium will be put. The Separate Account has the following
Divisions:
o Aggressive Stock
o High Yield
o Common Stock
o Balanced
o Money Market
Each Division invests in shares of a corresponding investment portfolio
(Portfolio) of the Trust. Each Portfolio has a different investment policy.
Throughout this prospectus we will discuss the investment experience of the
Separate Account and the Divisions. On these occasions you should keep in mind
that THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT AND THE DIVISIONS DEPENDS
ON THE INVESTMENT PERFORMANCE OF THE TRUST AND THE CORRESPONDING PORTFOLIOS.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
THE TRUST
The Hudson River Trust is a "series" type of mutual fund registered with the SEC
under the 1940 Act as an open-end diversified management investment company. In
addition to the Portfolios available for investment by Divisions of the Separate
Account, the Trust has a Global Portfolio which currently is not available. The
Trust does not impose a sales charge.
The Trust serves as an investment medium for variable life policies issued by
us, and by insurers affiliated or unaffiliated with Equitable. We are currently
in control of the Trust; however, purchasers of each of these contracts will
also have voting privileges in the Trust. See YOUR VOTING PRIVILEGES.
For a full description of the Trust, including the investment policies and
objectives of the Portfolios, see its prospectus which is attached to this
prospectus and its Statement of Additional Information referred to therein.
- --------------------------------------------------------------------------------
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Equitable Capital Management Corporation (Equitable
Capital), a wholly-owned subsidiary of Equitable. Equitable Capital is
registered with the SEC as an investment adviser under the Investment Advisers
Act of 1940. The Trust pays advisory fees to Equitable Capital based on maximum
annual rates of between 0.40% and 0.55% of the average daily value of the
aggregate net assets of each Portfolio. However, we credit the values of our
SP-1 policies to offset completely the effect on such values of the portion of
the Trust's advisory fees which exceeds a 0.25% annual rate.
- --------------------------------------------------------------------------------
DEATH BENEFITS
The Death Benefit under the policy can go up or down depending on the investment
experience of the Division or Divisions into which you choose to put your net
premium. The guaranteed minimum Death Benefit is the face amount of the policy
regardless of the investment experience of the Divisions. The Death Benefit is
the guaranteed minimum Death Benefit, plus the sum (if positive) of the variable
adjustment amounts (determined annually) in the Divisions in which you have
Account Value.
However, if the Account Value at the date of death, considered as a single
premium, can buy more Death Benefit, then the Death Benefit will be this higher
amount.
See THE VARIABLE ADJUSTMENT AMOUNT, THE GUARANTEED MINIMUM DEATH BENEFIT, and
DEATH BENEFIT BASED ON ACCOUNT VALUE in Part 2.
- --------------------------------------------------------------------------------
ACCOUNT VALUE
Our policy is a whole life policy and it will have both an Account Value and a
Cash Surrender Value. The Account Value of a policy may increase or decrease
daily to reflect the investment experience of the Divisions in which your policy
participates. The Account Value is your net single premium, minus the cost of
insurance and the Separate Account asset charges, plus or minus investment
experience. Unlike the Death Benefit, which has a guaranteed minimum, we do not
guarantee a minimum amount of Account Value. You will bear the entire market
risk for Account Value.
You can request that all or part of your Account Value be transferred between
the Divisions. See YOU CAN TRANSFER ACCOUNT VALUE BETWEEN DIVISIONS in Part 2.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
CASH SURRENDER VALUE
Our policy also has a Cash Surrender Value. The Cash Surrender Value will be
less than the Account Value during the first ten policy years, and will equal
the Account Value thereafter. The difference between the Cash Surrender Value
and the Account Value is considered a contingent deferred sales load. Any
contingent deferred sales load will not be more than 9% of your single premium.
The Cash Surrender Value is not guaranteed.
See CONTINGENT DEFERRED SALES LOAD in Part 2.
- --------------------------------------------------------------------------------
COMMISSIONS
The agent or broker who sells you one of our single premium policies will
receive a commission for the sale equivalent to a maximum of 3% of the single
premium that is payable. (You do not pay any sales charge for shares of the
Trust purchased by the Separate Account). The agent or broker will not receive
commissions in later policy years.
- --------------------------------------------------------------------------------
CHARGES AGAINST PREMIUM
Your total premium after deduction for state premium taxes and a $200
administrative expense charge is put into our Separate Account. The
administrative charge is used to pay administrative expenses.
- --------------------------------------------------------------------------------
CHARGES AGAINST THE
SEPARATE ACCOUNT
The amount in the Divisions credited to your policy is decreased by the cost of
your insurance protection. Also, the investment experience of the Separate
Account reflects a daily charge we make at an effective annual rate of 0.50% of
the value of the assets of the Separate Account for certain mortality and
expense risks.
Any charges against the Divisions will have an impact on whether the Divisions
earn more than the assumed rate of 4% and whether your policy's Death Benefit
increases above the guaranteed minimum.
For more information on the cost of insurance, see HOW WE SUPPORT THE OPERATIONS
OF A POLICY in Part 2.
- --------------------------------------------------------------------------------
CONTINGENT DEFERRED SALES LOAD
We charge a contingent deferred sales load if you surrender your policy before
its 10th anniversary. The charge will be a percentage of the Account Value which
will vary by issue age and sex. The rate will never be more than 9% of the
Account Value and will diminish to zero over the first 10 policy years. In any
event the rate will never be more than 9% of your single premium.
This charge affects your Cash Surrender Value and the amount available for
policy loans. It does not affect Account Value transfers, Separate Account
investment experience or Death Benefits.
See CONTINGENT DEFERRED SALES LOAD in Part 2.
- --------------------------------------------------------------------------------
POLICY LOANS
As a policy owner, you may borrow up to 90% of your policy's Cash Surrender
Value at 5% interest but borrowed amounts are transferred out of the Divisions
and, therefore, not affected by investment experience. We will credit the
assumed interest rate of 4% on the borrowed amounts.
See TAKING A POLICY LOAN in Part 2.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
PREMIUM
You may choose to purchase a policy based on a single premium or an initial face
amount. The size of the initial face amount depends on the single premium, and
the insured's age and sex. The minimum premium for this policy is $2,500.
- --------------------------------------------------------------------------------
CANCELLATION AND
EXCHANGE RIGHTS
You have a limited right to return your policy for cancellation and a full
refund of premium paid. Your request must be postmarked by the latest of
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
Also, within 24 months of a policy's issue date, it may be exchanged for a fixed
single premium whole life insurance policy on the life of the insured without
submitting proof of insurability.
- --------------------------------------------------------------------------------
INCOME TAXES
Any Death Benefit paid under our policy will be fully excludable from the gross
income of the beneficiary for Federal income tax purposes.
We may, in the future, charge the Divisions for any of our income taxes
attributable to the Separate Account.
See THE IMPACT OF TAXES in Part 2.
- --------------------------------------------------------------------------------
MORE INFORMATION
For further information, including illustrations of how the investment
experience of the Separate Account Divisions and the investment performance of
the Trust could cause Death Benefits, Account Values and Cash Surrender Values
to vary, please see Part 2 of this prospectus and the Trust's current
prospectus. Our financial statements are in Part 3 of this prospectus. The
Trust's prospectus contains Condensed Financial Information for the Trust and
its Statement of Additional Information contains its financial statements.
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL
INFORMATION
SEPARATE ACCOUNT I
The tables below show the actual net returns of the Common Stock and Money
Market Divisions of our Separate Account as if the Reorganization discussed
under GENERAL INFORMATION -- PREDECESSORS OF THE TRUST in Part 2 had always been
in effect. The tables show the actual net returns of the predecessors of the
Common Stocks and Money Market Divisions operating as management investment
companies prior to the Reorganization. The same results would have been achieved
if the Separate Account had operated as a unit investment trust investing in The
Hudson River Trust, for all the periods shown, the operations of the Trust
having been as currently reported in the Trust's separate Prospectus and
Statement of Additional Information. The net returns for each Division for the
periods shown assume the Common Stock Division and the Money Market Division
would have received initial policy premium allocations on January 13, 1976 and
August 21, 1981, respectively, the dates on which the predecessors of these
Divisions first received premium allocations under variable life policies. The
tables break the net return into its component parts.
When you examine the tables, remember that the percentages apply to a policy
with its policy year starting on the first day of the periods shown and apply to
a policy that would have been in force throughout the periods shown. Because
they are determined each December 31, the percentages do not reflect the average
net assets in the Divisions during those periods. To get a more complete picture
of the Separate Account and its Divisions you may want to refer to the financial
statements and related notes in the Statement of Additional Information for The
Hudson River Trust.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
COMMON STOCK DIVISION
<TABLE>
<CAPTION>
January 13,
Year Ended December 31, 1976 to
----------------------------------------------------------------------------------------------- December 31,
1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976(a)(b)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income(c) 1.55 % 2.92 % 3.22 % 2.65 % 4.64 % 4.02 % 4.35 % 3.91 % 4.06 % 3.49 % 2.63 %
Net realized
and
unrealized
gain (loss)
on invest-
ments 16.04 % 30.91 % (4.68)% 24.06 % 13.58 % (9.40)% 46.48 % 26.56 % 4.72 % (12.26)% 7.00 %
----- ----- ---- ----- ----- ---- ----- ----- ---- ----- ----
Gross
Return 17.59 % 33.83 % (1.46)% 26.71 % 18.22 % (5.38)% 50.83 % 30.47 % 8.78 % (8.77)% 9.63 %
Expense
charges(c) (.59)% (.74)% (.74)% (.94)% (.95)% (.70)% (1.13)% (.98)% (.81)% (.69)% (.77)%
----- ----- ---- ----- ----- ---- ----- ----- ---- ----- ----
Net Return 17.00 % 33.09 % (2.20)% 25.77 % 17.27 % (6.08)% 49.70 % 29.49 % 7.97 % (9.46)% 8.86 %
===== ===== ==== ===== ===== ==== ===== ===== ==== ===== ====
- --------------------------------------------------------------------------------
<FN>
(a) Date as of which net premiums under the policies were first allocated to
the predecessor of the Division.
(b) The gross return and the net return for the periods indicated are not
annual rates of return.
(c) Subsequent to March 22, 1985, the advisory service fees have been deducted
in arriving at income rather than as an expense charge.
</FN>
</TABLE>
The effective annual net rate of return for the Common Stock Division from
January 13, 1976 to December 31, 1986 was 14.36%. For the same period ended
December 31, 1986, the average annual increase for the Standard and Poor's 500
Stock Index with dividends reinvested was 14.06%. (Standard and Poor's is an
unmanaged index of groups of common stocks.)
- --------------------------------------------------------------------------------
MONEY MARKET DIVISION
<TABLE>
<CAPTION>
Year Ended December 31, August 21, 1981
------------------------------------------------------ to December 31,
1986 1985(d) 1984 1983 1982 1981(a)(b)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income(c) 6.83 % 8.65 % 11.00 % 9.56 % 13.53 % 5.46 %
Net realized and unrealized gain
(loss) on investments 0.03 % (.09)% .42 % (.06)% .03 % .06 %
---- ---- ----- ---- ----- ----
Gross Return 6.86 % 8.56 % 11.42 % 9.50 % 13.56 % 5.52 %
Expense charges(c) (.55)% (.60)% (.84)% (.83)% (.84)% (.35)%
---- ---- ----- ---- ----- ----
Net Return 6.31 % 7.96 % 10.58 % 8.67 % 12.72 % 5.17 %
==== ==== ===== ==== ===== ====
- --------------------------------------------------------------------------------
<FN>
(a) Date as of which net premiums under the policies were first allocated to
the predecessor of the Division.
(b) The gross return and the net return for the periods indicated are not
annual rates of return.
(c) Subsequent to March 22, 1985, the advisory service fees have been deducted
in arriving at income rather than as an expense charge.
(d) Net return for 1985 has been adjusted to reflect a recalculation of the net
return of the Division.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
HYPOTHETICAL
ILLUSTRATIONS
The following illustrations are based on the assumption that the Separate
Account and the Trust had been operating since January 1, 1976 in the same
manner as they operate as a result of the implementation of the Reorganization
described under GENERAL INFORMATION -- PREDECESSORS OF THE TRUST in Part 2. For
illustrations based on various constant hypothetical annual investment returns,
see ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER VALUES,
AND ACCUMULATED PREMIUM in Part 2.
- --------------------------------------------------------------------------------
ILLUSTRATION OF VARIATIONS OF THE
DEATH BENEFIT, THE ACCOUNT VALUE
AND THE CASH SURRENDER VALUE IN
RELATION TO INVESTMENT EXPERIENCE
OF THE COMMON STOCK DIVISION
The following example shows how the net return of the Common Stock Division
would have affected the Death Benefits, Account Values and Cash Surrender Values
of a single premium policy dated January 1, 1976. Assume a single premium of
$25,000 and that the insured was a 40 year old male on January 1, 1976.
- --------------------------------------------------------------------------------
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
($81,932 Face Amount)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Guaranteed
Policy Anniversary on Surrender Minimum
January 1 in Year: Value Account Value Death Benefit Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1977* $24,171 $26,224 $ 85,615 $81,932
1978 21,713 23,353 81,932 81,932
1979 23,835 25,410 81,932 81,932
1980 29,920 31,618 93,868 81,932
1981 46,298 48,487 139,540 81,932
1982 43,575 45,227 126,201 81,932
1983 49,898 51,320 138,888 81,932
1984 63,970 65,188 171,147 81,932
1985 62,235 62,829 160,066 81,932
1986 83,742 83,742 207,077 81,932
1987 98,819 98,819 237,244 81,932
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Reflects net investment income credited at the assumed rate of 4% from January
1, 1976 to January 12, 1976, and an actual rate of return for the Common Stock
Division assuming the investment performance of the Trust's Common Stock
Portfolio was the same as our pre-Reorganization Separate Account I starting
January 13, 1976. Net annual premiums under variable life policies were first
put into our pre-Reorganization Separate Account I on January 13, 1976.
</FN>
</TABLE>
Remember, this example of past investment performance is for a specific age,
sex, premium amount and policy anniversary. Also, the policy described in this
prospectus was not available in 1976. The benefits illustrated under this policy
are calculated on the policy anniversary and do not represent the average net
investment performance of our pre-Reorganization Separate Account I during the
policy year. Past investment performance should not be deemed a representation
of future investment experience of the Division or investment performance of the
Trust.
The difference between the Account Value and the Cash Surrender Value is the
contingent deferred sales load.
This example assumes that the net single premium and related Account Values and
Cash Surrender Values are 100% in the Common Stock Division for the entire
period.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
ILLUSTRATION OF VARIATIONS OF THE
DEATH BENEFIT, THE ACCOUNT VALUE
AND THE CASH SURRENDER VALUE IN
RELATION TO INVESTMENT EXPERIENCE
OF THE MONEY MARKET DIVISION
The following example shows how the net return of the Money Market Division
would have affected the Death Benefits, Account Values and Cash Surrender Values
of a single premium policy dated January 1, 1982. Assume a single premium of
$25,000 and that the insured was a 40 year old male on January 1, 1982.
- --------------------------------------------------------------------------------
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
($81,932 Face Amount)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Guaranteed
Policy Anniversary on Surrender Minimum
January 1 in Year: Value Account Value Death Benefit Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1983 $25,074 $27,204 $ 88,814 $81,932
1984 27,305 29,366 92,864 81,932
1985 30,227 32,225 98,726 81,932
1986 32,674 34,527 102,505 81,932
1987 34,784 36,429 104,839 81,932
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This example reflects Money Market Division investment experience assuming the
investment performance of the Trust's Money Market Portfolio was the same as our
pre-Reorganization Separate Account II starting January 1, 1982. Net premiums
under variable life policies were first put into our pre-Reorganization Separate
Account II on August 21, 1981.
Remember, this example of past investment performance is for a specific age,
sex, premium amount and policy anniversary. Also, the policy described in this
prospectus was not available in 1982. The benefits illustrated under this policy
are calculated on the policy anniversary and do not represent the average net
investment performance of our pre-Reorganization Separate Account II during the
policy year. Past investment performance should not be deemed a representation
of future investment experience of the Division or future investment performance
of the Trust.
The difference between the Account Value and the Cash Surrender Value is the
contingent deferred sales load.
This example assumes that the net premium and related Account Values and Cash
Surrender Values are 100% in the Money Market Division for the entire period.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
PART 2 -- DETAILED INFORMATION
- --------------------------------------------------------------------------------
GENERAL INFORMATION
ABOUT US
We are Equitable Variable. We were organized in 1972 in New York State as a
stock life insurance company and are authorized to sell life insurance and
annuities there. We also are authorized to sell life insurance and annuities in
other jurisdictions. In January of 1976 we began selling periodic premium
variable life policies, and two years later, in January of 1978, we began
selling fixed annuity contracts.
In 1983 we began selling a form of fixed life insurance policy, the Equitable
Life Account. In 1983 we also began selling single premium variable life
policies. In 1986 we began selling an individual flexible premium variable life
policy designed to provide insurance coverage with flexibility in death benefits
and premium payments. We also sell two types of term insurance policies, fixed
single premium life insurance policies and universal life insurance policies. At
the end of 1986 we had approximately $9.7 billion face amount of variable life
insurance in force and $47.1 billion of fixed life insurance in force (and about
$1.9 billion of fixed annuity payment obligations).
Policy owners who have our variable life policies on a single premium basis, as
well as on a periodic premium basis, have monies placed in our Separate Account.
Our financial statements including those of our continuing Separate Account are
in Part 3.
- --------------------------------------------------------------------------------
EQUITABLE
Equitable is a New York mutual life insurance company that has its home office
at 787 Seventh Avenue, New York, N.Y. 10019.
Equitable has been in business since 1859. Equitable's total assets make it the
third largest life insurance company in the United States. At December 31, 1986
these assets were approximately $55 billion. Equitable is also one of the
largest managers of retirement fund assets. At December 31, 1986, Equitable and
its subsidiaries were managing pension fund assets of $66.2 billion and total
assets of $102.7 billion. These assets include amounts in our General Account,
Equitable's General Account and separate accounts, and other accounts managed by
Equitable and Equitable Capital.
On December 31, 1986, Equitable Capital was managing approximately $30 billion
in assets. Equitable Capital acts as an investment adviser to various separate
accounts and general accounts of Equitable and other affiliated insurance
companies. Equitable Capital also provides management and consulting services to
mutual funds, endowment funds, insurance companies, foreign entities, and
non-tax-qualified corporate funds, pension and profit-sharing plans, foundations
and tax-exempt organizations.
Between the time we were organized and the end of December 1986, Equitable
invested over $570 million in us. This money has been used to help us meet
operational costs and policy reserve requirements.
Equitable probably will invest more money in us in the future although it has no
legal obligation to do so. Its assets do not back benefits that may be paid
under the policy discussed in this prospectus.
In December, 1984, Equitable acquired Donaldson, Lufkin & Jenrette, Inc. (DLJ).
A DLJ subsidiary, Donaldson, Lufkin & Jenrette Securities Corporation, is one of
the nation's largest investment banking and securities firms. Another DLJ
subsidiary, Autranet, Inc., is a securities broker that markets independently
originated research to institutions. Through the Pershing Division of Donaldson,
Lufkin & Jenrette Securities Corporation, DLJ supplies correspondent services,
including order execution, securities clearance and other centralized financial
services, to approximately 300 independent regional securities firms and 100
banks. To the extent permitted by law, Equitable, Equitable Variable and their
separate accounts and affiliated companies, several of which are registered
investment companies (including the Trust), may engage in securities and other
transactions with the various entities mentioned in the preceding paragraph or
may invest in shares of investment companies with which those entities have
affiliations.
- --------------------------------------------------------------------------------
REGULATION
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to insurance laws and regulations in every jurisdiction
where we sell our policies. We submit annual reports on our operations and
finances to insurance officials in these jurisdictions. The officials are
responsible for reviewing our reports to be sure we are financially sound and
that we are complying with applicable laws and regulations.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
Our single premium variable life policy has been approved in 50 states and the
Virgin Islands.
We are also subject to various Federal securities laws and regulations.
- --------------------------------------------------------------------------------
THE TRUST
The Hudson River Trust currently issues six series or classes of shares, each of
which represents an interest in one of the Trust's Portfolios. Shares of the
Aggressive Stock, High Yield, Common Stock, Balanced and Money Market Portfolios
are purchased and redeemed by the corresponding Separate Account Division. The
Global Portfolio is not available for investment under SP-1. The Trust sells and
redeems its shares at net asset value. It does not impose a sales charge.
The Trust serves as an investment medium for variable life policies issued by us
and by insurers affiliated or unaffiliated with Equitable. We currently do not
foresee any disadvantages to our policy owners arising out of this. However, the
Trust's Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts that possibly may arise and to determine what
action, if any, should be taken in response. If we believe that the Trust's
response to any of those events insufficiently protects our policy owners, we
will see to it that appropriate action is taken to protect our policy owners.
Also, if we ever believe that any of the Trust's Portfolios is so large as to
materially impair the investment performance of a Portfolio or the Trust, we
will examine other investment options.
The Trust's shares will be sold only to separate accounts of insurance
companies. Since we are the only insurance company now investing in the Trust,
we are currently in control of the Trust. We owned approximately $475 million
worth of the Trust's shares as of December 31, 1986, and will continue to
control the Trust at least until other insurance companies, selling significant
amounts of variable insurance products, have made substantial investments in
Trust shares.
The Trust's address is 787 Seventh Avenue, New York, New York 10019. The
custodian of the securities and other assets of the Trust is The Chase Manhattan
Bank, N.A.
The Trust, its investment objectives and policies, its risks, expenses,
organization and other aspects of its operations are described in more detail in
its prospectus, which is attached to this prospectus, and in a Statement of
Additional Information which may be obtained free of charge by written request
to the Trust at 787 Seventh Avenue, New York, New York 10019. Please carefully
read the Trust's prospectus.
- --------------------------------------------------------------------------------
PREDECESSORS OF THE TRUST
Pursuant to a Plan of Reorganization (Reorganization) approved at a meeting of
our policy owners held on February 14, 1985, effective as of March 22, 1985, we
restructured our Separate Accounts I and II into one separate account in unit
investment trust form. To accomplish this restructuring, we converted our then
existing Separate Account I, a Common Stock Account, and Separate Account II, a
Money Market Account, into our continuing Separate Account I with two investment
divisions: the Common Stock Division and the Money Market Division. On March 22,
1985, all of the assets and related liabilities of our former Separate Accounts
I and II were transferred to the Common Stock and Money Market Portfolios of The
Hudson River Fund, Inc. respectively, in exchange for shares in the Portfolios,
and we ceased to be an investment adviser of our continuing Separate Account.
The Reorganization did not change the policy values of then outstanding
policies.
On September 30, 1987, pursuant to an Agreement and Plan of Reorganization
approved by policyowners, The Hudson River Fund, Inc., a Maryland corporation,
was reorganized as a Massachusetts business trust and its name was changed to
The Hudson River Trust. Refer to the Prospectus for the Trust for further
information.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES OF
THE PORTFOLIOS
Each Portfolio of the Trust has a different investment objective which it tries
to achieve by following separate investment policies. The objectives and
policies of each Portfolio will affect its return and its risks. The policies
and objectives of the Portfolios available for investment under SP-1 are as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Investment Policy Objective
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HIGH YIELD Primarily a diversified mix of high yield, High return by maximizing current income
fixed income securities involving greater and, to the extent consistent with that
volatility of price and risk of principal objective, capital appreciation
and income than high quality fixed income
securities
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Investment Policy Objective
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AGGRESSIVE STOCK Primarily common stocks and other equity-type Long-term growth of capital
securities issued by medium and smaller sized
companies with strong growth potential
COMMON STOCK Primarily common stock and other equity-type Long-term growth of capital and increasing
instruments income
BALANCED Common stocks, publicly-traded debt High return through a combination of
securities and high quality money market current income and capital appreciation
instruments
MONEY MARKET Primarily high quality short-term money High level of current income while
market instruments preserving assets and maintaining liquidity
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There is no guarantee that these objectives will be achieved.
- --------------------------------------------------------------------------------
THE TRUST'S INVESTMENT
ADVISER
The Trust is advised by Equitable Capital, a wholly-owned subsidiary of
Equitable. Equitable Capital is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940. Equitable Capital's address is 1285
Avenue of the Americas, New York, New York 10019.
We make a daily credit to the values of the divisions of the Separate Account to
offset completely the effect on such values of the portion of the Trust's
investment advisory fees which exceed a 0.25% effective annual rate and all
other Trust expenses except (a) all brokers' commissions, transfer taxes and
other fees and expenses for services relating to purchases and sales of
Portfolio investments and (b) any Trust income tax liabilities. Equitable
Capital provides services pursuant to an investment advisory agreement for a fee
based on the following maximum effective annual percentages of the average daily
value of the aggregate net assets of each of the Portfolios. These annual
percentages for the Portfolios corresponding to the Divisions available for
investment under SP-1 are: 0.40% for the Common Stock, Balanced and Money Market
Portfolios, 0.50% for the Aggressive Stock Portfolio and 0.55% for the High
Yield Portfolio.
- --------------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUM
The amount of premium for a standard mortality risk policy put into the Separate
Account's Divisions is the total single premium minus a $200 administrative
charge and a charge for state premium taxes. This is the net single premium that
is then put into the Separate Account. We do this as of the date of your
application if the application and the premium are received at our Regional
Service Center within 10 days after you sign the application. If the application
and the premium are received more than 10 days from the date you sign the
application, the net single premium will be put into the Separate Account when
received.
A summary of the charges against the single premium follows.
- --------------------------------------------------------------------------------
ADMINISTRATIVE EXPENSE CHARGE
We charge $200 for administrative expenses. These include:
o processing applications;
o establishing policy records;
o conducting medical examinations;
o determining insurability;
o processing claims, paying Cash Surrender Values, and making policy changes;
o record keeping;
o communicating with policy owners; and
o other expenses and overhead.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
STATE PREMIUM TAX CHARGE
We deduct an amount from your single premium to cover state and local premium
taxes payable by us. These taxes vary from state to state and also vary in some
areas by municipalities and counties. Taxes currently range up to 4%.
- --------------------------------------------------------------------------------
EXAMPLE OF DEDUCTIONS FROM
PREMIUM
The following (using the policies shown in the ILLUSTRATIONS OF DEATH BENEFITS,
ACCOUNT VALUES AND CASH SURRENDER VALUES, AND ACCUMULATED PREMIUM) shows what
amount of net single premium would be put into the Separate Account at the start
of the first policy year. A policy's actual Account Value and Cash Surrender
Value are related to the policy's net single premium.
- --------------------------------------------------------------------------------
NET SINGLE PREMIUMS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
State Male or Female Male or Female Male or Female Male or Female
Premium Issue Age 5 Issue Age 25 Issue Age 40 Issue Age 55
Tax ($10,000 Premium) ($20,000 Premium) ($25,000 Premium) ($50,000 Premium)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0% $9,800 $19,800 $24,800 $49,800
1% 9,700 19,600 24,550 49,300
2% 9,600 19,400 24,300 48,800
3% 9,500 19,200 24,050 48,300
4% 9,400 19,000 23,800 47,800
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There is no sales load deducted from the single premium. There will never be a
sales load deducted unless you surrender your policy for its Cash Surrender
Value in the first 10 policy years or exchange your policy for a fixed life
policy. See CONTINGENT DEFERRED SALES LOAD.
To the extent sales expenses are not covered by the sales loads, we will recover
them from funds other than premium deductions.
- --------------------------------------------------------------------------------
CONTINGENT DEFERRED
SALES LOAD
There is a difference between the Account Value and the Cash Surrender Value of
our policy in the first ten policy years. This difference is a contingent
deferred sales load against your Account Value decreasing from between 8% and 9%
in the first policy year to zero in the 10th policy year. The initial percentage
depends on the insured's age and sex. The percentage decreases evenly over the
first 10 policy years. This charge is designed to recover expenses of
distributing policies which are terminated by surrender in their early years. It
will never be greater than 9% of your single premium.
We charge the contingent deferred sales load if you surrender your policy in the
first ten years and receive its net Cash Surrender Value.
Since the loan value of the policy is based on the amount of Cash Surrender
Value rather than on the Account Value, the contingent deferred sales load has
the effect of reducing the amount available for a policy owner to borrow under a
policy.
The contingent deferred sales load is not imposed on Account Value transfers
between Divisions, Separate Account investment experience, Death Benefits or
exchanges to fixed benefit policies.
- --------------------------------------------------------------------------------
OUR SEPARATE ACCOUNT
AND ITS DIVISIONS
Our Separate Account is registered with the SEC as a unit investment trust,
which is a type of investment company. This does not involve any supervision by
the SEC of the management or investment policy or practices of the Separate
Account. For state law purposes the Separate Account is treated as a part of us.
After making certain deductions from premiums, we put your net premium in one or
more Divisions of our Separate Account. You decide in which Divisions your
policy's net premium will be put. (Also, you have certain voting privileges with
respect to the Trust shares held in the Divisions. See YOUR VOTING PRIVILEGES.)
Each Division invests in shares of a corresponding investment Portfolio of the
Trust. The Separate Account also invests income or capital gains dividends
received from the Trust in shares of the Trust.
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12
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The Separate Account purchases and redeems shares of the Trust at their net
asset value per share. The Separate Account's assets are allocated among the
Divisions in accordance with the allocations of the net premium invested in the
Separate Account and the earnings on those assets. Also, liabilities of the
Separate Account will be allocated to the Division to which they relate. Accrued
liabilities that are not allocable to one Division will be allocated to the
Divisions in proportion to their relative net assets. In the unlikely event that
any Division incurred liabilities in excess of its assets, the other Divisions
could be liable for such excess.
Each Portfolio has a different investment policy (see THE TRUST). You should
keep in mind that the investment experience of the Separate Account and the
Divisions depends on the investment performance of the Trust and the
corresponding Portfolios. Also, values of SP-1 policies are increased to
compensate policy owners for their share of Trust expenses in excess of the sum
of (1) expenses for brokers' commissions, transfer taxes and other fees relating
to purchases and sale of Portfolio investments, (2) fees for advisory services
at an annual rate equivalent to 0.25% of the average daily value of the
aggregate net assets of the Portfolios and (3) Trust income taxes, if any.
The Common Stock Division of our Separate Account superseded our
pre-Reorganization Separate Account I, which was established on June 28, 1973.
The Money Market Division of our Separate Account superseded our
pre-Reorganization Separate Account II, which was established on December 12,
1980. Both pre-Reorganization Separate Accounts were established under the
insurance law of New York State as separate investment accounts. Assets that
were used to provide money to pay benefits under our variable life policies were
allocated to the pre-Reorganization Separate Accounts from time to time. As a
result of the Reorganization, those assets and additional assets to be received
from premiums under in-force policies and future policies, will be allocated to
the Separate Account Divisions from time to time and used to provide money to
pay benefits under our variable life policies.
Any increase or decrease in a policy's Death Benefit, Account Value or Cash
Surrender Value will reflect the investment experience of the Division where you
have Account Value, which in turn will depend upon the investment performance of
the corresponding Portfolio of the Trust. (It will not be affected by the
experience of the other Divisions unless you have Account Value in other
Separate Account Divisions.)
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HOW WE SUPPORT THE OPERATIONS
OF A POLICY
We support the operations of a policy by putting the net single premium (which
is the single premium less the charges described under DEDUCTIONS FROM PREMIUM)
into the Separate Account Division or Divisions as the policy owner chooses. We
do this when the policy is issued.
Once the net single premium is placed into the Divisions we charge for the cost
of insurance based on the attained sex and age for the amount at risk. The
amount at risk on policy anniversaries is the Death Benefit payable less the
Account Value in the Divisions (adjusted for any loans). The cost of insurance
deducted from the amount in the Divisions is based on the 1980 Commissioners'
Standard Ordinary Mortality Table, and generally increases with attained age.
The cost of insurance differs in each year because, based on this mortality
table, the probability of death generally increases with attained age and the
amount at risk is different year by year. The dollar amount of the cost of
insurance also depends on investment experience of the Divisions in which a
policy participates.
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SEPARATE ACCOUNT ASSETS ARE OUR
PROPERTY
The assets of the Separate Account are our property. However, New York Insurance
Law provides that the portion of Separate Account's assets that relates to
variable life policies may not be used to satisfy any obligations that may arise
out of any other business we conduct, although under certain circumstances one
Division could be liable for claims arising out of the other Divisions'
operations.
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13
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We permit money from charges owed to us to stay in the Divisions and accumulate.
These accumulated amounts are in excess of each Division's net assets attributed
to variable life policies. These amounts belong to us.
There probably will be more assets in the Separate Account than those that apply
to our variable life policies. We expect to transfer part or all of the excess
to our General Account. These transfers will be in cash, but before we make them
we will consider whether the transfer could have any adverse effect on the
Separate Account. In 1986 we made no such transfer to our General Account.
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CHARGES AGAINST THE
SEPARATE ACCOUNT
The amount in the Separate Account Divisions in which your policy participates
is further decreased (after the following charges) by the cost of your insurance
protection. See HOW WE SUPPORT THE OPERATIONS OF A POLICY.
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CHARGES FOR MORTALITY AND
EXPENSE RISKS
We charge the Separate Account for the mortality and expense risks we assume.
The charge is made daily at an effective annual rate of 0.50% of the value of
each Division's assets that are attributable to variable life policies.
The mortality risk we assume is that insureds may live for shorter periods of
time than we estimated. If this occurs, we have to pay a greater amount of death
benefits than we expected in relation to the premiums we received.
The expense risk we assume is that our costs of issuing and administering
policies may be more than we estimated.
The money we collect from this charge may exceed the amount needed to cover
benefits and expenses and would be our gain.
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OTHER CHARGES
The Separate Account purchases shares of the Trust at their net asset value. The
net asset value of those shares reflects management fees and other expenses
already deducted from the assets of the Trust that are briefly described under
THE TRUST. More detailed information about the Trust is in its prospectus and
its Statement of Additional Information.
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YOUR VOTING
PRIVILEGES
GENERAL
As we have already said, all assets held in the Divisions are invested in shares
of the corresponding Portfolios of the Trust. We are the legal owners of those
shares and as such have the right to vote upon certain matters at any meeting of
the Trust's shareholders that may be held. Among other things, we may vote on
any matters described in the Trust's prospectus or Statement of Additional
Information or requiring a vote by shareholders under the 1940 Act.
However, in accordance with our view of current Federal securities law
requirements, we will offer you the opportunity to instruct us as to how Trust
shares allocable to your policy and held by us in the Separate Account will be
voted on these matters. We will vote the shares of the Trust at meetings of
shareholders of the Trust in accordance with your instructions. Thus, you will
have the right to have a voice in the affairs of the Trust. Trust shares held in
each Division of the Separate Account for which no timely instructions from
policy owners are received will be voted by us in the same proportion as shares
in that Division for which instructions are received. We will also vote any
Trust shares that we are entitled to vote directly due to amounts we have
accumulated in the Separate Account in the same proportions that all policy
owners vote, including those who participate in other separate accounts. See
YOUR VOTING PRIVILEGES -- VOTING INSTRUCTIONS OF OTHER SEPARATE ACCOUNT
PARTICIPANTS.
Each policy having a voting interest will be sent proxy material and a form for
giving voting instructions. If required by state insurance officials, we may
disregard voting instructions if those instructions would require shares to be
voted so as to cause a change in the investment objectives or policies of one or
more of the Trust's Portfolios, or to approve or disapprove an investment policy
or investment adviser of one or more of the Trust's Portfolios. In addition, we
may disregard voting instructions in favor of changes initiated by a policy
owner or the Trust's Board of
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14
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Trustees in the investment policy or the investment adviser of a Portfolio,
provided that our disapproval of the change is reasonable and is based on a good
faith determination that the change would be contrary to state law, the proposed
advisory fee would be higher than we are permitted to pay by the terms of our
variable life policies, or the charge would lead to an adverse effect on our
general account because it would result in unsound or overly speculative
investments. We will advise policy owners if we do disregard voting
instructions, and give our reasons for such actions in the next semiannual
report we send to policy owners.
All Trust shares of whatever class are entitled to one vote, and the votes of
all classes are cast on an aggregate basis, except on matters where the
interests of the Portfolios differ. In such a case, the voting is on a
Portfolio-by-Portfolio basis. Approval or disapproval by the shareholders in one
Portfolio on such a matter would not generally be a prerequisite of approval or
disapproval by shareholders in another Portfolio; and shareholders in a
Portfolio not affected by a matter generally would not be entitled to vote on
that matter. Examples of matters which would require a Portfolio-by-Portfolio
vote are changes in the fundamental investment policy or restrictions of a
particular Portfolio and approval of the investment advisory agreement.
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VOTING INSTRUCTIONS OF OTHER
SEPARATE ACCOUNT PARTICIPANTS
Net premiums for our individual flexible premium variable life policy and
premiums from our variable life insurance policy with additional premium option
are invested in our Separate Account FP, which, in turn, invests in the Trust.
In addition, Trust shares are held by other separate accounts established by us
and other insurance companies affiliated and unaffiliated with us. We expect
that those shares will be voted through those separate accounts in accordance
with instructions of their participants. This will dilute the effect of the
voting instructions of policy owners whose net premiums are invested in the
Separate Account.
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DETERMINING THE TRUST PORTFOLIO
FOR WHICH YOU CAN GIVE VOTING
INSTRUCTIONS
If all your Account Value is in one Division, you can participate in the voting
only for the shares in the Trust Portfolio that corresponds to that Division. If
your Account Value is divided among the Divisions, you are entitled to
participate in the voting of the shares of the Trust Portfolios that correspond
to each Division in which you have Account value.
The number of Trust shares held in each Division attributable to your policy for
purposes of your voting privilege will be determined by dividing your policy's
Account Value (less any policy indebtedness) allocable to that Division by the
net asset value of one share of the corresponding Trust Portfolio as of the
record date for the Trust's shareholder meeting. The record date for this
purpose will not be more than 90 days before the meeting of the Trust.
Fractional shares are counted.
EXAMPLE: Your policy has an Account Value of $3,000, 50% of which is
attributable to the Common Stock Division and 50% of which is attributable to
the Money Market Division. Assuming the net asset value of one share in each
Trust Portfolio is $100, you would have the privilege of voting 30 shares. You
will have the privilege of instructing us regarding 15 votes in each Division.
EXAMPLE (ASSUMING AN OUTSTANDING LOAN): Your policy has an Account Value of
$3,000, which entitles you to 30 votes. If you have a $1,000 loan (including
interest due) equally allocated between each Division, you would be entitled to
10 votes in each Division, or an aggregate of 10 fewer votes.
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LAW CHANGES MAY AFFECT
YOUR VOTING PRIVILEGES
Our Separate Account is required by Federal securities laws or regulations as
currently interpreted to have policy owners instruct us as to the Trust's voting
rights. However, if amendments to or interpretations of those laws or
regulations change what must be voted on, or restrict the matters for which
policy owners are given the opportunity to provide voting instructions, we will
in turn change what is submitted to policy owners.
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15
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OUR RIGHTS
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. We will always attempt to comply
with applicable laws before we take any of these actions. If necessary, we will
seek approval by policy owners.
Specifically we reserve the right to:
o add Divisions to or remove Divisions from the Separate Account;
o combine any two or more Divisions within the Separate Account;
o transfer assets of the variable life policy offered by this prospectus, as
well as the assets of our other variable life policies, from one Division to
another (if we do, we will withdraw proportional amounts of each investment
in the Division, but we will also make whatever adjustments are needed to
avoid odd lots and fractions);
o operate the Separate Account as a management investment company under the
1940 Act, or in any other form the law allows (if we do, we may invest the
assets in any legal investments and we or one of our affiliates, such as
Equitable Capital, will serve as investment adviser);
o end the registration of the Separate Account under the 1940 Act; or
o operate the Separate Account under the general supervision of a Committee
made up of individuals all of whom may be, under the 1940 Act, interested
persons of us or of Equitable or discharge such Committee.
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SUBSTITUTION OF TRUST SHARES
Although we believe it to be highly unlikely, it is possible that, in our
judgment, one or more of the Portfolios of the Trust may become unsuitable for
investment by the Separate Account because, for example, of a change in the
investment policy, or a change in the tax laws, or because the shares are no
longer available for investment. For those or other reasons, we may seek to
substitute the shares of another Portfolio or of an entirely different mutual
fund. Before we can do this, we would obtain the approval of the SEC, and
possibly one or more state insurance departments, to the extent legally
required.
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DEATH BENEFITS UNDER
OUR POLICIES
The Death Benefit is the amount payable to the named beneficiary when the
insured dies. All or part of the Death Benefit can be paid in cash or applied
under one or more of our payment options described under PAYMENT OPTIONS.
The Death Benefit will at least equal the guaranteed minimum of insurance.
Whether the Death Benefit is higher than the guaranteed minimum depends on the
investment experience of the Divisions in which a policy participates. See the
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER VALUES, AND
ACCUMULATED PREMIUM.
The Death Benefit is the higher of the guaranteed minimum Death Benefit, plus
the sum (if positive) of the variable adjustment amounts (determined annually)
in the Divisions in which you have Account Value, or the insurance coverage that
can be purchased by the Account Value at the date of death.
The amount of Death Benefit actually paid to the insured's beneficiary will be
adjusted as of the date of the insured's death to reflect:
o any policy loans together with accrued interest;
o the insured's suicide within 2 years after the policy's date of issue. See
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY; and
o any material misstatement in the application for insurance, including a
misstatement of the insured's age or sex. See LIMITS ON OUR RIGHT TO
CHALLENGE THE POLICY.
Interest will be paid from the date of death to the date the Death Benefit is
paid at the annual rate that we are paying under the deposit option described in
PAYMENT OPTIONS.
If you sign an application and send us money, and if the person proposed to be
insured dies between the application date and the date we act on the
application, we have a special rule. Should we decide the proposed insured was
insurable and accept the application, we will pay the initial face amount to the
proposed beneficiary.
- --------------------------------------------------------------------------------
THE GUARANTEED MINIMUM DEATH
BENEFIT
The guaranteed minimum Death Benefit equals a policy's initial face amount
regardless of the investment experience of the Divisions in which a policy
participates.
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16
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THE VARIABLE ADJUSTMENT AMOUNT
The variable adjustment amount for each Division is the amount of the Death
Benefit that results from all past investment experience of that Division. In
the first policy year, the variable adjustment amount in each Division is zero.
After that, the variable adjustment amount is the amount of insurance purchased
by the difference between the actual rate of return and 4%. Therefore, a
Division's variable adjustment amount will not change in any year that the
Division's gross return minus the charges to the Division results in a net
return of 4%. If the net return is more than 4%, that variable adjustment amount
will increase. The variable adjustment amount will increase because additional
amounts of paid-up life insurance are purchased. If the net return is less than
4%, it will decrease. The variable adjustment amount will decrease because these
additional amounts of paid-up life insurance are lost. The rates at which these
additional amounts of paid-up life insurance are purchased or lost are based on
sex and attained age and are guaranteed.
The percentage change in the Death Benefit for any year is not the same as the
net return for the preceding year and it is not necessarily related to current
or future rates of inflation. The Death Benefit is equal to the guaranteed
minimum Death Benefit plus the sum (if positive) of the variable adjustment
amounts for each Division in which you have funds. However, even if the sum of
the variable adjustment amounts is negative, the Death Benefit will never be
less than the guaranteed minimum.
In any year that the sum of the variable adjustment amounts increases (and is
positive), the Death Benefit will increase. If the sum of the variable
adjustment amounts is negative, investment experience can not increase the Death
Benefit above the guaranteed minimum until it has increased the variable
adjustment amount of at least one Division so that the sum is positive. In any
year that the sum of the variable adjustment amounts for the Divisions in which
the policy participates decreases, the Death Benefit will decrease, unless it is
already at the guaranteed minimum.
The variable adjustment amount for each Division is set on each policy
anniversary. Once set, it remains the same for the following policy year. If it
is set above the guaranteed minimum, we will be responsible for keeping it at
that level until the next policy anniversary. You will bear the risk that it
could drop on the next policy anniversary (but not below the guaranteed
minimum). In addition, if the Account Value at the date of death, considered as
a single premium, can buy more Death Benefit than what was calculated at the
beginning of the policy year, this increased Death Benefit will be paid.
There is no guarantee that a Division's investment experience, which will
reflect the investment performance of the corresponding Portfolio of the Trust,
will be sufficient to result in an increase in Death Benefits. However, the
historical pattern of stock performance has been one of long-range growth, and
money market investments in recent years have returned more than 4%.
THE VARIABLE ADJUSTMENT AMOUNT IS CUMULATIVE. Increases and decreases in the
variable adjustment amount are carried into each succeeding year. The variable
adjustment amount for a Division can be positive or negative. If it is positive,
good investment experience will produce a larger variable adjustment amount. If
it is negative, good investment experience must first offset the current
negative variable adjustment amount before there can be a positive amount.
EXAMPLE: You were a 40 year old male when your policy was issued. Assume a
hypothetical gross annual investment return of 0% for the first 4 policy years.
This results in a negative variable adjustment amount. A net return of
approximately 25.4% in the 5th policy year would offset the cumulative negative
variable adjustment amount so that it would equal zero. Any net return above
that would produce a positive variable adjustment amount. On the other hand, the
negative variable adjustment amount may be offset over a number of years. Thus,
if the gross return in the 5th policy year were 8%, (equivalent to 7.19% net), a
gross return of 8% in each of the 6 following policy years would be required to
produce a positive variable adjustment amount by the 12th policy year.
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17
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For a given net return, the greater the Account Value in a Division, the greater
the effect of investment experience on the variable adjustment amount.
Therefore, in later policy years, when your total Account Value may be greater,
investment experience may have a greater effect on the Death Benefit.
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THE DEATH BENEFIT
BASED ON ACCOUNT
VALUE
If the Account Value increases at an annual rate of more than 4% between the
beginning of the policy year and the date of death, the Death Benefit will be
greater than the amount determined at the beginning of the policy year. This is
because we see how much insurance the Account Value would buy if it were
considered as a single premium.
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NET RETURN
The Death Benefit based on a Division's net return is set on each policy
anniversary. The net return depends on the investment experience of the Division
from the first day of that policy year to the first day of the next policy year.
It takes into account investment income, capital gains and capital losses
(whether realized or unrealized), with respect to Trust shares owned by the
Division and gains resulting from the reimbursement by us to the Division of
amounts corresponding to certain Trust expenses. The charges against the
Division are then deducted to determine the net return. The net return on a date
during a policy year depends on the investment experience of the Division from
the first day of that policy year to that date and can affect Account Values,
Cash Surrender Values and Death Benefits.
The net return of each Division is determined at the close of trading on each
day in which the degree of trading in the corresponding Portfolio of the Trust
might materially affect the net return of that Division. We call this a
"business day". Normally this would be each day that the New York Stock Exchange
is open. However, because we are closed on Martin Luther King Day and the Friday
after Thanksgiving Day, no determination will be made on those days.
The assets of each Division are valued by multiplying the number of Trust shares
in each Division by the net asset value of such shares and is adjusted by the
charge for mortality and expense risks. See the financial statements for the
Separate Account in this prospectus.
The net return for a policy year is not the same as for a calendar year unless
the policy anniversary is January 1.
A statement of the method we use to calculate net return is an exhibit to the
Registration Statement we filed with the SEC. It will be furnished on request.
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HOW THE DEATH BENEFIT VARIES
FROM THE GUARANTEED MINIMUM
The following example shows how the Death Benefit varies from the guaranteed
minimum as a result of investment experience. Assume that the insured was a 40
year old male when the policy was issued, and the hypothetical gross annual
return for each of the first 6 policy years was 8% for each Division or their
combination (which is equal to a net return of 7.19%). Use the amounts from the
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER VALUES, AND
ACCUMULATED PREMIUM.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Variable
Guaranteed Adjustment Death
Minimum + Amount = Benefit
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
End of policy year 5 $81,932 $13,468 $95,400
Increase -- 2,951 2,951 (3.1% increase)
- ------------------------------------------------------------------------------------------------------------------------------------
End of policy year 6 $81,932 $16,419 $98,351
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
If the gross annual return was 0% (equal to a net return of -.75%), the Death
Benefit at the end of policy year 6 would have been $91,006 (a 4.6% decrease).
This reflects a decrease in the variable adjustment amount of $4,394.
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18
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ACCOUNT VALUES, CASH
SURRENDER VALUES AND
LOAN PRIVILEGES UNDER
OUR POLICIES
HOW WE DETERMINE ACCOUNT VALUE
When your policy is issued, your total Account Value is your total single
premium net of deductions. See DEDUCTIONS FROM PREMIUM. On dates other than at
issue, the total Account Value is the sum of the funds allocated to each
Division. The funds in each Division, on any date other than a policy
anniversary, are the sum of (1) the portion of the tabular Account Value for
that date attributable to that Division, (2) the aggregate net single premium on
that date for the variable adjustment amount, (3) adjustments to reflect
investment experience of the Division from the last policy anniversary to that
date and (4) adjustments to reflect charges to the Separate Account, cost of
insurance charges and transfers to and from that Division from the last policy
anniversary to that date. The tabular Account Value is what the Account Value
for the policy would be if each Division in which you had funds had a constant
net investment return of 4% a year. On each policy anniversary, the policy's net
investment return in excess of 4% per year is used as a net single premium to
purchase additional paid up variable life insurance (see THE VARIABLE ADJUSTMENT
AMOUNT and NET RETURN). The net single premium is the one time net cost for your
sex and attained age to purchase one dollar of Death Benefit, as specified in
your policy. On each policy anniversary, the process begins again.
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HOW WE DETERMINE CASH
SURRENDER VALUE
Account Value minus any contingent deferred sales load equals Cash Surrender
Value. The policy's Cash Surrender Value will vary daily with investment
experience. Cash Surrender Value is the same as Account Value except in the
first ten years of the policy. During the first ten policy years the Cash
Surrender Value on any date will equal the product of the Account Value on that
date and the tabular cash value (which is stated in your policy) divided by the
tabular Account Value for that date. After the tenth policy year, the Cash
Surrender Value will equal the Account Value. The difference between the Cash
Surrender Value and the Account Value is a contingent deferred sales load.
See CONTINGENT DEFERRED SALES LOAD.
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THERE IS NO GUARANTEED MINIMUM
ACCOUNT VALUE OR CASH SURRENDER
VALUE
Daily increases or decreases in Account Value or Cash Surrender Value depend on
the investment experience of the Divisions. There is no guaranteed minimum
Account Value or Cash Surrender Value.
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RETURNING THE POLICY FOR CASH
During the insured's lifetime, and subject to our rules, your policy can be
returned for payment of the Cash Surrender Value net of any indebtedness. The
amount payable will be based on the net Cash Surrender Value next computed after
we receive your signed request for payment of the Cash Surrender Value at your
Regional Service Center, accompanied by your policy. The insurance coverage will
end on the date you send us the policy and your request.
SPLITTING THE POLICY. You can request to split your policy into two policies. In
addition, you may return one for cash. Any policy that continues will be based
on the new initial face amount.
If you split a policy, each continued policy must have a face amount that is at
least equal to what the face amount of the $2,500 premium policy would be at the
time of the split. This face amount will also be based on the same age and sex
as the original policy.
These are our current procedures, which may change.
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19
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INCOME TAX WITHHOLDING
Federal tax law requires us to withhold income tax from any portion of your
surrender proceeds that is subject to tax, unless you request us not to
withhold.
If you surrender your policy and do not advise us in writing that you do not
want us to withhold Federal income tax before the date payment must be made, we
are required by law to withhold tax from the surrender payment.
If you elect not to have tax withheld from the surrender payment, or if the
amount of Federal income tax withheld is insufficient, you may be responsible
for payment of tax. You may incur penalties under the estimated tax rules if
your withholding and estimated tax payments are not sufficient. You may wish to
consult your tax adviser.
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YOU CAN TRANSFER ACCOUNT VALUE
AMONG DIVISIONS
You may transfer Account Value among the Divisions by contacting our regional
Life Insurance Center. You can request to transfer part or all of your Account
Value among the Divisions. You may do this up to four times in a policy year. A
transfer will go into effect on the day we receive your request. We reallocate
loans if you transfer Account Value.
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WHEN A DIVISION
BECOMES INACTIVE
If you have a policy loan allocated to a Division and your Account Value less
your loan (including accrued loan interest) in that Division reaches zero, that
Division will become inactive for your policy. We will reallocate the loan to
the other Divisions based on the proportion that your Account Value in each
Division has to your total Account Value. A Division will also become inactive
for your policy if you transfer its entire Account Value to the other Divisions.
We will notify you when a Division becomes inactive.
If a Division becomes inactive, the future variable adjustment amount, Account
Value and net return will be affected. You may transfer Account Value into an
inactive Division from the other Divisions. See YOU CAN TRANSFER ACCOUNT VALUE
AMONG DIVISIONS.
- --------------------------------------------------------------------------------
TAKING A POLICY LOAN
You may borrow up to 90% of your policy's Cash Surrender Value (net of previous
loans) using the policy as security. We will not grant a loan that is not at
least $100 more than any outstanding loan with accrued interest.
Borrowing money against your policy will have a permanent effect on your
policy's Account Value and Cash Surrender Value, and the amount by which the
Death Benefit may increase above the guaranteed minimum. This effect remains
even though the loan is repaid in whole or in part.
Whenever the loan with accrued interest from one Division equals or exceeds the
Account Value in that Division, that Division will become inactive for your
policy. We will transfer the total Account Value and loan allocation to the
other Divisions. See WHEN A DIVISION BECOMES INACTIVE.
IF LOANS EXCEED THE CASH SURRENDER VALUE OF YOUR POLICY. Whenever the loan with
accrued interest exceeds the Cash Surrender Value of your policy, we will send a
notice to you and to anyone to whom you told us you assigned the policy. The
policy will end 31 days after we send the notice unless you make a repayment
during the 31-day period that is large enough to reduce your outstanding loan
with accrued interest to below the total Cash Surrender Value of your policy.
If you borrow the maximum of 90% of your policy's Cash Surrender Value, you
increase your risk of having your policy end. This might happen if the
combination of policy loan interest as it builds up, the cost of insurance,
asset charges against the Separate Account, and investment experience of the
Divisions where you have Cash Surrender Value uses up the remaining 10%.
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20
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INTEREST. Interest on loans is 5% a year. Interest is charged daily and is
payable by the policy owner on each anniversary. However, if it is not paid, it
will be compounded on the policy anniversary because it will be added to the
loan principal. This unpaid interest is transferred out of each Division where
you have your loan into our general account. This interest is not deductible for
Federal income tax purposes.
REPAYMENT. You can repay all or part of any outstanding loan with accrued
interest at any time while the policy is in effect and the insured is alive.
Your repayment, whether full or partial, will be allocated to the Divisions in
proportion to the loan allocation to each Division at the time of repayment.
The amount of any outstanding loan with accrued interest will be deducted from
the Death Benefit or Cash Surrender Value proceeds.
WHAT DIVISION WE CHARGE LOANS AGAINST. We allocate a loan based on the net Cash
Surrender Value in each Division on the date the loan is made. We reallocate
loans if you transfer Account Value.
THE PERMANENT EFFECT OF A LOAN. When you take out a loan, we transfer part of
the Cash Surrender Value equal to the amount of the loan from the Divisions to
our general account. In addition, unpaid interest on the policy loan will be
transferred to our general account from time to time. The amount taken out of
the Divisions will not be affected by the Divisions' investment experience while
the loan is outstanding. Since the amount is not in the Divisions, it cannot
contribute to any possible increase in your policy's Death Benefit, Account
Value or Cash Surrender Value.
We will credit your policy with a 4% annual return on any amount transferred to
our general account as a result of your policy loan. This can protect Cash
Surrender Value and Death Benefits from decreasing if investment experience is
below 4%. It will also prevent them from increasing if investment experience is
above 4%.
EXAMPLE: You were a 40 year old male when your policy was issued, and you have a
Single Premium Variable Life Insurance policy. Use the illustration on page 25
and assume an 8% hypothetical gross annual investment return for each Division
or their combination (which is a net return of 7.19%). If you take a loan for
$22,000 at the end of the 9th policy year, it will affect the Death Benefit,
Account Value, and Cash Surrender Value (before subtracting the amount of the
loan with loan interest) in the 10th policy year as follows:
- --------------------------------------------------------------------------------
Without Loan With Loan
- --------------------------------------------------------------------------------
Death Benefit $111,106 $109,370
Account Value 44,931 44,229
Cash Surrender Value 44,931 44,229
- --------------------------------------------------------------------------------
The difference results from the transfer of the portion of the Cash Surrender
Value equal to the loan from the Division to the general account. The return on
the amount transferred is reduced to 4% a year, rather than the Division's net
return of 7.19%.
See DEATH BENEFITS UNDER OUR POLICIES for adjustments that are made as of the
date of the insured's death.
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER VALUES, AND
ACCUMULATED PREMIUM
To help you get a picture of how the key financial elements of our policy work,
we have prepared a series of tables.
The tables show how Death Benefits, Account Values and Cash Surrender Values of
policies with single premiums of $10,000, $20,000, $25,000 and $50,000 could
vary over an extended period of time if the Divisions had CONSTANT hypothetical
gross annual investment returns of 0%, 4%, 8%, and 12% over the years covered by
each table. The Death Benefits, Account Values and Cash Surrender Values would
differ from those shown in the tables if the annual investment returns did not
remain absolutely constant. Thus, the figures would be different if the return
AVERAGED 0%, 4%, 8%, or 12% over a period of years but went above or below
those figures in individual policy years. The Death Benefits, Account Values and
Cash Surrender Values would also differ, depending on the investment allocations
made to the Divisions, if the actual investment experience averaged 0%, 4%, 8%,
or 12%, but went above or below those figures for individual Divisions. The
difference between the Account Value and the Cash Surrender Value in the first
ten years is the contingent deferred sales load.
The amounts of Death Benefits, Account Values and Cash Surrender Values shown in
the tables for the end of each policy year take into account a daily charge
against each Division that is equivalent to an annual charge of 0.75% at the
beginning of each year. This charge is the 0.50% charge against the Separate
Account for mortality and expense risks and the effect on each Division's
investment experience of the charge to the Trust assets for investment advisory
services (equivalent to an annual rate of 0.25% of the aggregate average daily
net assets of the Portfolios). The effect of these adjustments is that on a 0%
actual rate of return the return would be -0.75%, on 4% it would be 3.22%, on 8%
it would be 7.19% and on 12% it would be 11.16%.
The hypothetical returns shown in the tables do not reflect any charges for
Trust expenses in addition to the 0.25% investment advisory fee charge, because
the Divisions in general will be reimbursed for their share of such expenses, as
previously discussed under THE SEPARATE ACCOUNT, ITS INVESTMENTS AND ITS
INVESTMENT EXPERIENCE and THE TRUST.
The tables reflect the fact that we do not currently charge the Divisions for
Federal income tax. However, if we do make such a charge in the future, it would
take a higher rate of return to produce after-tax returns of 0%, 4%, 8%, and 12%
than it does now.
The second and third columns of each table show what would happen if an amount
equal to the total premium were invested to earn interest, after taxes, of 4% or
5% compounded annually. These tables show that if a policy is returned in its
very early years for payment of its Cash Surrender Value, the Cash Surrender
Value will be low in comparison to the premium accumulated with interest. This
means that the cost of owning your policy for a relatively short time will be
high.
If you request, we will furnish you with a comparable illustration based on the
proposed insured's sex, age and an initial face amount or premium amount of your
choice. In addition, if you do purchase a policy, we will deliver a specific
illustration that reflects your actual premium paid.
We have also prepared special illustrations showing the effects of policy loans
on a planned basis. These are available on request.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
OF ILLUSTRATIONS
Page
----
$10,000 Single premium Male Age 5 23
$20,000 Single premium Male Age 25 24
$25,000 Single premium Male Age 40 25
$50,000 Single premium Male Age 55 26
$10,000 Single premium Female Age 5 27
$20,000 Single premium Female Age 25 28
$25,000 Single premium Female Age 40 29
$50,000 Single premium Female Age 55 30
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $98,654 MALE AGE 5 SINGLE PREMIUM $10,000(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- ------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 10,400 $ 10,500 $98,654 $98,654 $101,705 $ 105,501
2 10,816 11,025 98,654 98,654 104,848 112,820
3 11,249 11,576 98,654 98,654 108,087 120,642
4 11,699 12,155 98,654 98,654 111,423 128,999
5 12,167 12,763 98,654 98,654 114,861 137,934
6 12,653 13,401 98,654 98,654 118,404 147,482
7 13,159 14,071 98,654 98,654 122,056 157,694
8 13,686 14,775 98,654 98,654 125,823 168,616
9 14,233 15,513 98,654 98,654 129,708 180,303
10 14,802 16,289 98,654 98,654 133,716 192,810
11 15,395 17,103 98,654 98,654 137,853 206,196
12 16,010 17,959 98,654 98,654 142,120 220,524
13 16,651 18,856 98,654 98,654 146,523 235,857
14 17,317 19,799 98,654 98,654 151,063 252,260
15 18,009 20,789 98,654 98,654 155,745 269,806
16 18,730 21,829 98,654 98,654 160,570 288,570
17 19,479 22,920 98,654 98,654 165,544 308,634
18 20,258 24,066 98,654 98,654 170,669 330,082
19 21,068 25,270 98,654 98,654 175,951 353,011
20 21,911 26,533 98,654 98,654 181,394 377,520
60 (Age 65) 105,196 186,792 98,654 98,654 614,156 5,545,865
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------------- ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------ ------- -------- ---------- ------ ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$9,447 $ 9,827 $ 10,208 $ 10,590 $8,691 $ 9,041 $ 9,392 $ 9,743
9,302 10,067 10,863 11,689 8,634 9,344 10,083 10,849
9,165 10,320 11,567 12,910 8,585 9,666 10,834 12,093
9,038 10,585 12,324 14,268 8,544 10,007 11,650 13,487
8,915 10,862 13,135 15,773 8,505 10,363 12,533 15,049
8,797 11,149 14,004 17,444 8,471 10,737 13,486 16,797
8,680 11,443 14,930 19,288 8,436 11,123 14,511 18,748
8,561 11,740 15,909 21,321 8,400 11,519 15,611 20,920
8,436 12,037 16,943 23,552 8,356 11,923 16,783 23,329
8,308 12,331 18,030 25,998 8,308 12,331 18,030 25,998
8,173 12,620 19,169 28,673 8,173 12,620 19,169 28,673
8,034 12,907 20,366 31,600 8,034 12,907 20,366 31,600
7,892 13,191 21,622 34,805 7,892 13,191 21,622 34,805
7,751 13,478 22,950 38,326 7,751 13,478 22,950 38,326
7,611 13,770 24,358 42,198 7,611 13,770 24,358 42,198
7,474 14,070 25,856 46,468 7,474 14,070 25,856 46,468
7,342 14,380 27,453 51,183 7,342 14,380 27,453 51,183
7,216 14,704 29,162 56,401 7,216 14,704 29,162 56,401
7,096 15,042 30,990 62,175 7,096 15,042 30,990 62,175
6,981 15,396 32,950 68,576 6,981 15,396 32,950 68,576
3,509 37,715 370,342 3,344,211 3,509 37,715 370,342 3,344,211
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
23
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $106,799 MALE AGE 25 SINGLE PREMIUM $20,000(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $20,800 $ 21,000 $106,799 $106,799 $110,101 $ 114,209
2 21,632 22,050 106,799 106,799 113,503 122,131
3 22,497 23,153 106,799 106,799 117,010 130,598
4 23,397 24,310 106,799 106,799 120,623 139,649
5 24,333 25,526 106,799 106,799 124,347 149,326
6 25,306 26,802 106,799 106,799 128,185 159,671
7 26,319 28,142 106,799 106,799 132,141 170,733
8 27,371 29,549 106,799 106,799 136,218 182,560
9 28,466 31,027 106,799 106,799 140,422 195,206
10 29,605 32,578 106,799 106,799 144,756 208,727
11 30,789 34,207 106,799 106,799 149,223 223,187
12 32,021 35,917 106,799 106,799 153,830 238,649
13 33,301 37,713 106,799 106,799 158,578 255,185
14 34,634 39,599 106,799 106,799 163,475 272,870
15 36,019 41,579 106,799 106,799 168,523 291,784
16 37,460 43,658 106,799 106,799 173,728 312,014
17 38,958 45,840 106,799 106,799 179,096 333,653
18 40,516 48,132 106,799 106,799 184,631 356,799
19 42,137 50,539 106,799 106,799 190,339 381,557
20 43,822 53,066 106,799 106,799 196,225 408,040
40 (Age 65) 96,020 140,800 106,799 106,799 361,588 1,568,889
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
--------------------------------------------------------- ---------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$19,096 $19,866 $ 20,637 $ 21,407 $17,579 $18,288 $ 18,996 $ 19,705
18,808 20,355 21,964 23,633 17,465 18,902 20,396 21,947
18,530 20,863 23,384 26,099 17,363 19,549 21,910 24,455
18,263 21,390 24,903 28,832 17,268 20,225 23,547 27,260
18,005 21,936 26,527 31,857 17,180 20,932 25,313 30,398
17,753 22,500 28,263 35,206 17,096 21,669 27,218 33,904
17,506 23,081 30,115 38,910 17,017 22,436 29,273 37,822
17,264 23,679 32,090 43,007 16,940 23,234 31,486 42,198
17,026 24,292 34,195 47,536 16,864 24,061 33,871 47,085
16,792 24,922 36,439 52,542 16,792 24,922 36,439 52,542
16,558 25,565 38,826 58,070 16,558 25,565 38,826 58,070
16,327 26,223 41,367 64,177 16,327 26,223 41,367 64,177
16,096 26,895 44,068 70,915 16,096 26,895 44,068 70,915
15,866 27,577 46,937 78,346 15,866 27,577 46,937 78,346
15,636 28,271 49,981 86,540 15,636 28,271 49,981 86,540
15,405 28,976 53,213 95,570 15,405 28,976 53,213 95,570
15,172 29,690 56,635 105,511 15,172 29,690 56,635 105,511
14,940 30,415 60,265 116,463 14,940 30,415 60,265 116,463
14,707 31,147 64,112 128,519 14,707 31,147 64,112 128,519
14,473 31,890 68,184 141,786 14,473 31,890 68,184 141,786
9,750 47,521 218,040 946,055 9,750 47,521 218,040 946,055
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $81,932 MALE AGE 40 SINGLE PREMIUM $25,000(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $26,000 $26,250 $81,932 $81,932 $ 84,462 $ 87,612
2 27,040 27,563 81,932 81,932 87,072 93,688
3 28,122 28,941 81,932 81,932 89,763 100,187
4 29,246 30,388 81,932 81,932 92,538 107,139
5 30,416 31,907 81,932 81,932 95,400 114,575
6 31,633 33,502 81,932 81,932 98,351 122,530
7 32,898 35,178 81,932 81,932 101,394 131,039
8 34,214 36,936 81,932 81,932 104,532 140,142
9 35,583 38,783 81,932 81,932 107,769 149,879
10 37,006 40,722 81,932 81,932 111,106 160,296
11 38,486 42,758 81,932 81,932 114,547 171,440
12 40,026 44,896 81,932 81,932 118,096 183,362
13 41,627 47,141 81,932 81,932 121,757 196,118
14 43,292 49,498 81,932 81,932 125,532 209,767
15 45,024 51,973 81,932 81,932 129,427 224,373
16 46,825 54,572 81,932 81,932 133,444 240,002
17 48,697 57,300 81,932 81,932 137,587 256,729
18 50,645 60,165 81,932 81,932 141,861 274,628
19 52,671 63,174 81,932 81,932 146,269 293,783
20 54,778 66,332 81,932 81,932 150,817 314,282
25 (Age 65) 66,646 84,659 81,932 81,932 175,799 440,537
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
------------------------------------------------------------ ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$23,941 $24,906 $ 25,870 $ 26,836 $22,066 $22,956 $ 23,845 $ 24,734
23,580 25,519 27,534 29,627 21,925 23,727 25,602 27,547
23,219 26,142 29,299 32,702 21,779 24,520 27,483 30,674
22,857 26,772 31,170 36,087 21,630 25,335 29,497 34,150
22,494 27,410 33,149 39,812 21,478 26,172 31,652 38,014
22,130 28,055 35,246 43,911 21,322 27,031 33,959 42,307
21,767 28,708 37,466 48,420 21,164 27,912 36,427 47,078
21,403 29,368 39,815 53,378 21,004 28,819 39,070 52,380
21,040 30,036 42,301 58,830 20,842 29,752 41,901 58,274
20,678 30,711 44,931 64,823 20,678 30,711 44,931 64,823
20,316 31,393 47,712 71,410 20,316 31,393 47,712 71,410
19,953 32,078 50,649 78,639 19,953 32,078 50,649 78,639
19,589 32,767 53,747 86,572 19,589 32,767 53,747 86,572
19,224 33,456 57,012 95,268 19,224 33,456 57,012 95,268
18,856 34,144 60,447 104,791 18,856 34,144 60,447 104,791
18,487 34,830 64,062 115,217 18,487 34,830 64,062 115,217
18,115 35,514 67,863 126,629 18,115 35,514 67,863 126,629
17,744 36,195 71,860 139,113 17,744 36,195 71,860 139,113
17,373 36,875 76,063 152,773 17,373 36,875 76,063 152,773
17,003 37,554 80,481 167,713 17,003 37,554 80,481 167,713
15,154 40,845 106,009 265,648 15,154 40,845 106,009 265,648
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
25
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $104,488 MALE AGE 55 SINGLE PREMIUM $50,000(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------------- -------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 52,000 $ 52,500 $104,488 $104,488 $107,731 $111,766
2 54,080 55,125 104,488 104,488 111,075 119,556
3 56,243 57,881 104,488 104,488 114,526 127,892
4 58,493 60,775 104,488 104,488 118,085 136,812
5 60,833 63,814 104,488 104,488 121,755 146,358
6 63,266 67,005 104,488 104,488 125,542 156,575
7 65,797 70,355 104,488 104,488 129,448 167,509
8 68,428 73,873 104,488 104,488 133,478 179,213
9 71,166 77,566 104,488 104,488 137,635 191,742
10 74,012 81,445 104,488 104,488 141,925 205,154
11 76,973 85,517 104,488 104,488 146,351 219,513
12 80,052 89,793 104,488 104,488 150,917 234,886
13 83,254 94,282 104,488 104,488 155,628 251,344
14 86,584 98,997 104,488 104,488 160,489 268,965
15 90,047 103,946 104,488 104,488 165,504 287,831
16 93,649 109,144 104,488 104,488 170,679 308,029
17 97,395 114,601 104,488 104,488 176,018 329,657
18 101,291 120,331 104,488 104,488 181,529 352,820
19 105,342 126,348 104,488 104,488 187,216 377,630
20 109,556 132,665 104,488 104,488 193,086 404,206
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------------- ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$47,844 $49,781 $ 51,718 $ 53,655 $44,341 $46,136 $ 47,932 $ 49,727
46,883 50,758 54,787 58,969 43,790 47,410 51,174 55,080
45,921 51,732 58,012 64,783 43,232 48,703 54,617 60,991
44,961 52,703 61,406 71,144 42,670 50,019 58,278 67,521
44,003 53,673 64,973 78,102 42,103 51,356 62,169 74,731
43,045 54,637 68,720 85,707 41,533 52,718 66,305 82,697
42,089 55,593 72,651 94,013 40,960 54,100 70,700 91,488
41,134 56,538 76,771 103,076 40,383 55,506 75,368 101,193
40,177 57,467 81,079 112,953 39,802 56,931 80,323 111,899
39,218 58,377 85,581 123,710 39,218 58,377 85,581 123,710
38,258 59,266 90,282 135,415 38,258 59,266 90,282 135,415
37,298 60,132 95,186 148,148 37,298 60,132 95,186 148,148
36,343 60,981 100,307 161,999 36,343 60,981 100,307 161,999
35,393 61,808 105,651 177,063 35,393 61,808 105,651 177,063
34,451 62,617 111,229 193,439 34,451 62,617 111,229 193,439
33,516 63,403 117,041 211,227 33,516 63,403 117,041 211,227
32,586 64,160 123,087 230,526 32,586 64,160 123,087 230,526
31,659 64,883 129,361 251,427 31,659 64,883 129,361 251,427
30,735 65,563 135,852 274,023 30,735 65,563 135,852 274,023
29,809 66,193 142,551 298,417 29,809 66,193 142,551 298,417
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
26
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $118,930 FEMALE AGE 5 SINGLE PREMIUM $10,000(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ---------------------------- ----------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 10,400 $ 10,500 $118,930 $118,930 $122,609 $ 127,188
2 10,816 11,025 118,930 118,930 126,401 136,014
3 11,249 11,576 118,930 118,930 130,308 145,450
4 11,699 12,155 118,930 118,930 134,333 155,535
5 12,167 12,763 118,930 118,930 138,482 166,316
6 12,653 13,401 118,930 118,930 142,757 177,839
7 13,159 14,071 118,930 118,930 147,163 190,160
8 13,686 14,775 118,930 118,930 151,707 203,335
9 14,233 15,513 118,930 118,930 156,389 217,423
10 14,802 16,289 118,930 118,930 161,217 232,491
11 15,395 17,103 118,930 118,930 166,196 248,605
12 16,010 17,959 118,930 118,930 171,328 265,837
13 16,651 18,856 118,930 118,930 176,620 284,267
14 17,317 19,799 118,930 118,930 182,075 303,974
15 18,009 20,789 118,930 118,930 187,698 325,047
16 18,730 21,829 118,930 118,930 193,495 347,578
17 19,479 22,920 118,930 118,930 199,470 371,670
18 20,258 24,066 118,930 118,930 205,629 397,428
19 21,068 25,270 118,930 118,930 211,978 424,969
20 21,911 26,533 118,930 118,930 218,521 454,413
60 (Age 65) 105,196 186,792 118,930 118,930 738,965 6,658,114
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------------- ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------ ------- -------- ---------- ------ ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$9,444 $ 9,824 $ 10,206 $ 10,587 $8,690 $ 9,041 $ 9,391 $ 9,742
9,295 10,061 10,857 11,682 8,629 9,340 10,079 10,845
9,152 10,306 11,551 12,894 8,574 9,654 10,822 12,079
9,017 10,562 12,298 14,239 8,524 9,985 11,626 13,461
8,886 10,828 13,096 15,728 8,478 10,331 12,494 15,006
8,761 11,105 13,951 17,380 8,436 10,694 13,434 16,737
8,639 11,391 14,863 19,206 8,396 11,072 14,447 18,668
8,517 11,683 15,835 21,224 8,357 11,463 15,538 20,825
8,397 11,984 16,871 23,455 8,317 11,869 16,709 23,231
8,277 12,287 17,969 25,913 8,277 12,287 17,969 25,913
8,158 12,599 19,137 28,626 8,158 12,599 19,137 28,626
8,040 12,916 20,379 31,621 8,040 12,916 20,379 31,621
7,921 13,239 21,697 34,922 7,921 13,239 21,697 34,922
7,806 13,571 23,103 38,571 7,806 13,571 23,103 38,571
7,692 13,911 24,599 42,600 7,692 13,911 24,599 42,600
7,580 14,262 26,195 47,054 7,580 14,262 26,195 47,054
7,471 14,621 27,896 51,978 7,471 14,621 27,896 51,978
7,364 14,992 29,711 57,424 7,364 14,992 29,711 57,424
7,259 15,374 31,648 63,447 7,259 15,374 31,648 63,447
7,157 15,767 33,715 70,111 7,157 15,767 33,715 70,111
3,749 40,206 393,875 3,548,841 3,749 40,206 393,875 3,548,841
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $125,738 FEMALE AGE 25 SINGLE PREMIUM $20,000(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY -------------------------- ----------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $20,800 $21,000 $125,738 $125,738 $129,619 $ 134,449
2 21,632 22,050 125,738 125,738 133,620 143,763
3 22,497 23,153 125,738 125,738 137,743 153,722
4 23,397 24,310 125,738 125,738 141,994 164,369
5 24,333 25,526 125,738 125,738 146,376 175,754
6 25,306 26,802 125,738 125,738 150,893 187,926
7 26,319 28,142 125,738 125,738 155,549 200,943
8 27,371 29,549 125,738 125,738 160,348 214,858
9 28,466 31,027 125,738 125,738 165,296 229,738
10 29,605 32,578 125,738 125,738 170,396 245,649
11 30,789 34,207 125,738 125,738 175,654 262,661
12 32,021 35,917 125,738 125,738 181,075 280,854
13 33,301 37,713 125,738 125,738 186,664 300,312
14 34,634 39,599 125,738 125,738 192,426 321,121
15 36,019 41,579 125,738 125,738 198,369 343,377
16 37,460 43,658 125,738 125,738 204,496 367,185
17 38,958 45,840 125,738 125,738 210,814 392,650
18 40,516 48,132 125,738 125,738 217,330 419,889
19 42,137 50,539 125,738 125,738 224,050 449,025
20 43,822 53,066 125,738 125,738 230,978 480,190
40 (Age 65) 96,020 140,800 125,738 125,738 425,204 1,842,347
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
-------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$19,128 $19,899 $ 20,668 $ 21,439 $17,600 $18,308 $ 19,017 $ 19,725
18,863 20,412 22,023 23,695 17,512 18,951 20,446 21,999
18,602 20,941 23,468 26,191 17,427 19,617 21,985 24,535
18,347 21,484 25,009 28,949 17,345 20,311 23,643 27,369
18,096 22,044 26,653 32,002 17,266 21,032 25,430 30,534
17,849 22,619 28,405 35,377 17,188 21,781 27,354 34,067
17,605 23,207 30,272 39,107 17,111 22,557 29,425 38,011
17,365 23,813 32,265 43,233 17,038 23,364 31,657 42,418
17,130 24,435 34,389 47,796 16,968 24,204 34,063 47,344
16,897 25,073 36,652 52,838 16,897 25,073 36,652 52,838
16,667 25,727 39,064 58,412 16,667 25,727 39,064 58,412
16,437 26,396 41,629 64,568 16,437 26,396 41,629 64,568
16,208 27,075 44,352 71,357 16,208 27,075 44,352 71,357
15,980 27,767 47,248 78,847 15,980 27,767 47,248 78,847
15,748 28,469 50,317 87,101 15,748 28,469 50,317 87,101
15,517 29,180 53,571 96,192 15,517 29,180 53,571 96,192
15,283 29,899 57,019 106,200 15,283 29,899 57,019 106,200
15,049 30,628 60,672 117,220 15,049 30,628 60,672 117,220
14,814 31,365 64,542 129,350 14,814 31,365 64,542 129,350
14,579 32,113 68,644 142,707 14,579 32,113 68,644 142,707
10,167 49,469 226,637 981,989 10,167 49,469 226,637 981,989
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $95,798 FEMALE AGE 40 SINGLE PREMIUM $25,000(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- ----------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $26,000 $26,250 $95,798 $95,798 $ 98,757 $102,439
2 27,040 27,563 95,798 95,798 101,808 109,544
3 28,122 28,941 95,798 95,798 104,955 117,143
4 29,246 30,388 95,798 95,798 108,200 125,272
5 30,416 31,907 95,798 95,798 111,546 133,966
6 31,633 33,502 95,798 95,798 114,995 143,266
7 32,898 35,178 95,798 95,798 118,552 153,213
8 34,214 36,936 95,798 95,798 122,221 163,852
9 35,583 38,783 95,798 95,798 126,003 175,233
10 37,006 40,722 95,798 95,798 129,903 187,406
11 38,486 42,758 95,798 95,798 133,924 200,428
12 40,026 44,896 95,798 95,798 138,071 214,357
13 41,627 47,141 95,798 95,798 142,348 229,258
14 43,292 49,498 95,798 95,798 146,757 245,199
15 45,024 51,973 95,798 95,798 151,305 262,252
16 46,825 54,572 95,798 95,798 155,994 280,496
17 48,697 57,300 95,798 95,798 160,830 300,012
18 50,645 60,165 95,798 95,798 165,816 320,888
19 52,671 63,174 95,798 95,798 170,957 343,218
20 54,778 66,332 95,798 95,798 176,257 367,101
25 (Age 65) 66,646 84,659 95,798 95,798 205,345 513,986
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------------- ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$23,941 $24,906 $ 25,871 $ 26,835 $22,060 $22,949 $ 23,838 $ 24,726
23,581 25,520 27,536 29,628 21,919 23,722 25,595 27,540
23,219 26,142 29,300 32,702 21,773 24,514 27,475 30,666
22,856 26,771 31,168 36,087 21,626 25,330 29,491 34,144
22,494 27,410 33,150 39,813 21,475 26,168 31,647 38,008
22,134 28,059 35,250 43,916 21,322 27,031 33,959 42,308
21,774 28,718 37,478 48,435 21,169 27,920 36,436 47,090
21,418 29,387 39,840 53,411 21,017 28,837 39,093 52,410
21,062 30,067 42,341 58,885 20,862 29,782 41,941 58,328
20,709 30,756 44,994 64,911 20,709 30,756 44,994 64,911
20,357 31,454 47,801 71,539 20,357 31,454 47,801 71,539
20,007 32,162 50,775 78,830 20,007 32,162 50,775 78,830
19,657 32,877 53,921 86,843 19,657 32,877 53,921 86,843
19,310 33,601 57,246 95,647 19,310 33,601 57,246 95,647
18,962 34,331 60,764 105,320 18,962 34,331 60,764 105,320
18,617 35,068 64,481 115,946 18,617 35,068 64,481 115,946
18,275 35,816 68,417 127,624 18,275 35,816 68,417 127,624
17,937 36,576 72,584 140,465 17,937 36,576 72,584 140,465
17,604 37,350 77,002 154,592 17,604 37,350 77,002 154,592
17,278 38,141 81,689 170,141 17,278 38,141 81,689 170,141
15,686 42,225 109,451 273,960 15,686 42,225 109,451 273,960
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
29
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $121,514 FEMALE AGE 55 SINGLE PREMIUM $50,000(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ---------------------------- -------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 52,000 $ 52,500 $121,514 $121,514 $125,279 $129,967
2 54,080 55,125 121,514 121,514 129,163 139,010
3 56,243 57,881 121,514 121,514 133,167 148,683
4 58,493 60,775 121,514 121,514 137,296 159,030
5 60,833 63,814 121,514 121,514 141,552 170,096
6 63,266 67,005 121,514 121,514 145,941 181,934
7 65,797 70,355 121,514 121,514 150,467 194,597
8 68,428 73,873 121,514 121,514 155,134 208,144
9 71,166 77,566 121,514 121,514 159,948 222,641
10 74,012 81,445 121,514 121,514 164,915 238,155
11 76,973 85,517 121,514 121,514 170,038 254,758
12 80,052 89,793 121,514 121,514 175,321 272,526
13 83,254 94,282 121,514 121,514 180,771 291,541
14 86,584 98,997 121,514 121,514 186,391 311,887
15 90,047 103,946 121,514 121,514 192,187 333,658
16 93,649 109,144 121,514 121,514 198,166 356,954
17 97,395 114,601 121,514 121,514 204,333 381,886
18 101,291 120,331 121,514 121,514 210,695 408,575
19 105,342 126,348 121,514 121,514 217,260 437,149
20 109,556 132,665 121,514 121,514 224,035 467,746
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
-------------------------------------------------------- --------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$47,910 $49,848 $ 51,785 $ 53,723 $44,282 $46,072 $ 47,863 $ 49,654
47,030 50,911 54,946 59,134 43,822 47,439 51,198 55,102
46,160 51,990 58,292 65,084 43,371 48,849 54,770 61,151
45,305 53,091 61,840 71,630 42,928 50,305 58,596 67,872
44,465 54,215 65,605 78,834 42,494 51,812 62,696 75,338
43,638 55,359 69,593 86,757 42,070 53,368 67,092 83,639
42,821 56,519 73,816 95,465 41,650 54,974 71,796 92,853
42,006 57,688 78,273 105,019 41,228 56,620 76,823 103,075
41,189 58,857 82,967 115,486 40,801 58,303 82,185 114,399
40,368 60,021 87,902 126,939 40,368 60,021 87,902 126,939
39,543 61,176 93,084 139,462 39,543 61,176 93,084 139,462
38,718 62,329 98,532 153,162 38,718 62,329 98,532 153,162
37,895 63,477 104,261 168,149 37,895 63,477 104,261 168,149
37,081 64,634 110,300 184,565 37,081 64,634 110,300 184,565
36,276 65,797 116,663 202,540 36,276 65,797 116,663 202,540
35,479 66,965 123,364 222,215 35,479 66,965 123,364 222,215
34,686 68,125 130,401 243,712 34,686 68,125 130,401 243,712
33,891 69,270 137,770 267,159 33,891 69,270 137,770 267,159
33,090 70,382 145,452 292,662 33,090 70,382 145,452 292,662
32,280 71,453 153,439 320,354 32,280 71,453 153,439 320,354
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
30
<PAGE>
- --------------------------------------------------------------------------------
YOU WILL RECEIVE
PERIODIC REPORTS
As a policy owner, you will receive an annual statement about your policy giving
you the status as of the first day of the current policy year of:
o the Death Benefit;
o the Account Value and Cash Surrender Value; and
o your outstanding loans.
Notice will also be sent to you for policy issuance, transfers of funds between
Divisions and certain other policy transactions.
You will receive a billing notice each year showing accrued interest for the
past policy year if you have a policy loan outstanding.
We will also send you semiannual reports with financial information on the
Separate Account and the Trust (including a list of the investments held by each
Portfolio in which the Divisions invest) as required by the 1940 Act.
- --------------------------------------------------------------------------------
THE IMPACT OF TAXES
POLICY PROCEEDS
The Tax Reform Act of 1984 (1984 Act) includes a definition of life insurance
for tax purposes. Our variable life policy meets the statutory definition of
life insurance and hence will receive the same Federal income tax treatment as
fixed benefit life insurance. Thus, (a) the Death Benefit under our policy will
be excludable from the gross income of the beneficiary under Section 101(a)(1)
of the Internal Revenue Code (Code) and (b) the policy owner will not be deemed
to be in constructive receipt of the Cash Surrender Value under the policy until
the policy is actually surrendered. Only then would the owner be taxed on any
increase in Cash Surrender Value due to investment experience.
In general, if you return your policy for its Cash Surrender Value, you will not
be taxed on the amount you receive, except for the portion which exceeds the
premium you have paid.
A split of the policy into two policies followed by a return of one for cash, or
an exchange referred to under CANCELLATION AND EXCHANGE RIGHTS, may result in
taxable income to the policy owner depending on the circumstances. We suggest
you consult your tax adviser.
The 1984 Act also gives the Secretary of the Treasury authority to set standards
for diversification of the investments underlying variable life policies in
order for such policies to be treated as life insurance. On September 15, 1986,
Treasury issued temporary regulations regarding the diversification
requirements. Failure to meet the diversification requirements would disqualify
SP-1 as a variable life insurance policy under Section 7702 of the Code. If this
were to occur, you would be taxed on the amount in your Policy Account that
exceeds the premiums you have paid. We believe that the investments underlying
SP-1 are in compliance with the requirements. We do not anticipate any problems
with the investments continuing to meet the requirements.
We also believe that loans received under the policies will be treated as
indebtedness of an owner, and that no part of any loan under a policy will
constitute income to the owner. (However, interest on policy loans is not
deductible.)
The individual situation of each policy owner or beneficiary will determine how
ownership or receipt of policy proceeds will be treated for purposes of Federal
estate tax as well as state and local estate, inheritance and other taxes.
See the Prospectus for the Trust for a discussion of the Trust's tax aspects,
including the diversification requirements.
- --------------------------------------------------------------------------------
OUR INCOME TAXES
Under the life insurance company tax provisions of the Code, as amended by the
1984 Act, variable life insurance is treated in a manner consistent with fixed
life insurance. The operations of the Separate Account are included in the
Federal income tax return of Equitable Variable. Under current tax law,
Equitable Variable pays no tax on investment income and capital gains reflected
in variable life insurance policy reserves. Consequently, no charge is currently
being made to either Division of the Separate Account for our Federal income
taxes. We reserve the right, however, to make such a charge in the future, if
the law changes and we incur Federal income tax
- --------------------------------------------------------------------------------
31
<PAGE>
- --------------------------------------------------------------------------------
which is attributable to the Separate Account. If such a charge is made, it
would be set aside as a provision for taxes which we would keep in the affected
Division rather than in our general account. We anticipate that our variable
life policy owners will benefit from any investment earnings that are not needed
to maintain this provision. We may have to pay state and local taxes (in
addition to premium taxes) in several states. At present, these taxes are not
substantial. If they increase, however, charges may be made for such taxes when
they are attributable to the Separate Account.
- --------------------------------------------------------------------------------
GENERAL PROVISIONS OF
OUR POLICY
This section of the prospectus describes the general provisions of our policy
and is subject to the terms of the policy you buy. You may review a copy of our
policy upon request.
The minimum single premium for this policy is $2,500. The policy may be issued
to age 75. The policy is issued only on a standard risk basis. Before issuing
any policy, we require satisfactory evidence of insurability.
You will handle all business connected with your policy at your regional Life
Insurance Center shown on page 3 of your policy.
- --------------------------------------------------------------------------------
PREMIUM
Your premium is a single premium payment that must accompany your signed
application for the policy.
YOU CAN CHOOSE THE DIVISION OR DIVISIONS WHERE YOUR NET SINGLE PREMIUM WILL BE
PUT. You can decide how your net single premium will be applied to the
Divisions. You can put the whole net single premium in one Division or a
percentage in more than one Division. Percentages cannot be fractions and must
add up to 100.
You will make your decision on the application for your policy.
HOW WE USE THE PREMIUM. The single premium is used to cover expenses and to pay
Death Benefits.
We make no charge to cover the possibility that, at an insured's death, the
guaranteed minimum will be more than what would have been payable, based on the
investment experience of the Divisions, if there were no guaranteed minimum
Death Benefit. If the net premium exceeds what is needed to meet Death Benefits
over the years, the excess contributes to our profits.
CHANGES IN PREMIUM RATES. Congress and the legislatures of various states have
from time to time considered legislation that would require premium rates to be
the same for males and females of the same age and risk class.
ILLUSTRATION OF PREMIUM RATES. Premiums are based on actuarial estimates of
Death Benefits, Account Values, Cash Surrender Value benefits, expenses,
investment experience, and amounts contributed to our surplus.
The following table shows premium rates for certain face amounts. The rates per
$1,000 differ for different face amounts only because of our $200 administrative
fee, which is constant.
- --------------------------------------------------------------------------------
PREMIUMS PER $1,000 INITIAL FACE AMOUNT*
Age at $10,000 Initial $25,000 Initial $50,000 Initial
Issue Face Amount Face Amount Face Amount
- --------------------------------------------------------------------------------
Age 5
Male $119.70 $107.46 $103.38
Female 102.78 90.53 86.45
Age 25
Male 205.77 193.52 189.44
Female 177.85 165.60 161.52
Age 40
Male 323.05 310.81 306.72
Female 279.24 267.00 262.92
Age 55
Male 496.98 484.73 480.65
Female 430.20 417.96 413.88
- --------------------------------------------------------------------------------
*Assuming a 2% state premium tax.
- --------------------------------------------------------------------------------
32
<PAGE>
- --------------------------------------------------------------------------------
CANCELLATION RIGHT
You have a limited right to return your policy to your regional Life Insurance
Center with a written request for cancellation. We will give you a full refund
(guaranteed by Equitable) of the single premium paid if your request and policy
are postmarked by the latest of the following:
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
- --------------------------------------------------------------------------------
EXCHANGING OUR POLICY FOR FIXED
WHOLE LIFE INSURANCE
You may exchange your single premium variable life policy for a fixed whole life
single premium policy on the life of the insured (benefits will be as described
in the single premium fixed life policy). The fixed policy will be issued by
Equitable. You have this right for 24 months from the date your policy is
issued. The exchange will be effective when we receive your request, accompanied
by your policy and an application for the fixed policy.
We will not require evidence of the insured's insurability before an exchange.
The new policy's face amount will be the same as the initial face amount of the
variable life policy. It will also have the same register date and date of
issue. The new policy will be based on premiums for the same sex and age.
Any policy loan with accrued interest must be repaid before the exchange. The
exchange is also subject to limits described in the policy.
CASH ADJUSTMENT ON EXCHANGE. There will be a cash adjustment on exchange. The
adjustment will reflect the difference in premiums between the two policies. The
cash adjustment will also reflect the market performance of the variable life
policy.
The difference in premium will be payable by the owner. This amount, however,
will be adjusted. It will be decreased by the excess, if any, of the total Cash
Surrender Value over the tabular Cash Surrender Value of the policy or will be
increased by the excess, if any, of the tabular Cash Surrender Value over the
total Cash Surrender Value of the policy. We have filed a description of the
method we use to calculate the adjustment with the appropriate state insurance
officials.
You may choose, instead, Equitable Variable's single premium fixed life policy,
SP Plus. If you choose SP Plus, we will advise you of the cash adjustment and
how it is calculated.
- --------------------------------------------------------------------------------
PAYMENT OPTIONS
The Death Benefit proceeds or Cash Surrender Value proceeds (net of loans) of
the policy offered by this prospectus can be paid in a lump sum. Or you may
choose to apply all or part of the proceeds under one of our payment options. A
combination of options can be used if we agree. Proceeds applied under an option
will no longer be affected by investment experience.
For an option to be used, the proceeds to be applied must be at least $2,500. If
no option is chosen at the insured's death, the beneficiary can choose an
option. The following options are available, subject to limits described in the
policy.
DEPOSIT OPTION. Proceeds are left on deposit with us. We will pay interest on
the proceeds of at least 3% a year, or we may set and pay a higher rate.
INSTALLMENT OPTION FOR A FIXED PERIOD. Proceeds are paid in installments for up
to 30 years, with interest of at least 3-1/2% a year.
INSTALLMENT OPTION OF A FIXED AMOUNT. Proceeds are paid in installments with
interest of at least 3-1/2% a year until the proceeds are used up.
LIFE INCOME OPTION WITH A PERIOD CERTAIN. Proceeds are paid in monthly
installments for the longer of the life of the person being paid or the end of a
chosen period of 10 or 20 years.
LIFE INCOME OPTION WITH A REFUND CERTAIN. Proceeds are paid in monthly
installments for the longer of the life of the person being paid or until they
are used up.
- --------------------------------------------------------------------------------
33
<PAGE>
- --------------------------------------------------------------------------------
BENEFICIARY
You name your beneficiary when you apply for your policy. You may change the
beneficiary during the insured's lifetime by writing to your regional Life
Insurance Center. If no beneficiary is living when the insured dies, the Death
Benefit will be paid in equal shares to the insured's surviving children. If
there is no surviving child, the Death Benefit will be paid to the insured's
estate.
- --------------------------------------------------------------------------------
ASSIGNMENT
You may assign the policy as collateral for a loan or other obligation. We are
not responsible for any payment we make or action we take before we receive a
copy of the assignment at your regional Life Insurance Center.
- --------------------------------------------------------------------------------
CREDITORS' CLAIMS
Proceeds are paid free from the claims of creditors to the extent allowed by
law.
- --------------------------------------------------------------------------------
LIMITS ON OUR RIGHT TO CHALLENGE
THE POLICY
We cannot challenge the validity of the policy after it has been in effect
during the insured's lifetime for 2 years from the date of issue (unless another
date is required by law). If a death claim is made within the time we can
challenge validity, our payment will generally be delayed while we determine
whether to make such a challenge.
MISSTATEMENT OF AGE OR SEX. If the insured's age or sex is misstated in the
policy application, the Death Benefit will be what the premium paid would have
purchased based on the insured's true age and sex.
SUICIDE. If the insured commits suicide within 2 years from the date the policy
was issued (or less where required by law), the Death Benefit will be limited to
the sum of the premium paid minus outstanding policy loans with interest.
- --------------------------------------------------------------------------------
DIVIDENDS
No dividends will be paid on the policy described in this prospectus.
- --------------------------------------------------------------------------------
WHEN WE PAY PROCEEDS
Payment of the Death Benefit, Cash Surrender Value (net of loans) or loan
proceeds will be made within 7 days after we receive the required form or
request (and other documents that may be required for payment of the Death
Benefit) at your regional Life Insurance Center. If an Equitable agent is
assisting the beneficiary in preparing the documents required for payment of the
Death Benefit, we will send the check to the agent within 7 days after we
receive all required documents. The agent will then deliver the check to the
beneficiary. But we can delay payment if:
o payment is contested;
o it is not reasonably practicable to determine the amount because the New York
Stock Exchange is closed, trading is restricted by the SEC, or the SEC
declares that an emergency exists; or
o the SEC, by order, permits us to delay in order to protect our policy owners.
We will pay at least 3% interest a year if we delay paying the Cash Surrender
Value or loan proceeds more than 30 days.
- --------------------------------------------------------------------------------
SALES AND OTHER
AGREEMENTS
Equitable Variable and Integrity Life Insurance Company, a wholly-owned
subsidiary of Equitable, are the principal underwriters for the Trust pursuant
to a Distribution Agreement. Under the Distribution Agreement, we have entered
into a Sales Agreement with Equitable by which Equitable will distribute our
policies.
Both Equitable Variable and Equitable are registered with the SEC as
broker-dealers under the Securities and Exchange Act of 1934, and we are each a
member of the National Association of Securities Dealers, Inc. We are also the
principal underwriter for our policies funded through our Separate Account I and
our other policies funded through our Separate Account FP, which is also a
registered investment company. (Equitable may also be deemed a principal
underwriter for our policies.)
- --------------------------------------------------------------------------------
SALES BY AGENTS OF EQUITABLE
We sell our policies through agents who are licensed by state insurance
officials to sell our variable life insurance. These agents are also registered
representatives of Equitable.
Under the Sales Agreement, agents receive commissions from Equitable for selling
our policies. We reimburse Equitable for these commissions. We also reimburse
Equitable for other expenses incurred in marketing and selling our policies.
These expenses include agency and district managers' compensation, agents'
training allowance, deferred compensation, insurance benefits of agents and
agency and district managers, and agency clerical and advertising expenses.
- --------------------------------------------------------------------------------
34
<PAGE>
- --------------------------------------------------------------------------------
COMMISSION SCHEDULE. Agents may receive the equivalent of up to a maximum of 3%
of the premium.
Agents with less than 3 full years of service with Equitable may be paid
differently.
Agents who meet certain production and persistency standards in selling our
policies and Equitable policies will be eligible for added compensation. Agents
who meet certain lifetime production standards will be eligible to receive
increased fees for servicing our policies. Agents also are eligible for added
compensation for servicing our policies when there is no assigned soliciting
agent.
- --------------------------------------------------------------------------------
SALES BY BROKERS
We also sell our policies through independent brokers who are licensed by state
insurance officials to sell our variable life insurance. They will also be
registered representatives either of Equitable or of another company registered
with the SEC as a broker-dealer under the Securities Exchange Act of 1934. The
commissions for independent brokers will be no more than those for agents.
Commissions will be paid through the registered broker-dealer.
- --------------------------------------------------------------------------------
APPLICATIONS
When an application for one of our policies is completed, it is submitted to us.
Based on the information in the application and our standards for issuing
insurance and classifying risks, a policy may be issued. If a policy is not
issued, we will refund any premium that has been paid. (Equitable guarantees the
refund.)
- --------------------------------------------------------------------------------
JOINT SERVICES AGREEMENT
In addition to acting as distributor for our policies, Equitable performs
certain other sales and administrative duties for us. Equitable does this
pursuant to a written agreement. The agreement is automatically renewed each
year, unless either party terminates.
Under this agreement, we pay Equitable for salary costs and other services and
an amount for indirect costs incurred through our use of Equitable personnel and
facilities. We also reimburse Equitable for sales expenses related to business
other than variable life policies.
- --------------------------------------------------------------------------------
AMOUNTS PAID UNDER SALES AND
JOINT SERVICES AGREEMENTS
The amounts paid or accrued to Equitable by us under sales and the joint
services agreements totalled approximately $249.4 million in 1986, $225.7
million in 1985 and $164.8 million in 1984.
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
- --------------------------------------------------------------------------------
LEGAL MATTERS
The legal validity of the policy described in this prospectus has been passed on
by Herbert P. Shyer, who is Executive Vice President and General Counsel of
Equitable.
The Washington, D.C. law firm of Freedman, Levy, Kroll & Simonds has advised
Equitable Variable with respect to certain matters relating to Federal
securities laws.
- --------------------------------------------------------------------------------
FINANCIAL AND ACTUARIAL
EXPERTS
The financial statements of the Separate Account and of Equitable Variable in
this prospectus have been examined by the accounting firm of Deloitte Haskins &
Sells, our independent auditors, to the extent stated in their opinions, and
their opinions on them are part of this prospectus. We have relied on the
opinions of Deloitte Haskins & Sells given upon their authority as experts in
accounting and auditing.
Actuarial matters in this prospectus have been examined by Joseph O. North, Jr.,
F.S.A., M.A.A.A., who is Vice President and Actuary of Equitable Variable and an
Assistant Vice President and Actuary of Equitable. His opinion on actuarial
matters is filed as an exhibit to the Registration Statement we filed with the
SEC.
- --------------------------------------------------------------------------------
35
<PAGE>
- --------------------------------------------------------------------------------
WHERE YOU CAN GET
ADDITIONAL
INFORMATION
We have filed with the SEC a Registration Statement relating to the Separate
Account and the variable life policy described in this prospectus. The
Registration Statement, which is required by the Securities Act of 1933,
includes additional information that is not required in this prospectus under
the rules and regulations of the SEC. If you would like the additional
information, you may obtain copies of that document from the SEC's main office
in Washington, D.C. You will have to pay a fee for the material.
- --------------------------------------------------------------------------------
MANAGEMENT
Here is a list of our directors and officers and a brief statement of their
business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Harry Douglas Garber................................ Vice Chairman of the Board, Equitable, since February 1984; prior thereto,
Executive Vice President and Chief Financial Officer. Director, Equitable
Investment Corporation (EIC) and Genesco, Inc. Former Chairman and Chief
Executive Officer, Equitable Variable.
Glenn Howard Gettier, Jr. .......................... Executive Vice President and Chief Financial Officer, Equitable, since
December 1984; prior thereto, Partner, Peat, Marwick, Mitchell & Co.
Richard Hampton Jenrette............................ Vice Chairman, Chief Investment Officer and Director, Equitable. Chairman,
Donaldson, Lufkin and Jenrette, Inc., since February 1985; prior thereto,
Chairman and Chief Executive Officer. Director, Equitable Capital
Management Corporation (Equitable Capital) and various other Equitable
subsidiaries.
William Thomas McCaffrey............................ Executive Vice President, Equitable, since March 1986; prior thereto,
various other Equitable positions.
Francis Helmut Schott............................... Senior Vice President and Chief Economist, Equitable.
Leo Martin Walsh, Jr. .............................. Senior Executive Vice President, Director and Chief Operating Officer,
Equitable, since July 1986; prior thereto, Executive Vice President,
Director and Chief Investment Officer. Chairman, EIC since July 1986; prior
thereto, President and Chief Executive Officer. Director, Equitable
Capital and various other Equitable subsidiaries.
Peter Rawlinson Wilde............................... Executive Vice President, Equitable, since July 1984. Director, Integrity
Life Insurance Company (Integrity) and National Integrity Life Insurance
Company (National Integrity). Chairman and Chief Executive Officer,
Equitable Variable, from November 1984 to December 1986. Chief Financial
Officer, CIGNA Corporation, from April 1983 to June 1984; prior thereto,
Senior Vice President.
Brian Fredrick Wruble............................... Chairman, President and Chief Executive Officer, Equitable Capital.
Executive Vice President, Equitable, since September 1984; prior thereto,
various other Equitable positions.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICER -- DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Robert Wayne Barth.................................. Chairman and Chief Executive Officer, Equitable Variable, since December
1986; President and Chief Operating Officer, from December 1985 to December
1986. Executive Vice President, Equitable, since June 1985; Senior Vice
President since September 1984; prior thereto, Vice President since April
1984.
Thomas Michael Kirwan............................... President and Chief Operating Officer, Equitable Variable, since December
1986. Executive Vice President and Chief Financial Officer, EIC, since
March 1985; prior thereto, President, Columbia Group -- CBS, Inc. Director,
Equitable Capital and various other Equitable subsidiaries.
Robert Seymour Jones................................ Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since June 1985; prior thereto, Vice President.
Michael Searle Martin............................... Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since June 1985; prior thereto, Vice President.
Stanley Julian Rispler.............................. Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President.
Samuel Barry Shlesinger............................. Senior Vice President and Actuary, Equitable Variable, since February 1986.
Senior Vice President and Actuary, Equitable; prior thereto, Vice President
and Actuary.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
James Thomas Liddle, Jr. ........................... Senior Vice President and Chief Financial Officer, Equitable Variable,
since February 1986. Vice President and Actuary, Equitable.
Richard Marshall Stenson............................ Senior Vice President, Equitable Variable, since December 1981. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President and
Actuary. Actuary, Integrity.
William Arnold Canfield............................. Vice President and Chief Underwriting Officer, Equitable Variable. Vice
2 Penn Plaza President, Equitable.
New York, New York 10121
Franklin Kennedy, III............................... Vice President, Equitable Variable, since August 1981. Senior Vice
1221 Avenue of the Americas President, Equitable Capital since January 1987. Managing Director and
New York, New York 10020 Chief Investment Officer, Equitable Investment Management Corporation, from
November 1983 to January 1987. Vice President, Equitable.
Donald Anthony King................................. Vice President, Equitable Variable, since February 1986. Vice President,
1285 Avenue of the Americas Integrity, since April 1984. Vice President, Equitable, since January 1976.
New York, New York 10020 Executive Vice President, Equitable Capital.
Joseph Oswell North, Jr. ........................... Vice President and Actuary, Equitable Variable, since February 1984. Vice
2 Penn Plaza President and Actuary, Equitable, since October 1984; prior thereto,
New York, New York 10121 Assistant Vice President and Actuary, since April 1982.
Stephen Anthony Scarpati............................ Vice President and Controller, Equitable Variable, since June 1986. Vice
2 Penn Plaza President, Equitable, since December 1985. Vice President and Controller,
New York, New York 10121 EIC, from November 1984 to December 1985; prior thereto, Division
Controller, Colgate-Palmolive Company.
Larry Kenneth Mills................................. Treasurer, Equitable Variable, Integrity and National Integrity, since
February 1986. Vice President and Treasurer, Equitable, since March 1986;
prior thereto, Vice President.
Theodore Edward Plucinski, M.D. .................... Chief Medical Director, Equitable Variable, Integrity and National
2 Penn Plaza Integrity. Chief Medical Director, Equitable, since September 1985; prior
New York, New York 10121 thereto, Chief Medical Director, MONY.
Kevin Brian Keefe................................... Secretary, Equitable Variable, Integrity, National Integrity and The Hudson
River Trust, Vice President and Assistant Secretary, Equitable, since June
1986; prior thereto, Assistant Vice President and Assistant Secretary.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
[THE EQUITABLE FINANCIAL COMPANIES LOGO -- 1986 VERSION]
- --------------------------------------------------------------------------------
Catalogue No. 121503
<PAGE>
[EDGARIZER'S NOTE:]
[THE SP-1 PROSPECTUS ENDS HERE; THE BASIC & EXPANDED PROSPECTUS FOLLOWS]
<PAGE>
- --------------------------------------------------------------------------------
[VLI LOGO]
- --------------------------------------------------------------------------------
LEVEL FACE AMOUNT VARIABLE LIFE INSURANCE POLICY
(Basic Policy)
INCREASING FACE AMOUNT VARIABLE LIFE INSURANCE POLICY
(Expanded Policy)
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO -- 1986 VERSION]
- --------------------------------------------------------------------------------
VM 346 PROSPECTUS DATED APRIL 30, 1986
- --------------------------------------------------------------------------------
THE HUDSON RIVER FUND, INC.
PRINCIPAL OFFICE LOCATED AT:
787 Seventh Avenue, New York, New York 10019
- --------------------------------------------------------------------------------
VM 348 SUPPLEMENT DATED MAY 1, 1986 TO
VM 342 PROSPECTUS DATED APRIL 17, 1986
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[VLI LOGO]
- --------------------------------------------------------------------------------
LEVEL FACE AMOUNT VARIABLE LIFE INSURANCE POLICY
(Basic Policy)
INCREASING FACE AMOUNT VARIABLE LIFE INSURANCE POLICY
(Expanded Policy)
- --------------------------------------------------------------------------------
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO -- 1986 VERSION]
This prospectus describes two variable life insurance policies being offered by
Equitable Variable. The Basic policy is available only for face amounts under
$50,000. Your net annual premiums are invested in the Common Stock Division and
the Money Market Division of Equitable Variable's Separate Account I.
Each policy owner decides whether the premiums for his or her policy will be put
into the Common Stock Division of the Money Market Division, or both, after
certain deductions have been made. The assets in each Division are invested in
shares of corresponding Portfolios of The Hudson River Fund, Inc.
The prospectus for the Fund, which is attached to this prospectus, describes the
investment objectives and policies of each of the Fund Portfolios as well as the
risks relating to investment in the Fund.
The investment policy of the Fund's Common Stock Portfolio is to purchase
primarily common stock and other equity-type instruments with the objective of
long-term growth of its capital and increasing income. The investment policy of
the Fund's Money Market Portfolio is to purchase primarily high quality
short-term money market instruments with the objective of obtaining a high level
of current income while preserving its assets and maintaining liquidity. There
is no guaranty that the objectives will be achieved.
The death benefit and cash value of a policy will vary up or down depending on
investment experience of the Divisions, which in turn depends on the investment
performance of the corresponding Portfolios. While there is no guaranteed
minimum cash value for a policy, Equitable Variable guarantees that a policy's
death benefit will never be less than its face amount as long as premiums are
paid on time and there is no outstanding policy loan.
A policy is serviced through a regional Life Insurance Center. This is the
Administrative Office shown on page 3 of a policy when it is issued. Equitable
Variable's Home Office is 787 Seventh Avenue, New York, New York. Telephone
(212) 714-5288.
REPLACING EXISTING INSURANCE WITH A POLICY DESCRIBED IN THIS PROSPECTUS MAY NOT
BE TO YOUR ADVANTAGE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS FOR DETAILS ON THE POLICIES BEING OFFERED AND KEEP
IT FOR FUTURE REFERENCE. IT IS NOT VALID UNLESS ATTACHED TO THE CURRENT
PROSPECTUS FOR THE HUDSON RIVER FUND, INC.
PROSPECTUS DATED APRIL 30, 1986
- --------------------------------------------------------------------------------
VM-346
Copyright 1986 Equitable Variable Life Insurance Company. All rights reserved.
<PAGE>
- --------------------------------------------------------------------------------
THE PURPOSES OF THE POLICIES WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION
FOR A POLICY'S BENEFICIARY.
WE DO NOT CLAIM THAT THE POLICIES ARE IN ANY WAY SIMILAR TO OR COMPARABLE TO A
MUTUAL FUND'S SYSTEMATIC INVESTMENT PLAN.
Because we want you to have as much information as possible about our variable
life policies before you buy one, we urge you to examine this prospectus
carefully, and we also urge you to read the attached Fund prospectus. This
prospectus assumes that all premiums are paid on time and there is no
outstanding policy loan.
The first Part of this prospectus contains a summary that will introduce us and
our variable life policies to you. You will find more detailed information in
Part 2 and financial statements in Part 3.
- --------------------------------------------------------------------------------
PART 1 -- SUMMARY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE ISSUING COMPANY
We are Equitable Variable Life Insurance Company (Equitable Variable), a New
York stock life insurance company.
- --------------------------------------------------------------------------------
OUR PARENT, EQUITABLE
We are a wholly-owned subsidiary of The Equitable Life Assurance Society of the
United States (Equitable), a New York mutual life insurance company.
- --------------------------------------------------------------------------------
THE POLICIES
By this prospectus we are offering two types of variable life insurance
policies:
o Level Face Amount Policy (Basic Policy, Policy Number 85-01)
o Increasing Face Amount Policy (Expanded Policy, Policy Number 85-02).
The Basic policy is available only for face amounts between $25,000 and $49,999.
We also offer, through separate prospectuses, a single premium variable life
policy, a periodic premium variable life policy and a flexible premium variable
life policy. The net premiums for the Basic Policy and the Expanded Policy are
invested in our Separate Account I (Separate Account) which in turn buys shares
in The Hudson River Fund, Inc. (Fund).
- --------------------------------------------------------------------------------
WHY VARIABLE LIFE VARIES
Our variable life policies are, first and foremost, whole life insurance
policies with death benefits, cash values, loan privileges, level premiums, and
other features traditionally associated with whole life insurance. They are
called "variable" because, unlike the fixed death benefits of an ordinary whole
life policy, the death benefits and cash values of our policies may increase or
decrease. They do so because your net annual premiums are put into our Separate
Account's Common Stock Division or Money Market Division. The assets of each
Division buy shares in the Fund's corresponding Common Stock Portfolio or Money
Market Portfolio. The Separate Account's investment experience will vary over
the years reflecting the investment performance of the Fund's Portfolios in
which it invests.
When the Separate Account's net investment return is greater than the assumed
investment return of 4%, additional amounts of paid-up life insurance are
purchased. This results in additional death benefit and cash value. If the
Separate Account's net investment return is less than the assumed investment
return, this additional paid-up life insurance may be lost, resulting in smaller
cash value and death benefit, but the death benefit will never be less than the
guaranteed minimum.
- --------------------------------------------------------------------------------
THE SEPARATE ACCOUNT, ITS
INVESTMENTS AND ITS
INVESTMENT EXPERIENCE
Our Separate Account is registered with the 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. For state law purposes the
Separate Account is treated as a part of us.
After making certain deductions from premiums, we put the net annual premiums in
either the Common Stock Division or the Money Market Division (Division) of the
Separate Account. You decide whether your policy's net annual premium will be
put entirely in one Division or whether you want a percentage in each Division.
Each Division invests in shares of a corresponding investment portfolio of the
Fund: the Common Stock Portfolio and the Money Market Portfolio (Portfolio).
Each Portfolio has a different investment policy. Throughout this prospectus we
will discuss the investment experience of the Separate Account and the
Divisions. You should keep in mind that THE INVESTMENT EXPERIENCE OF THE
SEPARATE ACCOUNT AND THE DIVISIONS DEPENDS ON THE INVESTMENT PERFORMANCE OF THE
FUND AND THE CORRESPONDING PORTFOLIOS.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
THE FUND
The Hudson River Fund, Inc. is a "series" type of mutual fund registered with
the SEC under the 1940 Act as an open-end diversified management investment
company. In addition to the Common Stock Portfolio and the Money Market
Portfolio referred to above, the Fund has a Balanced Portfolio and an Aggressive
Stock Portfolio which currently are not available for investment by the Separate
Account. The Fund does not impose a sales charge.
It is anticipated that, subject to obtaining additional necessary governmental
exemptions and approvals, if any, the Fund may serve as an investment medium
for, among others, variable annuity contracts issued by Equitable, variable life
policies and variable annuity contracts issued by Integrity Life Insurance
Company (Integrity, a wholly-owned subsidiary of Equitable), new series of
variable life policies issued by us, and variable life policies and variable
annuity contracts issued by insurers affiliated or unaffiliated with Equitable.
We are currently in control of the Fund; however, purchasers of each of these
contracts will also have voting privileges in the Fund. See YOUR VOTING
PRIVILEGES.
The Fund's address is 787 Seventh Avenue, New York, New York 10019. The Fund's
custodian is The Chase Manhattan Bank, N.A.
- --------------------------------------------------------------------------------
FUND PORTFOLIO INVESTMENT
POLICIES AND OBJECTIVES
The investment policy of the Common Stock Portfolio is to purchase primarily
common stock and other equity-type instruments to achieve long-term growth of
its capital and increasing income. The investment policy of the Money Market
Portfolio is to purchase primarily high quality short-term money market
instruments to obtain a high level of current income while preserving its assets
and maintaining liquidity.
- --------------------------------------------------------------------------------
THE FUND'S INVESTMENT
ADVISERS
The Fund is advised by Equitable Investment Management Corporation (EIMC), which
is a subsidiary of Equitable, and by Integrity. They are registered with the SEC
as investment advisers under the Investment Advisers Act of 1940. The Fund pays
advisory fees to EIMC and Integrity based on maximum annual rates of 0.40% of
the average daily value of the aggregate net assets of the Common Stock, Money
Market and Balanced Portfolios and 0.50% of the average daily value of the
aggregate net assets of the Aggressive Stock Portfolio. However, we credit the
values of our Basic and Expanded policies to offset completely the effect on
such values of the portion of the Fund's advisory fees which exceeds a 0.25%
annual rate.
- --------------------------------------------------------------------------------
DEATH BENEFITS
The death benefit under a policy can go up or down depending on the investment
experience of the Division or Divisions into which you choose to put your net
premiums. The guaranteed minimum Death Benefit is the face amount of the policy
regardless of the investment experience of the Divisions. In the first policy
year, the death benefit equals the initial face amount. In each later policy
year, the death benefit equals the guaranteed minimum death benefit, plus the
sum (if positive) of the variable adjustment amounts in the Divisions in which
you have cash value.
See THE VARIABLE ADJUSTMENT AMOUNT and THE GUARANTEED MINIMUM DEATH BENEFIT in
Part 2.
- --------------------------------------------------------------------------------
CASH VALUE
Our policies are whole life policies and they can have a cash value. The cash
value of a policy may increase or decrease daily to reflect the investment
experience of the Divisions in which your policy participates. Unlike the death
benefits, which have a guaranteed minimum, we do not guarantee a minimum amount
of cash value. You will bear the entire market risk for cash value.
You can request that all or part of your cash value be transferred between the
Divisions. See YOU CAN TRANSFER CASH VALUE BETWEEN DIVISIONS in Part 2.
- --------------------------------------------------------------------------------
COMMISSIONS
The agent or broker who sells you one of our policies will receive a commission
for the first policy year equivalent to a maximum of 50% of the first year
premium that is payable. Commissions and fees the agent or broker will receive
in later policy years are described under SALES AND OTHER AGREEMENTS in Part 2.
The commissions and fees are paid by Equitable Variable and do not equal the
charges for sales load discussed in this prospectus. See DEDUCTIONS FROM
PREMIUMS in Part 2.
- --------------------------------------------------------------------------------
CHARGES AGAINST PREMIUMS
Your net annual premium is put into our Separate Account each year. This is your
total premium after deductions for any optional insurance benefits, the sales
load, state premium taxes, annual administrative expenses and a risk charge for
the guaranteed minimum death benefit. The charge for sales load is used to pay
agent or broker commissions and other sales expenses for the policy. (You do not
pay any sales charge for shares of the Fund purchased by the Separate Account.)
In the first policy year we also deduct a fixed charge for expenses incurred in
issuing the policy.
See DEDUCTIONS FROM PREMIUMS in Part 2.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
CHARGES AGAINST THE
SEPARATE ACCOUNT
The amount in the Divisions credited to your policy is decreased by the cost of
your insurance protection. Also, the investment experience of the Separate
Account reflects a daily charge we make at an effective annual rate of 0.50% of
the value of the assets of the Separate Account for certain mortality and
expense risks.
Any charges against the Divisions will have an impact on whether the Divisions
earn more than the assumed rate of 4% and whether your policy's death benefit
increases above the guaranteed minimum.
For more information on the cost of insurance, see HOW WE SUPPORT THE OPERATIONS
OF A POLICY in Part 2.
- --------------------------------------------------------------------------------
POLICY LOANS
As a policy owner, you may borrow up to 90% of your policy's cash value at 5%
interest but borrowed amounts are transferred out of the Divisions and,
therefore, are not affected by the investment experience. You may choose an
adjustable loan interest rate, and if you do, we will credit the adjustable loan
interest rate less 0.75% (and less any charge for taxes) on the borrowed
amounts. For a loan at 5% interest, we will credit the assumed interest rate of
4% to the borrowed amounts.
See TAKING A POLICY LOAN in Part 2.
- --------------------------------------------------------------------------------
PREMIUMS
The size of an annual premium depends on which policy you choose, the initial
face amount (which must be at least $25,000) and the insured's risk class, age
and sex. We guarantee that a premium will remain the same once it has been
determined.
- --------------------------------------------------------------------------------
CANCELLATION AND
EXCHANGE RIGHTS
You have a limited right to return your policy for cancellation and a full
refund of premiums paid. Your request must be postmarked by the latest of
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
Also, within 18 months of a policy's issue date, it may be exchanged for a fixed
whole life insurance policy on the life of the insured without submitting proof
of insurability.
- --------------------------------------------------------------------------------
INCOME TAXES
Any death benefit paid under our policies is fully excludable from the gross
income of the beneficiary for Federal income tax purposes. This may differ for
policies owned by pension or profit sharing plans.
We may, in the future, charge the Divisions for any portion of our income taxes
attributable to the Separate Account.
See THE IMPACT OF TAXES in Part 2.
- --------------------------------------------------------------------------------
MORE INFORMATION
For further information, including illustrations of how the investment
experience of the Separate Account Divisions and the investment performance of
the Fund could cause death benefits and cash values to vary, please see Part 2
of this prospectus and the Fund's current prospectus. Our financial statements
are in Part 3 of this prospectus. The Fund's prospectus contains Condensed
Financial Information for the Fund and its Statement of Additional Information
contains its financial statements.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
CONDENSED
FINANCIAL
INFORMATION
SEPARATE ACCOUNT I
The tables below show the actual net returns of the Divisions of our Separate
Account as if the Reorganization discussed under GENERAL INFORMATION -- ABOUT US
- -- REORGANIZATION had always been in effect. The tables show the actual net
returns of the predecessor Separate Accounts I and II operating as management
investment companies prior to the Reorganization. The same results would have
been achieved if the continuing Separate Account had operated as a unit
investment trust investing in The Hudson River Fund, Inc., for all the periods
shown, the operations of the Fund having been as currently reported in the
Fund's separate Prospectus and Statement of Additional Information. The net
returns for each Division for the periods shown assume the Common Stock Division
and the Money Market Division would have received initial policy premium
allocations on January 13, 1976 and August 21, 1981, respectively, the dates on
which our former Separate Accounts I and II first received premium allocations
under variable life policies. The tables break the net return into its component
parts.
When you examine the tables, remember that the percentages apply to a policy
with its policy year starting on the first day of the periods shown and apply to
a policy that would have been in force throughout the periods shown. Because
they are determined each December 31, the percentages do not reflect the average
net assets in the Divisions during those periods. The auditing firm of Deloitte
Haskins & Sells, our independent auditors, has examined the tables (for its
opinion, see the Separate Account financial statements in part 3 of this
prospectus). To get a more complete picture of the Separate account and its
Divisions you may want to refer to the financial statements and related notes in
the Statement of Additional Information for The Hudson River Fund, Inc.
- --------------------------------------------------------------------------------
COMMON STOCK DIVISION
<TABLE>
<CAPTION>
January 13,
Year Ended December 31, 1976 to
--------------------------------------------------------------------------------------- December 31,
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976(a)(b)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income 2.95 % 3.22 % 2.65 % 4.64 % 4.02 % 4.35 % 3.91 % 4.06 % 3.49 % 2.63 %
Net realized and
unrealized gain
(loss) on
investments 31.14 % (4.68)% 24.06 % 13.58 % (9.40)% 46.48 % 26.56 % 4.72 % (12.26)% 7.00 %
----- ----- ----- ----- ----- ----- ----- ---- ----- ----
Gross Return 34.09 % (1.46)% 26.71 % 18.22 % (5.38)% 50.83 % 30.47 % 8.78 % (8.77)% 9.63 %
Expense charges (1.00)% (.74)% (.94)% (.95)% (.70)% (1.13)% (.98)% (.81)% (.69)% (.77)%
----- ----- ----- ----- ----- ----- ----- ---- ----- ----
Net Return 33.09 % (2.20)% 25.77 % 17.27 % (6.08)% 49.70 % 29.49 % 7.97 % (9.46)% 8.86 %
===== ===== ===== ===== ===== ===== ===== ==== ===== ====
- --------------------------------------------------------------------------------
<FN>
(a) Date as of which net premiums under the policies were first allocated to the
predecessor of the Division.
(b) The gross return and the net return for the periods indicated are not annual
rates of return, and they are not necessarily indicative of those returns
which would have been realized for a full year.
</FN>
</TABLE>
The effective annual rate of return for the Common Stock Division from January
13, 1976 to December 31, 1985 was 14.09%. For the same period ended December 31,
1985, the average annual increase for the Standard and Poor's 500 Stock Index
with dividends reinvested was 13.63%. (Standard and Poor's is an unmanaged index
of groups of common stocks.)
- --------------------------------------------------------------------------------
MONEY MARKET DIVISION
<TABLE>
<CAPTION>
August 21,
Year Ended December 31, 1981 to
------------------------------------------------- December 31,
1985 1984 1983 1982 1981(a)(b)
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET RETURN:
Income 9.36 % 11.00 % 9.56 % 13.53 % 5.46 %
Net realized and unrealized gain
(loss) on investments (.09)% .42 % (.06)% .03 % .06 %
---- ----- ---- ----- ----
Gross Return 9.27 % 11.42 % 9.50 % 13.56 % 5.52 %
Expense charges (.81)% (.84)% (.83)% (.84)% (.35)%
---- ----- ---- ----- ----
Net Return 8.46 % 10.58 % 8.67 % 12.72 % 5.17 %
==== ===== ==== ===== ====
- --------------------------------------------------------------------------------
<FN>
(a) Date as of which net premiums under the policies were first allocated to the
predecessor of the Division.
(b) The gross return and the net return for the periods indicated are not annual
rates of return, and they are not necessarily indicative of those returns
which would have been realized for a full year.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
HYPOTHETICAL
ILLUSTRATIONS
The following illustrations are based on the assumption that the Separate
Account and the Fund had been operating since January 1, 1976 in the same manner
as they operate as a result of the implementation of the Reorganization
described under GENERAL INFORMATION -- ABOUT US -- REORGANIZATION in Part 2. For
illustrations based on various constant hypothetical annual investment returns,
see ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES, AND ACCUMULATED PREMIUMS in
Part 2.
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF VARIATIONS
OF THE DEATH BENEFIT AND
THE CASH VALUE IN
RELATION TO ACTUAL
INVESTMENT EXPERIENCE OF
THE COMMON STOCK DIVISION
The following example shows how the net return of the Common Stock Division
would have affected the death benefits and cash values of two policies dated
January 1, 1976. Assume an annual premium of $500 and that the insured was a 25
year old male and a standard risk on January 1, 1976.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
BASIC POLICY EXPANDED POLICY
($40,034 Face Amount) ($29,541 Initial Face Amount)
- -------------------------------------------------------------------------------------------------------------------------
Cash Death Guaranteed Cash Death Guaranteed
Policy Anniversary In: Value Benefit Minimum Value Benefit Minimum
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1977* $ 96 $40,071 $40,034 $ 174 $30,476 $30,427
1978 359 40,034 40,034 443 31,343 31,343
1979 744 40,034 40,034 848 32,288 32,288
1980 1,343 41,017 40,034 1,482 34,323 33,263
1981 2,636 44,863 40,034 2,865 39,448 34,238
1982 2,787 43,595 40,034 3,015 39,119 35,272
1983 3,578 44,949 40,034 3,850 41,633 36,335
1984 5,022 48,724 40,034 5,378 46,757 37,428
1985 5,195 47,338 40,034 5,547 46,403 38,551
1986 7,433 53,596 40,034 7,908 54,206 39,703
- -------------------------------------------------------------------------------------------------------------------------
<FN>
*Reflects net investment income credited at the assumed rate of 4% from January
1, 1976 to January 12, 1976, and the actual rate of return for the Common Stock
Division assuming the investment performance of the Fund's Common Stock
Portfolio was the same as our pre-Reorganization Separate Account I starting
January 13, 1976. Net annual premiums were first put into our
pre-Reorganization Separate Account I on January 13, 1976.
</FN>
</TABLE>
Remember, this example of past investment performance is for a specific age,
sex, risk class, premium amount and policy anniversary. Also, the policy series
described in this prospectus was not available in 1976. The benefits illustrated
under these policies are calculated on the policy anniversary and do not
represent the average net investment performance of our pre-Reorganization
Separate Account I during the policy year. Past investment performance should
not be deemed a representation of future investment experience of the Division
or investment performance of the Fund.
This example assumes that net annual premiums and related cash values are 100%
in the Common Stock Division for the entire period.
- --------------------------------------------------------------------------------
ILLUSTRATION OF VARIATIONS
OF THE DEATH BENEFIT AND
THE CASH VALUE IN
RELATION TO ACTUAL
INVESTMENT EXPERIENCE OF
THE MONEY MARKET DIVISION
The following example shows how the net return of the Money Market Division
would have affected the death benefits and cash values of two policies dated
January 1, 1982. Assume an annual premium of $500 and that the insured was a 25
year old male and a standard risk on January 1, 1982.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
BASIC POLICY EXPANDED POLICY
($40,034 Face Amount) ($29,541 Initial Face Amount)
- -------------------------------------------------------------------------------------------------------------------------
Cash Death Guaranteed Cash Death Guaranteed
Policy Anniversary In: Value Benefit Minimum Value Benefit Minimum
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1983 $ 102 $40,103 $40,034 $ 182 $30,519 $30,427
1984 458 40,214 40,034 558 31,563 31,343
1985 860 40,471 40,034 982 32,793 32,288
1986 1,277 40,721 40,034 1,419 34,041 33,263
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
This example reflects Money Market Division investment experience assuming the
investment performance of the Fund's Money Market Portfolio was the same as our
pre-Reorganization Separate Account II starting January 1, 1982. Net annual
premiums under variable life policies were first put into our pre-Reorganization
Separate Account II on August 21, 1981.
Remember, this example of past investment performance is for a specific age,
sex, risk class, premium amount and policy anniversary. The benefits illustrated
under the Basic and Expanded policies are calculated on the policy anniversary
and do not represent the average net investment performance of our
pre-Reorganization Separate Account II during the policy year. Past investment
performance should not be deemed a representation of future investment
experience of the Division or future investment performance of the Fund.
This example assumes that net annual premiums and related cash values are 100%
in the Money Market Division for the entire period.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
PART 2 -- DETAILED INFORMATION
- --------------------------------------------------------------------------------
GENERAL
INFORMATION
ABOUT US
We are Equitable Variable. We were organized in 1972 in New York State as a
stock life insurance company and are authorized to sell life insurance and
annuities there. We also are authorized to sell life insurance and annuities in
other jurisdictions. In January of 1976 we began selling periodic premium
variable life policies, and two years later, in January of 1978, we began
selling fixed annuity contracts.
In 1983 we began selling a form of fixed life insurance policy, the Equitable
Life Account. In 1983 we also began selling single premium variable life
policies. In 1986 we began selling an individual flexible premium variable life
policy designed to provide insurance coverage with flexibility in death benefits
and premium payments. We also sell two types of term insurance policies, fixed
single premium life insurance policies and universal life insurance policies. At
the end of 1985 we had approximately $6.9 billion face amount of variable life
insurance in force and $38 billion of fixed life insurance in force (and about
$1.6 billion of fixed annuity payment obligations).
REORGANIZATION. Pursuant to a Plan of Reorganization (Reorganization) approved
at a meeting of our policy owners held on February 14, 1985, effective as of
March 22, 1985, we restructured our Separate Accounts I and II into one separate
account in unit investment trust form. To accomplish this restructuring, we
converted our then existing Separate Account I, a Common Stock Account and
Separate Account II, a Money Market Account, into our continuing Separate
Account I with two investment divisions: the Common Stock Division and the Money
Market Division. On March 22, 1985, all of the assets and related liabilities of
our former Separate Accounts I and II were transferred to the Common Stock and
Money Market Portfolios of the Fund, respectively, in exchange for shares in the
Portfolios, and we ceased to be an investment adviser of our continuing Separate
Account. EIMC, which served with us as an investment adviser of our former
Separate Accounts I and II, continues as an investment adviser to the Fund. At
the Reorganization, Integrity began to serve, together with EIMC, as an
investment adviser to the Fund. The Separate Account no longer requires an
investment adviser. The Reorganization did not change the policy values of then
outstanding policies or policies.
Policy owners who have our variable life policies on a single premium basis, as
well as on a periodic premium basis, have monies placed in our Separate Account.
Our financial statement including those of our continuing Separate Account are
in Part 3.
- --------------------------------------------------------------------------------
EQUITABLE
Equitable is a New York mutual life insurance company that has its home office
at 787 Seventh Avenue, New York, N.Y. 10019.
Equitable has been in business since 1859. Equitable's total assets make it the
third largest life insurance company in the United States. At December 31, 1985
these assets were over $51 billion. Equitable is also one of the largest
managers of retirement fund assets. At December 31, 1985, Equitable and its
subsidiaries, such as Alliance Capital Management Corporation, were managing
pension fund assets of over $54 billion and total assets of over $91 billion. At
December 31, 1985, Equitable, together with EIMC, was responsible for stock
portfolios of over $5 billion and debt portfolios of about $23 billion. These
portfolios include amounts in our General Account, Equitable's General Account
and separate accounts, and other accounts managed by Equitable and EIMC.
Between the time we were organized and the end of December 1985, Equitable
invested over $334 million in us. This money has been used to help us meet
operational costs and policy reserve requirements.
Equitable probably will invest more money in us in the future although it has no
legal obligation to do so. Its assets do not back benefits that may be paid
under the policy discussed in this prospectus.
In December, 1984, Equitable acquired Donaldson, Lufkin & Jenrette, Inc. (DLJ).
A DLJ subsidiary, Donaldson, Lufkin & Jenrette Securities Corporation, is one of
the nation's largest investment banking and securities firms. Another DLJ
subsidiary, Autranet, Inc., is a securities broker that markets independently
originated research to institutions. Through the Pershing Division of Donaldson,
Lufkin & Jenrette Securities Corporation, DLJ supplies correspondent services,
including order execution, securities clearance and other centralized financial
services, to approximately 300 independent regional securities firms and 100
banks.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
To the extent permitted by law, Equitable Variable and their separate accounts
and affiliated companies, several of which are registered investment companies
(including the Fund), may engage in securities and other transactions with the
various entities mentioned in the preceding paragraph or may invest in shares of
investment companies with which those entities have affiliations.
- --------------------------------------------------------------------------------
REGULATION
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to insurance laws and regulations in ever jurisdiction
where we sell our policies. We submit annual reports on our operations and
finances to insurance officials in these jurisdictions. The officials are
responsible for reviewing our reports to be sure we are financially sound and
that we are complying with applicable laws and regulations.
Our Basic and Expanded variable life policies have been approved in 49 states
and the Virgin Islands.
We are also subject to various Federal securities laws and regulations.
- --------------------------------------------------------------------------------
THE FUND
The Hudson River Fund, Inc. currently issues four series of classes of shares,
each of which represents an interest in one of the Fund's Portfolios. Shares of
the Common Stock and Money Market Portfolios are purchased and redeemed by the
corresponding Separate Account Division. The Fund sells and redeems its shares
at net asset value. It does not impose a sales charge.
It is anticipated that, subject to obtaining additional necessary governmental
exemptions and approvals, if any, the Fund may serve as an investment medium
for, among others, variable annuity contracts issued by Equitable, variable life
policies and variable annuity contracts issued by Integrity, new series of
variable life policies issued by us, and variable life insurance policies and
variable annuity contracts issued by insurers affiliated or unaffiliated with
Equitable. Letters of intent have been signed with two such unaffiliated
insurers and preliminary discussions are now going on with several additional
unaffiliated insurers. We currently do not foresee any disadvantages to our
policy owners arising out of this. However, the Fund's Board of Directors
intends to monitor events in order to identify any material irreconcilable
conflicts that possibly may arise and to determine what action, if any, should
be taken in response. If we believe that the Fund's response to any of those
events insufficiently protects our policy owners, we will see to it that
appropriate action is taken to protect our policy owners. Also, if we ever
believe that any of the Fund's Portfolios is so large as to materially impair
the investment performance of a Portfolio or the Fund, we will examine other
investment options.
The Fund's shares will be sold only to separate accounts of insurance companies.
Since we are the only insurance company now investing in the Fund, we are
currently in control of the Fund. We owned approximately $331 million worth of
the Fund's shares as of December 31, 1985, and we will continue to control the
Fund at least until other insurance companies, selling significant amounts of
variable insurance products, have made substantial investments in Fund shares.
The Fund's address is 787 Seventh Avenue, New York, New York 10019. The
custodian of the securities and other assets of the Fund is The Chase Manhattan
Bank, N.A.
The Fund, its investment objectives and policies, its risks, expenses,
organization and other aspects of its operations are described in more detail in
its prospectus, which is attached to this prospectus, and in a Statement of
Additional Information which may be obtained free of charge by written request
to the Fund at 787 Seventh Avenue, New York, New York 10019. Please carefully
read the Fund's prospectus.
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THE FUND'S INVESTMENT
ADVISERS
The Fund is advised by EIMC and Integrity. They are registered with the SEC as
investment advisers under the Investment Advisers Act of 1940. EIMC's address is
1221 Avenue of the Americas, New York, New York 10020 and Integrity's address is
787 Seventh Avenue, New York, New York 10019.
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8
<PAGE>
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Services are provided pursuant to an investment advisory agreement among the
Fund, EIMC and Integrity for a fee equivalent to maximum annual rates of 0.40%
of the average daily value of the aggregate net assets of the Common Stock,
Money Market and Balanced Portfolios (0.25% to EIMC and 0.15% to Integrity) and
0.50% of the average daily value of the Aggressive Stock Portfolio's aggregate
net assets (0.35% to EIMC and 0.15% to Integrity). We make a daily credit to the
values of our Basic and Expanded policies to offset completely the effect on
such values of the portion of the Fund's investment advisory fee which exceeds a
0.25% annual rate and all other Fund expenses except (a) all brokers'
commissions, transfer taxes and other fees and expenses for services relating to
purchases and sales of Portfolio investments and (b) any Fund income tax
liabilities.
- --------------------------------------------------------------------------------
DEDUCTIONS FROM
PREMIUMS
The amount of premium put into the Separate Account's Divisions is based on what
is called the basic annual premium. This is the total annual premium for a
standard mortality risk policy minus a $30 annual administrative charge and
minus the premiums for any optional insurance benefits you take. After we figure
the basic annual premium, we deduct certain charges and put the rest (the net
annual premium) into the Separate Account's Divisions.
A summary of charges against premiums follows. We guarantee that premiums will
not increase.
- --------------------------------------------------------------------------------
ANNUAL ADMINISTRATIVE
CHARGE
We charge $30 in each policy year for administrative expenses. These include:
o premium billing and collection;
o processing claims, paying cash values, and making policy changes;
o record keeping;
o communicating with policy owners; and
o other expenses and overhead.
- --------------------------------------------------------------------------------
ADDITIONAL FIRST YEAR
ADMINISTRATIVE CHARGE
In the first policy year we make a one-time administrative charge of $5 for each
$1,000 of initial face amount of a policy. This charge is applied to the cost
of:
o processing applications;
o conducting medical examinations;
o establishing policy records; and
o determining insurability and assigning the insured to a risk class.
- --------------------------------------------------------------------------------
SALES LOAD
We make a charge that can be considered a "sales load". The amount of the sales
load in a policy year is not necessarily related to our actual sales expenses
for that year. We expect to recover our total sales expenses over the lifetimes
of the insureds.
Our sales load charge will not be more than:
o 20% of the basic annual premium for the first policy year;
o 14.5% of the basic annual premium for the 2nd through 4th policy years; and
o 7.25% of the basic annual premium for all policy years after the 4th.
To the extent sales expenses are not covered by the sales load, we will cover
them from funds other than premium deductions.
- --------------------------------------------------------------------------------
RISK CHARGE
We charge 1.2% of the basic annual premium to provide for the possibility that
an insured will die at a time when, based on the investment experience of the
Separate Account, the death benefit that would ordinarily be paid is less than
the guaranteed minimum death benefit of the policy.
- --------------------------------------------------------------------------------
STATE PREMIUM TAX CHARGE
We deduct 2% of the basic annual premium to cover state premium taxes. These
taxes vary from state to state and the 2% rate is an average.
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9
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EXAMPLE OF DEDUCTIONS
FROM PREMIUMS
The following example (using the policies shown in the ILLUSTRATION OF DEATH
BENEFITS, CASH VALUES, AND ACCUMULATED PREMIUMS) shows what amount of net annual
premium would be put into the Separate Account at the start of each policy year.
A policy's actual cash value is related to the policy's net annual premium. The
differences between net annual premiums for males and females are due to two
factors: the higher face amounts for females cause higher first year
administrative charges and our pricing policies lead to other variations. These
variations sometimes lead to lower sales loads.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Issue Age 10 Issue Age 25 Issue Age 40
$300 Annual $500 Annual $1,000 Annual
Beginning of Premium for Premium for Premium for
Policy Year Standard Risk Standard Risk Standard Risk
- ------------------------------------------------------------------------------------------------------
MALE FEMALE MALE FEMALE MALE FEMALE
<S> <C> <C> <C> <C> <C> <C>
Basic Policy
(Initial Face Amount) ($37,605) ($42,654) ($40,034) ($45,898) ($49,238) ($57,396)
1st 57.91 60.57 160.94 131.73 498.78 458.02
2nd through 4th 238.79 238.01 392.73 405.74 900.56 873.57
5th through 40th 242.18 241.85 421.16 421.34 928.63 912.60
Expanded Policy
(Initial Face Amount) ($29,316) ($33,708) ($29,541) ($34,382) ($34,754) ($40,756)
1st 60.98 45.51 213.58 189.44 571.36 541.65
2nd through 4th 233.94 240.34 386.99 387.14 900.48 873.40
5th and later 241.86 242.02 421.25 421.52 928.63 912.93
- ------------------------------------------------------------------------------------------------------
</TABLE>
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OUR SEPARATE
ACCOUNT AND ITS
DIVISIONS
Our Separate Account is registered with the SEC as a unit investment trust,
which is a type of investment company. This does not involve any supervision by
the SEC of the management or investment policy or practices of the Separate
Account. For state law purposes the Separate Account is treated as a part of us.
After making certain deductions from premiums, we put your net annual premiums
in the Common Stock Division or the Money Market Division of our Separate
Account. You decide whether your policy's net annual premium will be put
entirely in one Division or whether you want a percentage in each Division.
(Also, you have certain voting privileges with respect to the Fund shares held
in the Divisions. See YOUR VOTING PRIVILEGES.) Each Division invests in shares
of a corresponding investment Portfolio of the Fund. The Separate Account also
invests income or capital gains dividends received from the Fund in shares of
the Fund.
The Separate Account purchases and redeems shares of the Fund at their net asset
value per share. The Separate Account's assets are allocated between the
Divisions in accordance with the allocations of the net annual premiums invested
in the Separate Account and the earnings on those assets. Also, liabilities of
the Separate Account will be allocated to the Division to which they relate.
Accrued liabilities that are not allocable to one Division will be allocated to
both Divisions in proportion to their relative net assets. In the unlikely event
that any Division incurred liabilities in excess of its assets, the other
Division could be liable for such excess.
Each Portfolio has a different investment policy (see THE FUND). You should keep
in mind that the investment experience of the Separate Account and the Divisions
depends on the investment performance of the Fund and the corresponding
Portfolios. Also, values of Basic and Expanded policies are increased to
compensate policy owners for their share of Fund expenses in excess of the sum
of (1) expenses for brokers' commissions, transfer taxes and other fees relating
to purchases and sale of Portfolio investments, (2) fees for advisory services
at an annual rate equivalent to 0.25% of the average daily value of the
aggregate net assets of the Portfolios and (3) Fund income taxes, if any.
The Common Stock Division of our Separate Account superseded our
pre-Reorganization Separate Account I, which was established on June 28, 1973.
The Money Market Division of our Separate Account superseded our
pre-Reorganization Separate Account II, which was
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
established on December 12, 1980. Both pre-Reorganization Separate Accounts were
established under the insurance law of New York State as separate investment
accounts. Assets that were used to provide money to pay benefits under our
variable life policies were allocated to the pre-Reorganization Separate
Accounts from time to time. As a result of the Reorganization those assets, and
additional assets to be received from premiums under in-force policies and
future policies, will be allocated to the Separate Account Divisions from time
to time and used to provide money to pay benefits under our variable life
policies.
Any increase or decrease in a policy's death benefit or cash value will reflect
the investment experience of the Division where you have cash value, which in
turn will depend upon the investment performance of the corresponding Portfolio
of the Fund. (It will not be affected by the experience of the other Division
unless you have cash value in both Separate Account Divisions.)
- --------------------------------------------------------------------------------
HOW WE SUPPORT THE
OPERATIONS OF A POLICY
We support the operations of a policy by putting the net annual premium (which
is the annual premium less the charges described under DEDUCTIONS FROM PREMIUMS)
into the appropriate Separate Account Division or Divisions as the policy owner
chooses. We do this when the policy is issued and, after that, at the beginning
of each policy year during the premium payment period. Even though the gross
premium will be higher for an insured who is a high risk than the gross premium
for an insured who is a standard risk, any cash value that may build up on a
policy covering a high risk insured will be the same as the cash value that
would build up on a policy covering a standard risk insured of the same age and
sex, for the same amount and plan of insurance, and having the same date of
issue and allocation to the Divisions. This is also true for an insured who is a
non-smoker, even though the gross premium for a non-smoker insured will be lower
than for an insured who is a standard risk.
The policy is designed so that the net annual premium put in the Divisions does
not vary with the risk class of the insured. Therefore, we charge a higher gross
premium for an insured who is a high risk to cover the extra risk of mortality.
We charge a lower gross premium for certain non-smokers because of the expected
lower mortality.
The amount at risk on policy anniversaries is the death benefit payable less the
amounts in the Divisions in which a policy participates (adjusted for any
loans). Once the net annual premium is placed into the Divisions, we charge for
the cost of insurance based on the attained age for the amount at risk without
regard to differences in risk class. The cost of insurance is based on the 1958
Commissioners' Standard Ordinary Mortality Table, and generally increases with
attained age. The cost of insurance differs in each year because, based on this
mortality table, the probability of death generally increases with attained age
and the amount at risk is different year by year. The dollar amount of the cost
of insurance also depends on investment experience of the Divisions in which a
policy participates.
Your net annual premium will be put into the Divisions only once each year,
regardless of whether you pay your premium monthly, quarterly, semiannually, or
annually.
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ASSETS
ARE OUR PROPERTY
The assets of the Separate Account are our property. However, New York Insurance
Law provides that the portion of Separate Account's assets that relates to
variable life policies may not be used to satisfy any obligations that may arise
out of any other business we conduct, although under certain circumstances one
Division could perhaps be liable for claims arising out of the other Division's
operations.
We permit money from charges owed to us to stay in the Divisions and accumulate.
These accumulated amounts are in excess of each Division's net assets attributed
to variable life policies. These amounts belong to us.
There probably will be more assets in the Separate Account than those that apply
to our variable life policies. We expect to transfer part or all of the excess
to our General Account. These transfers will be in cash, but before we make them
we will consider whether the transfer could have any adverse effect on our
Separate Account. In 1985 we made no such transfer to our General Account.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
CHARGES AGAINST
THE SEPARATE
ACCOUNT
The amount in the Separate Account Divisions in which your policy participates
is further decreased (after the following charges) by the cost of your insurance
protection. See HOW WE SUPPORT THE OPERATIONS OF A POLICY.
- --------------------------------------------------------------------------------
CHARGES FOR MORTALITY AND
EXPENSE RISKS
We charge the Separate Account for the mortality and expense risk we assume. The
charge is made daily at an effective annual rate of 0.50% of the value of each
Division's assets that are attributable to variable life policies.
The mortality risk we assume is that insureds may live for shorter periods of
time than we estimated. If this occurs, we have to pay a greater amount of death
benefits than we expected in relation to the premiums we received.
The expense risk we assume is that our costs of issuing and administering
policies may be more than we estimated.
The money we collect from this charge may exceed the amount needed to cover
benefits and expenses and would be our gain.
- --------------------------------------------------------------------------------
OTHER CHARGES
The Separate Account purchases shares of the Fund at their net asset value. The
net asset value of those shares reflects management fees and other expenses
already deducted from the assets of the Fund that are briefly described under
THE FUND. More detailed information about the Fund is in its prospectus and in
its Statement of Additional Information.
- --------------------------------------------------------------------------------
YOUR VOTING
PRIVILEGES
GENERAL
As we have already said, all assets held in the Divisions are invested in shares
of the corresponding Portfolios of the Fund. We are the legal owners of those
shares and as such have the right to vote upon certain matters that are required
by the 1940 Act to be approved or ratified by the shareholders of a mutual fund
and to vote upon any other matters that may be voted upon at a shareholder's
meeting. Among other things, we may vote on:
o the election of the Fund's Board of Directors;
o the ratification of the selection of the Fund's independent auditors; and
o matters spelled out in the Fund's prospectus or Statement of Additional
Information that require a shareholder vote.
However, in accordance with our view of current Federal securities law
requirements, we will offer you the opportunity to instruct us as to how Fund
shares allocable to your policy and held by us in the Separate Account will be
voted on these matters. We will vote the shares of the Fund at regular and
special meetings of shareholders of the Fund in accordance with your
instructions. Thus, you will have the right to have a voice in the affairs of
the Fund. Fund shares held in each Division of the Separate Account which are
not allocable to policies or for which no timely instructions from policy owners
are received will be voted by us in the same proportion as shares in that
Division for which instructions are received.
Each policy having a voting interest will be sent proxy material and a form for
giving voting instructions. If required by state insurance officials, we may
disregard voting instructions if those instructions would require shares to be
voted so as to cause a change in the investment objectives or policies of one or
more of the Fund's Portfolios, or to approve or disapprove an investment policy
or investment adviser of one or more of the Fund's Portfolios. In addition, we
may disregard voting instructions in favor of changes initiated by a policy
owner or the Fund's Board of Directors in the investment policy or the
investment adviser of a Portfolio, provided that our disapproval of the change
is reasonable and is based on a good faith determination that the change would
be contrary to state law, the proposed advisory fee would be higher than we are
permitted to pay by the terms of our variable life policies, or the charge would
lead to an adverse effect on our general account because it would result in
unsound or overly speculative investments. We will advise policy owners if we do
disregard voting instructions, and give our reasons for such actions in the next
semiannual report we send to policy owners.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
All Fund shares of whatever class are entitled to one vote, and the votes of all
classes are cast on an aggregate basis, except on matters where the interests of
the Portfolios differ. In such case, the voting is on a Portfolio-by-Portfolio
basis. Approval or disapproval by the shareholders in one Portfolio on such a
matter would not generally be a prerequisite of approval or disapproval by
shareholders in another Portfolio; and shareholders in a Portfolio not affected
by a matter generally would not be entitled to vote on that matter. Examples of
matters which would require a Portfolio-by-Portfolio vote are changes in the
fundamental investment policy or restrictions of a particular Portfolio and
approval of the investment advisory agreement.
- --------------------------------------------------------------------------------
VOTING INSTRUCTIONS OF
OTHER SEPARATE ACCOUNT
PARTICIPANTS
Net premiums for our individual flexible premium variable life policy are
invested in our Separate Account FP, which, in turn, invests in the Fund. In
addition, we anticipate that Fund shares will be held by other separate accounts
established by us or other insurance companies affiliated or unaffiliated with
us. We expect that those shares will be voted through those separate accounts in
accordance with instructions of their participants. This will dilute the effect
of voting instructions of policy owners whose net premiums are invested in the
Separate Account.
- --------------------------------------------------------------------------------
DETERMINING THE FUND
PORTFOLIO FOR WHICH YOU
CAN GIVE VOTING
INSTRUCTIONS
If all your cash value is in one Division, you can participate in the voting
only for the shares in the Fund Portfolio that corresponds to that Division. If
your cash value is divided between the Divisions, you are entitled to
participate in the voting of the shares of the Fund that correspond to each of
the Fund Portfolios.
The number of Fund shares held in each Division attributable to your policy for
purposes of your voting privilege will be determined by dividing your policy's
cash value (less any policy indebtedness) allocable to that Division by the net
asset value of one share of the corresponding Fund Portfolio as of the record
date for the Fund's shareholder meeting. The record date for this purpose will
not be more than 90 days before the meeting of the Fund. Fractional shares are
counted.
EXAMPLE: Your policy has a cash value of $3,000, 50% of which is attributable to
the Common Stock Division and 50% of which is attributable to the Money Market
Division. Assuming the net asset value of one share in each Fund Portfolio is
$100, you would have the privilege of voting 30 shares. You will have the
privilege of instructing us regarding 15 votes in each Division.
EXAMPLE (ASSUMING AN OUTSTANDING LOAN): Your policy has a cash value of $3,000,
which entitles you to 30 votes. If you have a $1,000 loan (including interest)
equally allocated between each Division, you would be entitled to 10 votes in
each Division, or an aggregate 10 fewer votes.
- --------------------------------------------------------------------------------
LAW CHANGES MAY AFFECT
YOUR VOTING PRIVILEGES
Our Separate Account is required by Federal securities laws or regulations as
currently interpreted to have policy owners instruct us as to the Fund's voting
rights. However, if amendments to or interpretations of those laws or
regulations change what must be voted on or restrict the matters for which
policy owners are given the opportunity to provide voting instructions, we will
in turn change what is submitted to policy owners.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
OUR RIGHTS
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. We will always attempt to comply
with applicable laws before we take any of these actions. If necessary, we will
seek approval by policy owners.
Specifically, we reserve the right to:
o add Divisions to or remove Divisions from the Separate Account;
o combine any two or more Divisions within the Separate Account;
o transfer assets of the two types of variable life policies offered by this
prospectus, as well as the assets of our other variable life policies, from
one Division to another (if we do, we will withdraw proportional amounts of
each investment to the Division, but we will also make whatever adjustments
are needed to avoid odd lots and fractions);
o operate the Separate Account as a management investment company under the
1940 Act, or in any other form the law allows (if we do, we may invest the
assets in any legal investments and we or one of our affiliates, such as
EIMC, will serve as investment adviser);
o end the registration of the Separate Account under the 1940 Act; or
o operate the Separate Account under the general supervision of a committee
made up of individuals all of whom may be, under the 1940 Act, interested
persons of us or of Equitable or discharge such Committee.
- --------------------------------------------------------------------------------
SUBSTITUTION OF
FUND SHARES
Although we believe it to be highly unlikely, it is possible that, in our
judgment, one or more of the Portfolios of the Fund may become unsuitable for
investment by the Separate Account because, for example, of a change in the
investment policy, or a change in the tax laws, or because the shares are no
longer available for investment. For those or other reasons, we may seek to
substitute the shares of another Portfolio or of an entirely different mutual
fund. Before we can do this, we would obtain the approval of the SEC, and
possibly one or more state insurance departments, to the extent legally
required.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFITS
UNDER OUR POLICIES
The death benefit is the amount payable to the named beneficiary when the
insured dies. All or part of the benefit can be paid in cash or applied under
one or more of our payment options described under PAYMENT OPTIONS.
The death benefit will at least equal the guaranteed minimum of insurance for
the policy year in which the insured dies. Whether the death benefit is higher
than the guaranteed minimum depends on the investment experience of the
Divisions in which you have cash value. See ILLUSTRATIONS OF DEATH BENEFITS,
CASH VALUES, AND ACCUMULATED PREMIUMS.
The death benefit is the guaranteed minimum death benefit, plus the sum (if
positive) of the variable adjustment amounts (determined annually) in the
Divisions in which you have cash value.
The amount of death benefit actually paid to the insured's beneficiary will be
adjusted as of the date of the insured's death to reflect:
o any policy loans together with accrued interest;
o part of any unpaid premium due if the insured dies during the grace period;
o any premium paid for a period beyond the policy month in which the insured
dies;
o any insurance added to the policy by a rider;
o the insured's suicide within 2 years after the policy's date of issue. See
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY; and
o any material misstatement in the application for insurance, including a
misstatement of the insured's age or sex. See LIMITS ON OUR RIGHT TO
CHALLENGE THE POLICY.
Interest will be paid from the date of death to the date the death benefit is
paid at least at the annual rate that we are paying under the deposit option
described in PAYMENT OPTIONS.
If you sign an application and send us money, and if the person proposed to be
insured dies between the application date and the date we act on the
application, we have a special rule. Should we decide the proposed insured was
insurable and accept the application, we will pay the initial face amount to the
proposed beneficiary.
- --------------------------------------------------------------------------------
THE GUARANTEED MINIMUM
DEATH BENEFIT
The guaranteed minimum death benefit equals a policy's face amount for the
policy year in which the insured dies, regardless of the investment experience
of the Divisions in which a policy participates.
BASIC POLICY. The guaranteed minimum death benefit of a Basic Policy is equal to
its face amount and remains level as long as the policy is in force.
EXPANDED POLICY. The guaranteed minimum death benefit of an Expanded Policy is
equal to its face amount for the policy year in which the insured dies. The
policy's face amount in the first policy year is its initial face amount.
On each policy anniversary the face amount will increase by 3% over the prior
year's face amount until the 14th policy anniversary, when the face amount is
set at 150% of the initial face amount. Thereafter, the face amount always
remains at that level.
In the table below, we show the face amount for each $1,000 of initial face
amount in an Expanded Policy.
- --------------------------------------------------------------------------------
On Policy Face Amount On Policy Face Amount
Anniversary Increases To Anniversary Increases To
- --------------------------------------------------------------------------------
1 $1,030 8 $1,267
2 1,061 9 1,305
3 1,093 10 1,344
4 1,126 11 1,384
5 1,159 12 1,426
6 1,194 13 1,469
7 1,230 14 and beyond 1,500
- --------------------------------------------------------------------------------
15
<PAGE>
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THE VARIABLE ADJUSTMENT
AMOUNT
The variable adjustment amount for each Division is the amount of the death
benefit that results from all past investment experience of that Division. In
the first policy year, the variable adjustment amount in each Division is zero.
After that, the variable adjustment amount is the amount of insurance purchased
by the difference between the actual rate of return and 4%. Therefore, a
Division's variable adjustment amount will not change in any year that the
Division's gross return minus the charges to that Division results in a net
return of 4%. If the net return is more than 4%, the variable adjustment amount
will increase. The variable adjustment amount will increase because additional
amounts of paid-up life insurance are purchased. If the net return is less than
4%, it will decrease. The variable adjustment amount will decrease because these
additional amounts of paid-up life insurance are lost. The rates at which these
additional amounts of paid-up life insurance are purchased or lost are based on
sex and attained age and are guaranteed.
The percentage change in the death benefit for any year is not the same as the
net return for the preceding year and it is not necessarily related to current
or future rates of inflation.
The death benefit is equal to the guaranteed minimum death benefit plus the sum
(if positive) of the variable adjustment amounts for both Divisions. However,
even if the sum of the variable adjustment amounts is negative, the death
benefit in the year the insured dies will never be less than the guaranteed
minimum.
In any year that the sum of the variable adjustment amounts increases (and is
positive), the death benefit will increase. If the sum of the variable
adjustment amounts is negative, investment experience can not increase the death
benefit above the guaranteed minimum until it has increased the variable
adjustment amount of at least one Division so that the sum is positive. In any
year that the sum of the variable adjustment amounts for the Divisions
decreases, the death benefit may decrease, unless it is already at the
guaranteed minimum.
The variable adjustment amount for each Division is set on each policy
anniversary. Once set, it remains the same for the following policy year. If it
is set above the guaranteed minimum, we will be responsible for keeping it at
that level until the next policy anniversary. You will bear the risk that it
could drop on the next policy anniversary (but not below the guaranteed
minimum).
There is no guarantee that a Division's investment experience, which will
reflect the investment performance of the corresponding Portfolio of the Fund,
will be sufficient to result in an increase in death benefits. However, the
historical pattern of stock market investment performance has been one of
long-range growth, and money market investments in recent years have returned
over 4%.
THE VARIABLE ADJUSTMENT IS CUMULATIVE. Increases and decreases in the variable
adjustment amount are carried into each succeeding year. The variable adjustment
amount for a Division can be positive or negative. If it is positive, good
investment experience will produce a larger variable adjustment amount. If it is
negative, good investment experience must first offset the current negative
variable adjustment amount before there can be a positive amount.
For a given net return, the greater the cash value in a Division, the greater
the effect of investment experience will be on the variable adjustment amount.
Therefore, in later policy years, when your total cash value is likely to be
greater, investment experience may have a greater effect on the death benefit.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
Basic Policy. Assume a hypothetical gross annual investment return of 0% for the
first 9 policy years. This results in a negative variable adjustment amount. A
net return of approximately 26.6% in the 10th policy year would offset the
cumulative negative variable adjustment
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
amount so that it would equal zero. Any net return above that would produce a
positive variable adjustment amount. On the other hand, the negative variable
adjustment amount may be offset over a number of years. Thus, if the gross
return in the 10th policy year was 8% (net return of 7.19%), a net return of
7.19% in each of the 5 following policy years would be required to produce a
positive variable adjustment amount by the 16th policy year.
- --------------------------------------------------------------------------------
NET RETURN
The death benefit based on a Division's net return is set on each policy
anniversary. The net return depends on a Division's investment experience from
the first day of that policy year to the first day of the next policy year. It
takes into account investment income, capital gains and capital losses (whether
realized or unrealized) with respect to Fund shares owned by the Division and
gains resulting from the reimbursement by us to the Division of amounts
corresponding to certain Fund expenses. The charges against the Division are
then deducted to determine the net return. the net return on a date during a
policy year depends on the investment experience of the Division from the first
day of that policy year to that date and can affect cash values but not death
benefits.
The net return of each Division is determined at the close of business on each
day in which the degree of trading in the corresponding Portfolio of the Fund
might materially affect the net return of the Division. We call this a "business
day". Normally this would be each day that the New York Stock Exchange is open.
However, because we are closed on Martin Luther King Day and the Friday after
Thanksgiving Day, no determinations will be made on those days.
The assets of each Division are valued by multiplying the number of Fund shares
in each Division by the net asset value of such shares and is adjusted by the
charge for mortality and expense risks. See the financial statements for the
Separate Account in this prospectus.
The net return for a policy year is not the same as for a calendar year unless
the policy anniversary is January 1.
A statement of the method we use to calculate net return is an exhibit to the
Registration Statement we filed with the SEC. It will be furnished on request.
- --------------------------------------------------------------------------------
HOW THE DEATH BENEFIT
VARIES FROM THE
GUARANTEED MINIMUM
The following example shows how the death benefit varies from the guaranteed
minimum as a result of investment experience. Assume that the insured was a 25
year old male when the policy was issued, and the hypothetical gross annual
return is 8% for each Division or their combination (which is equal to a net
return of 7.19%). Use the amounts from the ILLUSTRATION OF DEATH BENEFITS, CASH
VALUES, AND ACCUMULATED PREMIUMS.
- --------------------------------------------------------------------------------
Variable
Guaranteed Adjustment Death
Minimum + Amount = Benefit
- --------------------------------------------------------------------------------
BASIC POLICY
End of policy year 5 $40,034 $621 $40,655
Increase -- 280 280 (0.7% increase)
- --------------------------------------------------------------------------------
End of policy year 6 $40,034 $901 $40,935
- --------------------------------------------------------------------------------
EXPANDED POLICY
End of policy year 5 $34,238 $688 $34,926
Increase 1,033 302 1,335 (3.8% increase)
- --------------------------------------------------------------------------------
End of policy year 6 $35,271 $990 $36,261
- --------------------------------------------------------------------------------
If the gross annual return was 0% (equal to a net return of -.75%), the death
benefit at the end of policy year 6 would have been:
o $40,238 (a 1.0% decrease) for the Basic Policy. This reflects a decrease in
the variable adjustment amount of $417.
o $35,511 (a 1.7% increase) for the Expanded Policy. This reflects a decrease
in the variable adjustment amount of $449.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
CASH VALUE AND
LOAN PRIVILEGES
UNDER OUR POLICIES
HOW WE DETERMINE CASH
VALUE
The cash value is the sum, on any date, of the cash values in each Division of
the Separate Account in which your policy participates. If no premium is due and
unpaid, the cash value of the Division equals the tabular cash value at the end
of each year as stated in the policy multiplied by the annual premium allocation
percentage selected by the policy owner for that Division in effect on the last
anniversary, increased or decreased by the aggregate net single premium
specified in the policy for the variable adjustment amount for that Division.
The tabular cash value is what the cash value for the policy would be if all the
Divisions in which you had funds had a constant net investment return of 4% a
year. The premium allocation percentage is the percentage of your current net
annual premium allocated to each of the Divisions. The net single premium is the
one-time cost at your attained age to purchase one dollar of death benefit, as
specified in your policy.
Adjustments during a year reflect a Division's investment experience, the cost
of insurance, premium payments, any indebtedness and any cash value transfers.
The cash values for substandard risk policies and non-smoker policies are the
same as for comparable standard risk policies. See THE VARIABLE ADJUSTMENT
AMOUNT and NET RETURN.
- --------------------------------------------------------------------------------
THERE IS NO GUARANTEED
MINIMUM CASH VALUE
Daily increases or decreases in cash value depend on the investment experience
of the Divisions. It is unlikely that there will be a cash value during the
early part of the first policy year because of the first year administrative
charges. There is no guaranteed minimum cash value.
- --------------------------------------------------------------------------------
RETURNING THE POLICY FOR
CASH
During the insured's lifetime, and subject to our rules, your policy can be
returned for payment of the cash value net of any indebtedness. The amount
payable will be based on the net cash value next computed after we receive your
signed request for payment of the cash value at your Regional Service Center,
accompanied by your policy. The insurance coverage will end on the date you send
us the policy and your request.
SPLITTING THE POLICY. You can request to split your policy into two policies. In
addition, you may return one for cash. Any policy that continues will be based
on the new initial face amount. The premium for the policy that continues will
be based on the new initial face amount but the same age, sex and risk class as
the original policy.
If you split a Basic Policy, the policy we continue must have a face amount of
at least $25,000.
If you split an Expanded Policy, the policy we continue must have a face amount
that at least equals what an Expanded Policy with an initial face amount of
$25,000 with its automatic 3% a year increases would have reached in the policy
year during which you split your policy.
These are our current procedures, which may change.
- --------------------------------------------------------------------------------
INCOME TAX WITHHOLDING
Federal tax law requires us to withhold income tax from any portion of your
surrender proceeds that is subject to tax, unless you request us not to
withhold.
If you surrender your policy and do not advise us in writing that you do not
want us to withhold Federal income tax before the date payment must be made, we
are required by law to withhold tax from the surrender payment.
If you elect not to have tax withheld from the surrender payment, or if the
amount of Federal income tax withheld is insufficient, you may be responsible
for payment of estimated tax. You may incur penalties under the estimated tax
rules if your withholding and estimated tax payments are not sufficient. You may
wish to consult your tax adviser.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
YOU CAN TRANSFER CASH
VALUE BETWEEN DIVISIONS
You can request to transfer part or all of your cash value between the
Divisions. You may do this up to twice in a policy year. A transfer will go into
effect on the day we receive your signed request at your regional Life Insurance
Center. Your request should show the policy number an amount (either in dollars
or as a percentage) you want to transfer. When cash value is transferred a
portion of the net annual premium is transferred as well. We reallocate loans if
you transfer cash value.
- --------------------------------------------------------------------------------
WHEN A DIVISION
BECOMES INACTIVE
If you have a policy loan allocated to a Division and your cash value plus
remaining net annual premium less your loan (including accrued loan interest) in
that Division reaches zero, that Division will become inactive for your policy.
We will reallocate the loan to the other Division. A Division will also become
inactive for your policy if you transfer its entire cash value to the other
Division.
We will notify you when a Division becomes inactive.
If a Division becomes inactive, the future variable adjustment amount, cash
value and net return will be affected. We will assume that you do not want to
put any part of future net annual premiums into the inactive Division. You can
request us to put any part of a future net annual premium into the inactive
Division effective on the next policy anniversary after your request is
received. You may also transfer cash value into an inactive Division from the
other Division. See YOU CAN TRANSFER CASH VALUE BETWEEN DIVISIONS.
- --------------------------------------------------------------------------------
TAKING A POLICY LOAN
For policy loans, we offer both a fixed and an adjustable interest rate
provision. This section will first discuss loans with fixed interest rates and
will then discuss the special features of the adjustable loan interest rate, if
it is elected.
Borrowing money against your policy will have a permanent effect on your
policy's cash value and the amount by which the death benefit may increase above
the guaranteed minimum. The effect remains even though the loan is repaid in
whole or in part.
You may borrow up to 90% of your policy's cash value using the policy as
security. Unless it is being used to pay premiums, we will not grant a loan that
is not at least $100 more than any outstanding loan with accrued interest. The
amount of your premium will not be affected by the fact you have a loan or by
how you repay the loan. If a loan is made after the due date of a premium, that
premium will be subtracted from the loan proceeds. If you request a loan in
order to pay a premium, we will charge loan interest from the date we make the
loan even if it is before the premium due date.
Whenever the loan with accrued interest from one Division equals or exceeds the
cash value in that Division, that Division will become inactive for your policy.
We will transfer the total cash value and loan allocation to the other Division.
See WHEN A DIVISION BECOMES INACTIVE.
IF LOANS EXCEED THE CASH VALUE OF YOUR POLICY. Whenever the loan with accrued
interest exceeds the total cash value of your policy, we will send a notice to
you and to anyone to whom you told us you assigned the policy. The policy will
end 31 days after we send the notice unless you make a repayment during the 31
day period that is large enough to reduce your outstanding loan with accrued
interest to below the total cash value of your policy. See OPTIONS ON LAPSE.
If you borrow the maximum of 90% of your policy's cash value, you increase your
risk of having your policy end. This might happen if the combination of policy
loan interest (as it builds up), the cost of insurance, asset charges against
the Separate Account and investment experience in the Divisions where you have
cash value uses up the remaining 10%.
INTEREST. Except as discussed under ADJUSTABLE LOAN INTEREST RATE, interest on
loans is 5% a year. Interest is charged daily and is payable by the policy owner
on each anniversary. However, if it is not paid, it will be compounded on the
policy anniversary because it will be added to the loan principal. This unpaid
interest is transferred out of each Division where you have your loan into our
general account. You should rely on your tax adviser as to whether this interest
is deductible.
REPAYMENT. You can repay all or part of any outstanding loan with accrued
interest at any time while the policy is in effect and the insured is alive. You
repayment, whether full or partial, will be reallocated to the Divisions in
proportion to the loan allocation to each Division at the time of repayment.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
The amount of any outstanding loan with accrued interest will be deducted from
the death benefit or cash value proceeds.
WHICH DIVISION WE CHARGE LOANS AGAINST. We allocate a loan based on the net cash
value in each Division on the date the loan is made. We reallocate loans if you
transfer cash value.
THE PERMANENT EFFECT OF A FIXED INTEREST RATE LOAN. When you take out a loan, we
transfer part of the cash value equal to the amount of the loan from the
Divisions to our general account. In addition, unpaid interest on the policy
loan will be transferred to our general account from time to time. The amount
taken out of the Divisions will not be affected by the Divisions' investment
experience while the loan is outstanding. Since the amount is not in the
Divisions, it cannot contribute to any possible increase in your policy's death
benefit or cash value.
We will credit your policy with a 4% annual return on any amount transferred to
our general account as a result of your policy loan. This can protect cash value
from decreasing if investment experience is below 4%. It will also prevent cash
value from increasing if investment experience is above 4%.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
Basic Policy with standard rates. Use the illustration on page 25, and assume an
8% hypothetical gross annual investment return for each Division of their
combination (which is a net return of 7.19%). If you take a loan for $3,000 at
the end of the 9th policy year, it will affect the death benefit and cash value
(before subtracting the amount of the loan with loan interest) in the 10th
policy year as follows:
- --------------------------------------------------------------------------------
Without Loan With Loan
- --------------------------------------------------------------------------------
Death Benefit $42,603 $42,250
Cash Value 4,456 4,360
- --------------------------------------------------------------------------------
The difference results from the transfer of the portion of the cash value equal
to the loan from the Division to the general account. The return on the amount
transferred is reduced to 4% a year, rather than the Division's net return of
7.19%.
See DEATH BENEFITS UNDER OUR POLICIES for adjustments that are made as of the
date of the insured's death.
ADJUSTABLE LOAN INTEREST RATE. As an alternative to the fixed loan interest rate
of 5%, you may elect (in writing) the Adjustable Loan Interest Rate. Under this
alternative, a rate will be determined as of the beginning of each policy year
and it will apply to any new or outstanding loan under your policy during that
policy year. The annual interest rate for a policy year will be the greater of
5% or the Monthly Average Corporates yield shown in Moody's Corporate Bond Yield
Averages published by Moody's Investors Service, Inc., for the month ending two
months before the beginning of the policy year.
However, if you have elected an Adjustable Loan Interest Rate, it will be the
same for a policy year after the first as it was for the immediately preceding
policy year if the formula above would produce a change of less than 1/2 of 1%
from the rate applicable to your policy for the preceding year.
NOTIFICATION OF ADJUSTABLE LOAN INTEREST RATE. We will notify you of the initial
interest rate at the time a loan is made under the Adjustable Loan Interest Rate
election. Initial loan interest rates are also available on request. We will
also notify you in advance of each policy anniversary of the interest rate for
the following policy year.
CANCELLATION OF ADJUSTABLE LOAN INTEREST RATE ELECTION. You may cancel your
election of the Adjustable Loan Interest Rate in writing at any time, but the
request will not take effect until the next policy anniversary. When the
cancellation takes effect, the loan rate will revert to the fixed rate of 5%.
Election or re-election of the Adjustable Loan Interest Rate may be made in
writing at any time but will not take effect until the next policy anniversary
even if no loan is outstanding.
- --------------------------------------------------------------------------------
20
<PAGE>
STATE VARIATIONS. Not all states have laws permitting adjustable policy loan
interest rates. Some states permit adjustable rates but set maximums. Some
states do not permit cancellation of an adjustable loan interest rate provision,
and there are other variations from state to state. For details about the policy
loan interest rate laws in your state, contact your agent or your regional Life
Insurance Center.
AMOUNTS CREDITED ON BORROWED FUNDS. When you take out a loan, we transfer part
of the cash value equal to the amount of the loan from the Divisions in which
your policy participates to our general account. In addition, unpaid interest on
the policy loan will be transferred to our general account from time to time.
The amount taken out of the Divisions will not be affected by the investment
experience of the Divisions while the loan is outstanding. Since the amounts is
not in the Divisions, it contributes to possible increases in your policy's
death benefit or cash value only if you have elected the Adjustable Loan
Interest Rate.
If you have chosen an Adjustable Loan Interest Rate, we will credit your policy
with a rate of return which is 0.75% below the interest rate that is charged as
a result of your policy loan, minus any charges for taxes or amounts set aside
as a provision for taxes. We are not making charges for taxes or provisions for
taxes now but we may make such charges in the future. See OUR INCOME TAXES. For
example, if the Adjustable Loan Interest Rate were 10%, the credit rate would be
9.25%. If the Adjustable Loan Interest Rate were below 5%, the actual interest
rate would be 5% and the credit rate would be 4.25%. Any amounts credited over
4% will increase your policy's death benefit and cash value. If you elect the
Adjustable Loan Interest Rate, you will bear the additional investment risk
connected with changes in the annual credit rate because they affect the death
benefit and cash value under your policy.
THE PERMANENT EFFECT OF AN ADJUSTABLE INTEREST RATE LOAN. If the current policy
year's Adjustable Loan Interest Rate less 0.75% (and less any charge for taxes
or provision for taxes) is greater than the net return for that year of the
Divisions in which you have funds, then the death benefit and cash value for
that year will be greater than if no loan were made. The reverse would also be
true.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
Basic Policy with standard rates. Use the illustration on page 25, and assume an
8% hypothetical gross annual investment return for each Division of their
combination (which is a net return of 7.19%). If you take a loan for $3,000 at
the beginning of the 10th policy year and you have elected the Adjustable Loan
Interest Rate with an assumed hypothetical loan interest rate of 12.88% (the
actual rate for February, 1985) in the 10th policy year, it will affect the
death benefit and cash value (before subtracting the amount of the loan with
loan interest) in the 10th policy year as follows:
- --------------------------------------------------------------------------------
Without Loan With Loan
- --------------------------------------------------------------------------------
Death Benefit $42,603 $43,150
Cash Value 4,456 4,604
- --------------------------------------------------------------------------------
See the example under THE PERMANENT EFFECT OF A FIXED INTEREST RATE LOAN for a
loan with the fixed interest rate of 5%.
WHENEVER THIS PROSPECTUS DISCUSSES INCREASES AND DECREASES IN THE DEATH BENEFIT
AND CASH VALUES UNDER OUR VARIABLE LIFE POLICIES, YOU SHOULD CONSIDER THE IMPACT
OF HAVING ELECTED AN ADJUSTABLE LOAN INTEREST RATE.
21
<PAGE>
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF
DEATH BENEFITS,
CASH VALUES, AND
ACCUMULATED
PREMIUMS
To help you get a picture of how the key financial elements of our policies
work, we have prepared a series of tables.
The tables show how death benefits and cash value of policies with annual
premiums of $300, $500, and $1,000 could vary over an extended period of time if
the Divisions had CONSTANT hypothetical gross annual investment returns of 0%,
4%, 8% and 12% over the years covered by each table. The death benefits and cash
values would differ from those shown in the tables if the annual investment
returns did not remain absolutely constant. Thus, the figures would be different
if the return AVERAGED 0%, 4%, 8% and 12% over a period of years but went above
or below those figures in individual policy years. The death benefits and cash
values would also differ, depending on the investment allocations made to the
Divisions, if the actual rates of investment return averaged 0%, 4%, 8% and 12%,
but went above or below those figures for individual Divisions. The tables are
for standard risk policies.
The cash values in the tables are related to the annual premiums shown on page
38. The amounts of death benefits and cash values shown in the tables for the
end of each policy year take into account a daily charge against each Division
that is equivalent to an annual charge of 0.75% at the beginning of each year.
This charge is the 0.50% charge against the Separate Account for mortality and
expense risks and the effect on each Division's investment experience of the
charge to the Fund assets for investment advisory services (equivalent to an
annual rate of 0.25% of the aggregate average daily net assets of the
Portfolios). The effect of these adjustments is that on a 0% actual rate of
return the net rate of return would be -0.75%, on 4% it would be 3.22%, on 8% it
would be 7.19% and on 12% it would be 11.16%.
The hypothetical returns shown in the tables do not reflect any charges for Fund
expenses in addition to an investment advisory fee charge of 0.25%, because the
Divisions in general will be reimbursed for their share of such expenses, as
previously discussed under THE SEPARATE ACCOUNT, ITS INVESTMENTS AND ITS
INVESTMENT EXPERIENCE and THE FUND.
The tables reflect the fact that we do not currently charge the Divisions for
Federal income tax. However, if we do make such a charge in the future, it would
take a higher rate of return to produce after-tax returns of 0%, 4%, 8% and 12%
than it does now.
The second and third columns of each table show what would happen if an amount
equal to the total annual premiums for the premium payment period were invested
to earn interest, after taxes, of 4% or 5% compounded annually. These tables
show that if a policy is returned in its early years for payment of its cash
value, the cash value will be low in comparison to premiums accumulated with
interest. This means that the cost of carrying insurance for a relatively short
time will be high.
The Basic Policy has a level guaranteed minimum death benefit. The Expanded
Policy has a guaranteed death benefit which increases by 3% per year regardless
of investment experience until it reaches 150% of the original face amount in
the fifteenth year.
If you request, we will furnish you with a comparable illustration based on the
proposed insured's sex and age and an initial face amount or premium amount of
your choice. A specific illustration will assume that the insured is a standard
risk and that the premium will be paid on an annual basis. In addition, if you
do purchase a policy, we will deliver a specific illustration that reflects how
the premium will actually be paid and to what risk class the insured has been
assigned.
We have also prepared special illustrations showing the effects of policy loans
on a planned basis and showing various insurance plans suitable for special
purposes. These are available on request.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
OF ILLUSTRATIONS
- --------------------------------------------------------------------------------
Basic policy Expanded policy
Page Page
---------------------------------------
$ 300 annual premium Male Age 10 23 24
$ 500 annual premium Male Age 25 25 26
$1,000 annual premium Male Age 40 27 28
$ 300 annual premium Female Age 10 29 30
$ 500 annual premium Female Age 25 31 32
$1,000 annual premium Female Age 40 33 34
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$37,605 FACE AMOUNT MALE ISSUE AGE 10
(GUARANTEED MINIMUM DEATH BENEFIT) $300 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $37,605 $37,605 $ 37,619 $ 37,637
2 636 646 37,605 37,605 37,680 37,775
3 974 993 37,605 37,605 37,788 38,025
4 1,325 1,358 37,605 37,605 37,944 38,391
5 1,690 1,741 37,605 37,605 38,149 38,881
6 2,069 2,143 37,605 37,605 38,402 39,500
7 2,464 2,565 37,605 37,605 38,704 40,254
8 2,875 3,008 37,605 37,605 39,055 41,149
9 3,302 3,473 37,605 37,605 39,455 42,193
10 3,746 3,962 37,605 37,605 39,905 43,394
15 6,247 6,797 37,605 37,605 42,921 52,064
20 9,291 10,416 37,605 37,605 47,286 66,260
25 12,993 15,034 37,605 37,605 53,123 87,932
30 17,498 20,928 37,605 37,605 60,578 119,837
55 (Age 65) 53,393 79,106 37,605 37,605 128,494 637,584
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------ ------- ------- --------
$ 7 $ 10 $ 12 $ 14
197 209 221 234
385 414 445 477
569 624 683 746
753 842 939 1,045
934 1,065 1,211 1,375
1,112 1,292 1,500 1,738
1,286 1,525 1,806 2,138
1,457 1,762 2,131 2,578
1,627 2,006 2,478 3,065
2,456 3,338 4,595 6,390
3,270 4,896 7,548 11,915
4,066 6,706 11,647 21,071
4,828 8,779 17,285 36,150
4,419 17,723 80,874 401,295
(1) If premiums are paid more frequently than annually the payments would be
$153 semi-annually, $78 quarterly or $27 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
23
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$29,316 FACE AMOUNT MALE ISSUE AGE 10
(GUARANTEED MINIMUM DEATH BENEFIT) $300 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $30,195 $30,195 $ 30,210 $ 30,229
2 636 646 31,104 31,104 31,183 31,283
3 974 993 32,042 32,042 32,234 32,482
4 1,325 1,358 33,009 33,009 33,363 33,829
5 1,690 1,741 33,977 33,977 34,543 35,304
6 2,069 2,143 35,003 35,003 35,381 36,971
7 2,464 2,565 36,058 36,058 37,198 38,807
8 2,875 3,008 37,143 37,143 38,646 40,817
9 3,302 3,473 38,257 38,257 40,172 43,008
10 3,746 3,962 39,400 39,400 41,779 45,388
15 6,247 6,797 43,974 43,974 49,430 58,830
20 9,291 10,416 43,974 43,974 53,823 73,195
25 12,993 15,034 43,974 43,974 59,641 94,983
30 17,498 20,928 43,974 43,974 67,022 126,924
55 (Age 65) 59,642 85,905 43,974 43,974 134,792 645,712
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------ ------- ------- --------
$ 26 $ 28 $ 31 $ 33
220 233 246 259
411 442 474 508
598 656 717 782
788 881 982 1,092
974 1,110 1,262 1,431
1,156 1,342 1,557 1,804
1,332 1,578 1,870 2,213
1,504 1,818 2,201 2,663
1,671 2,063 2,551 3,158
2,459 3,362 4,652 6,497
3,208 4,852 7,550 12,009
3,933 6,575 11,561 21,129
4,604 8,523 17,050 36,119
5,878 19,389 82,508 404,081
(1) If premiums are paid more frequently than annually the payments would be
$153 semi-annually, $78 quarterly or $27 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
24
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$40,034 FACE AMOUNT MALE ISSUE AGE 25
(GUARANTEED MINIMUM DEATH BENEFIT) $500 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $40,034 $40,034 $40,059 $ 40,090
2 1,061 1,076 40,034 40,034 40,133 40,259
3 1,623 1,655 40,034 40,034 40,256 40,544
4 2,208 2,263 40,034 40,034 40,429 40,952
5 2,816 2,901 40,034 40,034 40,655 41,496
6 3,449 3,571 40,034 40,034 40,935 42,183
7 4,107 4,275 40,034 40,034 41,270 43,021
8 4,791 5,013 40,034 40,034 41,659 44,016
9 5,503 5,789 40,034 40,034 42,103 45,177
10 6,243 6,603 40,034 40,034 42,603 46,513
15 10,412 11,329 40,034 40,034 45,957 56,162
20 15,484 17,360 40,034 40,034 50,786 71,906
25 21,656 25,057 40,034 40,034 57,191 95,840
30 29,164 34,880 40,034 40,034 65,321 131,001
40 (Age 65) 49,413 63,419 40,034 40,034 87,684 254,387
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------ ------- ------- --------
$ 80 $ 86 $ 93 $ 99
389 415 441 467
696 753 813 875
1,001 1,102 1,211 1,328
1,330 1,491 1,667 1,861
1,656 1,890 2,154 2,451
1,979 2,301 2,674 3,104
2,299 2,725 3,230 3,828
2,615 3,160 3,823 4,628
2,929 3,608 4,456 5,514
4,424 6,016 8,286 11,535
5,748 8,659 13,420 21,282
6,884 11,510 20,219 36,906
7,825 14,525 29,093 61,649
9,395 21,081 55,188 160,111
(1) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $130 quarterly or $44 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
25
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$29,541 FACE AMOUNT MALE ISSUE AGE 25
(GUARANTEED MINIMUM DEATH BENEFIT) $500 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $30,427 $30,427 $30,460 $ 30,502
2 1,061 1,076 31,343 31,343 31,461 31,612
3 1,623 1,655 32,288 32,288 32,543 32,874
4 2,208 2,263 33,263 33,263 33,706 34,294
5 2,816 2,901 34,238 34,238 34,926 35,859
6 3,449 3,571 35,271 35,271 36,261 37,634
7 4,107 4,275 36,335 36,335 37,682 39,596
8 4,791 5,013 37,428 37,428 39,190 41,754
9 5,503 5,789 38,551 38,551 40,785 44,114
10 6,243 6,603 39,703 39,703 42,467 46,686
15 10,412 11,329 44,311 44,311 50,595 61,470
20 15,484 17,360 44,311 44,311 55,595 77,894
25 21,656 25,057 44,311 44,311 62,157 102,683
30 29,164 34,880 44,311 44,311 70,410 138,898
55 (Age 65) 49,413 63,419 44,311 44,311 92,742 264,957
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------ ------- ------- --------
$ 153 $ 161 $ 170 $ 179
476 506 537 568
794 859 928 999
1,108 1,222 1,344 1,475
1,451 1,629 1,824 2,039
1,790 2,046 2,335 2,661
2,123 2,473 2,879 3,349
2,451 2,911 3,458 4,108
2,774 3,359 4,074 4,947
3,091 3,818 4,730 5,872
4,553 6,234 8,641 12,103
5,794 8,824 13,818 22,118
6,802 11,562 20,614 38,111
7,540 14,356 29,378 63,326
8,140 19,699 54,314 162,706
(1) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $130 quarterly or $44 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
26
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$49,238 FACE AMOUNT MALE ISSUE AGE 40
(GUARANTEED MINIMUM DEATH BENEFIT) $1,000 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $49,238 $49,238 $49,286 $ 49,346
2 2,122 2,153 49,238 49,238 49,404 49,617
3 3,246 3,310 49,238 49,238 49,593 50,053
4 4,416 4,526 49,238 49,238 49,850 50,662
5 5,633 5,802 49,238 49,238 50,177 51,454
6 6,898 7,142 49,238 49,238 50,576 52,438
7 8,214 8,549 49,238 49,238 51,046 53,621
8 9,583 10,027 49,238 49,238 51,586 55,012
9 11,006 11,578 49,238 49,238 52,196 56,620
10 12,486 13,207 49,238 49,238 52,878 58,457
15 20,824 22,657 49,238 49,238 57,353 71,501
20 30,969 34,719 49,238 49,238 63,660 92,439
25 (Age 65) 43,312 50,113 49,238 49,238 71,913 124,015
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------- ------- ------- --------
$ 321 $ 340 $ 360 $ 380
1,022 1,091 1,161 1,233
1,705 1,852 2,005 2,167
2,370 2,623 2,897 3,190
3,045 3,435 3,867 4,342
3,700 4,257 4,888 5,603
4,335 5,089 5,966 6,984
4,950 5,930 7,100 8,496
5,543 6,778 8,292 10,148
6,115 7,633 9,546 11,955
8,627 11,972 16,809 23,822
10,551 16,333 25,967 42,151
11,884 20,574 37,322 70,115
(1) If premiums are paid more frequently than annually the payments would be
$510 semi-annually, $258 quarterly or $87 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
27
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$34,754 FACE AMOUNT MALE ISSUE AGE 40
(GUARANTEED MINIMUM DEATH BENEFIT) $1,000 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $35,796 $35,796 $35,852 $35,921
2 2,122 2,153 36,873 36,873 37,060 37,297
3 3,246 3,310 37,986 37,986 38,379 38,889
4 4,416 4,526 39,133 39,133 39,806 40,700
5 5,633 5,802 40,280 40,280 41,310 42,710
6 6,898 7,142 41,496 41,496 42,959 44,996
7 8,214 8,549 42,747 42,747 44,720 47,532
8 9,583 10,027 44,033 44,033 46,591 50,327
9 11,006 11,578 45,353 45,353 48,573 53,392
10 12,486 13,207 46,709 46,709 50,666 56,737
15 20,824 22,657 52,131 52,131 60,904 76,223
20 30,969 34,719 52,131 52,131 67,604 98,584
25 (Age 65) 43,312 50,113 52,131 52,131 76,279 132,073
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------- ------- ------- --------
$ 450 $ 473 $ 495 $ 518
1,203 1,280 1,359 1,439
1,939 2,101 2,271 2,450
2,655 2,934 3,235 3,557
3,381 3,808 4,281 4,802
4,085 4,693 5,384 6,165
4,767 5,589 6,545 7,657
5,425 6,491 7,766 9,288
6,057 7,399 9,047 11,068
6,662 8,310 10,390 13,011
9,182 12,789 18,017 25,611
10,955 17,126 27,458 44,880
12,067 21,243 39,069 74,185
(1) If premiums are paid more frequently than annually the payments would be
$510 semi-annually, $258 quarterly or $87 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
28
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$42,654 FACE AMOUNT FEMALE ISSUE AGE 10
(GUARANTEED MINIMUM DEATH BENEFIT) $300 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $42,654 $42,654 $ 42,671 $ 42,692
2 636 646 42,654 42,654 42,741 42,851
3 974 993 42,654 42,654 42,864 43,135
4 1,325 1,358 42,654 42,654 43,040 43,550
5 1,690 1,741 42,654 42,654 43,272 44,105
6 2,069 2,143 42,654 42,654 43,559 44,806
7 2,464 2,565 42,654 42,654 43,901 45,660
8 2,875 3,008 42,654 42,654 44,299 46,676
9 3,302 3,473 42,654 42,654 44,754 47,862
10 3,746 3,962 42,654 42,654 45,266 49,226
15 6,247 6,797 42,654 42,654 48,695 59,082
20 9,291 10,416 42,654 42,654 53,646 75,193
25 12,993 15,034 42,654 42,654 60,256 99,768
30 17,498 20,928 42,654 42,654 68,700 135,933
55 (Age 65) 53,393 79,106 42,654 42,654 145,533 721,273
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------ ------- ------- --------
$ 12 $ 15 $ 17 $ 20
200 212 225 238
386 416 447 479
569 624 684 747
754 843 940 1,046
937 1,067 1,214 1,378
1,117 1,298 1,506 1,745
1,295 1,534 1,817 2,150
1,471 1,776 2,147 2,596
1,642 2,023 2,497 3,087
2,459 3,345 4,607 6,410
3,248 4,871 7,522 11,888
4,032 6,657 11,580 20,973
4,804 8,734 17,206 36,011
4,601 18,399 83,802 415,330
(1) If premiums are paid more frequently than annually the payments would be
$153 semi-annually, $78 quarterly or $27 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
29
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$33,708 FACE AMOUNT FEMALE ISSUE AGE 10
(GUARANTEED MINIMUM DEATH BENEFIT) $300 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $34,719 $34,719 $ 34,732 $ 34,748
2 636 646 35,764 35,764 35,846 35,948
3 974 993 36,842 36,842 37,049 37,315
4 1,325 1,358 37,955 37,955 38,343 38,852
5 1,690 1,741 39,067 39,067 39,693 40,534
6 2,069 2,143 40,247 40,247 41,167 42,433
7 2,464 2,565 41,460 41,460 42,732 44,524
8 2,875 3,008 42,708 42,708 44,389 46,813
9 3,302 3,473 43,988 43,988 46,136 49,309
10 3,746 3,962 45,303 45,303 47,974 52,019
15 6,247 6,797 50,562 50,562 56,715 67,297
20 9,291 10,416 50,562 50,562 61,670 83,499
25 12,993 15,034 50,562 50,562 68,220 108,044
30 17,498 20,928 50,562 50,562 76,529 144,011
55 (Age 65) 59,641 85,903 50,562 50,562 152,983 727,459
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------ ------- ------- --------
$ 7 $ 9 $ 11 $ 13
206 218 229 242
402 431 462 494
594 650 709 773
785 875 974 1,081
972 1,105 1,255 1,421
1,156 1,341 1,553 1,796
1,336 1,581 1,869 2,209
1,511 1,824 2,203 2,661
1,681 2,070 2,555 3,158
2,452 3,353 4,639 6,475
3,168 4,801 7,478 11,901
3,873 6,487 11,422 20,890
4,555 8,432 16,873 35,747
6,259 20,283 85,423 416,224
(1) If premiums are paid more frequently than annually the payments would be
$157 semi-annually, $78 quarterly or $27 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
30
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$37,605 FACE AMOUNT FEMALE ISSUE AGE 25
(GUARANTEED MINIMUM DEATH BENEFIT) $500 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $45,898 $45,898 $45,921 $ 45,950
2 1,061 1,076 45,898 45,898 46,000 46,131
3 1,623 1,655 45,898 45,898 46,136 46,445
4 2,208 2,263 45,898 45,898 46,329 46,899
5 2,816 2,901 45,898 45,898 46,582 47,507
6 3,449 3,571 45,898 45,898 46,895 48,274
7 4,107 4,275 45,898 45,898 47,270 49,210
8 4,791 5,013 45,898 45,898 47,706 50,323
9 5,503 5,789 45,898 45,898 48,204 51,623
10 6,243 6,603 45,898 45,898 48,765 53,119
15 10,412 11,329 45,898 45,898 52,537 63,952
20 15,484 17,360 45,898 45,898 57,993 81,687
25 21,656 25,057 45,898 45,898 65,259 108,718
30 29,164 34,880 45,898 45,898 74,502 148,463
40 (Age 65) 49,413 63,419 45,898 45,898 99,952 287,894
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------ ------- ------- --------
$ 42 $ 48 $ 53 $ 58
358 381 405 429
671 725 781 840
981 1,079 1,185 1,297
1,305 1,461 1,633 1,820
1,627 1,855 2,112 2,400
1,946 2,261 2,625 3,044
2,262 2,679 3,173 3,757
2,576 3,110 3,759 4,547
2,887 3,554 4,385 5,421
4,403 5,974 8,210 11,402
5,811 8,711 13,441 21,228
7,053 11,713 20,450 37,125
8,125 14,958 29,733 62,589
9,916 22,140 57,555 165,778
(1) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $130 quarterly or $44 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
31
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$45,898 FACE AMOUNT FEMALE ISSUE AGE 25
(GUARANTEED MINIMUM DEATH BENEFIT) $500 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $35,413 $35,413 $ 35,447 $ 35,489
2 1,061 1,076 36,479 36,479 36,604 36,762
3 1,623 1,655 37,579 37,579 37,852 38,206
4 2,208 2,263 38,714 38,714 39,192 39,827
5 2,816 2,901 39,848 39,848 40,595 41,609
6 3,449 3,571 41,052 41,052 42,131 43,628
7 4,107 4,275 42,289 42,289 43,764 45,857
8 4,791 5,013 43,561 43,561 45,495 48,305
9 5,503 5,789 44,868 44,868 47,326 50,982
10 6,243 6,603 46,209 46,209 49,254 53,896
15 10,412 11,329 51,573 51,573 58,538 70,567
20 15,484 17,360 51,573 51,573 64,137 88,895
25 21,656 25,057 51,573 51,573 71,522 116,639
30 29,164 34,880 51,573 51,573 80,839 157,228
40 (Age 65) 49,413 63,419 51,573 51,573 106,116 298,586
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------ ------- ------- --------
$ 124 $ 131 $ 139 $ 146
440 468 497 526
752 814 878 945
1,060 1,168 1,284 1,409
1,398 1,568 1,754 1,960
1,731 1,977 2,255 2,568
2,060 2,398 2,789 3,240
2,384 2,829 3,357 3,983
2,703 3,270 3,961 4,803
3,016 3,721 4,604 5,707
4,494 6,134 8,479 11,843
5,819 8,810 13,721 21,857
6,938 11,693 20,689 38,000
7,817 14,717 29,821 63,756
8,728 20,769 56,456 167,286
(1) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $130 quarterly or $44 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
32
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$57,396 FACE AMOUNT FEMALE ISSUE AGE 40
(GUARANTEED MINIMUM DEATH BENEFIT) $1,000 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $57,396 $57,396 $57,446 % 57,509
2 2,122 2,153 57,396 57,396 57,576 57,805
3 3,246 3,310 57,396 57,396 57,784 58,289
4 4,416 4,526 57,396 57,396 58,070 58,968
5 5,633 5,802 57,396 57,396 58,439 59,857
6 6,898 7,142 57,396 57,396 58,889 60,964
7 8,214 8,549 57,396 57,396 59,420 62,301
8 9,583 10,027 57,396 57,396 60,032 63,875
9 11,006 11,578 57,396 57,396 60,726 65,699
10 12,486 13,207 57,396 57,396 61,502 67,785
15 20,824 22,657 57,396 57,396 66,616 82,643
20 30,969 34,719 57,396 57,396 73,853 106,568
25 (Age 65) 43,312 50,113 57,396 57,396 83,351 142,705
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- -----------------------------------------------------
0% 4% 8% 12%
- ------ ------- ------- --------
$ 305 $ 323 $ 341 $ 359
1,007 1,073 1,140 1,208
1,696 1,837 1,986 2,142
2,368 2,615 2,881 3,167
3,063 3,446 3,869 4,335
3,739 4,290 4,913 5,617
4,399 5,147 6,016 7,025
5,040 6,017 7,182 8,569
5,663 6,900 8,413 10,264
6,268 7,794 9,713 12,123
8,991 12,409 17,337 24,457
11,173 17,172 27,123 43,770
12,814 21,970 39,517 73,695
(1) If premiums are paid more frequently than annually the payments would be
$510 semi-annually, $258 quarterly or $87 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
33
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$40,756 FACE AMOUNT FEMALE ISSUE AGE 40
(GUARANTEED MINIMUM DEATH BENEFIT) $1,000 ANNUAL PREMIUM FOR STANDARD RISK(1)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $41,978 $41,978 $42,038 $ 42,112
2 2,122 2,153 43,242 43,242 43,445 43,704
3 3,246 3,310 44,546 44,546 44,977 45,537
4 4,416 4,526 45,891 45,891 46,633 47,619
5 5,633 5,802 47,236 47,376 48,376 49,926
6 6,898 7,142 48,662 48,662 50,287 52,547
7 8,214 8,549 50,129 50,129 52,325 55,453
8 9,583 10,027 51,637 51,637 54,491 58,653
9 11,006 11,578 53,186 53,186 56,783 62,160
10 12,486 13,207 54,776 54,776 59,202 65,985
15 20,824 22,657 61,134 61,134 70,999 88,188
20 30,969 34,719 61,134 61,134 78,599 113,460
25 (Age 65) 43,312 50,113 61,134 61,134 88,471 151,369
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- ------------------------------------------------------
0% 4% 8% 12%
- ------- ------- ------- --------
$ 431 $ 453 $ 474 $ 496
1,177 1,251 1,327 1,404
1,908 2,065 2,230 2,402
2,622 2,894 3,186 3,500
3,358 3,776 4,239 4,748
4,074 4,672 5,350 6,117
4,771 5,581 6,524 7,618
5,447 6,502 7,762 9,265
6,099 7,432 9,066 11,068
6,729 8,370 10,438 13,041
9,436 13,082 18,352 25,989
11,458 17,786 28,342 46,082
12,855 22,410 40,881 77,099
(1) If premiums are paid more frequently than annually the payments would be
$510 semi-annually, $258 quarterly or $87 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
34
<PAGE>
- --------------------------------------------------------------------------------
YOU WILL RECEIVE
PERIODIC REPORTS
As a policy owner, you will receive an annual statement about your policy giving
you the status as of the first day of the current policy year of:
o the way the net annual premium is divided between the Divisions;
o the death benefit;
o the cash value; and
o your outstanding policy loans.
Notice will also be sent to you for policy issuance, transfers of funds between
Division and certain other policy transactions.
We will not send you an annual statement for any year your policy is in effect
under an option on lapse.
You will also receive a billing notice each year showing accrued interest for
the past policy year if you have a policy loan outstanding.
We will also send you semiannual reports with financial information on the
Separate Account and the Fund (including a list of the investments held by each
Portfolio of the Fund in which the Divisions invest) as required by the 1940
Act.
- --------------------------------------------------------------------------------
THE IMPACT OF
TAXES
POLICY PROCEEDS
The Tax Reform Act of 1984 (1984 Act) includes a definition of life insurance
for tax purposes. Our variable life policies meet the statutory definition of
life insurance and hence will receive the same Federal income tax treatment as
fixed benefit life insurance. Thus, (a) the death benefit under our policies
will be excludable from the gross income of the beneficiary under Section
101(a)(1) of the Internal Revenue Code (Code) and (b) the policy owner will not
be deemed to be in constructive receipt of the cash value under the policy until
the policy is actually surrendered. Only then would the owner be taxed on any
increase in cash value due to investment experience.
In general if you return your policy for its cash value, you will not be taxed
on the amount you receive, except for the portion which exceeds the premiums you
have paid.
A split of the policy into two policies followed by a return of one for cash, or
an exchange referred to under CANCELLATION AND EXCHANGE RIGHTS, may result in
taxable income to the policy owner depending on the circumstances. We suggest
you consult your tax adviser.
The 1984 Act also gives the Secretary of the Treasury authority to set standards
for diversification of the investments underlying variable life policies in
order for such policies to be treated as life insurance. Based on a Temporary
Regulation, we believe that we will have 90 days following publication in the
Federal Register of the regulations prescribing diversification standards to
comply with those standards. We do not anticipate any problem in complying with
the regulatory standards within the 90-day period.
We also believe that loans received under the policies will be treated as
indebtedness of an owner, and that no part of any loan under a policy will
constitute income to the owner.
The individual situation of each policy owner or beneficiary will determine how
ownership or receipt of policy proceeds will be treated for purposes of Federal
estate tax as well as state and local estate, inheritance and other taxes.
See the prospectus of the Fund for discussion of the Fund's tax aspects.
- --------------------------------------------------------------------------------
PENSION AND PROFIT
SHARING PLANS
If our policies are purchased by a trust which forms part of a pension or profit
sharing plan qualified under Section 401(a) of the Code for the benefit of
participants covered under the plan, the Federal income tax treatment with
respect to our policies will be somewhat different from that described above. We
suggest you consult your tax adviser.
- --------------------------------------------------------------------------------
35
<PAGE>
- --------------------------------------------------------------------------------
The first difference is that the current value of the "at risk" portion of our
policies, that is, the amount by which the current death benefit exceeds the
cash value, is treated as a "current fringe benefit" and is required to be
included annually in the plan participant's gross income. This value, commonly
referred to as the "P.S. 58 cost", is computed by using tables published by the
Internal Revenue Service and is reported to the participant annually as an
addition to wages and salaries on the Form W-2 annually furnished by the
employer who is maintaining the plan.
Second, if the plan participant dies while covered by the plan and the policy
proceeds are paid to the participant's beneficiary, then a portion of the
proceeds of our policies may be includable in the gross income of the
beneficiary. The 1984 Act repeals the $100,000 exclusion for death benefits
payable under qualified plans effective for deaths after December 31, 1984.
- --------------------------------------------------------------------------------
OUR INCOME TAXES
Under the life insurance company tax provisions of the Code, as amended by the
1984 Act, variable life insurance is treated in a manner consistent with fixed
life insurance. The operations of the Separate Account are included in the
Federal income tax return of Equitable Variable. Under current tax law,
Equitable Variable pays no tax on investment income and capital gains reflected
in variable life insurance policy reserves. Consequently, no charge is currently
being made to either Division of the Separate Account for our Federal income
taxes. We reserve the right, however, to make such a charge in the future, if
the law changes and we incur Federal income tax which is attributable to the
Separate Account. If such a charge is made, it would be set aside as a provision
for taxes which we would keep in the affected Division rather than in our
general account. We anticipate that our variable life policy owners will benefit
from any investment earnings that are not needed to maintain this provision.
We may have to pay state and local taxes (in addition to premium taxes) in
several states. At present, these taxes are not substantial. If they increase,
however, charges may be made for such taxes when they are attributable to the
Separate Account.
- --------------------------------------------------------------------------------
TAX REFORM
The President of the United States recently submitted a comprehensive set of tax
reform proposals to Congress. These proposals were substantially modified by the
House of Representatives which adopted a comprehensive tax reform bill. The
Senate is also considering comprehensive tax reform. The House bill would not
affect the taxes paid by life insurance companies such as Equitable Variable as
they relate to our Separate Account and would not alter the favorable tax
treatment of life insurance policies described in this prospectus. The ultimate
nature and the prospects for enactment of proposals for tax reform and their
precise effect are uncertain at this time.
- --------------------------------------------------------------------------------
GENERAL PROVISIONS
OF OUR POLICIES
This section of the prospectus describes the general provisions of our policies
and is subject to the terms of the policy you buy. You can review copies of our
Basic and Expanded Policies upon request.
The minimum face amount of a policy you may apply for is $25,000. The Basic
Policy may be issued to age 75 and the Expanded Policy to age 65. Before issuing
any policy, we require satisfactory evidence of insurability.
You will pay your premium and handle all other business connected with your
policy at your regional Life Insurance Center shown on page 3 of your policy.
- --------------------------------------------------------------------------------
PREMIUMS
Your premium is due on or before the due date shown in the policy and may be
paid annually, semiannually, quarterly or monthly. Monthly payments can be made
through a direct automatic payment plan arranged with your bank. You can request
a change in the frequency of the premium payment by writing to your regional
Life Insurance Center.
Premiums for the Basic Policy are payable for 40 years (but never beyond an
insured's attained age of 95). Premiums for the Expanded Policy are payable for
the insured's lifetime. The length of time during which your premium must be
paid is called the premium payment period.
Premiums are not affected by the investment experience of the Separate Account,
or, in the case of our Expanded Policy, by increases in the policy's face
amount. We guarantee that your premium will not go up during your premium
payment period.
- --------------------------------------------------------------------------------
36
<PAGE>
- --------------------------------------------------------------------------------
Because the Basic Policy does not provide for an increasing guaranteed minimum,
the premium for it is lower than for the Expanded Policy, which does have this
feature.
We offer reduced premiums if the insured is a standard risk and meets additional
requirements as to smoking habits. The reduction is greater for face amounts of
at least $100,000. Non-smoker rates are available for ages 20 and over.
We will charge an additional premium if an extra mortality risk is involved or
if you want certain optional insurance benefits.
YOU CAN CHOOSE THE DIVISION OR DIVISIONS WHERE YOUR NET ANNUAL PREMIUM WILL BE
PUT. You can decide how your net annual premium will be applied to the
Divisions. You can put the whole net annual premium in either Division, or you
can put a percentage in each Division. Percentages cannot be fractions and must
add up to 100.
You make your initial decision on the application for your policy. You can write
to your regional Life Insurance Center at any time requesting to change your
decision. Regardless of when you make your request, changes go into effect only
on the next policy anniversary because we allocate net annual premiums to the
Separate Account only on policy anniversaries. It may not always be possible to
make a change that is received less than 7 days before a policy anniversary. In
this case, the change will not go into effect until the policy anniversary
following the entire next policy year.
HOW WE USE PREMIUMS. Premiums are used to cover expenses and to pay death
benefits. The amount of your annual premium does not change during the premium
payment period.
The way we use the premium does change. This is because, in early policy years,
policy expenses are greater and the risk of paying death benefits is less than
in later policy years. The risk of paying death benefits increases as the
insured gets older, while expenses decrease. Part of the net annual premium put
into the Separate Account in early policy years is used to pay death benefits in
those years, while the balance is used as a reserve to pay death benefits in
later policy years. The net annual premium in early policy years is more than
what is needed to meet death benefits. The net annual premium in later policy
years is less than what is needed to meet death benefits. If the net annual
premiums exceed what is needed to meet death benefits over the years, the excess
contributes to our profits.
Part of our premiums are retained in our general account as a reserve to cover
the possibility that, at an insured's death, the guaranteed minimum will be more
than what would have been payable, based on the investment experience of the
Separate Account, if there were no guaranteed minimum death benefit.
PREMIUM PAYMENTS BY SALARY ALLOTMENT. If you work for an employer which permits
you to pay insurance premiums by deduction from your salary, we may offer you
and your fellow employees fixed insurance in the amount of the face amount for
the variable insurance you apply for (with a maximum of $250,000). This
insurance would be without charge (except that a premium will be deducted from
any fixed death benefit), and would be in effect until we receive the first
payment from your employer. At that time, your policy will begin its
participation in our Separate Account.
CHANGES IN PREMIUM RATES. Congress and the legislatures of various states have
from time to time considered legislation that would require premium rates to be
the same for males and females of the same age and risk class. In addition,
employers and employee organizations should consider, in consultation with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the purchase
of the Basic Policy or the Expanded Policy in connection with an
employment-related insurance or benefit plan. The United States Supreme Court
held, in a 1983 decision, that, under Title VII, optional annuity benefits under
a deferred compensation plan could not vary on the basis of sex.
- --------------------------------------------------------------------------------
37
<PAGE>
- --------------------------------------------------------------------------------
ILLUSTRATION OF PREMIUM RATES. Premiums are based on actuarial estimates of
death benefits, cash value benefits, lapses, expenses, investment experience and
amount contributed to our surplus.
The following tables show premium rates for each $1,000 of face amount for
$25,000 policies, which is the minimum, and for a $100,000 Expanded policy,
which is the amount where our rates per $1,000 go down (except for smokers).
- --------------------------------------------------------------------------------
$25,000 FACE AMOUNT BASIC POLICY
Annual Premium for each $1,000 Face Amount
MALE FEMALE
Age At ----------------------------- -----------------------------
Issue Standard Risk Non-Smoker Standard Risk Non-Smoker
- --------------------------------------------------------------------------------
10 $ 8.38 n.a. $ 7.53 n.a.
25 12.94 $12.60 11.44 $11.24
40 20.90 19.88 18.10 17.49
- --------------------------------------------------------------------------------
$25,000 INITIAL FACE AMOUNT EXPANDED POLICY
Annual Premium for each $1,000 Initial Face Amount
MALE FEMALE
Age At ----------------------------- -----------------------------
Issue Standard Risk Non-Smoker Standard Risk Non-Smoker
- --------------------------------------------------------------------------------
10 $10.41 n.a. $ 9.21 n.a.
25 17.11 $16.77 14.87 $14.67
40 29.11 28.09 25.00 24.39
- --------------------------------------------------------------------------------
$100,000 INITIAL FACE AMOUNT EXPANDED POLICY
Annual Premium for each $1,000 Initial Face Amount
MALE FEMALE
Age At ----------------------------- -----------------------------
Issue Standard Risk Non-Smoker Standard Risk Non-Smoker
- --------------------------------------------------------------------------------
10 $ 9.33 n.a. $ 8.15 n.a.
25 16.21 $15.30 13.97 $13.27
40 28.21 26.26 24.10 22.68
- --------------------------------------------------------------------------------
38
<PAGE>
- --------------------------------------------------------------------------------
Premiums for semiannual, quarterly, and monthly periods will be higher per year
than the annual premium. This is due to a charge for loss of interest and added
billing and collection costs. The following tables compare annual and monthly
premiums for standard risks:
- --------------------------------------------------------------------------------
PREMIUMS FOR EACH $1,000 FACE AMOUNT
<TABLE>
<CAPTION>
% Excess of Total
Monthly Premiums
for Policy Year
Over
Initial Annual Basis Monthly Basis Annual Premiums
Age at Face ------------------ ----------------- ----------------
Issue Amount Male Female Male Female Male Female
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BASIC POLICY
10 $ 25,000 $ 8.38 $ 7.53 $ .78 $ .70 11.7% 11.6%
25 25,000 12.94 11.44 1.17 1.04 8.5 9.1
40 25,000 20.90 18.10 1.85 1.61 6.2 6.7
EXPANDED POLICY
10 $ 25,000 $10.41 $ 9.21 $ .95 $ .85 9.5% 10.7%
100,000 9.51 8.31 .83 .73 4.7 5.4
25 25,000 17.11 14.87 1.53 1.34 7.3 8.1
100,000 16.21 13.97 1.41 1.22 4.4 4.8
40 25,000 29.11 25.00 2.56 2.21 5.5 6.1
100,000 28.21 24.10 2.44 2.09 3.8 4.1
- ------------------------------------------------------------------------------------------------------
</TABLE>
GRACE PERIOD. We allow a grace period of 31 days to pay each premium after the
first one. Insurance will continue during the grace period, but we will deduct
one month's premium from the death benefit if the insured dies during the grace
period.
LAPSE. If a premium has not been paid by the end of the 31-day grace period, the
policy will lapse as of the date the premium was due. When a policy lapses, any
riders will end. All insurance may end unless the policy's net cash value is
used under a continued insurance option on lapse. See OPTIONS ON LAPSE.
- --------------------------------------------------------------------------------
OPTIONS ON LAPSE
If a policy lapses because a premium remains due and unpaid beyond its 31-day
grace period, you may use one of the following options. A key element in these
options is your policy's net cash value on any day for a period of up to 3
months after the unpaid premium was due. Net cash value is cash value minus any
policy loans with accrued interest on the date an option is used. If your policy
has no net cash value, you cannot use the options.
PAYMENT OF NET CASH VALUE OPTION. You can withdraw the net cash value and
receive payment in cash.
CONTINUED INSURANCE OPTION. Within 3 months from the date a policy lapses (which
is the date the unpaid premium was due), you can use its net cash value to
obtain one of two types of fixed life insurance plans. These are reduced paid-up
insurance or extended term insurance. You will not have to pay any additional
premium on either type because you are, in effect, using the net cash value of
your variable life policy to buy continued life coverage.
If we do not receive a written request to use the continued insurance option
with 3 months after lapse, extended term insurance will automatically go into
effect. The extended term insurance option may not be available under your
policy if the insured's risk class is not at least standard. If so, that fact
will be stated on page 3 of the policy and reduced paid-up insurance will apply
instead. If the insured dies after the grace period but within 3 months of the
date of lapse, the continued insurance option that would provide the greater
benefit will automatically apply, regardless of any restriction stated on page 3
of the policy.
- --------------------------------------------------------------------------------
39
<PAGE>
- --------------------------------------------------------------------------------
Here are details on the two types of plans offered under our continued insurance
option.
o REDUCED PAID-UP FIXED INSURANCE. You can use the net cash value to buy
reduced paid-up fixed whole life insurance. The net cash value determines the
face amount that can be purchased at the insured's age at the time of
purchase. Paid-up insurance has cash value. You can use the net cash value
during the insured's lifetime for a loan or for cash payment.
EXAMPLE: You are a 30 year old male insured. Your variable life policy was
issued when you were 25. Use the illustrations on page 25, and assume a 4%
hypothetical gross annual investment return for each Division or their
combination. At the end of the 5th policy year, depending on whether you had
a Basic or an Expanded Policy, its net cash value could buy reduced paid-up
fixed whole life insurance with a face amount as follows:
- --------------------------------------------------------------------------------
Face Amount Term
- --------------------------------------------------------------------------------
Basic Policy $6,477 Life
Expanded Policy $7,076 Life
- --------------------------------------------------------------------------------
o EXTENDED TERM INSURANCE. If the insured's risk class is at least standard,
you can use the net cash value to buy extended term insurance. The face
amount will equal the death benefit under your variable life policy on the
date of lapse minus any unpaid loan with accrued interest. The net cash value
determines how long coverage will last at the insured's then attained age. It
will last at least 90 days if the premium has been paid on the variable life
policy for 3 months before lapse and there is no policy loan. Extended term
coverage has cash value, but it cannot be used for a loan.
EXAMPLE: You are a 30 year old male insured. Your variable life policy was
issued when you were 25. Use the illustrations on page 25, and assume a 4%
hypothetical gross annual investment return for each Division or their
combination. At the end of the 5th policy year, depending on whether you had
a Basic or Expanded Policy, its net cash value could buy extended term
insurance as follows:
- --------------------------------------------------------------------------------
Face Amount Term
- --------------------------------------------------------------------------------
Basic Policy $40,034 13 Years
Expanded Policy $34,238 16 Years
- --------------------------------------------------------------------------------
REINSTATEMENT OPTION. You can request that we reinstate the policy during the
insured's lifetime. You must make this request within 5 years after lapse. We
will not reinstate the policy if it has been returned for net cash value.
Before we will reinstate, we must receive evidence satisfactory to us of the
insured's insurability. We must also receive the larger of:
o all due and unpaid premiums with interest at 6% a year; or
o an amount equal to:
the cash value just after reinstatement, MINUS
the cash value just before reinstatement, and further MINUS
any policy loan with accrued interest at 5% a year compounded daily to the
date of reinstatement, TIMES
110%.
If we do reinstate, the policy will have the same variable adjustment amount and
premium allocation between the Divisions as if there had been no lapse.
If a policy has enough cash value at the time it lapses, it might be possible to
reinstate it by requesting a policy loan for that purpose.
- --------------------------------------------------------------------------------
40
<PAGE>
- --------------------------------------------------------------------------------
CANCELLATION RIGHT
You have a limited right to return your policy to your regional Life Insurance
Center with a written request for cancellation. We will give you a full refund
(guaranteed by Equitable) of premiums paid if your request and policy are
postmarked by the latest of the following:
o 10 days after your receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
- --------------------------------------------------------------------------------
EXCHANGING OUR POLICIES
FOR FIXED WHOLE LIFE
INSURANCE
You may exchange your variable life policy for a fixed whole life policy on the
life of the insured (benefits will be as described in the fixed life policy).
You have this right for 18 months from the date your policy is issued, but only
if no premium remains due and unpaid. The fixed policy may be issued by
Equitable. The exchange will be effective when we receive your request,
accompanied by your policy and an application for the fixed policy.
We will not require evidence of the insured's insurability before an exchange.
The new policy's face amount will be the same as the initial face amount of the
variable life policy. It will also have the same register date, date of issue
and risk class. The premium for the new policy will be that in effect on the
register date for the same sex, age and risk class.
Any policy loan with accrued interest must be repaid before the exchange. The
exchange is also subject to limits described in the policy.
CASH ADJUSTMENT ON EXCHANGE. There will be a cash adjustment on exchange. The
adjustment will reflect the difference in premiums between the two policies.
There will also be an adjustment for the difference in cash values between the
two policies. If the new policy's cash value is more than the cash value of the
policy that is turned in, you pay the difference. If it is less, the difference
is paid to you. The adjustment will also reflect the effect of the investment
performance on cash value. We have filed a description of the method we use to
calculate the adjustment with the appropriate state insurance officials.
- --------------------------------------------------------------------------------
PAYMENT OPTIONS
The death benefit proceeds or net cash value proceeds of the policies offered by
this prospectus can be paid in a lump sum. Or you can choose to apply all or
part of the proceeds under one of our payment options. A combination of options
can be used if we agree. Proceeds applied under an option will no longer be
affected by investment experience.
For an option to be used, the proceeds to be applied must be at least $2,500. If
no option is chosen at the insured's death, the beneficiary can choose an
option. The following options are available, subject to limits described in the
policy.
DEPOSIT OPTION. Proceeds are left on deposit with us. We will pay interest on
the proceeds of at least 3% a year, or we may set and pay a higher rate.
INSTALLMENT OPTION FOR A FIXED PERIOD. Proceeds are paid in installment for up
to 30 years, with interest of at least 3-1/2% a year.
INSTALLMENT OPTION OF A FIXED AMOUNT. Proceeds are paid in installments with
interest of at least 3-1/2% a year until the proceeds are used up.
LIFE INCOME OPTION WITH A PERIOD CERTAIN. Proceeds are paid in monthly
installments for the longer of the life of the person being paid or the end of a
chosen period of 10 or 20 years.
LIFE INCOME OPTION WITH A REFUND CERTAIN. Proceeds are paid in monthly
installments for the longer of the life of the person being paid or until they
are used up.
- --------------------------------------------------------------------------------
41
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL BENEFITS YOU
CAN GET BY RIDER
Your policy can include additional benefits that we approve based on our
standards for issuing insurance and classifying risks. An additional benefit
requires an additional premium. An additional benefit is provided by a rider
that is subject to the terms of the policy. The following riders are available.
WAIVER OF PREMIUM RIDER. With this rider, we will waive the premium if the
insured becomes totally disabled and the disability continues for 6 months. The
disability must start before the policy anniversary nearest the insured's 60th
birthday. If disability starts after that, we will waive the premium only up to
the policy anniversary nearest the insured's 65th birthday.
ACCIDENTAL DEATH BENEFIT RIDER. With this rider, we will pay a benefit if the
insured dies from an accidental bodily injury before the policy anniversary
nearest his or her 70th birthday.
OPTION TO PURCHASE ADDITIONAL INSURANCE RIDER. With this rider, you have the
right to buy additional insurance on the life of the insured at certain future
dates. We will not require evidence of the insured's insurability when you use
your right to buy additional insurance.
SUPPLEMENTAL PROTECTIVE BENEFIT RIDER. With this rider, we will waive the
premium if the insured is a child under age 15 on the date of issue and:
o the person who applied for the policy dies; or
o the person who applied for the policy is totally disabled for at least 6
months before the policy anniversary nearest his or her 60th birthday. We
will only waive the premium while the disability continues.
In any case, we will not waive the premium that is due after the policy
anniversary nearest the insured's 25th birthday.
TERM INSURANCE RIDER. Several types of riders are available that provide for
term insurance on the life of the insured or an additional insured.
- --------------------------------------------------------------------------------
BENEFICIARY
You name your beneficiary when you apply for your policy. You can change the
beneficiary during the insured's lifetime by writing to your regional Life
Insurance Center. If no beneficiary is living when the insured dies, the death
benefit will be paid in equal shares to the insured's surviving children. If
there is no surviving child, the death benefit will be paid to the insured's
estate.
- --------------------------------------------------------------------------------
ASSIGNMENT
You can assign the policy as collateral for a loan or other obligation. We are
not responsible for any payment we make or action we take before we receive a
copy of the assignment at your regional Life Insurance Center.
- --------------------------------------------------------------------------------
CREDITORS' CLAIMS
Proceeds are paid free from the claims of creditors to the extent allowed by
law.
- --------------------------------------------------------------------------------
LIMITS ON OUR RIGHT TO
CHALLENGE THE POLICY
We cannot challenge the validity of the policy after it has been in effect
during the insured's lifetime for 2 years from the date of issue or
reinstatement (unless another date is required by law). But we can challenge at
any time any rider that provides benefits in the event of total disability. If a
death claim is made within the time we can challenge validity, our payment will
generally be delayed while we determine whether to make such a challenge.
MISSTATEMENT OF AGE OR SEX. If the insured's age or sex is misstated in the
policy application, the death benefit will be what the premium paid would have
purchased based on the insured's true age and sex.
SUICIDE. If the insured commits suicide within 2 years from the date the policy
was issued or reinstated (or less where required by law), the death benefit will
be limited to the sum of all premiums paid minus outstanding policy loans with
interest.
- --------------------------------------------------------------------------------
42
<PAGE>
- --------------------------------------------------------------------------------
DIVIDENDS
No dividends will be paid on the policies described in this prospectus.
- --------------------------------------------------------------------------------
WHEN WE PAY PROCEEDS
Payment of the death benefit, net cash value, or loan proceeds will be made
within 7 days after we receive the required form or request (and other documents
that may be required for payment of the death benefit) at your regional Life
Insurance Center. If an Equitable agent is assisting the beneficiary in
preparing the documents required for payment of the death benefit, we will send
the check to the agent within 7 days after we receive all required documents.
The agent will then deliver the check to the beneficiary. But we can delay
payment if:
o payment is contested;
o it is not reasonably practicable to determine the amount because the New York
Stock Exchange is closed, trading is restricted by the SEC, or the SEC
declares that an emergency exists; or
o the SEC, by order, permits us to delay to protect our policy owners.
If your policy is being continued as reduced paid-up or extended term insurance,
we can delay payment of a loan or cash value for up to 6 months.
We will pay at least 3% interest a year if we delay paying the cash value or
loan proceeds more than 30 days.
- --------------------------------------------------------------------------------
SALES AND OTHER
AGREEMENTS
Equitable Variable and Integrity are the principal underwriters for the Fund
pursuant to a Distribution Agreement. Under the Distribution Agreement, we have
entered into a Sales Agreement with Equitable by which Equitable will distribute
our policies.
Equitable Variable, Integrity and Equitable are registered with the SEC as
broker-dealers under the Securities Exchange Act of 1934 and each of us is a
member of the National Association of Securities Dealers, Inc. We are also the
principal underwriter for our policies. (Equitable may also be deemed a
principal underwriter for our policies.)
- --------------------------------------------------------------------------------
SALES BY AGENTS OF
EQUITABLE
We sell our policies through agents who are licensed by state insurance
officials to sell our variable life policies. These agents are also registered
representatives of Equitable.
Under the Sales Agreement, agents receive commissions from Equitable for selling
our policies. We reimburse Equitable for these commissions. We also reimburse
Equitable for other expenses incurred in marketing and selling our policies.
These expenses include agency and district managers' compensation, agents'
training allowance, deferred compensation, insurance benefits of agents and
agency and district managers, and agency clerical and advertising expenses.
COMMISSION SCHEDULE. Agents receive the equivalent of up to 50% of the premium
payable in the first policy year. In the second policy year, agents receive up
to 10% of the premium paid for that year. In the third, fourth and fifth policy
years, agents receive up to 8% of the premium paid in each year. In the sixth
through tenth policy years, agents receive up to 5% of the premium paid in each
year. After that, agents receive up to 2% of the premium paid in each year.
Agents will less than 3 full years of service with Equitable may be paid
differently.
Agents who meet certain production and persistency standards in selling
Equitable Variable and Equitable policies will be eligible for added
compensation. Agents who meet certain lifetime production standards will be
eligible to receive increased fees for servicing our policies. Agents also are
eligible for added compensation for servicing our policies when there is no
assigned soliciting agent.
- --------------------------------------------------------------------------------
43
<PAGE>
- --------------------------------------------------------------------------------
SALES BY BROKERS
We also sell our policies through independent brokers who are licensed by state
insurance officials to sell our variable life policies. They will also be
registered representatives either of Equitable or of another company registered
with the SEC as a broker-dealer under the Securities Exchange Act of 1934. The
commissions for independent brokers will be no more than those for agents.
Commissions will be paid through the registered broker-dealer.
- --------------------------------------------------------------------------------
APPLICATIONS
When an application for one of our policies is completed, it is submitted to us.
Based on the information in the application and our standards for issuing
insurance and classifying risks, a policy may be issued. If a policy is not
issued, we will refund any premium that has been paid. (Equitable guarantees the
refund.)
- --------------------------------------------------------------------------------
JOINT SERVICES AGREEMENT
In addition to acting as distributor for our policies, Equitable performs
certain other sales and administrative duties for us. Equitable does this
pursuant to a written agreement. The agreement is automatically renewed each
year, unless either party terminates and have been superseded by the sales
agreement referred to above.
Under this agreement, we pay Equitable for salary costs and other services and
an amount for indirect costs incurred through our use of Equitable personnel and
facilities. We also reimburse Equitable for sales expenses related to business
other than variable life policies.
- --------------------------------------------------------------------------------
AMOUNTS PAID UNDER SALES
AND JOINT SERVICES
AGREEMENTS
The aggregate amounts paid or accrued to Equitable by us under sales and joint
services agreements totalled approximately $225,277,000 in 1985, $164,754,000 in
1984 and $93,361,000 in 1983.
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
- --------------------------------------------------------------------------------
LEGAL MATTERS
The legal validity of the policies described in this prospectus has been passed
on by Herbert L. Shyer, who is Executive Vice President and General Counsel of
Equitable.
The Washington, D.C. law firm of Freedman, Levy, Kroll & Simonds has served as
special counsel on matters relating to Federal securities laws.
- --------------------------------------------------------------------------------
FINANCIAL AND
ACTUARIAL EXPERTS
The financial statements of the Separate Account and of Equitable Variable in
this prospectus have been examined by the accounting firm of Deloitte Haskins &
Sells, our independent auditors, to the extent stated in its opinions, and its
opinions on them are part of this prospectus. We have relied on the fact that
Deloitte Haskins & Sells is expert in accounting and auditing.
Actuarial matters in this prospectus have been examined by Joseph O. North, Jr.,
F.S.A., M.A.A.A., who is Vice President and Actuary of Equitable Variable and an
Assistant Vice President and Actuary of Equitable. His opinion on actuarial
matters is filed as an exhibit to the Registration Statement we filed with the
SEC.
- --------------------------------------------------------------------------------
44
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT
Here is a list of our directors and officers and their business experience for
the past five years. Unless otherwise noted, the following persons have been
involved in the management of Equitable and its subsidiaries in various
positions for the last five years. Unless otherwise noted, their address is 787
Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Richard Lee Anderson Executive Vice President -- Operations and Director, Melville Corp. since
3000 Westchester Avenue January 1983; prior thereto, President F.W. Woolworth Co. Director,
Harrison, New York 10528 Equitable.
Ruth Smolensky Block Executive Vice President and Chief Insurance Officer, Equitable, since
February 1985; prior thereto, Executive Vice President. Chairman and Chief
Executive Officer, Equitable Variable, until November 1984. Director,
Integrity Life Insurance Company, National Integrity Life Insurance
Company, Tandem Financial Group, Inc., Equitable Investment Management
Corporation, Equitable Tax-Free Account, Inc., Equitable Money Market
Account, Inc., Equitable Real Estate Group, Inc., Donaldson, Lufkin &
Jenrette, Inc., Avon Products, Inc., Economics Laboratory, Inc. Trustee,
The Life Underwriters Training Council.
Joseph Lewis Dionne President and Chief Executive Officer McGraw-Hill, Inc. since June 1983;
1221 Avenue of the Americas prior thereto, President and Chief Operating Officer. Director, Equitable
New York, New York 10020 and Equitable Investment Corporation.
Raymond Bernard Dolan Executive Vice President, Equitable, since February 1985; prior thereto,
Executive Vice President and Chief Agency Officer. Chairman, The Equitable
of Delaware, Inc. Director, Equico Securities, Inc., Donaldson, Lufkin &
Jenrette, Inc., Equitable Capital Management Corporation, Equitable Life
Leasing Corporation and Equitable/Omnilease, Inc.
Harry Douglas Garber Vice Chairman of the Board, Equitable, since February 1984; prior thereto,
Executive Vice President and Chief Financial Officer. Director, Equitable
Investment Corporation and Genesco, Inc. Former Chairman and Chief
Executive Officer, Equitable Variable.
Glenn Howard Gettier, Jr. Executive Vice President and Chief Financial Officer, Equitable, since
December 1984; prior thereto, Partner, Peat, Marwick, Mitchell & Co.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Donald Richardson Kurtz Chairman and Chief Executive Officer, Equitable Investment Management
1221 Avenue of the Americas Corporation, since November 1983. Executive Vice President, Equitable.
New York, New York 10020 Director, Calvin Bullock, Ltd., Integrity Life Insurance Company, National
Integrity Life Insurance Company and Equitable Real Estate Group, Inc.
Member, Advisory Board of the Investment Management Institute, the Board of
Overseers of Bowdoin College and the Board of Trustees of Investor
Responsibility Research Center, Inc.
Donald James Mooney Executive Vice President, Equitable, since October 1984; prior thereto,
Senior Vice President. President, Equitable Variable, until November 1984.
Director, Integrity Life Insurance Company, The Equitable of Delaware,
Inc., Equico Securities, Inc., and The Equitable of Colorado, Inc.
Francis Helmut Schott Senior Vice President and Chief Economist, Equitable.
Leo Martin Walsh, Jr. Executive Vice President, Director and Chief Investment Officer, Equitable,
since June 1983; prior thereto, Executive Vice President. Director since
March 1983 and President and Chief Executive Officer since March 1984,
Equitable Investment Corporation; prior thereto, Executive Vice President
and Chief Operating Officer. Chairman, Calvin Bullock, Ltd., Equitable
Casualty Insurance Company, Equitable General Insurance Company of
Oklahoma, Equitable Money Market Account, Inc., Equitable Tax-Free Account,
Inc., Equitable Life Leasing Corporation, and Equitable Relocation
Management Corporation. Director, Equitable Mortgage Resources, Inc.,
Equitable Real Estate Investment Management, Inc., Equitable Agri-Business,
Inc., mutual funds to which Calvin Bullock, Ltd. is investment adviser,
ELAFUND, INC., Tandem Financial Group, Inc., Equitable Investment
Management Corporation, Equitable Capital Management Corporation, Alliance
Capital Management Corporation and Donaldson, Lufkin & Jenrette, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS -- DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Robert Wayne Barth President and Chief Operating Officer, Equitable Variable, since December
1985. Executive Vice President, Equitable, since June 1985; Senior Vice
President since September 1984; prior thereto, Vice President since April
1984. Director, The Equitable of Colorado, Inc. Director, President and
Chief Executive Officer, The Equitable of Delaware, Inc.
Peter Rawlinson Wilde Chairman and Chief Executive Officer, Equitable Variable, since November
1984. Chairman and Chief Executive Officer, The Equitable of Delaware, Inc.
Executive Vice President, Equitable, since July 1984; Chief Financial
Officer, CIGNA Corporation, from April 1983 to June 1984; prior thereto,
Senior Vice President. Director, Integrity Life Insurance Company, National
Integrity Life Insurance Company and Tandem Financial Group, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Robert Seymour Jones Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since June 1985; prior thereto, Vice President.
James Thomas Liddle, Jr. Senior Vice President and Chief Financial Officer, Equitable Variable,
2 Penn Plaza since February 1986. Vice President and Actuary, The Equitable of Colorado,
New York, New York 10121 since February 1984. Vice President and Actuary, Equitable.
Michael Searle Martin Senior Vice President, Equitable Variable, since February 1986. Director,
The Equitable of Colorado and The Equitable of Delaware. Senior Vice
President, Equitable, since June 1985; Vice President, from June 1982 to
June 1985; prior thereto, Agency Manager.
Stanley Julian Rispler Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President.
Samuel Barry Shlesinger Senior Vice President, Equitable Variable, since February 1986; President
and Chief Executive Officer, The Equitable of Colorado, since September
1985. Vice President and Actuary, Equitable.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Richard Marshall Stenson Senior Vice President, Equitable Variable, since December 1981. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President and
Actuary. Actuary, Integrity Life Insurance Company. Director, The Equitable
of Colorado, Inc.
Michael Guy Carew Vice President, Equitable Variable, since February 1986. Vice President,
Equitable, since February 1985. Prior thereto, Chief Financial Officer and
Treasurer, City Trust Bancorp, Inc.
Richard Henry Fitzpatrick Vice President, Equitable Variable, since February 1986. Vice President,
Equitable.
Diane Marie Giachino Vice President, Equitable Variable, since February 1986. Vice President,
Equitable, since October 1985; Assistant Vice President, from March 1983 to
October 1985; prior thereto, various managerial positions.
Catherine Theresa Henry Vice President, Equitable Variable, since February 1986. Vice President,
Equitable, since October, 1983; prior thereto, Assistant Vice President.
David Joseph Hughes Vice President, Equitable Variable, since February 1986; Vice President and
2 Penn Plaza Chief of Staff, The Equitable of Colorado. Vice President, Equitable, since
New York, New York 10121 October 1985; Assistant Vice President from August 1982 to October 1985;
prior thereto, Manager.
Franklin Kennedy, III Vice President, Equitable Variable, since August 1981; Managing Director
1221 Avenue of the Americas and Chief Investment Officer, Equitable Investment Management Corporation,
New York, New York 10020 since November 1983. Vice President, Equitable.
John Alfred Kern Vice President, Equitable Variable, since February 1986. Vice President,
2 Penn Plaza Equitable.
New York, New York 10121
Donald Anthony King Vice President, Equitable Variable, since February 1986; Vice President,
1285 Avenue of the Americas Integrity Life Insurance Company, since April 1984; Vice President,
New York, New York 10020 Equitable, since January 1976. Executive Vice President, Equitable Capital
Management Corporation.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Joseph Oswell North, Jr. Vice President and Actuary, Equitable Variable, since February 1984. Vice
2 Penn Plaza President and Actuary, Equitable, since October 1984; prior thereto,
New York, New York 10121 Assistant Vice President and Actuary, Equitable, since April 1982; prior
thereto, Associate Actuary, John Hancock Mutual Life Insurance Company.
Geoffrey Hall Radbill Vice President, Equitable Variable, since February 1986. Vice President,
135 West 50th Street Equitable, since February 1983; prior thereto, Assistant Vice President.
New York, New York 10020
Thomas Willard Shade, Jr. Vice President, Equitable Variable, since February 1986. Vice President,
2 Penn Plaza Equitable, since October 1985; Assistant Vice President from March 1983 to
New York, New York 10121 October 1985; prior thereto, various managerial positions.
Alan Romney Thomander Vice President and Controller, Equitable Variable, since February 1983;
2 Penn Plaza prior thereto, Vice President
New York, New York 10121 -- Controller's Operations. Vice President, Equitable, from May 1982 until
February 1983; prior thereto, Assistant Vice President. Controller,
Integrity Life Insurance Company.
Larry Kenneth Mills Treasurer, Equitable Variable, Integrity Life Insurance Company and
National Integrity Life Insurance Company, since February 1986. Vice
President and Treasurer, Equitable and Equico Securities, Inc., since March
1986; prior thereto, Vice President, Equitable. Treasurer, Equitable Real
Estate Group, Inc. Vice President, Treasurer and Director, Equitable Realty
Assets Corp.
Theodore Edward Plucinski, M.D. Chief Medical Director, Equitable Variable, since February 1986; Integrity
2 Penn Plaza Life Insurance Company and National Integrity Life Insurance Company since
New York, New York 10121 November 1985, and Equitable since September 1985. Prior thereto, Chief
Medical Director, MONY.
Kevin Brian Keefe Secretary, Equitable Variable, Assistant Vice President and Assistant
Secretary, Equitable, since August 1983; prior thereto, Assistant
Secretary. Secretary, Integrity Life Insurance Company, National Integrity
Life Insurance Company, Tandem Financial Group, Inc., The Hudson River
Fund, Inc., The Equitable of Delaware, Inc., and The Equitable of Colorado,
Inc. Assistant Secretary, Equitable Life Leasing Corporation and Equico
Securities.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Vincent Walter Jiminez Assistant Vice President, Equitable Variable, since June 1985; prior
2 Penn Plaza thereto, Vice President, Equitable Real Estate Investment Management Inc.
New York, New York 10121 Assistant Vice President, Equitable, since June 1984; prior thereto,
various managerial positions with Equitable. Director, Equico Capital
Corporation.
Norman Russell Meise Assistant Vice President, Equitable Variable, since February 1983; prior
2 Penn Plaza thereto, Assistant Vice President and Controller and Assistant Vice
New York, New York 10121 President, Equitable.
Robert Floyd Wiseman Assistant Vice President, Equitable Variable, since February 1986.
2 Penn Plaza Assistant Vice President, Equitable.
New York, New York 10121
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
WHERE YOU CAN GET
ADDITIONAL
INFORMATION
We have filed with the SEC a Registration Statement relating to the Separate
Account and the variable life policies described in this prospectus. The
Registration Statement, which is required by the Securities Act of 1933,
includes additional information that is not required in this prospectus under
the rules and regulations of the SEC. If you would like the additional
information, you may obtain copies of that document from the SEC's main office
in Washington, D.C. You will have to pay a fee for the material.
- --------------------------------------------------------------------------------
50
<PAGE>
- --------------------------------------------------------------------------------
PART 3 -- FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT 1
INDEX PAGE
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities, December 31, 1985 52
- --------------------------------------------------------------------------------
Statement of Operations for the Year Ended December 31, 1985 52
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets for the Years Ended
December 31, 1985 and 1984 53
- --------------------------------------------------------------------------------
Notes to Financial Statements 54
- --------------------------------------------------------------------------------
Opinion of Independent Auditors 55
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE
INSURANCE COMPANY
INDEX PAGE
- --------------------------------------------------------------------------------
Balance Sheets, December 31, 1985 and 1984 56
- --------------------------------------------------------------------------------
Summaries of Operations and Capital and Surplus Funds for the Years
Ended December 31, 1985 and 1984 57
- --------------------------------------------------------------------------------
Statements of Changes in Financial Position for the Years Ended
December 31, 1985 and 1984 58
- --------------------------------------------------------------------------------
Notes to Financial Statements 59
- --------------------------------------------------------------------------------
Opinion of Independent Auditors 62
- --------------------------------------------------------------------------------
The financial statements of Equitable Variable herein should be considered only
as bearing upon the ability of Equitable Variable to meet its obligations under
the policies.
- --------------------------------------------------------------------------------
51
<PAGE>
- --------------------------------------------------------------------------------
[VARIABLE LIFE INSURANCE LOGO]
- --------------------------------------------------------------------------------
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO -- 1986 VERSION]
- --------------------------------------------------------------------------------
Catalogue No. 11776
<PAGE>
PART II
REPRESENTATION REGARDING REASONABLENESS OF
AGGREGATE POLICY FEES AND CHARGES
Equitable represents that the fees and charges deducted under the Policies
described in this Registration Statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses to be incurred, and the risks
assumed by Equitable under the Policies, Equitable bases its representation on
its assessment of all of the facts and circumstances, including such relevant
factors as: the nature and extent of such services, expenses and risks, the need
for Equitable to earn a profit, the degree to which the Policies include
innovative features, and regulatory standards for the grant of exemptive relief
under the Investment Company Act of 1940 used prior to October 1996, including
the range of industry practice.
CONTENTS OF REGISTRATION STATEMENT
----------------------------------
This registration statement comprises the following papers and documents:
The facing sheet.
The Champion Reconciliation and Tie, previously filed with this Registration
Statement File No. 333-17633 on December 11, 1996.
The SP-1 Reconciliation and Tie, previously filed with this Registration
Statement File No. 333-17633 on December 11, 1996.
The Basic and Expanded Reconciliation and Tie, previously filed with this
Registration Statement File No. 333-17633 on December 11, 1996.
The Supplement dated May 1, 1997, consisting of 66 pages.
The Champion prospectus consisting of 40 pages.
SP-1 prospectus consisting of 40 pages.
Basic & Expanded prospectus consisting of 52 pages.
Representation regarding reasonableness of aggregate policy fees and charges.
Undertaking to file reports, previously filed with this Registration Statement
File No. 333-17633 on December 11, 1996.
Undertaking pursuant to Rule 484(b)(i) under the Securities Act of 1933,
previously filed with this Registration Statement File No. 333-17633 on December
11, 1996.
The signatures.
Written Consents of the following persons:
Mary P. Breen, Vice President and Associate General Counsel of Equitable (See
exhibit 2(a)).
II-1
<PAGE>
Joseph O. North, Jr. F.S.A., M.A.A.A., Vice President and Senior Actuary of
Equitable (See exhibit 2(b)).
Independent Public Accountants (see exhibit 6).
The following exhibits:
Exhibits required by Article IX, paragraph A of Form N-8B-2:
<TABLE>
<S> <C>
1-A(1)(a) Certified resolution re authority to market variable life insurance and establish
separate accounts, previously filed with this Registration Statement File No. 333-17633
on December 11, 1996.
1-A(2) Inapplicable.
1-A(3)(a) See Exhibit 1-A(8).
1-A(3)(b) Selling Agreement, previously filed with this Registration Statement File No. 333-
17633 on December 11, 1996.
1-A(3)(c) See Exhibit 1-A(8)(i)
1-A(4) Inapplicable.
1-A(5)(a)(i) Variable Whole Life Insurance Policy, previously filed with this Registration
Statement File No. 333-17633 on December 11, 1996.
1-A(5)(a)(ii) Variable Increasing Protection Life Insurance Policy, previously filed with this
Registration Statement File No. 333-17633 on December 11, 1996.
1-A(5)(a)(iii) Variable Limited Payment Life Insurance Policy -- Level Face Amount, previously
filed with this Registration Statement File No. 333-17633 on December 11, 1996.
1-A(5)(a)(iv) Variable Whole Life Insurance Policy -- Increasing Face Amount, previously filed
with this Registration Statement File No. 333-17633 on December 11, 1996.
1-A(5)(a)(v) Variable Limited Payment Life Plan Insurance Policy--Level Face Amount,
previously filed with this Registration Statement File No. 333-17633 on December
11, 1996.
1-A(5)(a)(vi) Variable Whole Life Plan Insurance Policy -- Increasing Face Amount,
previously filed with this Registration Statement File No. 333-17633 on
December 11, 1996.
1-A(5)(a)(vii) Single Premium Whole Life Plan Insurance Policy, previously filed with this
Registration Statement File No. 333-17633 on December 11, 1996.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
1-A(5)(a)(viii) Single Premium Whole Life Plan Insurance Policy -- Level Face Amount,
previously filed with this Registration Statement File No. 333-17633 on
December 11, 1996.
1-A(5)(a)(ix) Variable Whole Life Plan Insurance Policy, previously filed with this Registration
Statement File No. 333-17633 on December 11, 1996.
1-A(5)(a)(x) Variable Whole Life Plan -- Level Face Amount, previously filed with this
Registration Statement File No. 333-17633 on December 11, 1996.
1-A(5)(a)(xi) Single Premium Whole Life Plan Insurance Policy --
Level Face Amount, previously filed with this Registration Statement File No.
333-17633 on December 11, 1996.
1-A(5)(a)(xii) Variable Limited Payment Life Plan Insurance Policy -- Level Face Amount,
previously filed with this Registration Statement File No. 333-17633 on
December 11, 1996.
1-A(5)(a)(xiii) Variable Whole Life Plan Insurance Policy -- Increasing Face Amount,
previously filed with this Registration Statement File No. 333-17633 on
December 11, 1996.
1-A(5)(b) Rider adding Separate Account II to existing policies. (R81-100), previously filed
with this Registration Statement File No. 333-17633 on December 11, 1996.
1-A(5)(c) Rider re "Loan Value." (S. 83-23), previously filed with this Registration
Statement File No. 333-17633 on December 11, 1996.
1-A(5)(d) Rider re "Account Value." (S. 83-41), previously filed with this Registration
Statement File No. 333-17633 on December 11, 1996.
1-A(5)(e) Rider re "Loans." (S. 83-61), previously filed with this Registration Statement
File No. 333-17633 on December 11, 1996.
1-A(5)(f) Rider re "VAA Change Amount" and "Calculation of Cash
Values." (S. 84-81), previously filed with this Registration Statement File No.
333-17633 on December 11, 1996.
1-A(5)(g) Rider re "Unit Investment Trust Endorsement" (S.85-101), previously filed
with this Registration Statement File No. 333-17633 on December 11, 1996.
1-A(5)(h) Backdating Endorsement No. S.85-81 relating to Policy No. 85-11, previously filed
with this Registration Statement File No. 333-17633 on December 11, 1996.
1-A(5)(i) Adjustable Loan Interest Rate Endorsement No. S.85-83 relating to Policy No. 85-11,
previously filed with this Registration Statement File No. 333-17633 on December 11,
1996.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
1-A(5)(j) Accelerated Death Benefit Rider, previously filed with this Registration Statement
File No. 333-17633 on December 11, 1996.
1-A(5)(k) Name change endorsement (S.97-1), previously filed with this Registration Statement
File No. 333-17633 on December 11, 1996.
1-A(6)(a) Declaration and Charter of Equitable, as amended January 1, 1997.
1-A(6)(b) By-Laws of Equitable, as amended November 21, 1996.
1-A(7) Inapplicable.
1-A(8) Distribution and Servicing Agreement among EQ Financial Consultants, Inc. (formerly
known as Equico Securities, Inc.), Equitable and Equitable Variable dated as of May 1,
1994, previously filed with this Registration Statement File No. 333-17633 on December
11, 1996.
1-A(8)(i) Schedule of Commissions, previously filed with this Registration Statement File No.
333-17633 on December 11, 1996.
1-A(9) Agreement and Plan of Merger of Equitable Variable with and into Equitable dated
September 19, 1996, previously filed with this Registration Statement File No. 333-
17633 on December 11, 1996.
1-A(10)(a) Application Form EV4-200N, previously filed with this Registration Statement File
No. 333-17633 on December 11, 1996.
1-A(10)(b) Application Form EV4-200P, previously filed with this Registration Statement File
No. 333-17633 on December 11, 1996.
1-A(10)(c) Application Form EV4-200Q, previously filed with this Registration Statement File
No. 333-17633 on December 11, 1996.
Other Exhibits:
2(a) Opinion and Consent of Mary P. Breen, Vice President and Associate General Counsel of
The Equitable Life Assurance Society of the United States, previously
filed with this Registration Statement File No. 333-17633 on December 11, 1996.
2(b)(i) Opinion and Consent of Joseph O. North, Vice President and Senior Actuary, relating to
the SP-1 policies, previously filed with this Registration Statement File No. 333-17633 on
December 11, 1996.
2(b)(ii) Opinion and Consent of Joseph O. North, Vice President and Senior Actuary,
relating to the Champion and the Basic and Expanded policies, previously filed
with this Registration Statement File No. 333-17633 on December 11, 1996.
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C>
2(b)(iii) Consent of Joseph O. North, Vice President and Senior Actuary, relating to Exhibits
2(b)(i) and 2(b)(ii), previously filed with this Registration Statement File No. 333-17633
on December 11, 1996.
3 Inapplicable.
4 Inapplicable.
5 Financial Data Schedule. (See Exhibit 27 below).
6 Consent of Independent Public Accountant.
7(a) Powers of Attorney, previously filed with this Registration Statement File No. 333-
17633 on December 11, 1996.
7(b) Power of Attorney for Mary R. (Nina) Henderson.
8 Amended and Restated Description of Equitable's Issuance, Transfer and Redemption
Procedures for Policies pursuant to Rule 6e-2(b)(12)(ii), previously filed with
this Registration Statement File No. 333-17633 on December 11, 1996.
9 Schedule Regarding Equitable Variable Policies and Related Post-Effective Amendments.
27 Financial Data Schedule.
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it meets all the requirements for effectiveness of
this amendment to the registration statement pursuant to paragraph (b) of Rule
485 under the Securities Act of 1933 and it has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City and State of New York on the 30th day of April, 1997.
SEPARATE ACCOUNT I OF THE EQUITABLE
LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By: THE EQUITABLE LIFE
ASSURANCE SOCIETY OF
THE UNITED STATES,
DEPOSITOR
By: /s/ Samuel B. Shlesinger
------------------------
(Samuel B. Shlesinger)
Senior Vice President
Attest: /s/Linda Galasso
------------------
(Linda Galasso)
Assistant Secretary
April 30, 1997
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it meets all the requirements for effectiveness of
this amendment to the registration statement pursuant to paragraph (b) of Rule
485 under the Securities Act of 1933 and it has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and State of New York on the 30th day of
April, 1997.
THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES
By: /s/ Samuel B. Shlesinger
------------------------
(Samuel B. Shlesinger)
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following persons
in the capacities and on the date indicated:
PRINCIPAL EXECUTIVE OFFICERS:
*Joseph J. Melone Chairman of the Board and Chief Executive Officer
*James M. Benson President
*William T. McCaffrey Senior Executive Vice President and Chief
Operating Officer
*Jerry M. de St. Paer Executive Vice President
PRINCIPAL FINANCIAL OFFICER:
*Stanley B. Tulin. Senior Executive Vice President and Chief
Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
/s/Alvin H. Fenichel Senior Vice President and Controller
- --------------------
Alvin H. Fenichel
April 30, 1997
* DIRECTORS:
<TABLE>
<S> <C> <C>
Claude Bebear Jean-Rene Foutou Winthrop Knowlton
James M. Benson Norman C. Francis Arthur L. Liman
Christopher J. Brocksom Donald J. Greene George T. Lowy
Francoise Colloc'h John T. Hartley William T. McCaffrey
Henri de Castries John H.F. Haskell, Jr. Joseph J. Melone
Joseph L. Dionne Mary R. (Nina) Henderson Didier Pineau-Valencienne
William T. Esrey W. Edwin Jarmain George J. Sella, Jr.
G.Donald Johnston, Jr. Dave H. Williams
</TABLE>
* By: /s/ Samuel B. Shlesinger
------------------------
(Samuel B. Shlesinger)
Attorney-in-Fact
April 30, 1997
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. TAG VALUE
- ----------- ---------
<S> <C> <C>
1-A(6)(a) Declaration and Charter of Equitable, as amended January 1, 1997. EX-99.1A6a CHARTER
1-A(6)(b) By-Laws of Equitable, as amended, November 21, 1996. EX-99.1A6b BYLAWS
6 Consent of Independent Public Accountant. EX-99.6 CONSENT
7(b) Power of Attorney for Mary R. (Nina) Henderson. EX-99.7b POW ATTY
9 Schedule Regarding Equitable Variable Policies and EX-99.9 SCHEDULE
Related Post-Effective Amendments.
27 Financial Data Schedule for Separate Account I. EX-27
</TABLE>
II-8
RESTATED CHARTER
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
ARTICLE I
The name of the corporation shall continue to be The Equitable Life
Assurance Society of the United States.
ARTICLE II
The principal office of the corporation shall be located in the City of
New York, County of New York, State of New York.
ARTICLE III
(a) The business to be transacted by the corporation shall be the kinds
of insurance business specified in Paragraphs 1, 2 and 3 of Subsection (a) of
Section 1113 of the Insurance Law of the State of New York, as follows:
(1) "Life insurance": every insurance upon the lives of human
beings, and every insurance appertaining thereto, including the
granting of endowment benefits, additional benefits in the event of
death by accident, additional benefits to safeguard the contract from
lapse, accelerated payments of part or all of the death benefit or a
special surrender value upon diagnosis (A) of terminal illness defined
as a life expectancy of twelve months or less, or (B) of a medical
condition requiring extraordinary medical care or treatment regardless
of life expectancy, or provide a special surrender value, upon total
and permanent disability of the insured, and optional modes of
settlement of proceeds. "Life insurance" also includes additional
benefits to safeguard the contract against lapse in the event of
unemployment of the insured. Amounts paid the insurer for life
insurance and proceeds applied under optional modes of settlement or
under dividend options may be allocated by the insurer
<PAGE>
to one or more separate accounts pursuant to section four thousand two
hundred forty of the Insurance Law of the State of New York;
(2) "Annuities": all agreements to make periodical payments for a
period certain or where the making or continuance of all or some of a
series of such payments, or the amount of any such payment, depends
upon the continuance of human life, except payments made under the
authority of paragraph (1) above. Amounts paid the insurer to provide
annuities and proceeds applied under optional modes of settlement or
under dividend options may be allocated by the insurer to one or more
separate accounts pursuant to section four thousand two hundred forty
of the Insurance Law of the State of New York;
(3) "Accident and health insurance": (i) insurance against death
or personal injury by accident or by any specified kind or kinds of
accident and insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits pursuant to article
nine of the workers' compensation law, except as specified in item (ii)
hereof; and (ii) non-cancellable disability insurance, meaning
insurance against disability resulting from sickness, ailment or bodily
injury (but excluding insurance solely against accidental injury) under
any contract which does not give the insurer the option to cancel or
otherwise terminate the contract at or after one year from its
effective date or renewal date;
and any amendments to such paragraphs or provisions in substitution therefor
which may be hereafter adopted; such other kind or kinds of business now or
hereafter authorized by the laws of the State of New York to stock life
insurance companies; and such other kind or kinds of business to the extent
necessarily or properly incidental to the kind or kinds of insurance business
which the corporation is authorized to do.
(b) The corporation shall also have all other rights, powers, and
privileges now or hereafter authorized or granted by the Insurance Law of the
State of New York or any other law or laws of the State of New York to stock
life insurance companies having power to do the kind or kinds of business
hereinabove referred to and any and all other rights, powers, and privileges of
a corporation now or hereafter granted by the laws of the State of New York and
not prohibited to such stock life insurance companies.
- 2 -
<PAGE>
ARTICLE IV
The business of the corporation shall be managed under the direction of
the Board of Directors.
ARTICLE V
(a) The Board of Directors shall consist of not less than 13 (except
for vacancies temporarily unfilled) nor more than 36 Directors, as may be
determined from time to time by a vote of a majority of the entire Board of
Directors. No decrease in the number of Directors shall shorten the term of any
incumbent Director.
(b) The Board of Directors shall have the power to adopt from time to
time such By-Laws, rules and regulations for the governance of the officers,
employees and agents and for the management of the business and affairs of the
corporation, not inconsistent with this Charter and the laws of the State of New
York, as may be expedient, and to amend or repeal such by-laws, rules and
regulations, except as provided in the By-Laws.
(c) Any or all of the Directors may be removed at any time, either for
or without cause, by vote of the shareholders.
(d) No Director shall be personally liable to the corporation or any of
its shareholders for damages for any breach of duty as a Director; provided,
however, that the foregoing provision shall not eliminate or limit (i) the
liability of a Director if a judgment or other final adjudication adverse to him
or her establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or that he or she personally gained in fact a
financial profit or other advantage to which he or she was not legally entitled,
or were acts or omissions which (a) he or she knew or reasonably should have
known violated the Insurance Law of the State of New York or (b) violated a
specific standard of care imposed on Directors directly, and not by reference,
by a provision of the Insurance Law of the State of New York (or any regulations
promulgated thereunder) or (c) constituted a knowing violation of any other law;
or (ii) the liability of a Director for any act or omission prior to September
21, 1989.
- 3 -
<PAGE>
ARTICLE VI
(a) The Directors of the corporation shall be elected at each annual
meeting of shareholders of the corporation in the manner prescribed by law. The
annual meeting of shareholders shall be held at such place, within or without
the State of New York, and at such time as may be fixed by or under the By-Laws.
At each annual meeting of shareholders, directors shall be elected to hold
office for a term expiring at the next annual meeting of shareholders.
(b) Newly created directorships resulting from an increase in the
number of Directors and vacancies occurring in the Board of Directors shall be
filled by vote of the shareholders.
(c) Each Director shall be at least twenty-one years of age, and at all
times a majority of the Directors shall be citizens and residents of the United
States, and not less than three of the Directors shall be residents of the State
of New York.
(d) The Board of Directors shall elect such officers as are provided
for in the By-Laws at the first meeting of the Board of Directors following each
annual meeting of the shareholders. In the event of the failure to elect
officers at such meeting, officers may be elected at any regular or special
meeting of the Board of Directors. A vacancy in any office may be filled by the
Board of Directors at any regular or special meeting.
ARTICLE VII
The duration of the corporate existence of the corporation shall be
perpetual.
ARTICLE VIII
The amount of the capital of the corporation shall be $2,500,000, and
shall consist of 2,000,000 Common Shares, par value $1.25 per share.
44859-1.DOC
- 4 -
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF
THE UNITED STATES
BY-LAWS
-------
As Amended November 21, 1996
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF
THE UNITED STATES
BY-LAWS
-------
Table of Contents
ARTICLE I SHAREHOLDERS................................................ 1
Section 1.1 Annual Meetings............................................ 1
Section 1.2 Notice of Meetings; Waiver................................. 1
Section 1.3 Organization; Procedure.................................... 2
Section 1.4 Action Without a Meeting................................... 2
ARTICLE II BOARD OF DIRECTORS.......................................... 2
Section 2.1 Regular Meetings........................................... 2
Section 2.2 Special Meetings........................................... 2
Section 2.3 Independent Directors; Quorum.............................. 2
Section 2.4 Notice of Meetings......................................... 3
Section 2.5 Newly Created Directorships;
Vacancies................................................ 3
Section 2.6 Presiding Officer.......................................... 3
Section 2.7 Telephone Participation in
Meetings; Action by Consent
Without Meeting.......................................... 3
ARTICLE III COMMITTEES.................................................. 4
Section 3.1 Committees................................................. 4
Section 3.2 Authority of Committees.................................... 5
Section 3.3 Quorum and Manner of Acting................................ 5
Section 3.4 Removal of Members......................................... 6
Section 3.5 Vacancies.................................................. 6
Section 3.6 Subcommittees.............................................. 6
Section 3.7 Alternate Members of Committees............................ 6
Section 3.8 Attendance of Other Directors.............................. 6
<PAGE>
ARTICLE IV OFFICERS.................................................... 6
Section 4.1 Chairman of the Board...................................... 6
Section 4.2 Vice-Chairman of the Board................................. 7
Section 4.3 President.................................................. 7
Section 4.4 Chief Executive Officer.................................... 7
Section 4.5 Secretary.................................................. 7
Section 4.6 Other Officers............................................. 8
ARTICLE V CAPITAL STOCK............................................... 8
Section 5.1 Transfers of Stock;
Registered Shareholders.................................. 8
Section 5.2 Transfer Agent and Registrar............................... 9
ARTICLE VI EXECUTION OF INSTRUMENTS..................................... 9
Section 6.1 Execution of Instruments................................... 9
Section 6.2 Facsimile Signatures of
Former Officers.......................................... 10
Section 6.3 Meaning of Term "Instruments".............................. 10
ARTICLE VII GENERAL..................................................... 10
Section 7.1 Reports of Committees...................................... 10
Section 7.2 Independent Certified
Public Accountants....................................... 10
Section 7.3 Directors' Fees............................................ 10
Section 7.4 Indemnification of Directors,
Officers and Employees................................... 10
Section 7.5 Waiver of Notice........................................... 11
Section 7.6 Company.................................................... 11
ARTICLE VIII AMENDMENT OF BY-LAWS....................................... 11
Section 8.1 Amendment of By-Laws....................................... 11
Section 8.2 Notice of Amendment........................................ 12
<PAGE>
BY-LAWS
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
ARTICLE I
---------
SHAREHOLDERS
------------
Section 1.1. Annual Meetings. The annual meeting of the shareholders of
the Company for the election of Directors and for the transaction of such other
business as properly may come before such meeting shall be held at the principal
office of the Company on the third Wednesday in the month of May at 3:00 P.M.,
local time, or at such other place, within or without the State of New York, or
on such other earlier or later date in April or May or at such other hour as may
be fixed from time to time by resolution of the Board of Directors and set forth
in the notice or waiver of notice of the meeting. [Business Corporation Law
Secs. 602(a), (b)]*
Section 1.2. Notice of Meetings; Waiver. The Secretary or any Assistant
Secretary shall cause written notice of the place, date and hour of each meeting
of the shareholders, and, in the case of a special meeting, the purpose or
purposes for which such meeting is called and by or at whose direction such
notice is being issued, to be given, personally or by first class mail, not
fewer than ten nor more than fifty days before the date of the meeting to each
shareholder of record entitled to vote at such meeting.
No notice of any meeting of shareholders need be given to any
shareholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting or who attends the meeting, in person or by
proxy, without protesting prior to its conclusion the lack of notice of such
meeting. [Business Corporation Law Secs. 605, 606]
- --------
* Citations are to the Business Corporation Law and Insurance Law of the State
of New York, as in effect on [date of adoption], and are inserted for reference
only, and do not constitute a part of the By-Laws.
<PAGE>
Section 1.3. Organization; Procedure. At every meeting of shareholders
the presiding officer shall be the Chairman of the Board or, in the event of his
or her absence or disability, the President or, in his or her absence, any
officer of the Company designated by the shareholders. The order of business and
all other matters of procedure at every meeting of shareholders may be
determined by such presiding officer. The Secretary, or in the event of his or
her absence or disability, an Assistant Secretary or, in his or her absence, an
appointee of the presiding officer, shall act as Secretary of the meeting.
Section 1.4. Action Without a Meeting. Any action required or permitted
to be taken by shareholders may be taken without a meeting on written consent
signed by the holders of all the outstanding shares entitled to vote on such
action. [Business Corporation Law Sec. 615]
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
Section 2.1. Regular Meetings. Regular meetings of the Board of
Directors shall be held at the principal office of the Company on the third
Thursday of each month, except January and August, unless a change in place or
date is ordered by the Board of Directors. The first regular meeting of the
Board of Directors following the annual meeting of the shareholders of the
Company is designated as the Annual Meeting. [Business Corporation Law Sec. 710]
Section 2.2. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board, the President,
or two directors. [Business Corporation Law Sec. 710]
Section 2.3. Independent Directors; Quorum. Not less than one-third of
the Board of Directors shall be persons who are not officers or employees of the
Company or of any entity controlling, controlled by, or under common control
with the Company and who are not beneficial owners of a controlling interest in
the voting stock of the Company or of any such entity.
A majority of the entire Board of Directors, including at least one
Director who is not an officer or employee of the Company or of any entity
controlling, controlled by, or under common control with the Company and who is
not a beneficial owner of a controlling interest in the voting stock of the
Company
<PAGE>
or of any such entity, shall constitute a quorum for the transaction of business
at any regular or special meeting of the Board of Directors, except as otherwise
prescribed by these By-Laws. Except as otherwise prescribed by law, the Charter
of the Company, or these By-Laws, the vote of a majority of the Directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the Board of Directors. A majority of the Directors present, whether
or not a quorum is present, may adjourn any meeting from time to time and from
place to place. As used in these By-Laws "entire Board of Directors" means the
total number of directors which the Company would have if there were no
vacancies. [Business Corporation Law Secs. 707, 708; Insurance Law Sec. 1202]
Section 2.4. Notice of Meetings. Notice of a regular meeting of the
Board of Directors need not be given. Notice of a change in the time or place of
a regular meeting of the Board of Directors shall be given to each Director at
least five days in advance thereof in writing and by telephone or telecopy.
Notice of each special meeting of the Board of Directors shall be given to each
Director at least 24 hours prior to the special meeting, personally or by
telephone or telegram or telecopy, and shall state in general terms the purpose
or purposes of the meeting. Any such notice for a regular or special meeting not
specifically required by this Section 2.4 to be given by telephone or telecopy
shall be deemed given to a director when sent by mail, telegram, cablegram or
radiogram addressed to such director at his or her address furnished to the
Secretary. Notice of an adjourned regular or special meeting of the Board of
Directors shall be given if and as determined by a majority of the directors
present at the time of the adjournment, whether or not a quorum is present.
[Business Corporation Law Sec. 711]
Section 2.5. Newly Created Directorships; Vacancies. Any newly created
directorships resulting from an increase in the number of Directors and
vacancies occurring in the Board of Directors for any reasons (including
vacancies resulting from the removal of a Director without cause) shall be
filled by the shareholders of the Company. [Business Corporation Law Sec. 705;
Insurance Law Sec. 4211]
Section 2.6. Presiding Officer. In the absence or inability to act of
the Chairman of the Board at any regular or special meeting of the Board of
Directors, any Vice-Chairman of the Board, or the President, as designated by
the chief executive officer, shall preside at such meeting. In the absence or
inability to act of all of such officers, the Board of Directors shall select
from among their number present a presiding officer.
Section 2.7. Telephone Participation in Meetings; Action by
Consent Without Meeting. Any Director may participate in a meeting of the Board
<PAGE>
or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time, and such participation shall
constitute presence in person at such meeting; provided that one meeting of the
Board each year shall be held without the use of such conference telephone or
similar communication equipment. When time is of the essence, but not in lieu of
a regularly scheduled meeting of the Board of Directors, any action required or
permitted to be taken by the Board or any committee thereof may be taken without
a meeting if all members of the Board or such committee, as the case may be,
consent in writing to the adoption of a resolution authorizing the action and
such written consents and resolution are filed with the minutes of the Board or
such committee, as the case may be. [Business Corporation Law Sec. 708]
ARTICLE III
-----------
COMMITTEES
----------
Section 3.1. Committees. (a) The Board of Directors, by resolution
adopted by a majority of the entire Board of Directors, may establish from among
its members an Executive Committee of the Board composed of three or more
Directors. Not less than one-third of the members of such committee shall be
persons who are not officers or employees of the Company or of any entity
controlling, controlled by, or under common control with the Company and who are
not beneficial owners of a controlling interest in the voting stock of the
Company or of any such entity.
(b) The Board of Directors, by resolution adopted by a majority of the
entire Board of Directors, shall establish from among its members one or more
committees with authority to discharge the responsibilities enumerated in this
subsection (b). Each such committee shall be composed of three or more Directors
and shall be comprised solely of Directors who are not officers or employees of
the Company or of any entity controlling, controlled by, or under common control
with the Company and who are not beneficial owners of a controlling interest in
the voting stock of the Company or of any such entity. Such committee or
committees shall have responsibility for:
(i) Recommending to the Board of Directors candidates for nomination
for election by the shareholders to the Board of Directors;
<PAGE>
(ii) Evaluating the performance of officers deemed by any such
committee to be principal officers of the Company and recommending their
selection and compensation;
(iii) Recommending the selection of independent certified public
accountants;
(iv) Reviewing the scope and results of the independent audit and of
any internal audit; and
(v) Reviewing the Company's financial condition.
(c) The Board of Directors, by resolution adopted from time to time by
a majority of the entire Board of Directors, may establish from among its
members one or more additional committees of the Board, each composed of five or
more Directors. Not less than one-third of the members of each such committee
shall be persons who are not officers or employees of the Company or of any
entity controlling, controlled by, or under common control with the Company and
who are not beneficial owners of a controlling interest in the voting stock of
the Company or of any such entity. [Business Corporation Law Sec. 712; Insurance
Law Sec. 1202]
Section 3.2. Authority of Committees. Each committee shall have all the
authority of the Board of Directors, to the extent permitted by law and provided
in the resolution creating such committee, provided, however, that no committee
shall have authority as to the following matters:
(a) the submission to shareholders of any action as to which
shareholder approval is required by law;
(b) the filling of vacancies in the Board of Directors or in any
committee thereof;
(c) the fixing of compensation of the Directors for serving on the
Board of Directors or any committee thereof;
(d) the amendment or repeal of the By-Laws, or the adoption of new
By-Laws; or
(e) the amendment or repeal of any resolution of the Board of Directors
unless such resolution of the Board of Directors by its terms provides that
it may be so amended or repealed.
<PAGE>
Section 3.3. Quorum and Manner of Acting. A majority of the total
membership that a committee would have if there were no vacancies (including at
least one Director who is not an officer or employee of the Company or of any
entity controlling, controlled by, or under common control with the Company and
who is not a beneficial owner of a controlling interest in the voting stock of
the Company or of any such entity) shall constitute a quorum for the transaction
of business. The vote of a majority of the members present at the time of the
vote, if a quorum is present at such time, shall be the act of such committee.
Except as otherwise prescribed by these By-Laws or by the Board of Directors,
each committee may elect a chairman from among its members, fix the times and
dates of its meetings, and adopt other rules of procedure.
Section 3.4. Removal of Members. Any member (and any alternate member)
of a committee may be removed by vote of a majority of the entire Board of
Directors.
Section 3.5. Vacancies. Any vacancy occurring in any committee for any
reason may be filled by vote of a majority of the entire Board of Directors.
Section 3.6. Subcommittees. Any committee may appoint one or more
subcommittees from its members. Any such subcommittee may be charged with the
duty of considering and reporting to the appointing committee on any matter
within the responsibility of the committee appointing such subcommittee but
cannot act in place of the appointing committee.
Section 3.7. Alternate Members of Committees. The Board of Directors
may designate, by resolution adopted by a majority of the entire Board of
Directors, one or more directors as alternate members of any committee who may
replace any absent member or members at a meeting of such committee. [Business
Corporation Law Sec. 712]
Section 3.8. Attendance of Other Directors. Except as otherwise
prescribed by the Board of Directors, members of the Board of Directors may
attend any meeting of any committee.
ARTICLE IV
----------
OFFICERS
--------
Section 4.1. Chairman of the Board. The Board of Directors may at a
regular or special meeting elect from among their number a Chairman of the
<PAGE>
Board who shall hold office, at the pleasure of the Board of Directors, until
the next Annual Meeting.
The Chairman of the Board shall preside at all meetings of the Board of
Directors and also shall exercise such powers and perform such duties as may be
delegated or assigned to or required of him or her by these By-Laws or by or
pursuant to authorization of the Board of Directors.
Section 4.2. Vice-Chairman of the Board. The Board of Directors may at
a regular or special meeting elect from among their number one or more
Vice-Chairmen of the Board who shall hold office, at the pleasure of the Board
of Directors, until the next Annual Meeting.
The Vice-Chairmen of the Board shall exercise such powers and perform
such duties as may be delegated or assigned to or required of them by these
By-Laws or by or pursuant to authorization of the Board of Directors or by the
Chairman of the Board.
Section 4.3. President. The Board of Directors shall at a regular or
special meeting elect from among their number a President who shall hold office,
at the pleasure of the Board of Directors, until the next Annual Meeting and
until the election of his or her successor.
The President shall exercise such powers and perform such duties as may
be delegated or assigned to or required of him or her by these By-Laws or by or
pursuant to authorization of the Board of Directors or (if the President is not
the chief executive officer) by the chief executive officer. The President and
Secretary may not be the same person.
Section 4.4. Chief Executive Officer. The Chairman of the Board or the
President shall be the chief executive officer of the Company as the Board of
Directors from time to time shall determine, and the Board of Directors from
time to time may determine who shall act as chief executive officer in the
absence or inability to act of the then incumbent.
Subject to the control of the Board of Directors, and to the extent not
otherwise prescribed by these By-Laws, the chief executive officer shall have
plenary power over all departments, officers, employees, and agents of the
Company, and shall be responsible for the general management and direction of
all the business and affairs of the Company.
<PAGE>
Section 4.5. Secretary. The Board of Directors shall at a regular or
special meeting elect a Secretary who shall hold office, at the pleasure of the
Board of Directors, until the next Annual Meeting and until the election of his
or her successor.
The Secretary shall issue notices of the meetings of the shareholders
and the Board of Directors and its committees, shall keep the minutes of the
meetings of the shareholders and the Board of Directors and its committees and
shall have custody of the Company's corporate seal and records. The Secretary
shall exercise such powers and perform such other duties as relate to the office
of the Secretary, and also such powers and duties as may be delegated or
assigned to or required of him or her by or pursuant to authorization of the
Board of Directors or by the Chairman of the Board or (if the Chairman of the
Board is not the chief executive officer) the chief executive officer.
Section 4.6. Other Officers. The Board of Directors may elect such
other officers as may be deemed necessary for the conduct of the business of the
Company. Each such officer elected by the Board of Directors shall exercise such
powers and perform such duties as may be delegated or assigned to or required of
him or her by the Board of Directors or the chief executive officer, and shall
hold office until the next Annual Meeting, but at any time may be suspended by
the chief executive officer or by the Board of Directors, or removed by the
Board of Directors. [Business Corporation Law Secs. 715, 716]
ARTICLE V
---------
CAPITAL STOCK
-------------
Section 5.1. Transfers of Stock; Registered Shareholders. (a) Shares of
stock of the Company shall be transferable only upon the books of the Company
kept for such purpose upon surrender to the Company or its transfer agent or
agents of a certificate (unless such shares shall be uncertificated shares)
representing shares, duly endorsed or accompanied by appropriate evidence of
succession, assignment or authority to transfer. Within a reasonable time after
the transfer of uncertificated shares, the Company shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates.
(b) Except as otherwise prescribed by law, the Board of Directors may
make such rules, regulations and conditions as it may deem expedient concerning
the subscription for, issue, transfer and registration of, shares of stock.
<PAGE>
Except as otherwise prescribed by law, the Company, prior to due presentment for
registration of transfer, may treat the registered owner of shares as the person
exclusively entitled to vote, to receive notifications, and otherwise to
exercise all the rights and powers of an owner. [Business Corporation Law Sec.
508(d), (f); Insurance Law Sec. 4203]
Section 5.2 Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer agents and one or more registrars, and may require
all certificates representing shares to bear the signature of any such transfer
agents or registrars. The same person may act as transfer agent and registrar
for the Company.
ARTICLE VI
----------
EXECUTION OF INSTRUMENTS
------------------------
Section 6.1. Execution of Instruments. (a) Any one of the following,
namely, the Chairman of the Board, any Vice-Chairman of the Board, the
President, any Vice-President (including a Deputy or Assistant Vice-President or
any other Vice-President designated by a number or a word or words added before
or after the title Vice-President to indicate his or her rank or
responsibilities), the Secretary, or the Treasurer, or any officer, employee or
agent designated by or pursuant to authorization of the Board of Directors or
any committee created under these By-Laws, shall have power in the ordinary
course of business to enter into contracts or execute instruments on behalf of
the Company (other than checks, drafts and other orders drawn on funds of the
Company deposited in its name in banks) and to affix the corporate seal. If any
such instrument is to be executed on behalf of the Company by more than one
person, any two or more of the foregoing or any one or more of the foregoing
with an Assistant Secretary or an Assistant Treasurer shall have power to
execute such instrument and affix the corporate seal.
(b) The signature of any officer may be in facsimile on any such
instrument if it shall also bear the actual signature, or personally inscribed
initials, of an officer, employee or agent empowered by or pursuant to the first
sentence of this Section to execute such instrument, provided that the Board of
Directors or a committee thereof may authorize the issuance of insurance
contracts and annuity contracts on behalf of the Company bearing the facsimile
signature of an officer without the actual signature or personally inscribed
initials of any person.
<PAGE>
(c) All checks, drafts and other orders drawn on funds of the Company
deposited in its name in banks shall be signed only pursuant to authorization of
and in accordance with rules prescribed from time to time by the Board of
Directors or a committee thereof, which rules may permit the use of facsimile
signatures.
Section 6.2. Facsimile Signatures of Former Officers. If any officer
whose facsimile signature has been placed upon any instrument shall have ceased
to be such officer before such instrument is issued, it may be issued with the
same effect as if he or she had been such officer at the time of its issue.
Section 6.3. Meaning of Term "Instruments". As used in this Article VI,
the term "instruments" includes, but is not limited to, contracts and
agreements, checks, drafts and other orders for the payment of money, transfers
of bonds, stocks, notes and other securities, and powers of attorney, deeds,
leases, releases of mortgages, satisfactions and all other instruments entitled
to be recorded in any jurisdiction.
ARTICLE VII
-----------
GENERAL
-------
Section 7.1. Reports of Committees. Reports of any committee charged
with responsibility for supervising or making investments shall be submitted at
the next meeting of the Board of Directors. Reports of other committees of the
Board of Directors shall be submitted at a regular meeting of the Board of
Directors as soon as practicable, unless otherwise directed by the Board of
Directors.
Section 7.2 Independent Certified Public Accountants. The books and
accounts of the Company shall be audited throughout each year by such
independent certified public accountants as shall be selected by the Board of
Directors.
Section 7.3. Directors' Fees. The Directors shall be paid such fees for
their services in any capacity as may have been authorized by the Board of
Directors. No Director who is a salaried officer of the Company shall receive
any fees for serving as a Director of the Company. [Business Corporation Law
Sec. 713(e)]
<PAGE>
Section 7.4. Indemnification of Directors, Officers and Employees. (a)
To the extent permitted by the law of the State of New York and subject to all
applicable requirements thereof:
(i) any person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that he or she,
or his or her testator or intestate, is or was a director, officer or
employee of the Company shall be indemnified by the Company;
(ii) any person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that he or she,
or his or her testator or intestate serves or served any other organization
in any capacity at the request of the Company may be indemnified by the
Company; and
(iii) the related expenses of any such person in any of said categories
may be advanced by the Company.
(b) To the extent permitted by the law of the State of New York, the
Company may provide for further indemnification or advancement of expenses by
resolution of shareholders of the Company or the Board of Directors, by
amendment of these By-Laws, or by agreement. [Business Corporation Law Secs.
721-726; Insurance Law Sec. 1216]
Section 7.5. Waiver of Notice. Notice of any meeting of the Board of
Directors or any committee thereof shall not be required to be given to any
Director who submits a signed waiver of notice whether before or after the
meeting, or who attends the meeting without protesting, prior to or at its
commencement, the lack of notice to him. [Business Corporation Law Sec. 711(c)]
Section 7.6. Company. The term "Company" in these By-Laws means The
Equitable Life Assurance Society of the United States.
ARTICLE VIII
------------
AMENDMENT OF BY-LAWS
--------------------
Section 8.1. Amendment of By-Laws. Subject to Section 1210 of the
Insurance Law of the State of New York, all By-Laws of the Corporation,
<PAGE>
whether adopted by the Board of Directors or the shareholders, shall be subject
to amendment, alteration or repeal, and new By-Laws may be made, either
(a) by the shareholders at any annual or special meeting of
shareholders the notice of which shall have specified or summarized the
proposed amendment, alteration, repeal or new By-Laws, or
(b) by resolution adopted by the Board of Directors at any regular or
special meeting, the notice or waiver of notice of which, unless none is
required hereunder, shall have specified or summarized the proposed
amendment, alteration, repeal or new By-Laws,
provided, however, that the shareholders may at any time provide in the By-Laws
that any specified provision or provisions of the By-Laws may be amended,
altered or repealed only in the manner specified in the foregoing clause (a), in
which event such provision or provisions shall be subject to amendment,
alteration or repeal only in such manner. [Business Corporation Law Sec. 601(a);
Insurance Law Sec. 1210]
Section 8.2. Notice of Amendment. If any By-Law regulating an impending
election of directors is adopted, amended or repealed by the Board of Directors,
there shall be set forth in the notice of the next meeting of shareholders for
the election of directors the By-Law so adopted, amended or repealed, together
with a concise statement of the changes made. [Business Corporation Law Sec. 601
(b).]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus Supplement constituting part of
this Post-Effective Amendment No. 1 to the Registration Statement No. 333-17633
on Form S-6 of our report dated February 10, 1997 relating to the financial
statements of The Equitable Life Assurance Society of the United States Separate
Account I for the year ended December 31, 1996, and our report dated February
10, 1997 relating to the consolidated financial statements of The Equitable Life
Assurance Society of the United States for the year ended December 31, 1996,
which reports appear in such Prospectus Supplement. We also consent to the
reference to us under the heading "Financial Statements" in the Prospectus
Supplement.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
New York, New York
April 29, 1997
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in fact and agent , with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorney-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 6th day of January, 1997
/s/ Mary R. (Nina) Henderson
---------------------------------
Mary R. (Nina) Henderson
Exhibit 9
---------
SCHEDULE REGARDING
EQUITABLE'S LIFE INSURANCE
POLICIES FUNDED BY SEPARATE ACCOUNT I
AND RELATED POST-EFFECTIVE AMENDMENTS
MAY 1, 1997
--------------------------------------------
The Equitable Life Assurance Society of the United States ("Equitable")
registers the interests of Separate Account I on Form S-6 in File No. 333-17633.
Equitable Variable Life Insurance Company ("Equitable Variable"), a wholly-owned
subsidiary of Equitable, was merged with and into Equitable on January 1, 1997
(the "Merger"). Pursuant to the Merger, Equitable became the depositor of
Separate Account I and the Policies became obligations of Equitable. The
interests of Equitable Variable's Separate Account I were previously registered
on Form S-6 in File No. 2-54015. Separate Account I funds the following
policies:
1. "SP-1(TM)." This policy, offered from 1984 to 1990, is a
single-premium policy with a contingent deferred sales load and a level face
amount. (Equitable Variable continues to collect premiums and permit transfers
of accumulated amounts under each of two series of these policies.)
2. The "Champion(TM)." This policy, offered from 1984 to 1990, is a
periodic-premium policy with a contingent deferred sales load and a level face
amount. (Equitable Variable continues to collect premiums and permit transfers
of accumulated amounts under this policy.)
3. Basic & Expanded. These policies, offered from 1976 to 1987, are
periodic-premium policies with a front-end sales load. (Equitable Variable
continues to collect premiums and permit transfers of accumulated amounts under
each of three series of these policies.)
The polices referred to above were the subject of post-effective
amendments filed with the Commission as set out below.
The abbreviation "P.E." refers to a post-effective amendment. The
abbreviation ("I") refers to Equitable Variable Separate Account I (File No.
811-2581), and the abbreviation ("II") refers to Separate Account II (File No.
811-3182).
1. Variable Life Insurance Policy, Level Face Amount ("Basic"), and
----------------------------------------------------------------
Variable Life Insurance Policy, Increasing Face Amount
------------------------------------------------------
("Expanded") (Files No. 2-48988, 2-54015 and 2-72201).
------------------------------------------------------
The Basic Policy was originally registered under File No. 2-48988, and
the Expanded Policy was originally registered under File No. 2-54015. The
registration statements were declared effective on December 17 and December 23,
1975, respectively. The registration statements were amended separately until
1981. Beginning in 1981, the registration statements for both policies funded
through Separate Account I were amended under File No. 2-54015 and, by reference
pursuant to Rule 429 under the Securities Act of 1933, to File No. 2-48988. Both
policies funded through Separate Account II were originally registered under
File No. 2-72201, and the registration statement was amended under the same file
number. On March 22, 1985 Separate Account I was combined with Separate Account
II. All subsequent amendments have
<PAGE>
been filed only under File No. 2-54015. Equitable Variable discontinued its
offer to sell Basic and Expanded policies in January, 1987.
First Series (Basic and Expanded)
- ---------------------------------
<TABLE>
<S> <C> <C>
P.E. No. 1(I) 6-17-76 Update (Basic; later filing for Expanded)
P.E. No. 1(I) 6-22-76 Update (Expanded; earlier filing for Basic)
P.E. No. 2(I) 9-3-76 Update (Each policy)
P.E. No. 3(I) 3-31-77 Update (Each policy)
P.E. No. 4(I) 2-16-78 Update (Each policy)
P.E. No. 5(I) 4-26-78 Update (Each policy)
P.E. No. 12(I) 7-29-81 Policy rider to permit funding through Separate
Account II (Each policy)
</TABLE>
Second Series (Basic and Expanded)
- ----------------------------------
<TABLE>
<S> <C> <C>
P.E. No. 6(I) 11-21-78 New series of policy (Specimen filed) (Each policy)
P.E. No. 7(I) 12-5-78 Respond to comments on P.E. No. 6(I) (Each policy)
P.E. No. 8(I) 4-27-79 Update (and first of annual supplements for
preceding series) (Each policy)
P.E. No. 9(I) 3-31-80 Update (Each policy)
P.E. No. 10(I) 1-14-81 Supplement: additional illustrations of death
benefits (Each policy)
P.E. No. 11(I) 4-15-81 Update (Each policy)
P.E. No. 12(I) 7-29-81 Policy rider to permit funding through Separate
Account II (Each policy)
</TABLE>
Third Series (Basic and Expanded)
- ---------------------------------
<TABLE>
<S> <C> <C>
P.E. No. 12(I) 7-29-81 New series of policy to permit funding through
Separate Account II, a registered money market
account (specimens filed, on May 8, 1981, as
exhibits to Form N-1 registration statement of
Separate Account II)
P.E. No. 13(I)&
P.E. No. 1(II) 3-18-82 Update and revise prospectus disclosure format
P.E. No. 14(I)&
P.E. No. 2(II) 12-7-82 Supplement: revised loan provisions and reduced
premiums for non-smokers and possible sale through
independent broker-dealers
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
P.E. No. 15(I) &
P.E. No. 3 (II) 4-26-83 Update
P.E. No. 21(I) &
P.E. No. 9(II) 3-9-84 Update
P.E. No. 24 12-19-84 Revision to reflect proposed reorganization
P.E. No. 25 3-13-85 Respond to comments on P.E. No. 24
P.E. No. 26 3-26-85 Reflect completion of reorganization and update
P.E. No. 27 4-30-86 Update
P.E. No. 28 9-29-86 Supplement: Update and add new investment
divisions
P.E. No. 29 12-18-86 Change effective date of P.E. No. 28 to 12-18-86
P.E. No. 30 2-27-87 Supplement: Update
P.E. No. 31 4-29-88 Supplement: Update
P.E. No. 32 5-1-89 Supplement: Update
P.E. No. 33 5-1-90 Supplement: Update
P.E. No. 34 2-26-91 Supplement: New Separate Account Divisions
P.E. No. 35 2-26-91 Supplement: Update
P.E. No. 36 4-27-92 Supplement: Update
P.E. No. 37 7-23-92 Supplement: Conversion from a Mutual Life
Insurance Company to a Stock Life Insurance Company
P.E. No. 38 4-28-93 Supplement: Update
P.E. No. 39 2-11-94 Supplement: Update
P.E. No. 40 4-28-94 Supplement: Update
P.E. No. 41 4-25-95 Supplement: Update
P.E. No. 42 4-26-96 Supplement: Update
Original 12-11-96 Supplement: To announce the merger of
Equitable Variable into Equitable.
</TABLE>
2. Single Premium Variable Life Insurance Policy ("SP-1").
-------------------------------------------------------
The original SP-1(TM) Policy, with an increasing face amount, was
originally registered on Post-Effective Amendment No. 16(I) under File No.
2-54015 and on Post-Effective Amendment No. 4(II) under File No. 2-72201.
Equitable Variable discontinued its offer to sell such Policy in December, 1983.
The second series SP-1 Policy, with a level face amount, was registered
on Post-Effective Amendment No. 23(I) under File No. 2-54015 and on
Post-Effective Amendment No. 11(II) under File No. 2-72201. On March 22, 1985
Separate Account I was combined with Separate Account II. All subsequent
amendments have been filed only under File No. 2-54015. Equitable Variable
discontinued its offer to sell the SP-1 Policy in April, 1990.
First Series (SP-1)
- -------------------
<TABLE>
<S> <C> <C>
P.E. No. 16(I) &
P.E. No. 4(II) 7-14-83 New policy (specimen filed)
P.E. No. 17(I) &
P.E. No. 5(II) 8-17-83 New policy
P.E. No. 18(I) &
P.E. No. 6(II) 10-18-83 Supplement: sale through independent brokers
</TABLE>
3
<PAGE>
Second Series (SP-1)
- --------------------
<TABLE>
<S> <C> <C>
P.E. No. 23(I) &
P.E. No. 11(II) 5-14-84 New series of policy (specimen filed)
P.E. No. 24 12-19-84 Revision to reflect proposed reorganization
P.E. No. 25 3-13-85 Respond to comments on P.E. No. 24
P.E. No. 26 3-26-85 Reflect completion of reorganization and update
P.E. No. 27 4-30-86 Update
P.E. No. 28 9-29-86 Supplement: Update and add new investment divisions
P.E. No. 29 12-18-86 Change effective date of P.E. No. 28 to 12-18-86
P.E. No. 30 2-27-87 Supplement: Update
P.E. No. 31 4-29-88 Supplement: Update
P.E. No. 32 5-1-89 Supplement: Update
P.E. No. 33 5-1-90 Supplement: Update
P.E. No. 34 2-26-91 Supplement: New Separate Account Divisions
P.E. No. 35 2-26-91 Supplement: Update
P.E. No. 36 4-27-92 Supplement: Update
P.E. No. 37 7-23-92 Supplement: Conversion from a Mutual Life
Insurance Company to a Stock Life Insurance Company
P.E. No. 38 4-28-93 Supplement: Update
P.E. No. 39 2-11-94 Supplement: Update
P.E. No. 40 4-28-94 Supplement: Update
P.E. No. 41 4-25-95 Supplement: Update
P.E. No. 42 4-26-96 Supplement: Update
Original 12-11-96 Supplement: To announce the merger of
Equitable Variable into Equitable.
</TABLE>
3. Periodic Premium Variable Life Insurance Policy with Contingent
---------------------------------------------------------------
Deferred Sales Load (The "Champion").
- -------------------------------------
The Champion(TM) Policy was originally registered on Post-Effective
Amendment No. 19 (I) under File No. 2-54015 and on Post-Effective Amendment No.
7(II) under File No. 2-72201. On March 22, 1985 Separate Account I was combined
with Separate Account II. All subsequent amendments have been filed only under
File No. 2-54015. Equitable Variable discontinued its offer to sell The Champion
Policy in April, 1990.
<TABLE>
<S> <C> <C>
P.E. No. 19(I) &
P.E. No. 7(II) 12-27-83 New policy (specimen filed)
P.E. No. 20(I) &
P.E. No. 8(II) 2-27-84 Cancel automatic effectiveness of P.E. No. 19(I) &
P.E. No. 7(II)
P.E. No. 22(I) &
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
P.E. No. 10 (II) 5-7-84 Respond to comments on P.E. No. 19(I) & P.E. No.
7(II)
P.E. No. 24 12-19-84 Revision to reflect proposed reorganization
P.E. No. 25 3-13-85 Respond to comments on P.E. No. 24
P.E. No. 26 3-26-85 Reflect completion of reorganization and update
P.E. No. 27 4-30-86 Update
P.E. No. 28 9-29-86 Reorganize prospectus presentation, update, and
add new investment divisions
P.E. No. 29 12-18-86 Change effective date of P.E. No. 28 to 12-18-86
P.E. No. 30 2-27-87 Supplement: Update
P.E. No. 31 4-29-88 Supplement: Update
P.E. No. 32 5-1-89 Supplement: Update
P.E. No. 33 5-1-90 Supplement: Update
P.E. No. 34 2-26-91 Supplement: New Separate Account Divisions
P.E. No. 35 2-26-91 Supplement: Update
P.E. No. 36 4-27-92 Supplement: Update
P.E. No. 37 7-23-92 Supplement: Conversion from a Mutual Life
Insurance Company to a Stock Life Insurance Company
P.E. No. 38 4-28-93 Supplement: Update
P.E. No. 39 2-11-94 Supplement: Update
P.E. No. 40 4-28-94 Supplement: Update
P.E. No. 41 4-25-95 Supplement: Update
P.E. No. 42 4-26-96 Supplement: Update
Original 12-11-96 Supplement: To announce the merger of
Equitable Variable into Equitable.
</TABLE>
1813
5
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000312576
<NAME> Sep Acct I ELAS
<SERIES>
<NUMBER> 02
<NAME> Common Stock Fund
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 317,825,084
<INVESTMENTS-AT-VALUE> 543,778,508
<RECEIVABLES> 73,012
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 543,851,520
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,780,560
<TOTAL-LIABILITIES> 12,780,560
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 531,070,960
<DIVIDEND-INCOME> 4,143,111
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,447,308
<NET-INVESTMENT-INCOME> 1,695,803
<REALIZED-GAINS-CURRENT> 56,095,898
<APPREC-INCREASE-CURRENT> 48,313,721
<NET-CHANGE-FROM-OPS> 106,105,422
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,695,803
<DISTRIBUTIONS-OF-GAINS> 104,409,619
<DISTRIBUTIONS-OTHER> (31,903,072)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 74,977,499
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000312576
<NAME> Sep Acct I ELAS
<SERIES>
<NUMBER> 03
<NAME> Money Market Fund
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 66,401,674
<INVESTMENTS-AT-VALUE> 67,476,741
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 67,476,741
<PAYABLE-FOR-SECURITIES> 42,198
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,224,516
<TOTAL-LIABILITIES> 1,266,714
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 66,210,027
<DIVIDEND-INCOME> 3,440,074
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 337,817
<NET-INVESTMENT-INCOME> 3,102,257
<REALIZED-GAINS-CURRENT> 82,253
<APPREC-INCREASE-CURRENT> 7,049
<NET-CHANGE-FROM-OPS> 3,191,559
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,102,257
<DISTRIBUTIONS-OF-GAINS> 89,302
<DISTRIBUTIONS-OTHER> (5,725,264)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2,694,659)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000312576
<NAME> Sep Acct I ELAS
<SERIES>
<NUMBER> 04
<NAME> Aggressive Stock Fund
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 20,811,659
<INVESTMENTS-AT-VALUE> 30,076,602
<RECEIVABLES> 28,965
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,105,567
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 917,537
<TOTAL-LIABILITIES> 917,537
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 29,188,030
<DIVIDEND-INCOME> 65,784
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 135,068
<NET-INVESTMENT-INCOME> (69,284)
<REALIZED-GAINS-CURRENT> 5,170,795
<APPREC-INCREASE-CURRENT> 166,218
<NET-CHANGE-FROM-OPS> 5,267,729
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (69,284)
<DISTRIBUTIONS-OF-GAINS> 5,337,013
<DISTRIBUTIONS-OTHER> 785,145
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,969,228
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000312576
<NAME> Sep Acct I ELAS
<SERIES>
<NUMBER> 05
<NAME> Balanced Fund
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 34,079,909
<INVESTMENTS-AT-VALUE> 40,158,726
<RECEIVABLES> 10,307
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,169,033
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,267,004
<TOTAL-LIABILITIES> 1,267,004
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 38,902,029
<DIVIDEND-INCOME> 1,225,630
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 189,178
<NET-INVESTMENT-INCOME> 1,036,452
<REALIZED-GAINS-CURRENT> 3,139,118
<APPREC-INCREASE-CURRENT> (105,067)
<NET-CHANGE-FROM-OPS> 4,070,503
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,036,452
<DISTRIBUTIONS-OF-GAINS> 3,034,051
<DISTRIBUTIONS-OTHER> (716,048)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,059,511
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000312576
<NAME> Sep Acct I ELAS
<SERIES>
<NUMBER> 06
<NAME> High Yield Fund
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 9,342,140
<INVESTMENTS-AT-VALUE> 10,464,112
<RECEIVABLES> 4,677
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,468,789
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 802,156
<TOTAL-LIABILITIES> 802,156
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 9,666,633
<DIVIDEND-INCOME> 952,760
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 44,945
<NET-INVESTMENT-INCOME> 907,815
<REALIZED-GAINS-CURRENT> 677,418
<APPREC-INCREASE-CURRENT> 354,579
<NET-CHANGE-FROM-OPS> 1,939,812
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 907,815
<DISTRIBUTIONS-OF-GAINS> 1,031,997
<DISTRIBUTIONS-OTHER> (267,365)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,432,798
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000312576
<NAME> Sep Acct I ELAS
<SERIES>
<NUMBER> 08
<NAME> Intermed Gov Securities Fund
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2,455,042
<INVESTMENTS-AT-VALUE> 2,446,690
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,446,690
<PAYABLE-FOR-SECURITIES> 762
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 159,775
<TOTAL-LIABILITIES> 160,537
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,286,153
<DIVIDEND-INCOME> 136,334
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 10,873
<NET-INVESTMENT-INCOME> 125,461
<REALIZED-GAINS-CURRENT> (46,354)
<APPREC-INCREASE-CURRENT> (465)
<NET-CHANGE-FROM-OPS> 78,642
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 125,461
<DISTRIBUTIONS-OF-GAINS> (46,819)
<DISTRIBUTIONS-OTHER> 55,427
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 124,088
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
