<PAGE>
Registration No. 333-24009
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)
13-5570651
(I.R.S. Employer Identification No.)
1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104
(212) 554-1234
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
JONATHAN E. GAINES, VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104
(212) 554-1234
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Please send copies of all communications to:
PETER E. PANARITES
FREEDMAN, LEVY, KROLL & SIMONDS
1050 CONNECTICUT AVENUE, N.W., SUITE 825
WASHINGTON, D.C. 20036
(202) 457-5100
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Approximate date of commencement of proposed sale to the public: As soon after
the effective date of this Registration Statement as is practicable.
The registrant hereby amends this Registration Statement under the Securities
Act of 1933 on such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until this
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
<PAGE>
May 1, 1997
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
PROFILE OF INCOME MANAGER ROLLOVER IRA
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
This Profile is a summary of some of the more important points that you should
know and consider before purchasing a Certificate. The Certificate is more
fully described in the prospectus which accompanies this Profile. Please read
the prospectus carefully.
1. THE ANNUITY CERTIFICATE. The Rollover IRA Certificate is a qualified
deferred annuity issued by Equitable Life. It is designed to provide for the
accumulation of savings and for retirement income through the investment,
during an accumulation phase, of rollover contributions, direct transfers from
other individual retirement arrangements and additional individual retirement
annuity or IRA, contributions. You may invest in Investment Funds where your
Certificate's value may vary up or down depending upon investment performance.
You may also invest in Guarantee Periods, or " GIROs" that when held to
maturity provide guaranteed interest rates that we have set and a guarantee of
principal. If you make transfers or withdrawals from a GIRO before maturity,
its investment value may increase or decrease due to interest rate changes.
Earnings accumulate under your Certificate on a tax-deferred basis until
amounts are distributed. All amounts distributed are subject to income tax.
The Investment Funds offer a potential for better returns than the interest
rates guaranteed when GIROs are held to maturity, but the Investment Funds
involve risk and you can lose money. You may make transfers among the
Investment Funds and GIRO's. The value of GIROs prior to their maturity
fluctuates and you can lose money on premature transfers or withdrawals.
The Certificate provides a number of distribution methods during the
accumulation phase and for converting to annuity income, which include the
ASSURED PAYMENT OPTION, APO PLUS and other Annuity Benefits.
The Assured Payment Option may also be elected if you desire to start receiving
lifetime income immediately. When you elect the Assured Payment Option, your
Certificate's value will be reduced to provide for guaranteed lifetime income.
You may also elect APO PLUS whereby a portion of your money is invested under
the Assured Payment Option, and the remaining amount is allocated to the
Alliance Common Stock Fund or the Alliance Equity Index Fund, as you select.
Every three years during the fixed period of the Assured Payment Option, a
portion of your money in the selected Investment Fund is applied to increase
the guaranteed payments under the Assured Payment Option.
The amount accumulated under your Certificate during the accumulation phase
will affect the amount of distribution or annuity benefits you will receive.
2. ANNUITY PAYMENTS. You can have your Certificate's value applied to any of
the following five ANNUITY BENEFITS: (1) Life Annuity - payments for your life,
(2) Life Annuity - Period Certain - payments for your life, but with payments
continuing to the beneficiary for the balance of the 5, 10, 15 or 20 years (as
you select) if you die before the end of the selected period; (3) Life Annuity
- - Refund Certain - payments
----------------
baseBUILDER is a service mark of
The Equitable Life Assurance Society of the United States.
1
<PAGE>
for your life, with payments continuing to the beneficiary after your death
until any remaining amount applied to this option runs out; and (4) Period
Certain Annuity - payments for a specified period of time, usually 5, 10, 15 or
20 years, with no life contingencies. Options (2) and (3) are also available as
a Joint and Survivor Annuity - payments for your life, and after your death,
continuation of payments to the survivor for life. Income Annuity Options
(other than the Refund Certain only available on a fixed basis) are available
as a fixed annuity, or as a variable annuity, where the dollar amount of your
payments will depend upon the investment performance of the Investment Funds.
Once you begin receiving annuity payments, you cannot change your annuity
benefit.
3. PURCHASE. You can purchase a Certificate by rolling over or transferring at
least $5,000 or more from one or more individual retirement arrangements. You
may add additional amounts of $1,000 or more at any time (subject to certain
restrictions). Additional amounts are limited to $2,000 per year, but
additional rollover or transfer amounts are unlimited. Subject to certain age
restrictions, you may purchase the baseBUILDER(SM) guaranteed benefits in the
form of a Combined Guaranteed Minimum Death Benefit and Guaranteed Minimum
Income Benefit (Plan A). If you do not elect the combined benefits, the
Guaranteed Minimum Death Benefit is provided under the Certificate at a lower
charge (Plan B). Both benefits are discussed below.
4. INVESTMENT OPTIONS. You may invest in any or all of the following Investment
Funds, which invest in shares of corresponding portfolios of The Hudson River
Trust (HR Trust) and EQ Advisors Trust, (EQ Trust). The portfolios are
described in the prospectuses for HR Trust and EQ Trust.
<TABLE>
<CAPTION>
HR TRUST INVESTMENT FUNDS EQ TRUST INVESTMENT FUNDS
- ------------------------- --------------------------
<S> <C> <C>
Alliance Conservative Investors EQ/Putnam Balanced Morgan Stanley Emerging
Alliance Growth Investors EQ/Putnam Growth & Markets Equity*
Alliance Growth & Income Income Value T. Rowe Price Equity
Alliance Common Stock MFS Emerging Growth Income
Alliance Global Companies T. Rowe Price
Alliance International MFS Research International Stock
Alliance Aggressive Stock Merrill Lynch Basic Warburg Pincus Small
Alliance Small Cap Growth Value Equity Company Value
Alliance Money Market Merrill Lynch World
Alliance Intermediate Strategy
Government Securities
Alliance High Yield
</TABLE>
Alliance Equity Index Fund (Available under APO Plus Only)
* The Morgan Stanley Emerging Markets Equity Fund will be available on or about
September 2, 1997.
You may also invest in one or more GIROs currently maturing in years 1998
through 2007. Under the Assured Payment Option and APO Plus, GIROs currently
maturing in years 2008 through 2012 are also available.
2
<PAGE>
5. EXPENSES. The Certificate has expenses as follows: For Plan A--there is an
annual charge as a percentage of the Guaranteed Minimum Death Benefit. The
percentage is equal to 0.45% for the 6% to Age 80 Benefit; and 0.30% for the 6%
to Age 70 Benefit. For Plan B-- the percentage is equal to 0.20%. A daily
charge is deducted for mortality and expense risks and administration expenses
at an annual rate of 0.90% of assets in the Investment Funds and 0.25%,
respectively.
The charges for the portfolios of HR Trust range from 0.63% to 1.33% of the
average daily assets of HR Trust portfolios, depending upon HR Trust portfolios
selected (based on 1996 other expenses). The charges for the portfolios of EQ
Trust range from 0.85% to 1.75% of the average daily assets of EQ Trust
portfolio. These amounts are based on estimates and, for EQ Trust, a current
expense cap. The 12b-1 fees for the portfolios of HR Trust and EQ Trust are
0.25% of the average daily net assets of HR Trust and EQ Trust, respectively.
Charges for state premium and other applicable taxes may also apply at the time
you elect to start receiving annuity payments.
A withdrawal charge is imposed as a percentage of each contribution withdrawn
in excess of a free corridor amount, or if the Certificate is surrendered. The
free corridor amount for withdrawals is 15% of the Certificate's value at the
beginning of the year, except that under the Assured Payment Option and APO
Plus it is 10%. The withdrawal charge does not apply under certain of the
distribution methods available under the Certificate. When applicable, the
withdrawal charge is determined in accordance with the table below, based on
the year a contribution is withdrawn. The year in which we receive your
contribution is "Year 1."
<TABLE>
<CAPTION>
Year of Contribution Withdrawal
1 2 3 4 5 6 7 8+
------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The following chart is designed to help you understand the charges in the
Certificate. The "Total Annual Charges" column shows the combined total of the
Certificate charges deducted as a percentage of assets in the Investment Funds
and the portfolio charges, as shown in the first two columns. The last two
columns show you two examples of the charges, in dollars, that you would pay
under a Certificate and include the benefit based charge for the baseBUILDER
combined Guaranteed Minimum Death and Income Benefits equal to 0.45% of the
Guaranteed Minimum Death Benefit in effect on each Contract Date anniversary.
The examples assume that you invested $1,000 in a Certificate which earns 5%
annually and that you withdraw your money: (1) at the end of year 1, and (2)
at the end of year 10. For year 1, the Total Annual Charges are assessed as
well as the withdrawal charge. For year 10, the example shows the aggregate
of all the annual charges assessed for the 10 years, but there is no
withdrawal charge. No charges for state premium and other applicable taxes
are assumed in the examples.
<TABLE>
<CAPTION>
EXAMPLES
TOTAL ANNUAL TOTAL ANNUAL TOTAL Total Annual
CERTIFICATE PORTFOLIO ANNUAL Expenses at End of:
INVESTMENT FUND CHARGES CHARGES CHARGES (1) (2)
1 Year 10 Years
<S> <C> <C> <C> <C> <C>
EQ TRUST
- --------
EQ/Putnam Balanced 1.15% 0.90% 2.05% $90.74 $293.88
EQ/Putnam Growth & Income Value 1.15 0.85 2.00 90.24 288.87
MFS Emerging Growth Companies 1.15 0.85 2.00 90.24 288.87
MFS Research 1.15 0.85 2.00 90.24 288.87
Merrill Lynch Basic Value Equity 1.15 0.85 2.00 90.24 288.87
Merrill Lynch World Strategy 1.15 1.20 2.35 93.72 323.50
Morgan Stanley Emerging Markets
Equity 1.15 1.75 2.90 99.19 375.62
T. Rowe Price Equity Income 1.15 0.85 2.00 90.24 288.87
T. Rowe Price International
Stock 1.15 1.20 2.35 93.72 323.50
Warburg Pincus Small
Company Value 1.15 1.00 2.15 91.73 303.84
HR TRUST
- --------
Alliance Conservative
Investors 1.15% 0.80% 1.95% $89.74 $275.75
Alliance Growth Investors 1.15 0.84 1.99 90.14 279.80
Alliance Growth & Income 1.15 0.85 2.00 90.24 280.80
Alliance Common Stock 1.15 0.66 1.81 88.35 261.52
Alliance Global 1.15 0.98 2.13 91.53 293.80
Alliance International 1.15 1.33 2.48 95.01 328.00
3
<PAGE>
Alliance Aggressive Stock 1.15 0.83 1.98 90.04 278.79
Alliance Small Cap Growth 1.15 1.25 2.40 94.22 ---
Alliance Money Market 1.15 0.64 1.79 88.15 259.45
Alliance Intermediate
Government Securities 1.15 0.84 1.99 90.14 279.80
Alliance High Yield 1.15 0.91 2.06 90.84 286.83
UNDER APO PLUS
Alliance Common Stock 1.15 0.66 1.81 88.35 233.84
Alliance Equity Index 1.15 0.63 1.78 88.05 230.74
</TABLE>
For Investment Funds investing in portfolios with less than 10 years of
operations, charges have been estimated. The charges reflect any expense waiver
or limitation. For more detailed information, see the Fee Table in the
prospectus.
6. TAXES. Your earnings are not taxed until distributions are made from your
Certificate. If you are younger than age 59 1/2 when you receive any
distributions, you may be charged a 10% Federal tax penalty on the amount
received.
7. ACCESS TO YOUR MONEY. During the accumulation phase, you also may receive
distributions under a Certificate through the following WITHDRAWAL OPTIONS: (1)
Lump Sum Withdrawals of at least $1,000 may be taken at any time. Lump Sum
Withdrawals are also available under the Distribution Options. (2)
Substantially Equal Payment Withdrawals (if you are less than age 59 1/2), paid
monthly, quarterly or annually based on life expectancy; (3) Systematic
Withdrawals (if you are age 59 1/2 to 70), paid monthly, quarterly or annually,
subject to certain restrictions, including a maximum percentage of your
Certificate's value; and (4) Minimum Distribution Withdrawals (after you are
age 70 1/2), which pays the minimum amount necessary to meet minimum
distribution requirements in the Internal Revenue Cole. You also have access to
your Certificate's value by surrendering the Certificate. All or a portion of
certain withdrawals may be subject to a withdrawal charge to the extent that
the withdrawal exceeds the free corridor amount. A free corridor amount does
not apply to a surrender. Withdrawals and surrenders are subject to income tax
and may be subject to a tax penalty.
8. PERFORMANCE. During the accumulation phase, your Certificate's value in the
Investment Funds may vary up or down depending upon the investment performance
of the Investment Funds you have selected. The following chart shows total
returns for certain Investment Funds for the time periods shown. The results
indicated reflect all of the charges, except for the optional Combined
Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit Charge
and the withdrawal charge. If included, these two charges would reduce the
performance numbers shown below. Past performance is not a guarantee of future
results.
4
<PAGE>
The performance data for the Alliance Growth & Income, Alliance International,
Alliance Conservative Investors, Alliance Intermediate Government Securities
(under which portfolios of HR Trust with a 12b-1 fee were not previously
available) and the for other Investment Funds prior to October 16, 1996, do not
reflect the 12b-1 fee. There is no performance data for the Alliance Small Cap
Growth Fund and the Investment Funds investing in EQ Trust portfolios as such
Investment Funds were not available prior to May 1, 1997.
<TABLE>
<CAPTION>
CALENDAR YEAR
INVESTMENT FUND 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors 3.99% 19.02% (5.20)% 9.54% 4.50% 18.51% 5.14% 2.79% -- --
Alliance Growth Investors 11.24 24.92 (4.27) 13.95 3.69 47.19 9.39 3.53 -- --
Alliance Growth & Income 18.70 22.65 (1.72) (0.55) -- -- -- -- -- --
Alliance Common Stock 22.76 30.93 (3.26) 23.29 2.03 36.30 (9.17) 24.16 21.03% 6.21%
Alliance Global 13.20 17.45 4.02 30.60 (1.65) 29.06 (7.15) 25.29 9.61 (13.62)
Alliance International 8.54 10.34 -- -- --- --- --- -- -- --
Alliance Aggressive Stock 20.71 30.13 (4.92) 15.41 (4.28) 84.73 6.92 41.86 (0.03) 6.06
Alliance Money Market 4.05 4.53 2.82 1.78 2.37 4.97 6.99 7.93 6.09 5.41
Alliance Intermediate
Government Securities 2.57 12.03 (5.47) 9.27 4.38 11.30 -- -- -- --
Alliance High Yield 21.39 18.54 (3.90) 21.74 11.02 23.03 (2.26) 3.93 8.48 3.49
Alliance Equity Index 20.97 34.92 0.11 -- -- -- -- -- -- --
</TABLE>
9. DEATH BENEFIT. If you die before amounts are applied under an annuity
benefit, the named beneficiary will be paid a death benefit. The death benefit
is equal to (1) your Certificate's value in the Investment Funds, or if
greater, the Guaranteed Minimum Death Benefit, and (2) the amount of the death
benefit provided with respect to GIRO's. The Guaranteed Minimum Death Benefit
is different in New York.
The Guaranteed Minimum Death Benefit is a "6% to Age 80 Benefit." We add
interest to the initial amount allocated to the Investment Funds at 6% (3%
for amounts in the Alliance Money Market Fund and Alliance Intermediate
Government Securities Fund) through the Annuitant's age 80.
If you elect the Plan A and are between the ages of 20 through 65, you
may instead elect a 6% to Age 70 Benefit, for a lower charge.
10. OTHER INFORMATION.
GUARANTEED MINIMUM INCOME BENEFIT. The Guaranteed Minimum Income Benefit,
as part of the baseBUILDER, is an optional benefit that provides a minimum
amount of guaranteed lifetime income for your future. When you are ready to
convert (during specified periods of time) your Certificate's value to the
Assured Payment Option the minimum amount of lifetime income that will be
provided will be the greater of (i) your Guaranteed Minimum Income Benefit
or (ii) your Certificate's current value in the Investment Funds, applied at
current annuity factors.
5
<PAGE>
Investment performance is not guaranteed. The Guaranteed Minimum Income Benefit
provides a safety net for your future income.
FREE LOOK. You can examine the Certificate for a period of 10 days after you
receive it, and return it to us for a refund. The free look period is longer in
some states.
Your refund will equal your Certificate's value, reflecting any investment gain
or loss, in the Investment Funds, and any increase or decrease in the value of
any amounts held in the GIRO's, through the date we receive your Certificate.
Some states or Federal income tax regulations may require that we calculate the
refund differently.
PRINCIPAL ASSURANCE. This option is designed to assure the return of your
original amount invested on a GIRO maturity date, by putting a portion of your
money in a particular GIRO, and the balance in the Investment Funds in any way
you choose. Assuming that you make no transfers or withdrawals of the portion
in the GIRO, such amount will grow to your original investment upon maturity.
DOLLAR COST AVERAGING. Special Dollar Cost Averaging - You can elect when you
apply for your Certificate to put your money into the Alliance Money Market
Fund and have a it transferred from the Alliance Money Market Fund into the
other Investment Funds on a monthly basis over the first twelve months in which
case Certificate charges will not be deducted from the amount remaining in the
Alliance Money Market Fund during this period. General Dollar Cost Averaging -
You can elect at any time to put money into the Alliance Money Market Funds and
have a dollar amount or percentage transferred from the Alliance Money Market
Fund into the other Investment Funds on a periodic basis over a longer period
of time, and all applicable charges deducted from the value in the Alliance
Money Market Fund will apply. Dollar cost averaging does not assure a profit or
protect against a loss should market prices decline.
REPORTS. We will provide you with an annual statement of your Certificate's
values as of the last day of each year, and three additional reports of your
Certificate's values each year. You also will be provided with written
confirmations of each financial transaction, and copies of annual and
semi-annual statements of HR Trust and EQ Trust.
You may call toll-free at 1-800-789-7771 for a recording of daily Investment
Fund values and guaranteed rates applicable to GIRO's.
11. INQUIRIES. If you need more information, please contact your agent. You may
also contact us, at:
The Equitable Life Assurance Society of the United States
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Telephone 1-800-789-7771 and Fax 1-201-583-2224
6
<PAGE>
INCOME MANAGER(SM) ROLLOVER IRA
PROSPECTUS DATED MAY 1, 1997
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
This prospectus describes individual retirement annuity (IRA) certificates The
Equitable Life Assurance Society of the United States (EQUITABLE LIFE, WE, OUR
and US) offers under a combination variable and fixed deferred annuity contract
(ROLLOVER IRA) issued on a group basis or as individual contracts. Enrollment
under a group contract will be evidenced by issuance of a certificate.
Certificates and individual contracts each will be referred to as
"Certificates." Under the Rollover IRA we will accept only initial
contributions that are rollover contributions or that are direct transfers from
other individual retirement arrangements, as described in this prospectus. A
minimum initial contribution of $5,000 is required to put a Certificate into
effect.
The Rollover IRA is designed to provide for the accumulation of retirement
savings and for income. Contributions accumulate on a tax-deferred basis and
can be distributed under a number of different methods which are designed to be
responsive to the owner's (CERTIFICATE OWNER, YOU and YOUR) objectives. The
distribution methods include the ASSURED PAYMENT OPTION, Assured Payment Option
Plus (APO PLUS), and a variety of payout options, including variable annuities
and fixed annuities. The Assured Payment Option and APO Plus are also available
for election in the application if you are interested in receiving
distributions rather than accumulating funds.
The Rollover IRA offers investment options (INVESTMENT OPTIONS) that permit you
to create your own strategies. These Investment Options include 21 variable
investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the GUARANTEED
PERIOD ACCOUNT.
We invest each Investment Fund in Class IB shares of a corresponding portfolio
(PORTFOLIO) of The Hudson River Trust (HR TRUST) or EQ Advisors Trust (EQ
TRUST), mutual funds whose shares are purchased by separate accounts of
insurance companies. The prospectuses for HR Trust and EQ Trust, both of which
accompany this prospectus, describe the investment objectives, policies and
risks of the Portfolios.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
EQUITY SERIES:
- ----------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY INTERNATIONAL EQUITY AGGRESSIVE EQUITY
<S> <C> <C>
Alliance Common Stock Alliance Global Alliance Aggressive Stock
Alliance Growth & Income Alliance International Alliance Small Cap Growth
EQ/Putnam Growth & Income Value Morgan Stanley Emerging Markets Equity MFS Emerging Growth Companies
MFS Research T. Rowe Price International Stock Warburg Pincus Small Company Value
Merrill Lynch Basic Value Equity
T. Rowe Price Equity Income
----------------------------------------------------------------------------- -------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES FIXED INCOME SERIES
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Conservative Investors AGGRESSIVE FIXED INCOME DOMESTIC FIXED INCOME
Alliance Growth Investors Alliance High Yield Alliance Intermediate Government Securities
EQ/Putnam Balanced Alliance Money Market
Merrill Lynch World Strategy Alliance Equity Index (ONLY AVAILABLE UNDER
APO PLUS)
--------------------------------------------------------------------------------------------------------------
</TABLE>
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). Each Guarantee Period has its own
Guaranteed Rates. The Guarantee Periods currently available have Expiration
Dates of February 15, in years 1998 through 2007 under the Rollover IRA and
1998 through 2012 under the Assured Payment Option and APO Plus.
This prospectus provides information about the Rollover IRA that prospective
investors should know before investing. You should read it carefully and retain
it for future reference. The prospectus is not valid unless accompanied by
current prospectuses for HR Trust and EQ Trust, both of which you should also
read carefully.
Registration statements relating to Separate Account No. 45 (SEPARATE ACCOUNT)
and interests under the Guarantee Periods have been filed with the Securities
and Exchange Commission (SEC). The statement of additional information (SAI),
dated May 1, 1997, which is part of the registration statement for the Separate
Account, is available free of charge upon request by writing to our Processing
Office or calling 1-800-789-7771, our toll-free number. The SAI has been
incorporated by reference into this prospectus. The Table of Contents for the
SAI appears at the back of this prospectus.
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
Copyright 1997 The Equitable Life Assurance Society of the
United States, New York, New York 10104.
All rights reserved. baseBUILDER is a service mark of The Equitable Life
Assurance Society of the United States.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December 31,
1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (EXCHANGE
ACT) after the date hereof and prior to the termination of the offering of the
securities offered hereby shall be deemed to be incorporated by reference in
this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified and superseded, to constitute a part of this prospectus. Equitable
Life files its Exchange Act documents and reports, including its annual and
quarterly reports on Form 10-K and Form 10-Q, electronically pursuant to EDGAR
under CIK No. 0000727920. The SEC maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. The address of the site is
http://www.sec.gov.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
2
<PAGE>
PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
FEE TABLE PAGE 6
PART 1: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE
INVESTMENT FUNDS PAGE 11
Equitable Life 11
Separate Account No. 45 11
HR Trust 12
HR Trust's Manager and Adviser 12
EQ Trust 12
EQ Trust's Manager and Advisers 12
Investment Policies and Objectives of
HR Trust's Portfolios and EQ Trust's
Portfolios 13
PART 2: THE GUARANTEED PERIOD
ACCOUNT PAGE 16
Guarantee Periods 16
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 17
Modal Payment Portion 18
Investments 18
PART 3: PROVISIONS OF THE
CERTIFICATES AND SERVICES
WE PROVIDE PAGE 20
What is the Rollover IRA? 20
Availability of the Certificates 20
Contributions Under the Certificates 20
Methods of Payment 20
Allocation of Contributions 20
Free Look Period 21
Annuity Account Value 21
Transfers Among Investment Options 22
Dollar Cost Averaging 22
baseBUILDER Benefits 23
Death Benefit 23
Guaranteed Minimum Income Benefit 24
Cash Value 25
Surrendering the Certificates to
Receive the Cash Value 25
When Payments are Made 25
Assignment 26
Services We Provide 26
Distribution of the Certificates 26
PART 4: DISTRIBUTION METHODS UNDER THE
CERTIFICATES PAGE 27
Assured Payment Option 27
APO Plus 30
Withdrawal Options 32
Annuity Benefits 35
PART 5: DEDUCTIONS AND CHARGES PAGE 37
Charges Deducted from the Annuity
Account Value 37
Charges Deducted from the Investment
Funds 37
HR Trust Charges to Portfolios 38
EQ Trust Charges to Portfolios 38
Sponsored Arrangements 39
Other Distribution Arrangements 39
PART 6: VOTING RIGHTS PAGE 40
HR Trust and EQ Trust Voting Rights 40
Voting Rights of Others 40
Separate Account Voting Rights 40
Changes in Applicable Law 40
PART 7: TAX ASPECTS OF THE PAGE 41
CERTIFICATES
Tax-Qualified Individual Retirement
Annuities (IRAs) 41
Penalty Tax on Early Distributions 46
Tax Penalty for Insufficient
Distributions 46
Tax Penalty for Excess Distributions or
Accumulation 46
Federal and State Income Tax
Withholding 47
Other Withholding 47
Impact of Taxes to Equitable Life 47
Transfers Among Investment Options 47
Tax Changes 48
PART 8: INDEPENDENT ACCOUNTANTS PAGE 49
PART 9: INVESTMENT PERFORMANCE PAGE 50
Standardized Performance Data 50
Rate of Return Data for Investment
Funds 52
Communicating Performance Data 55
Alliance Money Market Fund and Alliance
Intermediate Government Securities
Fund Yield Information 55
APPENDIX I: MARKET VALUE
ADJUSTMENT EXAMPLE PAGE 57
APPENDIX II: GUARANTEED MINIMUM
DEATH BENEFIT EXAMPLE PAGE 58
APPENDIX III: EXAMPLE OF PAYMENTS
UNDER THE ASSURED PAYMENT
OPTION AND APO PLUS PAGE 59
APPENDIX IV: IRS TAX DEDUCTION TABLE PAGE 60
STATEMENT OF ADDITIONAL
INFORMATION TABLE OF CONTENTS PAGE 61
</TABLE>
3
<PAGE>
GENERAL TERMS
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE--The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT--The individual who is the measuring life for determining benefits
under the Certificates. The Annuitant and Certificate Owner must be the same
individual.
ANNUITY ACCOUNT VALUE--The sum of the amounts in the Investment Options under
the Certificate. See "Annuity Account Value" in Part 3.
ANNUITY COMMENCEMENT DATE--The date on which Annuity Benefit payments
automatically commence.
ASSURED PAYMENT OPTION--A distribution option which provides guaranteed
lifetime income. The Assured Payment Option may be elected in the application
or elected as a distribution option at a later date. Under this option amounts
are allocated to the Guaranteed Period Account and the Life Contingent Annuity.
No amounts may be allocated to the Investment Funds.
APO PLUS--A distribution option which provides guaranteed lifetime income. APO
Plus may be elected in the application or as a distribution option at a later
date. Under this option amounts are allocated to the Guaranteed Period Account,
the Life Contingent Annuity and to the Alliance Common Stock Fund and/or the
Alliance Equity Index Fund. The amount in such Funds is then systematically
converted to increase the guaranteed lifetime income.
BASEBUILDER (SERVICE MARK) --Protection benefits, consisting of the Guaranteed
Minimum Death Benefit and the Guaranteed Minimum Income Benefit.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our Business
Day ends at 4:00 p.m. Eastern Time or the closing of the New York Stock
Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity contract
and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns a Certificate and has the right to
exercise all rights under the Certificate. The Certificate Owner must be the
same individual as the Annuitant.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The effective date of the Certificates. This is usually the
Business Day we receive the initial contribution at our Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EQ TRUST--EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants, Inc.
(EQ Financial) is the manager to EQ Trust and has appointed advisers for each
of the Portfolios.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEED MINIMUM DEATH BENEFIT--The minimum amount payable with respect to
the Investment Funds, upon the death of the Annuitant.
GUARANTEED MINIMUM INCOME BENEFIT--The minimum amount of future guaranteed
lifetime income provided with respect to the Investment Funds.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date that
are available for investment under the Certificates. Guarantee Periods may also
be referred to as Guaranteed Interest Rate Options (GIROs).
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods and
the Modal Payment Portion of such Account.
GUARANTEED RATE--The annual interest rate established for each allocation to a
Guarantee Period.
HR TRUST--The Hudson River Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. Alliance Capital Management L.P.
(Alliance) is the manager and adviser to HR Trust.
INVESTMENT FUNDS--The funds of the Separate Account that are available under
the Certificates. The Alliance Equity Index Fund is only available under APO
Plus.
4
<PAGE>
INVESTMENT OPTIONS--The choices for investment: the Investment Funds and each
available Guarantee Period.
IRA--An individual retirement annuity, as defined in Section 408(b) of the
Code.
LIFE CONTINGENT ANNUITY--Provides guaranteed lifetime income beginning at a
future date. Amounts may only be applied under the Life Contingent Annuity
through election of the Assured Payment Option and APO Plus.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
MODAL PAYMENT PORTION--Under the Assured Payment Option and APO Plus, the
portion of the Guaranteed Period Account from which payments, other than
payments due on an Expiration Date, are made.
PORTFOLIOS--The portfolios of HR Trust and EQ Trust that correspond to the
Investment Funds of the Separate Account.
PROCESSING DATE--The day when we deduct certain charges from the Annuity
Account Value. If the Processing Date is not a Business Day, it will be on the
next succeeding Business Day. The Processing Date will be once each year on
each anniversary of the Contract Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 3.
SAI--The statement of additional information for the Separate Account under the
Certificates.
SEPARATE ACCOUNT--Equitable Life's Separate Account No. 45.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If your
contribution or request reaches our Processing Office on a non-Business Day, or
after the close of the Business Day, the Transaction Date will be the next
following Business Day. Transaction requests must be made in a form acceptable
to us.
VALUATION PERIOD--Each Business Day together with any preceding non-business
days.
5
<PAGE>
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate so
that you may compare them with other similar products. The table reflects both
the charges of the Separate Account and the expenses of HR Trust and EQ Trust.
Charges for applicable taxes such as state or local premium taxes may also
apply. For a complete description of the charges under the Certificate, see
"Part 5: Deductions and Charges." For a complete description of each trust's
charges and expenses, see the prospectuses for HR Trust and EQ Trust.
As explained in Part 2, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. See "Part 5: Deductions and
Charges." A market value adjustment (either positive or negative) also may be
applicable as a result of a withdrawal, transfer or surrender of amounts from
a Guarantee Period. See "Part 2: The Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (percentage deducted upon
surrender or for certain withdrawals. The applicable withdrawal charge
percentage is determined by the Contract Year in which the withdrawal is made
or the Certificate is surrendered beginning with "Contract Year 1" with
respect to each contribution withdrawn or surrendered. For each contribution,
the Contract Year in which we receive that contribution is "Contract Year
1")(1)
<TABLE>
<CAPTION>
CONTRACT
YEAR
- ----------
<S> <C>
1.... 7.00%
2.... 6.00
3.... 5.00
4.... 4.00
5.... 3.00
6.... 2.00
7.... 1.00
8+... 0.00
</TABLE>
<TABLE>
<CAPTION>
GUARANTEED BENEFIT EXPENSE (DEDUCTED FROM ANNUITY ACCOUNT VALUE)(2)
<S> <C>
COMBINED GUARANTEED MINIMUM DEATH BENEFIT AND GUARANTEED MINIMUM INCOME BENEFIT
(PLAN A) .......................................................................... 0.45%
GUARANTEED MINIMUM DEATH BENEFIT ONLY (PLAN B) ..................................... 0.20%
THESE CHARGES ARE CALCULATED AS A PERCENTAGE OF THE GUARANTEED MINIMUM DEATH
BENEFIT
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH INVESTMENT
FUND)
MORTALITY AND EXPENSE RISKS......................................................... 0.90%
ADMINISTRATION(3)................................................................... 0.25%
-------
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES............................................. 1.15%
=======
</TABLE>
- ------------
See footnotes on next page.
6
<PAGE>
HR TRUST AND EQ TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET
ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
---------------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
CONSERVATIVE GROWTH GROWTH & COMMON ALLIANCE ALLIANCE
HR TRUST INVESTORS INVESTORS INCOME STOCK GLOBAL INTERNATIONAL
- -------- ----------------- ------------ ---------- ---------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.48% 0.53% 0.55% 0.38% 0.65% 0.90%
12b-1 Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.07% 0.06% 0.05% 0.03% 0.08% 0.18%
---------------- -------------- ------------ ---------------- ------------ ------------
TOTAL HR TRUST ANNUAL
EXPENSES(5) 0.80% 0.84% 0.85% 0.66% 0.98% 1.33%
================ ============== ============ ================ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE ALLIANCE ALLIANCE INTERMEDIATE ALLIANCE ALLIANCE
AGGRESSIVE SMALL MONEY GOVT. HIGH EQUITY
HR TRUST STOCK CAP GROWTH MARKET SECURITIES YIELD INDEX
- --------------------------- ---------------- -------------- ------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.55% 0.90% 0.35% 0.50% 0.60% 0.33%
12-b Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.03% 0.10% 0.04% 0.09% 0.06% 0.05%
---------------- -------------- ------------ ---------------- ------------ ------------
TOTAL HR TRUST ANNUAL
EXPENSES(5) 0.83% 1.25% 0.64% 0.84% 0.91% 0.63%
================ ============== ============ ================ ============ ============
</TABLE>
<TABLE>
<CAPTION>
EQ/PUTNAM MFS MERRILL
GROWTH & EMERGING LYNCH
EQ/PUTNAM INCOME GROWTH MFS BASIC VALUE
EQ TRUST BALANCED VALUE COMPANIES RESEARCH EQUITY
- -------- ------------ ------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.55% 0.55% 0.55% 0.55% 0.55%
12b-1 Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.10% 0.05% 0.05% 0.05% 0.05%
------------- ------------- ---------------- ----------------- ---------------
TOTAL EQ TRUST ANNUAL
EXPENSES(6) 0.90% 0.85% 0.85% 0.85% 0.85%
============= ============= ================ ================= ===============
</TABLE>
<TABLE>
<CAPTION>
MORGAN WARBURG
MERRILL STANLEY T. ROWE PINCUS
LYNCH EMERGING T. ROWE PRICE SMALL
WORLD MARKETS PRICE EQUITY INTERNATIONAL COMPANY
EQ TRUST STRATEGY EQUITY INCOME STOCK VALUE
- -------- ------------- ------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.70% 1.15% 0.55% 0.75% 0.65%
12b-1 Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.25% 0.35% 0.05% 0.20% 0.10%
------------- ------------- ---------------- ----------------- ---------------
TOTAL EQ TRUST ANNUAL
EXPENSES(6) 1.20% 1.75% 0.85% 1.20% 1.00%
============= ============= ================ ================= ===============
</TABLE>
- ------------
Notes:
(1) Deducted upon a withdrawal with respect to amounts in excess of the 15%
(10% under the Assured Payment Option and APO Plus) free corridor
amount, and upon a surrender. See "Part 5: Deductions and Charges,"
"Withdrawal Charge."
(2) The Guaranteed Minimum Death Benefit is applicable to the Investment
Funds. The Combined Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit (Plan A) is not available under APO Plus. See APO
Plus in Part 4. If you choose a 6% to Age 70 Benefit, the charge is
0.30%. This charge is deducted annually on each Processing Date. See
"Combined Guaranteed Minimum Death Benefit and Guaranteed Minimum Income
Benefit Benefit Charge (Plan A)" and "Guaranteed Minimum Death Benefit
Only Benefit Charge (Plan B)" in Part 5.
(3) We reserve the right to increase this charge to an annual rate of 0.35%,
the maximum permitted under the Certificates.
(4) The Class IB shares of HR Trust and EQ Trust are subject to fees imposed
under distribution plans (herein, the "Rule 12b-1 Plans") adopted by HR
Trust and EQ Trust pursuant to Rule 12b-1 under the Investment Company
Act of 1940. The Rule 12b-1 Plans provide that HR Trust and EQ Trust, on
behalf of each Portfolio, may pay annually up to 0.25% of the average
daily net assets of a Portfolio attributable to its Class IB shares in
respect of activities primarily intended to result in the sale of the
Class IB shares.
(5) The amounts shown for the Portfolios of HR Trust (other than Alliance
Small Cap Growth) have been restated to reflect advisory fees which went
into effect as of May 1, 1997. "Other Expenses" are based on average
daily net assets in each Portfolio during 1996. The amounts shown for the
Alliance Small Cap Growth Portfolio are estimated for the current fiscal
year as this Portfolio commenced operations on May 1, 1997. The
investment advisory fee for each Portfolio may vary from year to year
depending upon the average daily net assets of the respective Portfolio
of HR Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year depending
on actual expenses. See "HR Trust Charges to Portfolios" in Part 5.
(6) "Other Expenses" shown are based on estimated amounts (after expense
waiver or limitation) for the current fiscal year, as EQ Trust commenced
operations on May 1, 1997. The maximum investment advisory fees cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will fluctuate from year to year depending on
actual expenses but pursuant to agreement, cannot together with other
fees specified exceed total annual expenses specified. See "EQ Trust
Charges to Portfolios" in Part 5.
7
<PAGE>
EXAMPLES
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit Benefit (Plan A), under the Guaranteed Minimum Death
Benefit Only Benefit (Plan B) and under APO Plus in the two situations noted
below assuming a $1,000 contribution invested in one of the Investment Funds
listed, and a 5% annual return on assets.(1)
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be greater
or less than those shown. Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
COMBINED GUARANTEED MINIMUM DEATH BENEFIT/GUARANTEED MINIMUM INCOME BENEFIT
(PLAN A) ELECTION
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD CERTIFICATE AT THE END OF EACH PERIOD
SHOWN, THE EXPENSES WOULD BE: SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HR TRUST
- ----------------------
Alliance Conservative
Investors $89.74 $120.55 $154.64 $275.75 $24.51 $ 75.92 $130.68 $283.83
Alliance Growth
Investors 90.14 121.76 156.67 279.80 24.91 77.12 132.69 287.85
Alliance Growth &
Income 90.24 122.06 157.17 280.80 25.01 77.42 133.19 288.87
Alliance Common Stock 88.35 116.35 147.61 261.52 23.12 71.71 123.63 269.57
Alliance Global 91.53 125.95 163.66 293.80 26.30 81.30 139.67 301.85
Alliance International 95.01 136.36 180.97 328.00 29.78 91.73 157.01 336.07
Alliance Aggressive
Stock 90.04 121.46 156.17 278.79 24.81 76.82 132.19 286.85
Small Cap Growth 94.22 134.00 -- -- 28.99 89.36 -- --
Alliance Money Market 88.15 115.75 146.59 259.45 22.92 71.11 122.61 267.51
Alliance Intermediate
Gov't Securities 90.14 121.76 156.67 279.80 24.91 77.12 132.69 287.85
Alliance High Yield 90.84 123.86 160.17 286.83 25.61 79.22 136.19 294.89
EQ TRUST
- ----------------------
EQ/Putnam Balanced $90.74 $123.56 -- -- $25.51 $ 78.91 -- --
EQ/Putnam Growth &
Income Value 90.24 122.06 -- -- 25.01 77.42 -- --
MFS Emerging Growth
Companies 90.24 122.06 -- -- 25.01 77.42 -- --
MFS Research 90.24 122.06 -- -- 25.01 77.42 -- --
Merrill Lynch Basic
Value Equity 90.24 122.06 -- -- 25.01 77.42 -- --
Merrill Lynch World
Strategy 93.72 132.50 -- -- 28.49 87.87 -- --
Morgan Stanley
Emerging Market
Equity 99.19 148.78 -- -- 33.96 104.14 -- --
T. Rowe Price Equity
Income 90.24 122.06 -- -- 25.01 77.42 -- --
T. Rowe Price
International Stock 93.72 132.50 -- -- 28.49 87.87 -- --
Warburg Pincus Small
Company Value 91.73 126.55 -- -- 26.50 81.90 -- --
</TABLE>
- ------------
See note on next page.
8
<PAGE>
GUARANTEED MINIMUM DEATH BENEFIT ONLY BENEFIT (PLAN B) ELECTION
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD CERTIFICATE AT THE END OF EACH PERIOD
SHOWN, THE EXPENSES WOULD BE: SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors $89.74 $115.25 $143.62 $248.28 $21.86 $67.64 $116.31 $251.89
Alliance Growth
Investors 90.14 116.46 145.64 252.38 22.26 68.84 118.33 255.98
Alliance Growth &
Income 90.24 116.76 146.16 253.43 22.36 69.14 118.83 257.01
Alliance Common Stock 88.35 111.05 136.55 233.84 20.47 63.42 109.21 237.42
Alliance Global 91.53 120.66 152.69 266.60 23.65 73.04 125.36 270.18
Alliance International 95.01 131.11 170.11 301.30 27.13 83.49 142.78 304.87
Alliance Aggressive
Stock 90.04 116.16 145.14 251.37 22.16 68.54 117.82 254.95
Small Cap Growth 94.22 128.73 -- -- 26.34 81.12 -- --
Alliance Money Market 88.15 110.44 135.53 231.77 20.27 62.82 108.21 235.35
Alliance Intermediate
Gov't Securities 90.14 116.46 145.64 252.38 22.26 68.84 118.33 255.98
Alliance High Yield 90.84 118.56 149.17 259.51 22.96 70.95 121.86 263.11
EQ TRUST
- ----------------------
EQ/Putnam Balanced $90.74 $118.26 -- -- $22.86 $70.65 -- --
EQ/Putnam Growth &
Income Value 90.24 116.76 -- -- 22.36 69.14 -- --
MFS Emerging Growth
Companies 90.24 116.76 -- -- 22.36 69.14 -- --
MFS Research 90.24 116.76 -- -- 22.36 69.14 -- --
Merrill Lynch Basic
Value Equity 90.24 116.76 -- -- 22.36 69.14 -- --
Merrill Lynch World
Strategy 93.72 127.24 -- -- 25.84 79.62 -- --
Morgan Stanley
Emerging Market
Equity 99.19 143.56 -- -- 31.31 95.94 -- --
T. Rowe Price Equity
Income 90.24 116.76 -- -- 22.36 69.14 -- --
T. Rowe Price
International Stock 93.72 127.24 -- -- 25.84 79.62 -- --
Warburg Pincus Small
Company Value 91.73 121.26 -- -- 23.85 73.64 -- --
</TABLE>
- ------------
See note on next page.
9
<PAGE>
APO PLUS ELECTION
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD
SHOWN, THE
EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Alliance Common Stock $88.35 $111.05 $136.55 $233.84
Alliance Equity Index 88.05 110.14 135.02 230.74
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- --------- ----------
<S> <C> <C> <C> <C>
Alliance Common Stock $20.47 $63.42 $109.21 $237.42
Alliance Equity Index 20.17 62.52 107.69 234.31
</TABLE>
Note:
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity at the end of any of the periods shown in the
examples. If the amount applied to purchase an annuity is less than
$2,000, or the initial payment is less than $20 we may pay the amount to
the payee in a single sum instead of as payments under an annuity form.
See "Income Annuity Options" in Part 4. The examples do not reflect
charges for applicable taxes such as state or local premium taxes that
may also be deducted in certain jurisdictions.
10
<PAGE>
PART 1: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been selling
annuities since the turn of the century. Our home office is located at 1290
Avenue of the Americas, New York, New York 10104. We are authorized to sell
life insurance and annuities in all fifty states, the District of Columbia,
Puerto Rico and the Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1997 AXA, beneficially owned 63.8%
of the outstanding common stock of the Holding Company (assuming conversion of
convertible preferred stock held by AXA). Under its investment arrangements
with Equitable Life 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 Life. AXA, a French company,
is the holding company for an international group of insurance and related
financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $239.8 billion of assets as of December 31, 1996.
SEPARATE ACCOUNT NO. 45
Separate Account No. 45 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment Company
Act of 1940, as amended (1940 Act). This registration does not involve any
supervision by the SEC of the management or investment policies of the Separate
Account. The Separate Account has several Investment Funds, each of which
invests in shares of a corresponding Portfolio of HR Trust and EQ Trust.
Because amounts allocated to the Investment Funds are invested in a mutual
fund, investment return and principal will fluctuate and the Certificate
Owner's Accumulation Units may be worth more or less than the original cost
when redeemed.
Under the New York Insurance Law, the portion of the Separate Account's assets
equal to the reserves and other liabilities relating to the Certificates are
not chargeable with liabilities arising out of any other business we may
conduct. Income, gains or losses, whether or not realized, from assets of the
Separate Account are credited to or charged against the Separate Account
without regard to our other income gains or losses. We are the issuer of the
Certificates, and the obligations set forth in the Certificates (other than
those of Annuitants or Certificate Owners) are our obligations.
In addition to contributions made under the Rollover IRA Certificates, we may
allocate to the Separate Account monies received under other contracts,
certificates, or agreements. Owners of all such contracts, certificates or
agreements will participate in the Separate Account in proportion to the
amounts they have in the Investment Funds that relate to their contracts,
certificates or agreements. We may retain in the Separate Account assets that
are in excess of the reserves and other liabilities relating to the Rollover
IRA Certificates or to other contracts, certificates or agreements, or we may
transfer the excess to our General Account.
We reserve the right, subject to compliance with applicable law; (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove Investment
Funds (or sub-funds) from, the Separate Account, or to add other separate
accounts; (2) to combine any two or more Investment Funds or sub-funds thereof;
(3) to transfer the assets we determine to be the share of the class of
contracts to which the Certificates belong from any Investment Fund to another
Investment Fund; (4) to operate the Separate Account or any Investment Fund as
a management investment company under the 1940 Act, in which case charges and
expenses that otherwise would be assessed against an underlying mutual fund
would be assessed against the Separate Account; (5) to deregister the Separate
Account under the 1940 Act, provided that such action conforms with the
requirements of applicable law; (6) to restrict or eliminate any voting rights
as to the Separate Account; and (7) to cause one or more Investment Funds to
invest some or all of their assets in one or more other trusts or investment
companies. If any changes are made that result in a material change in the
underlying investment policy of an Investment Fund, you will be notified as
required by law.
11
<PAGE>
HR TRUST
HR 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
Portfolio of HR Trust. HR Trust commenced operations in January 1976 with a
predecessor of its Alliance Common Stock Portfolio. HR Trust does not impose a
sales charge or "load" for buying and selling its shares. All dividend
distributions to HR Trust are reinvested in full and fractional shares of the
Portfolio to which they relate. Investment Funds that invest in Portfolios of
HR Trust purchase Class IB shares of a corresponding Portfolio of HR Trust.
More detailed information about HR Trust, its investment objectives, policies,
restrictions, risks, expenses, the Rule 12b-1 Plan relating to Class IB shares,
and all other aspects of its operations appears in its prospectus which
accompanies this prospectus or in its statement of additional information.
HR TRUST'S MANAGER AND ADVISER
HR Trust is managed and advised by Alliance Capital Management L.P. (Alliance),
which is registered with the SEC as an investment adviser under the 1940 Act.
Alliance, a publicly-traded limited partnership, is indirectly majority-owned
by Equitable Life. On December 31, 1996, Alliance was managing approximately
$182.8 billion in assets. Alliance acts as an investment adviser to various
separate accounts and general accounts of Equitable Life and other affiliated
insurance companies. Alliance also provides management and consulting services
to mutual funds, endowment funds, insurance companies, foreign entities,
qualified and non-tax qualified corporate funds, public and private pension and
profit-sharing plans, foundations and tax-exempt organizations.
Alliance's main office is located at 1345 Avenue of the Americas, New York, New
York 10105.
EQ TRUST
EQ Trust is an open-end management investment company. As a "series type" of
mutual fund, EQ Trust issues different series of stock, each of which relates
to a different Portfolio of EQ Trust. EQ Trust commenced operations on May 1,
1997. EQ Trust does not impose a sales charge or "load" for buying and selling
its shares. All dividend distributions to EQ Trust are reinvested in full and
fractional shares of the Portfolio to which they relate. Investment Funds that
invest in Portfolios of EQ Trust purchase Class IB shares of a corresponding
Portfolio of EQ Trust. More detailed information about EQ Trust, its investment
objectives, policies and restrictions, risks, expenses, the 12b-1 relating to
the Class IB shares, and all other aspects of its operations appears in its
prospectus which accompanies this prospectus and in its statement of additional
information.
EQ TRUST'S MANAGER AND ADVISERS
EQ Trust is managed by EQ Financial Consultants, Inc. (EQ Financial) which,
subject to supervision and direction of the Trustees of EQ Trust, has overall
responsibility for the general management and administration of EQ Trust. EQ
Financial is an investment adviser registered under the 1940 Act, and a
broker-dealer registered under the Exchange Act. EQ Financial is a Delaware
corporation and an indirect, wholly-owned subsidiary of Equitable Life.
EQ Financial's main office is located at 1290 Avenue of the Americas, New York,
New York 10104.
EQ Financial has entered into investment advisory agreements with Putnam
Investments, Massachusetts Financial Services Company, Merrill Lynch Asset
Management, L.P., Morgan Stanley Asset Management, Inc., T. Rowe Price
Associates, Inc. and Rowe Price-Fleming International, Inc., and Warburg,
Pincus Counsellors, Inc., which serve as advisers to EQ/Putnam, MFS, Merrill
Lynch, Morgan Stanley, T. Rowe Price, and Warburg Pincus Portfolios,
respectively, of EQ Trust.
12
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF HR TRUST'S PORTFOLIOS AND EQ TRUST'S
PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of each
Portfolio will affect its return and its risks. There is no guarantee that
these objectives will be achieved. Set forth below is a summary of the
investment policies and objectives of each Portfolio. This summary is qualified
in its entirety by reference to the prospectuses for HR Trust and EQ Trust both
of which accompany this prospectus. Please read the prospectuses for each of
the trusts carefully before investing.
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- ------------------------------ ----------------------------------------------------- ------------------------------
<S> <C> <C>
HR TRUST
- -----------
Alliance Conservative Diversified mix of publicly-traded, fixed-income High total return without, in
Investors and equity securities; asset mix and security the adviser's opinion, undue
selection are primarily based upon factors risk to principal
expected to reduce risk. The Portfolio is
generally expected to hold approximately 70% of
its assets in fixed income securities and 30% in
equity securities.
Alliance Growth Investors Diversified mix of publicly-traded, High total return
fixed-income and equity securities; asset mix consistent with the adviser's
and security selection based upon factors determination of reasonable risk
expected to increase possibility
of high long-term return. The Portfolio is
generally expected to hold approximately 70%
of its assets in equity securities and 30% in
fixed income securities.
Alliance Growth & Income Primarily income producing common stocks and High total return through a
securities convertible into common stocks. combination of current income
and capital appreciation
Alliance Common Stock Primarily common stock and other equity-type Long-term growth of capital
instruments. and increasing income
Alliance Global Primarily equity securities of non-United Long-term growth of capital
States as well as United States companies.
Alliance International Primarily equity securities Long-term growth of capital
selected principally to permit participation
in non-United States companies
with prospects for growth.
Alliance Aggressive Stock Primarily common stocks and other equity-type Long-term growth of capital
securities issued by quality small and
intermediate sized companies with strong growth
prospects and in covered options on securities.
Alliance Small Cap Growth Primarily U.S. common stocks and other equity-type Long-term growth of capital
securities issued by smaller companies with
favorable growth prospects.
Alliance Money Market Primarily high quality U.S. dollar denominated High level of current income
money market instruments. while preserving assets and
maintaining liquidity
13
<PAGE>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- ------------------------------ ----------------------------------------------------- ------------------------------
Alliance Intermediate Primarily debt securities issued or guaranteed by High current income consistent
Government Securities the U.S. government, its agencies and with relative stability of
instrumentalities. Each investment will have a principal
final maturity of not more than 10 years or a
duration not exceeding that of a 10-year Treasury
note.
Alliance High Yield Primarily a diversified mix of high yield, High return by maximizing
fixed-income securities involving greater volatility current income and, to the
of price and risk of principal and income than high extent consistent with that
quality fixed-income securities. The medium and lower objective, capital
quality debt securities in which the Portfolio may appreciation
invest are known as "junk bonds."
Available under APO Plus
Alliance Equity Index Selected securities in the Standard Total return (before trust and
& Poor's 500 Index (the "Index") which the advisor separate account expenses)
believes will, in the aggregate, approximate the that approximates the
performance results of the Index investment performance of the
Index (including reinvestment
of dividends) at risk level
consistent with that of the
Index
EQ TRUST
EQ/Putnam Balanced A well-diversified portfolio of stocks Balanced Investment
and bonds that will produce both capital
growth and current income.
EQ/Putnam Growth & Primarily common stocks that offer potential for Capital growth and,
Income Value capital growth, consistent with the Portfolio's secondarily, current income
investment objective, common stocks that offer
potential for current income.
MFS Emerging Growth Primarily (i.e., at least 80% of its assets under Long-term growth of capital
Companies normal circumstances) in common stocks of emerging and future income
growth companies that the Portfolio adviser
believes are early in their life cycle but which
have the potential to become major enterprises.
MFS Research A substantial portion of assets Long-term growth of capital
invested in common stock or securities convertible and future income
into common stock of companies believed by
the Portfolio adviser to possess better than
average prospects for long-term growth.
Merrill Lynch Basic Value Investment in securities, primarily equities, that Capital appreciation and,
Equity the Portfolio adviser believes are undervalued and secondarily, income
therefore represent basic investment value.
14
<PAGE>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- ------------------------------ ----------------------------------------------------- ------------------------------
Merrill Lynch World Investment primarily in a portfolio of equity and High total investment return
Strategy fixed income securities, including convertible
securities, of U.S. and foreign issuers.
Morgan Stanley Emerging Primarily equity securities of emerging market Long-term capital appreciation
Markets Equity country (i.e., foreign) issuers.
T. Rowe Price Equity Primarily dividend paying common stocks of Substantial dividend income
Income established companies. and also capital appreciation
T. Rowe Price International Primarily common stocks of established non-United Long-term growth of capital
Stock States companies.
Warburg Pincus Small Primarily in a portfolio of equity securities of Long-term capital appreciation
Company Value small capitalization companies (i.e.,
companies having market capitalizations of $1
billion or less at the time of initial purchase)
that the Portfolio adviser considers to be
relatively undervalued.
</TABLE>
- ------------
* Will be available on or about September 2, 1997.
15
<PAGE>
PART 2: THE GUARANTEED PERIOD ACCOUNT
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's Expiration
Date accumulates interest at a Guaranteed Rate. The Guaranteed Rate for each
allocation is the annual interest rate applicable to new allocations to that
Guarantee Period, which was in effect on the Transaction Date for the
allocation. We may establish different Guaranteed Rates under different classes
of Certificates. We use the term GUARANTEED PERIOD AMOUNT to refer to the
amount allocated to and accumulated in each Guarantee Period. The Guaranteed
Period Amount is reduced or increased by any market value adjustment as a
result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you have
allocated Annuity Account Value. On the Expiration Date of a Guarantee Period,
its Guaranteed Period Amount and its value in the Guaranteed Period Account are
equal. We call the Guaranteed Period Amount on an Expiration Date the Guarantee
Period's Maturity Value. We report the Annuity Account Value in your Guaranteed
Period Account to reflect any market value adjustment that would apply if all
Guaranteed Period Amounts were withdrawn as of the calculation date. The
Annuity Account Value in the Guaranteed Period Account with respect to the
Guarantee Periods on any Business Day, therefore, will be the sum of the
present value of the Maturity Value in each Guarantee Period, using the
Guaranteed Rate in effect for new allocations to such Guarantee Period on such
date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1998 through 2007. Not all of these Guarantee Periods will be
available for ages 76 and above. See "Allocation of Contributions" in Part 4.
Also, the Guarantee Periods may not be available for investment in all states.
As Guarantee Periods expire we expect to add maturity years so that generally
10 are available at any time.
Under the Assured Payment Option and APO Plus, in addition to the Guarantee
Periods above, Guarantee Periods ending on February 15th for each of the
maturity years 2008 through 2012 are also available.
Under the Rollover IRA, we will not accept allocations to a Guarantee Period
if, on the Transaction Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period fall
within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount required
to be allocated to a Guarantee Period in order to produce a target Maturity
Value (assuming no transfers or withdrawals are made and no charges are
allocated to the Guarantee Period). The required amount is the present value of
that Maturity Value at the Guaranteed Rate on the Transaction Date for the
contribution, which may also be expressed as the price per $100 of Maturity
Value on such Transaction Date.
Guaranteed Rates for new allocations as of April 15, 1997 and the related price
per $100 of Maturity Value for each currently available Guarantee Period were
as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH GUARANTEED
EXPIRATION DATE RATE AS OF PRICE
FEBRUARY 15TH OF APRIL 15, PER $100 OF
MATURITY YEAR 1997 MATURITY VALUE
- ---------------- ------------ --------------
<S> <C> <C>
1998 4.93% $96.05
1999 5.40 90.78
2000 5.64 85.58
2001 5.76 80.65
2002 5.86 75.91
2003 5.94 71.39
2004 6.03 66.99
2005 6.09 62.89
2006 6.17 58.89
2007 6.23 55.16
</TABLE>
Available under the Assured Payment Option and APO Plus
<TABLE>
<CAPTION>
<S> <C> <C>
2008 6.20% $52.08
2009 6.20 49.04
2010 6.20 46.17
2011 6.20 43.48
2012 6.20 40.94
</TABLE>
16
<PAGE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create a
series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of years
1998 through 2002, then according to the above table the lump sum contribution
you would have to make as of April 15, 1997 would be $428.97 (i.e., the sum of
the price per $100 of Maturity Value for each maturity year from 1998 through
2002).
The above example is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted, withdrawals or transfers to be made from Guarantee Periods or for the
market value adjustment that would apply to such transactions. Actual
calculations will be based on Guaranteed Rates on each actual Transaction Date,
which may differ.
Options at Expiration Date
Under the Rollover IRA, we will notify you on or before December 31st prior to
the Expiration Date of each Guarantee Period in which you have any Guaranteed
Period Amount. You may elect one of the following options to be effective at
the Expiration Date, subject to the restrictions set forth on the prior page
and under "Allocation of Contributions" in Part 4:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges
which may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR TRANSFERS, WITHDRAWALS OR SURRENDER PRIOR TO THE
EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a Guarantee
Period prior to its Expiration Date will cause any remaining Guaranteed Period
Amount for that Guarantee Period to be increased or decreased by a market value
adjustment. The amount of the adjustment will depend on two factors: (a) the
difference between the Guaranteed Rate applicable to the amount being withdrawn
and the Guaranteed Rate on the Transaction Date for new allocations to a
Guarantee Period with the same Expiration Date, and (b) the length of time
remaining until the Expiration Date. In general, if interest rates have risen
between the time when an amount was originally allocated to a Guarantee Period
and the time it is withdrawn, the market value adjustment will be negative, and
vice versa; and the longer the period of time remaining until the Expiration
Date, the greater the impact of the interest rate difference. Therefore, it is
possible that a significant rise in interest rates could result in a
substantial reduction in your Annuity Account Value in the Guaranteed Period
Account related to longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a withdrawal
of all funds from a Guarantee Period will be determined for each contribution
allocated to that Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable
on the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period
(based on the Transaction Date) and convert it to fractional
years based on a 365 day year. For example three years and 12
days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee
Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in
(b) and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a withdrawal
(including any withdrawal charges) of a portion of the amount in a Guarantee
Period will be a percentage of the market value adjustment that would be
applicable upon a withdrawal of all funds from a Guarantee Period. This
percentage is determined by (i) dividing the amount of the withdrawal or
transfer from the Guarantee Period by (ii) the Annuity Account Value in such
Guarantee Period prior to the withdrawal or transfer. See Appendix I for an
example.
17
<PAGE>
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate in
(1)(c) above.
MODAL PAYMENT PORTION
Under the Assured Payment Option and APO Plus, a portion of your contributions
or Annuity Account Value is allocated to the Modal Payment Portion of the
Guaranteed Period Account for payments to be made prior to the Expiration Date
of the earliest Guarantee Period we then offer. Such amount will accumulate
interest beginning on the Transaction Date at an interest rate we set. Interest
will be credited daily. Such rate will not be less than 3%.
Upon the expiration of a Guarantee Period, the Guaranteed Period Amount will be
held in the Modal Payment Portion of the Guaranteed Period Account. Amounts
from an expired Guarantee Period held in the Modal Payment Portion of the
Guaranteed Period Account will be credited with interest at a rate equal to the
Guaranteed Rate applicable to the expired Guarantee Period, beginning on the
Expiration Date of such Guarantee Period.
There is no market value adjustment with respect to amounts held in the Modal
Payment Portion of the Guaranteed Period Account.
INVESTMENTS
Amounts allocated to Guarantee Periods or the Modal Payment Portion of the
Guaranteed Period Account will be held in a "nonunitized" separate account
established by Equitable Life under the laws of New York. This separate account
provides an additional measure of assurance that full payment of amounts due
under the Guarantee Periods and the Modal Payment Portion of the Guaranteed
Period Account will be made. Under the New York Insurance Law, the portion of
the separate account's assets equal to the reserves and other contract
liabilities relating to the Certificates are not chargeable with liabilities
arising out of any other business we may conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on the
assets held in the separate account accrues solely to Equitable Life's benefit.
Certificate Owners do not participate in the performance of the assets held in
this separate account. Equitable Life may, subject to applicable state law,
transfer all assets allocated to the separate account to its general account.
Regardless of whether assets supporting Guaranteed Period Accounts are held in
a separate account or our general account, all benefits relating to the Annuity
Account Value in the Guaranteed Period Account are guaranteed by Equitable
Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations, including
corporate bonds, mortgage backed and asset backed securities and government and
agency issues having durations in the aggregate consistent with those of the
Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for investing
the assets supporting Equitable Life's obligations under the fixed portion of
the Certificates, Equitable Life is not obligated to invest those assets
according to any particular plan except as may be required by state insurance
laws, nor will the Guaranteed Rates Equitable Life establishes be determined by
the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations. Amounts applied under the Life Contingent Annuity become
part of the general account. See "Assured Payment Option," "Life Contingent
Annuity," in Part 4.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933, as amended
(1933 Act), nor is the general account an investment company under
18
<PAGE>
the 1940 Act. Accordingly, neither the general account nor the Life Contingent
Annuity is subject to regulation under the 1933 Act or the 1940 Act. However,
the market value adjustment interests under the Certificates are registered
under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in the prospectus for your information that relates
to the general account (other than market value adjustment interests) and the
Life Contingent Annuity. The disclosure, however, may be subject to certain
generally applicable provisions of the Federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
19
<PAGE>
PART 3: PROVISIONS OF THE CERTIFICATES AND SERVICES
WE PROVIDE
THE PROVISIONS DISCUSSED IN THIS PART 3 APPLY WHEN YOUR CERTIFICATE IS
OPERATING PRIMARILY TO ACCUMULATE ANNUITY ACCOUNT VALUE. DIFFERENT RULES MAY
APPLY WHEN YOU ELECT THE ASSURED PAYMENT OPTION OR APO PLUS IN THE APPLICATION
OR AS LATER ELECTED AS A DISTRIBUTION OPTION UNDER YOUR ROLLOVER IRA AS
DISCUSSED IN PART 4. THE PROVISIONS OF YOUR CERTIFICATE MAY BE RESTRICTED BY
APPLICABLE LAWS OR REGULATIONS.
WHAT IS THE ROLLOVER IRA?
The Rollover IRA is a deferred annuity designed to provide for the accumulation
of retirement savings and for income at a future date. Investment Options
available are Investment Funds providing variable returns and Guarantee Periods
providing guaranteed interest when held to maturity. Rollover IRA Certificates
are issued as individual retirement annuities (IRAs).
Earnings generally accumulate on a tax-deferred basis until withdrawn or when
distributions become payable. Withdrawals made prior to 59 1/2 may be subject
to tax penalty.
AVAILABILITY OF THE CERTIFICATES
The Certificates are available for issue ages 20 through 78. These
Certificates may not be available in all states. These Certificates are not
available in Puerto Rico.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your initial contribution must be at least $5,000. We will only accept
initial contributions which are either rollover contributions under Sections
402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code, or direct
custodian-to-custodian transfers from other individual retirement
arrangements. See "Part 7: Tax Aspects of the Certificates."
You may make subsequent contributions in an amount of at least $1,000 at any
time until you attain age 79. Subsequent contributions may be "regular" IRA
contributions (limited to a maximum of $2,000 a year), or rollover
contributions or direct transfers as described above.
"Regular" IRA contributions may no longer be made for the taxable year in which
you attain age 70 1/2 or thereafter. Rollover and direct transfer contributions
may be made until you attain age 79. However, any amount contributed after you
attain age 70 1/2 must be net of your required minimum distribution for the
year in which the rollover or direct transfer contribution is made. See "Part
7: Tax Aspects of the Certificates." For the consequences of making a "regular"
IRA contribution to your Certificate, also see Part 7.
We may refuse to accept any contribution if the sum of all contributions under
all accumulation Certificates with the same Annuitant would then total more
than $1,500,000. We reserve the right to limit aggregate contributions made
after the first Contract Year to 150% of first year contributions. We may also
refuse to accept any contribution if the sum of all contributions under all
Equitable Life annuity accumulation certificates/contracts you own would then
total more than $2,500,000.
Contributions are credited as of the Transaction Date.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check drawn on a
bank or credit union in the U.S., in U.S. dollars and made payable to Equitable
Life. All checks are accepted subject to collection. Contributions must be sent
to Equitable Life at our Processing Office address designated for
contributions. Your initial contribution must be accompanied by a completed
application which is acceptable to us. In the event the application information
or the application is otherwise not acceptable, we may retain your contribution
for a period not exceeding five Business Days while an attempt is made to
obtain the required information. If the required information cannot be obtained
within those five Business Days, the Processing Office will inform the agent,
on behalf of the applicant, of the reasons for the delay and return the
contribution immediately to the applicant, unless the applicant specifically
consents to our retaining the contribution until the required information is
received by the Processing Office.
ALLOCATION OF CONTRIBUTIONS
You may choose Self-Directed, Principal Assurance or Dollar Cost Averaging
allocations.
20
<PAGE>
A contribution allocated to an Investment Fund purchases Accumulation Units in
that Investment Fund based on the Accumulation Unit Value for that Investment
Fund computed on the Transaction Date. A contribution allocated to the
Guaranteed Period Account will have the Guaranteed Rate for the specified
Guarantee Period offered on the Transaction Date.
Self-Directed Allocation
You allocate your contributions to one or up to all of the available Investment
Options. Allocations among Investment Options must be in whole percentages.
Allocation percentages can be changed at any time by writing to our Processing
Office, or by telephone. The change will be effective on the Transaction Date
and will remain in effect for future contributions unless another change is
requested.
At ages 76 and above, allocations to Guarantee Periods must be limited to those
with maturities of five years or less and with maturity dates no later than the
February 15th immediately following the Annuity Commencement Date.
Principal Assurance
This option (for issue ages 20 through 75) assures that your Maturity Value in
a specified Guarantee Period will equal your initial contribution on the
Guarantee Period's Expiration Date, while at the same time allowing you to
invest in the Investment Funds. It may be elected only at issue of your
Certificate and assumes no withdrawals or transfers from the Guarantee Period.
The maturity year generally may not be later than 10 years nor earlier than
seven years from the Contract Date. In order to accomplish this strategy, we
will allocate a portion of your initial contribution to the selected Guarantee
Period. See "Guaranteed Rates and Price Per $100 of Maturity Value" in Part 2.
The balance of your initial contribution and all subsequent contributions must
be allocated under "Self-Directed Allocation" as described above.
Before you select a year that would extend beyond the year in which you will
attain age 70 1/2 you should consider your ability to take minimum
distributions from other IRA funds that you may have or from the Investment
Funds to the extent possible. See "Required Minimum Distributions" in Part 7.
FREE LOOK PERIOD
You have the right to examine the Rollover IRA Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You cancel it
by sending it to our Processing Office. The free look is extended if your state
requires a refund period of longer than 10 days.
Your refund will equal the Annuity Account Value reflecting any investment gain
or loss, and any positive or negative market value adjustment, through the date
we receive your Certificate at our Processing Office. Some states or Federal
income tax regulations may require that we calculate the refund differently. If
the Assured Payment Option or APO Plus is elected in the application for the
Certificate, your refund will include any amount applied under the Life
Contingent Annuity. See "Assured Payment Option," "Life Contingent Annuity" in
Part 4. If you cancel your Certificate during the free look period, we may
require that you wait six months before you may apply for a Certificate with us
again.
We follow these same procedures if you change your mind before you receive
your Certificate but after a contribution has been made. See "Part 7: Tax
Aspects of the Certificates" for possible consequences of cancelling your
Certificate during the free look period.
ANNUITY ACCOUNT VALUE
Your Annuity Account Value is the sum of the amounts in the Investment Options.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal to
the number of Accumulation Units in that Investment Fund times the Accumulation
Unit Value for the Investment Fund for that date. The number of Accumulation
Units in an Investment Fund at any time is equal to the sum of Accumulation
Units purchased by contributions and transfers less the sum of Accumulation
Units redeemed for withdrawals, transfers or deductions for charges.
The number of Accumulation Units purchased or sold in any Investment Fund
equals the dollar amount of the transaction divided by the Accumulation Unit
Value for that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the corresponding Portfolios of each respective
trust, which in turn reflects the investment income and realized and unrealized
capital gains and losses of the Portfolios, as well as each respective trust's
fees and expenses. The Accumulation Unit Value is also stated after deduction
of the Separate Account asset charges relating to the Certificates. A
description of the computation of the Accumulation Unit Value is found in the
SAI.
Annuity Account Value in Guaranteed Period
Account
The Annuity Account Value in the Guaranteed Period Account on any Business
Day will be the sum of
21
<PAGE>
the present value of the Maturity Value in each Guarantee Period, using the
Guaranteed Rate in effect for new allocations to such Guarantee Period on such
date. (This is equivalent to the Guaranteed Period Amount increased or
decreased by the full market value adjustment.) The Annuity Account Value,
therefore, may be higher or lower than the contributions (less withdrawals)
accumulated at the Guaranteed Rate. At the Expiration Date the Annuity Account
Value in the Guaranteed Period Account will equal the Maturity Value. While the
Assured Payment Option or APO Plus is in effect, the Annuity Account Value will
include any amount in the Modal Payment Portion of the Guaranteed Period
Account. However, amounts held in the Modal Payment Portion of the Guaranteed
Period Account are not subject to a market value adjustment. See "Part 2: The
Guaranteed Period Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject to
the following restrictions.
o Transfers out of a Guarantee Period other than at the Expiration Date
will result in a market value adjustment. See "Part 2: The Guaranteed
Period Account."
o At ages 76 and above, transfers to Guarantee Periods must be limited to
those with maturities of five years or less and with maturity dates no
later than February 15th immediately following the Annuity Commencement
Date.
o Transfers may not be made to a Guarantee Period with an Expiration Date
in the current calendar year, or if the Guaranteed Rate is 3%.
Transfer requests must be made directly to our Processing Office. Your request
for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which the
amounts are to be transferred. Your transfer request may be in writing or by
telephone.
For telephone transfer requests, procedures have been established by Equitable
Life that are considered to be reasonable and are designed to confirm that
instructions communicated by telephone are genuine. Such procedures include
requiring certain personal identification information prior to acting on
telephone instructions and providing written confirmation. In light of the
procedures established, Equitable Life will not be liable for following
telephone instructions that it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must
be on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer
to or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in
writing.
DOLLAR COST AVERAGING
We offer two Dollar Cost Averaging programs as described below. The main
objective of dollar cost averaging is to attempt to shield your investment from
short term price fluctuations. Since the same dollar amounts are transferred to
other Investment Funds periodically, more Accumulation Units are purchased in
an Investment Fund if the value per Accumulation Unit is low and fewer
Accumulation Units are purchased if the value per Accumulation Unit is high.
Therefore, a lower average value per Accumulation Unit may be achieved over the
long term. This plan of investing allows you to take advantage of market
fluctuations but does not assure a profit or protect against a loss in
declining markets.
Special Dollar Cost Averaging
For Certificate Owners who (at issue of the Certificate) want to dollar cost
average their entire initial contribution from the Alliance Money Market Fund
into the other Investment Funds monthly over a period of twelve months, we
offer a Special Dollar Cost Averaging program under which the mortality and
expense risks and administration charges normally deducted from the Alliance
Money Market Fund will not be deducted. See "Charges Deducted from the
Investment Funds" in Part 5.
General Dollar Cost Averaging
If you have at least $5,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage of
your Annuity Account Value transferred from the Alliance Money Market Fund to
other Investment Funds on a monthly, quarterly or annual basis. This program
may be elected at any time.
<PAGE>
The minimum amount that may be transferred on each Transaction Date is $250.
The maximum amount which may be transferred is equal to the Annuity Account
Value in the Alliance Money Market Fund at the time the option is elected,
divided by
22
<PAGE>
the number of transfers scheduled to be made each Contract Year. Dollar cost
averaging may not be elected while the systematic withdrawal option is in
effect.
The transfer date will be the same calendar day of the month as the Contract
Date. If, on any transfer date, the Annuity Account Value in the Alliance Money
Market Fund is equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred and the dollar cost
averaging option will end. You may change the transfer amount once each
Contract Year, or cancel this option by sending us satisfactory notice to our
Processing Office at least seven calendar days before the next transfer date.
BASEBUILDER BENEFITS
The baseBUILDER option provides guaranteed benefits in the form of a Combined
Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit. The
combined benefit (Plan A) is available for Annuitant issue ages 20 through 75
for which there is a charge. (See "Combined Guaranteed Minimum Death Benefit
and Guaranteed Minimum Income Benefit Charge" in Part 5). If you do not elect
the combined benefit, the Guaranteed Minimum Death Benefit is still provided
under the Certificate at a lower charge.
If the Annuitant is age 76 or older and you are interested in the Combined
Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit, ask
your agent for a copy of the prospectus supplement describing this benefit. The
combined benefit (Plan A) is not currently available in New York.
DEATH BENEFIT
Generally, upon receipt of proof satisfactory to us of your death prior to the
Annuity Commencement Date, we will pay the death benefit to the beneficiary
named in your Certificate. You designate the beneficiary at the time you apply
for the Certificate. While the Certificate is in effect, you may change your
beneficiary by writing to our Processing Office. The change will be effective
on the date the written submission was signed. The death benefit payable will
be determined as of the date we receive such proof of death and any required
instructions as to the method of payment.
The death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the Guaranteed Minimum Death Benefit defined below; and
(2) the death benefit provided with respect to the Guaranteed Period
Account, which is equal to the Annuity Account Value in the
Guaranteed Period Account or, if greater, the sum of the Guaranteed
Period Amounts in each Guarantee Period, plus any amounts in the
Modal Payment Portion of the Guaranteed Period Account. See "Part
2: The Guaranteed Period Account."
Guaranteed Minimum Death Benefit
Your Guaranteed Minimum Death Benefit is the minimum amount payable with
respect to the Investment Funds upon your death.
Applicable to Certificates issued in all states except
New York
6% to Age 80 Benefit--On the Contract Date, the Guaranteed Minimum Death
Benefit is equal to the portion of the initial contribution allocated to the
Investment Funds. Thereafter, the Guaranteed Minimum Death Benefit is credited
with interest at 6% (3% for amounts in the Alliance Money Market Fund and
Alliance Intermediate Government Securities Funds) on each Contract Date
anniversary through the Annuitant's age 80 (or on the date of your death, if
earlier) and 0% thereafter, and is adjusted for any subsequent contributions
and transfers into the Investment Funds and transfers and withdrawals from such
Funds.
Applicable to Certificates issued in New York
Guaranteed Minimum Death Benefit--On the Contract Date, the Guaranteed Minimum
Death Benefit is equal to the initial contribution. Thereafter, the Guaranteed
Minimum Death Benefit is reset through the Annuitant's age 80 to the Annuity
Account Value on a Contract Date anniversary if higher than the current
Guaranteed Minimum Death Benefit, and is adjusted for any subsequent
contributions and withdrawals.
Upon your death, the Guaranteed Minimum Death Benefit will be reset to the
Annuity Account Value in the Investment Funds, plus the sum of the Guaranteed
Period Amounts in each Guarantee Period, if greater than the Guaranteed Minimum
Death Benefit determined above.
See Appendix II for an example of the calculation of the Guaranteed Minimum
Death Benefit. Withdrawals and transfers will reduce your Guaranteed Minimum
Death Benefit, see "How Withdrawals and Transfers Affect Your Guaranteed
Minimum Death Benefit and Guaranteed Minimum Income Benefit" below.
<PAGE>
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
benefit you have chosen
23
<PAGE>
under your Certificate. If no annuity benefit has been chosen at the time of
your death, the beneficiary will receive the death benefit in a lump sum.
However, subject to any exceptions in the Certificate, Equitable Life's rules
then in effect and any other applicable requirements under the Code, the
beneficiary may elect to apply the death benefit amount to one or more annuity
benefits offered by Equitable Life. See "Annuity Benefits and Distribution
Options" in Part 4.
Successor Annuitant
If you elect to have your spouse be both the sole primary beneficiary and the
successor Annuitant/ Certificate Owner, then no death benefit is payable until
your surviving spouse's death.
On the Processing Date following your death, if the successor
Annuitant/Certificate Owner election was elected at issue of your Certificate
and is in effect at your death, the Guaranteed Minimum Death Benefit will be
reset at the greater of the current Guaranteed Minimum Death Benefit and the
current Annuity Account Value in the Investment Funds. In determining whether
the Guaranteed Minimum Death Benefit will continue to grow, we will use the age
(as of the Processing Date) of the successor Annuitant/Certificate Owner.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit provides a minimum amount of guaranteed
lifetime income with respect to the Investment Funds. It operates through
application of your Annuity Account Value in the Investment Funds under the
Assured Payment Option (discussed in Part 4).
On the Transaction Date that you exercise your Guaranteed Minimum Income
Benefit, the annual lifetime income that will be provided under the Assured
Payment Option will be the greater of (i) your Guaranteed Minimum Income
Benefit, and (ii) the income provided by application of your Annuity Account
Value in the Investment Funds at our then current annuity factors. The
Guaranteed Minimum Income Benefit does not provide an Annuity Account Value or
guarantee performance of your Investment Funds. Because it is based on
conservative actuarial factors, the level of lifetime income that it guarantees
may often be less than the level that would be provided by application of your
Annuity Account Value at current annuity factors. It should therefore be
regarded as a safety net.
If you have any Annuity Account Value in the Guaranteed Period Account as of
the Transaction Date that you exercise your Guaranteed Minimum Income Benefit,
such Annuity Account Value will also be applied (at current annuity factors)
toward providing payments under the Assured Payment Option. Such Annuity
Account Value will increase the payments provided by the Guaranteed Minimum
Income Benefit. A market value adjustment may apply.
Illustrated below are Guaranteed Minimum Income Benefit amounts per $100,000 of
initial contribution, for a male age 60 (at issue) on Contract Date
anniversaries as indicated below, assuming allocation only to the Investment
Funds (excluding the Alliance Money Market and Alliance Intermediate Government
Securities Funds), no subsequent contributions, transfers or withdrawals.
<TABLE>
<CAPTION>
GUARANTEED MINIMUM
INCOME BENEFIT ANNUAL
INCOME PAYABLE
CONTRACT DATE FOR LIFE WITH
ANNIVERSARY 10 YEAR FIXED
AT ELECTION PERIOD
- --------------- ---------------------
<S> <C>
7 $ 8,992
10 12,160
15 18,358
</TABLE>
Withdrawals and transfers will reduce your Guaranteed Minimum Income Benefit,
see "How Withdrawals and Transfers Affect Your Guaranteed Minimum Death
Benefit and Guaranteed Minimum Income Benefit" below.
The Guaranteed Minimum Income Benefit may be exercised only within 30 days
following the 7th or later Contract Date anniversary. However, it may not be
exercised earlier than your age 60, nor later than age 83; except that for
issue ages 20 to 44, it may be exercised following the 15th or later Contract
Date anniversaries.
When you exercise your Guaranteed Minimum Income Benefit, you will receive at
least the minimum annual income specified and a fixed period based on your age
at the time the benefit is exercised as follows:
<PAGE>
<TABLE>
<CAPTION>
LEVEL PAYMENTS*
- ------------------------------------------
AGE AT ELECTION FIXED PERIOD YEARS
- ------------------- ----------------------
<S> <C>
60 to 75 10
76 9
77 8
78+ 7
</TABLE>
- ------------
* Other forms and period certains may also be available.
Payments start one payment mode after the Assured Payment Option goes into
effect.
Each year on your Contract Date anniversary, if you are eligible to exercise
Guaranteed Minimum Income Benefit, we will send you an eligibility notice
illustrating how much income could be provided
24
<PAGE>
under on the Contract Date anniversary. You may then notify us within 30 days
following the Contract Date anniversary if you want to exercise your Guaranteed
Minimum Income Benefit by submitting the proper form. The amount of income you
actually receive will be determined on the Transaction Date that we receive
your properly completed exercise notice.
The Guaranteed Minimum Death Benefit, which relates to the Investment Funds,
will no longer be in effect if you elect the Assured Payment Option. If you
subsequently terminate the Assured Payment Option and have your Certificate
operate under the Rollover IRA rules, then the Guaranteed Minimum Death Benefit
will go back into effect based on your Annuity Account Value in the Investment
Funds as of the Transaction Date that the Rollover IRA goes into effect.
You may always apply your Annuity Account Value to any of our life annuity
benefits. The annuity benefits are discussed in Part 4. These benefits differ
from the Assured Payment Option and may provide higher or lower income levels
but do not have all the features under the Assured Payment Option. You may
request and illustration from your agent.
Successor Annuitant/Certificate Owner
If the successor Annuitant/Certificate Owner election (discussed above) was
elected at issue of the Certificate and is in effect at your death, the
Guaranteed Minimum Income Benefit will continue to be available on Contract
Date anniversaries seven and later based on the Contract Date, provided the
Guaranteed Minimum Income Benefit is exercised as specified above based on the
age of the successor Annuitant/ Certificate Owner.
Alternate Combined Guaranteed Minimum Death Benefit/Guaranteed Minimum Income
Benefit Benefit (Plan A) available for issue ages 20 through 65
In addition to a baseBUILDER Combined Guaranteed Minimum Death Benefit and
Guaranteed Minimum Income Benefit Benefit where Guaranteed Minimum Death
Benefit interest is credited through age 80 (6% to Age 80 Benefit), there is a
lower cost benefit where Guaranteed Minimum Death Benefit interest is credited
through age 70 (6% to Age 70 Benefit) to the Guaranteed Minimum Death Benefit
and Guaranteed Minimum Income Benefit benefit base. If you wish to elect this
alternate benefit, you must do so in the application; otherwise the 6% to
Age 80 Benefit will apply. Once elected, the benefit may not be changed.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward
or downward market value adjustment. See "Part 2: The Guaranteed Period
Account." We do not guarantee any minimum Cash Value except for amounts in a
Guarantee Period held to the Expiration Date. On any date before the Annuity
Commencement Date while the Certificate is in effect, the Cash Value is equal
to the Annuity Account Value less any withdrawal charge. The free corridor
amount will not apply when calculating the withdrawal charge applicable upon a
surrender. See "Part 5: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while you
are living and before the Annuity Commencement Date.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on the
Transaction Date. All benefits under the Certificate will be terminated as of
that date.
You may receive the Cash Value in a single sum payment or apply it under one or
more of the income annuity options. See "Income Annuity Options" in Part 4. We
will usually pay the Cash Value within seven calendar days, but we may delay
payment as described in "When Payments are Made" below.
For the tax consequences of surrenders, see "Part 7: Tax Aspects of the
Certificates."
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds, payment
of any portion of the Annuity Account Value (less any applicable withdrawal
charge) from the Investment Funds, and, upon surrender, payment of the Cash
Value from the Investment Funds will be made within seven calendar days after
the Transaction Date. Payments or application of proceeds from the Investment
Funds can be deferred for any period during which (1) the New York Stock
Exchange is closed or trading on it is restricted, (2) sales of securities or
determination of the fair value of an Investment Fund's assets is not
reasonably practicable because of an emergency, or (3) the SEC, by order,
permits us to defer payment in order to protect persons with interest in the
Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account for up to six months while you are living. We may
also defer payments for any amount attributable to a
25
<PAGE>
contribution made in the form of a check for a reasonable amount of time (not
to exceed 15 days) to permit the check to clear.
ASSIGNMENT
The Certificates are not assignable or transferrable except through surrender
to us. They may not be borrowed against or used as collateral for a loan or
other obligation.
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the
calendar year;
o Three additional reports of your Certificate values each year;
o Annual and semi-annual statements of each trust; and
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values
and Guaranteed Rates applicable to the Guarantee Periods. Also call
during our regular business hours to speak to one of our customer
service representatives.
O PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive, 4th Floor
Secaucus, NJ 07096
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI), an
indirect wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI is
registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's principal
business address is 1290 Avenue of the Americas, New York, New York 10104. EDI
was paid a fee of $1,204,370 for 1996 and $126,914 for 1995 for its services
under its "Distribution Agreement" with Equitable Life and the Separate
Account.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents. Broker-dealer sales
compensation for EDI and its affiliates will generally not exceed six percent
of total contributions made under a Certificate. EDI may also receive
compensation and reimbursement for its marketing services under the terms of
its distribution agreement with Equitable Life. Broker-dealers receiving sales
compensation will generally pay a portion thereof to their registered
representatives as commissions related to sales of the Certificates. The
offering of the Certificates is intended to be continuous.
26
<PAGE>
PART 4: DISTRIBUTION METHODS UNDER THE CERTIFICATES
The Rollover IRA Certificates offer several distribution methods specifically
designed to provide retirement income. The Assured Payment Option and APO Plus,
may be elected in the application or as a distribution option at a later date.
In addition, the Certificates provide for Lump Sum Withdrawals, Substantially
Equal Payment Withdrawals, Systematic Withdrawals and Minimum Distribution
Withdrawals. Fixed and variable income annuity options are also available for
amounts to be applied at the Annuity Commencement Date. The Assured Payment
Option and APO Plus may not be available in all states.
The Certificates are subject to the Code's minimum distribution requirements.
Generally, distributions from these Certificates must commence by April 1 of
the calendar year following the calendar year in which you attain age 70 1/2.
Subsequent distributions must be made by December 31st of each calendar year.
If you do not commence minimum distributions in the calendar year in which you
attain age 70 1/2, and wait until the three month period (January 1 to April 1)
in the next calendar year to commence minimum distributions, then you must take
two required minimum distributions in that calendar year. If the required
minimum distribution is not made, a penalty tax in an amount equal to 50% of
the difference between the amount required to be withdrawn and the amount
actually withdrawn may apply. See "Part 7: Tax Aspects of the Certificates" for
a discussion of various special rules concerning the minimum distribution
requirements.
For IRA retirement benefits subject to minimum distribution requirements, we
will send a form outlining the distribution options available before you reach
age 70 1/2 (if you have not annuitized before that time).
ASSURED PAYMENT OPTION
The Assured Payment Option is designed to provide you with guaranteed payments
for your life (SINGLE LIFE) or for the lifetime of you and a joint Annuitant
you designate (JOINT AND SURVIVOR) through a series of distributions from the
Annuity Account Value that are followed by Life Contingent Annuity payments.
Payments you receive during the fixed period are designed to pay out the entire
Annuity Account Value by the end of the fixed period and to meet or exceed
minimum distribution requirements, if applicable. See "Minimum Distribution
Withdrawals" below. The fixed period ends with the distribution of the Maturity
Value of the last Guarantee Period, or distribution of the final amount in the
Modal Payment Portion of the Guaranteed Period Account. The fixed period may
also be referred to as the "liquidity period" as during this period, you have
access to the Cash Value through Lump Sum Withdrawals or surrender of the
Certificate, with lifetime income continuing in reduced amounts.
After the fixed period, the payments are made under the Life Contingent Annuity
described below.
You may elect the Assured Payment Option at any time if your initial
contribution or Annuity Account Value is at least $10,000 at the time of
election, by submitting a written request satisfactory to us. The Assured
Payment Option may be elected at ages 59 1/2 through 83. If you are over age
70 1/2, the availability of this option may be restricted under certain limited
circumstances. See "Tax Considerations for the Assured Payment Option and APO
Plus" in Part 7. The Assured Payment Option with level payments (described
below) may be elected at ages as young as 45. However, there are tax
considerations that should be taken into account before electing level payments
under the Assured Payment Option if you are under age 59 1/2. See "Penalty Tax
on Early Distributions" in Part 7. The Assured Payment Option with increasing
payments (described below) may be elected at ages as young 53 1/2 provided
payments do not start before you attain age 59 1/2.
Once the Assured Payment Option is elected, all amounts currently held under
your Rollover IRA must be allocated to the Guarantee Periods, the Modal Payment
Portion of the Guaranteed Period Account, if applicable, and the Life
Contingent Annuity. See "Allocation of Contributions or Annuity Account Value"
below. Subsequent contributions may be made according to the rules set forth
below and in "Tax-Free Transfers and Rollovers" in Part 7.
Subsequent Contributions under the Assured
Payment Option
Subsequent "regular" IRA contributions may no longer be made for the taxable
year in which you attain age 70 1/2 and thereafter. Subsequent rollover and
direct transfer contributions may be made at any time until the earlier of (i)
when you attain age 84 and (ii) when the Certificate is within seven years of
the end of the fixed period while the Assured Payment Option is in effect.
However, any amount contributed after you attain age 70 1/2 must be net of your
required minimum distribution for the year in which the rollover or direct
transfer contribution is made.
Payments
You may elect to receive monthly, quarterly or annual payments. However, all
payments are made on
27
<PAGE>
the 15th of the month. Payments to be made on an Expiration Date during the
fixed period represent distributions of the Maturity Values of serially
maturing Guarantee Periods on their Expiration Dates. Payments to be made
monthly, quarterly or annually on dates other than an Expiration Date
represent distributions from amounts in the Modal Payment Portion of the
Guaranteed Period Account. See "Part 2: The Guaranteed Period Account."
You have a choice of receiving level payments during the fixed period and then
under the Life Contingent Annuity. Or, you may elect to receive payments that
increase. During the fixed period, payments are designed to increase by 10%
every three years on each third anniversary of the payment start date. After
the end of the fixed period, your first payment under the Life Contingent
Annuity will be 10% greater than the final payment made under the fixed period.
Thereafter, payments will increase annually on each anniversary of the payment
start date under the Life Contingent Annuity based on the annual increase, if
any, in the Consumer Price Index, but in no event greater than 3% per year.
Payments will generally start one payment mode from the date the Assured
Payment Option goes into effect. Or you may choose to defer the date payments
will start generally for a period of up to 60 months. Deferral of the payment
start date permits you to lock in rates at a time when you may consider current
rates to be high, while permitting you to delay receiving payments if you have
no immediate need to receive income under your Certificate. In making this
decision, you should consider that the amount of income you purchase is based
on the rates applicable on the Transaction Date, so if rates rise during the
interim, your payments may be less than they would have been if you had elected
the Assured Payment Option at a later date. Deferral of the payment start date
is not available above age 80. Before you elect to defer the date your payments
will start, you should consider the consequences of this decision on the
requirement under the Code that you take minimum distributions each calendar
year with respect to the value of your IRA. See "Required Minimum
Distributions" in Part 7. The ability to defer the payment start date may not
be available in all states. Also, if amounts are applied to the Assured Payment
Option as a result of the Guaranteed Minimum Income Benefit (discussed in Part
3), deferral of the payment start date is not permitted.
Required minimum distributions will be calculated based on the Annuity Account
Value in each Guarantee Period and the deemed value of the Life Contingent
Annuity for tax purposes. If at any time your payment under the Assured Payment
Option would be less than the minimum amount required to be distributed under
minimum distribution rules, we will notify you of the difference. You will have
the option to have an additional amount withdrawn under your Certificate and
such withdrawal will be treated as a Lump Sum Withdrawal; however, no
withdrawal charge will apply. An adjustment will be made to future scheduled
payments. Or, you may take the amount from other IRA funds you may have. See
"Lump Sum Withdrawals" below and "Required Minimum Distributions" in Part 7.
See Appendix III for an example of payments purchased under an Assured Payment
Option.
Fixed Period
If you elect level payments, you may select a fixed period of not less than
seven years nor more than 15 years. The maximum fixed period available based on
your age at issue of the Certificate (or age at the time of election if the
Assured Payment Option is elected after issue) is as follows:
<TABLE>
<CAPTION>
MAXIMUM
AGE* FIXED PERIOD
- ----------------- --------------------
<S> <C>
45 through 70 15 years
71 through 78 85 less your age
79 through 83 7 years
</TABLE>
The minimum and maximum fixed period will be reduced by each year you defer the
date payments will start.
If you elect increasing payments, you do not have a choice as to the fixed
period. Based on your age at issue of the Certificate (or age at the time of
election if the Assured Payment Option is elected after issue), your fixed
period will be as follows:
<TABLE>
<CAPTION>
AGE* FIXED PERIOD
- ----------------- ----------------
<S> <C>
59 1/2 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
</TABLE>
If you elect increasing payments and defer the date payments will start, your
fixed period will be as follows:
<TABLE>
<CAPTION>
FIXED PERIOD BASED ON
DEFERRAL PERIOD
--------------------------
1-36 37-60
AGE* MONTHS MONTHS
- ----------------- ------------- ------------
<S> <C> <C>
53 1/2 through 70 12 years 9 years
71 through 75 9 years 9 years
76 through 80 6 years 6 years
81 through 83 N/A N/A
</TABLE>
* For joint and survivor, the fixed period is based on the age of the younger
Annuitant.
If amounts are applied to the Assured Payment Option as a result of the
Guaranteed Minimum Income Benefit, the fixed periods will be as discussed under
"Guaranteed Minimum Income Benefit" in Part 3.
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<PAGE>
Allocation of Contributions or Annuity Account Value
If the Assured Payment Option is elected in the application, then based on the
amount of your initial contribution, your age and sex (and the age and sex of
the joint Annuitant, if applicable), the mode of payment, the form of payments
and the fixed period you select, your entire contribution will be allocated by
us. A portion of the initial contribution will be allocated among the Guarantee
Periods and the Modal Payment Portion of the Guaranteed Period Account, if
applicable, to provide fixed period payments and a portion will be applied
under the Life Contingent Annuity in order to provide the payments for life.
For initial contributions of $500,000 or more, amounts allocated to the Life
Contingent Annuity may also be based on your underwriting classification. In
general, underwriting classification is based on your medical history and
smoker status and may result in a smaller allocation of amounts to the Life
Contingent Annuity if your classification is lower than our standard class. If
the Assured Payment Option is elected any time after issue of the Rollover IRA
Certificate or if you cancel APO Plus (discussed below) and elect the Assured
Payment Option, then based on your Annuity Account Value and the information
you provide as described above, your entire Annuity Account Value, including
any amounts currently invested in the Investment Funds, will be allocated by us
among the Guarantee Periods, the Modal Payment Portion of the Guaranteed Period
Account, if applicable, and applied under the Life Contingent Annuity. While
the Assured Payment Option is in effect, no amounts may be allocated to the
Investment Funds. If amounts in the Guarantee Periods are transferred, a market
value adjustment may apply.
If you elect the Assured Payment Option in the application and your initial
contribution will come from multiple sources, your application must also
indicate that contributions are to be allocated to the Alliance Money Market
Fund under the Rollover IRA described in Part 3. Election of the Assured
Payment Option must include your instructions to apply your Annuity Account
Value, on the date the last such contribution is received, under the Assured
Payment Option as described above.
Any subsequent contributions made while the Assured Payment Option is in effect
must be allocated to the Guarantee Periods and applied to the Life Contingent
Annuity. We will determine the allocation of such contributions, such that your
payments will be increased and the fixed period and date that payments are to
start under the Life Contingent Annuity will remain the same.
Life Contingent Annuity
The Life Contingent Annuity provides lifetime payments starting after the end
of the fixed period. The portion of your contributions or Annuity Account Value
applied under the Life Contingent Annuity does not have a Cash Value or an
Annuity Account Value and, therefore, does not provide for transfers or
withdrawals. Once the fixed period has ended and payments have begun under the
Life Contingent Annuity, subsequent amounts may no longer be applied under the
Life Contingent Annuity.
THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND
ANNUITY INCOME IS PAID ONLY IF YOU (OR A JOINT ANNUITANT) ARE LIVING AT THE
DATE ANNUITY BENEFITS BEGIN. BENEFITS ARE ONLY PAID DURING YOUR LIFETIME AND,
IF APPLICABLE, THE LIFETIME OF A JOINT ANNUITANT. CONSEQUENTLY, YOU SHOULD
CONSIDER THE POSSIBILITY THAT NO AMOUNTS WILL BE PAID UNDER THE LIFE CONTINGENT
ANNUITY IF YOU (OR A JOINT ANNUITANT) DO NOT SURVIVE TO THE DATE PAYMENTS ARE
TO START UNDER SUCH ANNUITY.
You may elect to have the Life Contingent Annuity provide level or increasing
payments on a Single Life or a Joint and 100% to Survivor basis. If you elect
increasing payments, the payments will increase annually based on the increase,
if any, in the Consumer Price Index, but in no event greater than 3% per year.
The Life Contingent Annuity may also provide payments on a Joint and one-half
to Survivor or a Joint and two-thirds to Survivor basis.
Payments under the Life Contingent Annuity will be made to you during your
lifetime (and the lifetime of the joint Annuitant, if applicable) on the same
payment mode and date as the payments that were made during the fixed period.
Election Restrictions under Joint and
Survivor
Election of the Assured Payment Option with a Joint and Survivor form of the
Life Contingent Annuity is subject to the following restrictions: (i) the joint
Annuitant must be your spouse; (ii) neither you nor the joint Annuitant can be
over age 83; (iii) under level payments if you elect the Joint and 100% to
Survivor form, only the longest fixed period is permitted; and (iv) the fixed
period may be limited by the minimum distribution rules. See "Required Minimum
Distributions" in Part 7.
Withdrawals under the Assured Payment Option
While the Assured Payment Option is in effect, if you take a Lump Sum
Withdrawal as described under "Lump Sum Withdrawals" below (or if a Lump Sum
Withdrawal is made to satisfy minimum distribu-
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tion requirements under the Certificate), such withdrawals will be taken from
all remaining Guarantee Periods to which your Annuity Account Value is
allocated and the Modal Payment Portion of the Guaranteed Period Account, if
applicable, such that the amount of the payments and the length of the fixed
period will be reduced, and the date payments are to start under the Life
Contingent Annuity will be accelerated. Additional amounts above the amount of
the requested withdrawal will be withdrawn from the Guaranteed Period Account
and applied to the Life Contingent Annuity to the extent necessary to achieve
this result. As a result, the same pattern of payments will continue in reduced
amounts for your life, and if applicable, the life of your joint Annuitant. If
you have elected increasing payments, the first reduction in your payments will
take place no later than the date of the next planned increase.
Substantially Equal Payment Withdrawals, Systematic Withdrawals and Minimum
Distribution Withdrawals may not be elected while the Assured Payment Option is
in effect. See "Substantially Equal Payment Withdrawals," "Systematic
Withdrawals" and "Minimum Distribution Withdrawals," below.
Death Benefit
Once you have elected the Assured Payment Option, if a death benefit becomes
payable during the fixed period we will pay the death benefit amount, as
described under "Death Benefit" in Part 3, to the designated beneficiary.
Unless you have elected a Joint and Survivor form under the Life Contingent
Annuity, no payment will be made under the Life Contingent Annuity. The death
benefit payable relates only to the Guarantee Periods under the Certificate; a
death benefit is never payable under the Life Contingent Annuity.
If you have elected a Joint and Survivor form of annuity under the Life
Contingent Annuity, payments will be made to you or the joint Annuitant, if
living on the date payments are to start. The designated beneficiary and the
joint Annuitant must be your spouse.
Termination of the Assured Payment Option
The Assured Payment Option will be terminated if: (i) you cancel such option at
any time by sending a written request satisfactory to us; (ii) you submit a
subsequent contribution and you do not want it applied under the Assured
Payment Option; (iii) you request a transfer of your Annuity Account Value as
described under "Transfers Among Investment Options" in Part 3, while the
Assured Payment Option is in effect; or (iv) you request a change in the date
the payments are to start under the Life Contingent Annuity. Once the Assured
Payment Option is terminated, in order to receive distributions from your
Annuity Account Value you must utilize the withdrawal options described under
"Withdrawal Options" below. Although the Life Contingent Annuity will continue
in effect and payments will be made if you or your joint Annuitant, if
applicable, are living on the date payments are to start, additional Life
Contingent Annuity payments may not be purchased. You may elect to start the
Assured Payment Option again by submitting a written request satisfactory to
us, but no sooner than three years after the Option was terminated. If you
elected the Assured Payment Option at age 70 1/2 or older and subsequently
terminate this Option, required minimum distributions must continue to be made
with respect to your Certificate.
Before terminating the Assured Payment Option, you should consider the
implications this may have under the minimum distribution requirements. See
"Tax Considerations for the Assured Payment Option and APO Plus" in Part 7.
Income Annuity Options and Surrendering
the Certificates
If you elect an annuity benefit as described under "Income Annuity Options"
below, or surrender the Certificate for its Cash Value as described under
"Surrendering the Certificates to Receive the Cash Value" in Part 3, once we
receive your returned Certificate, your Certificate will be returned to you
with a notation that the Life Contingent Annuity is still in effect.
Thereafter, no subsequent contributions will be accepted under the Certificate
and no amounts may be applied under the Life Contingent Annuity.
Withdrawal Charge
While the Assured Payment Option is in effect, withdrawal charges will not
apply to the level or increasing payments made during the fixed period. Except
as necessary to meet minimum distribution requirements under the Certificate,
Lump Sum Withdrawals will be subject to a withdrawal charge and will have a 10%
free corridor available. Upon termination of the Assured Payment Option, the
free corridor will apply as described under "Withdrawal Charge" in Part 5.
APO PLUS
APO Plus is a variation of the Assured Payment Option. APO Plus is available at
ages 59 1/2 through 83. It may also be elected at ages as young as 53 1/2
provided payments under APO Plus do not start before you attain age 59 1/2.
Except as indicated below, all provisions of the Assured Payment Option apply
to APO Plus. APO Plus enables you to keep a
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portion of your Annuity Account Value in the Alliance Common Stock Fund or the
Alliance Equity Index Fund as you select, while periodically converting such
Annuity Account Value to increase the guaranteed lifetime income under the
Assured Payment Option. You select either the Alliance Common Stock Fund or
Alliance Equity Index Fund in the application and once elected it may not be
changed. When you elect APO Plus, a portion of your initial contribution or
Annuity Account Value as applicable is allocated by us to the Assured Payment
Option to provide a minimum guaranteed lifetime income through allocation of
amounts to the Guarantee Periods and the Modal Payment Portion of the
Guaranteed Period Account, if applicable, and application of amounts to the
Life Contingent Annuity. The remaining Annuity Account Value remains in the
Investment Fund. Periodically during the fixed period (as described below), a
portion of the remaining Annuity Account Value in the Investment Fund is
applied to increase the guaranteed level payments under the Assured Payment
Option.
APO Plus allows you to remain invested in the Investment Funds for longer than
would be possible if you applied your entire Annuity Account Value all at once
to the Assured Payment Option or to an income annuity option, while utilizing
an "exit strategy" to provide retirement income.
The fixed period under APO Plus will be based on your age (or the age of the
younger Annuitant if Joint and Survivor is elected) at issue of the Certificate
(or age at the time of election if APO Plus is elected after issue) and will be
the same as the periods indicated for increasing payments under "Assured
Payment Option" above.
You may elect to defer the payment start date as described in "Payments" under
"Assured Payment Option," above. The fixed period will also be as indicated for
deferral of the payment start date for increasing payments under the Assured
Payment Option.
You elect APO Plus in the application or at a later date by submitting the
proper form. APO Plus may not be elected if the Assured Payment Option is
already in effect.
The amount applied under APO Plus is either the initial contribution if APO
Plus is elected at issue of the Certificate, or the Annuity Account Value if
APO Plus is elected after issue of the Certificate. Out of a portion of the
amount applied, level payments are provided under the Assured Payment Option
equal to the initial payment that would have been provided on the Transaction
Date by the allocation of the entire amount to increasing payments as described
in "Payments" under "Assured Payment Option," above. The difference between the
amount required for level payments and the amount required for increasing
payments is allocated to the Investment Fund. If you have Annuity Account Value
in the Guaranteed Period Account at the time this option is elected, a market
value adjustment may apply as a result of such amounts being transferred to
effect the Assured Payment Option.
On the third February 15th following the date the first payment is made (if
payments are to be made on February 15th, the date of the first payment will be
counted as the first February 15th) during the fixed period while you are
living, a portion of the Annuity Account Value in the Investment Funds is
applied to increase the level payments under the Assured Payment Option. If a
deferral period of three years or more is elected, a portion of the Annuity
Account Value in the Investment Funds will be applied on the February 15th
prior to the date the first payment is made, to increase the initial level
payments. If payments are to be made on February 15th, the date of the first
payment will be counted as the first February 15th.
The amount applied is the amount which provides for level payments equal to the
initial payment that would have been provided by the allocation of the entire
Annuity Account Value to increasing payments, as described in the preceding
paragraph. This process is repeated each third year during the fixed period.
The first increased payment will be reflected in the payment made following
three full years of payments and then every three years thereafter. On the
Transaction Date immediately following the last payment during the fixed
period, the remaining Annuity Account Value in the Investment Funds is first
applied to the Life Contingent Annuity to change the level payments previously
purchased to increasing payments. If there is any Annuity Account Value
remaining after the increasing payments are purchased, this balance is applied
to the Life Contingent Annuity to further increase such increasing payments. If
the Annuity Account Value in the Investment Funds is insufficient to purchase
the increasing payments, then the level payments previously purchased will be
increased to the extent possible.
While APO Plus provides a minimum guaranteed lifetime payment under the Assured
Payment Option, the total amount of income that can be provided over time will
depend on the investment performance of the Investment Funds in which you have
Annuity Account Value, as well as the current Guaranteed Rates and the cost of
the Life Contingent Annuity, which may vary. Consequently, the aggregate amount
of guaranteed lifetime income under
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APO Plus may be more or less than the amount that could have been purchased by
application at the outset of the entire initial contribution or Annuity Account
Value to the Assured Payment Option.
See Appendix III for an example of the payments purchased under Assured Payment
Option and APO Plus.
In calculating your required minimum distributions your Annuity Account Value
in the Investment Funds, the Annuity Account Value in each Guarantee Period,
any amount in the Modal Payment Portion of the Guaranteed Period Account, and
the deemed value of the Life Contingent Annuity for tax purposes will be taken
into account as described in "Payments" under "Assured Payment Option," above.
Also see "Required Minimum Distributions" in Part 7.
Allocation of Subsequent Contributions under IRA APO Plus
Any subsequent contributions you make may only be allocated to the Alliance
Common Stock Fund and Alliance Equity Index Fund, where it is later applied by
us under the Assured Payment Option. Subsequent contributions may no longer be
made after the end of the fixed period.
Withdrawals under APO Plus
While APO Plus is in effect, if you take a Lump Sum Withdrawal as described
under "Lump Sum Withdrawals" below (or if a Lump Sum Withdrawal is made to
satisfy minimum distribution requirements under the Certificate), such
withdrawals will be taken from your Annuity Account Value in the Investment
Funds unless you specify otherwise. If there is insufficient value in the
Investment Funds the excess will be taken from the Guarantee Periods and the
Modal Payment Portion of the Guaranteed Period Account, if applicable, as
described under "Withdrawals under the Assured Payment Option" above.
A Lump Sum Withdrawal taken to satisfy minimum distribution requirements under
the Certificate will not be subject to a withdrawal charge.
Death Benefit
Once you have elected APO Plus, if a death benefit becomes payable during the
fixed period we will pay the death benefit amount as described under "Death
Benefit" in Part 3, to the designated beneficiary. Unless you have elected
Joint and Survivor under the Life Contingent Annuity, no payment will be made
under the Life Contingent Annuity. The death benefit relates only to the
Investment Funds and the Guarantee Periods under the Certificate; a death
benefit is never payable under the Life Contingent Annuity.
Termination of APO Plus
You may terminate APO Plus at any time by submitting a request satisfactory to
us. In connection with the termination, you may either (i) elect to terminate
APO Plus at any time and have your Certificate operate under the Rollover IRA
rules (see "Part 3: Provisions of the Certificates and Services We Provide") or
(ii) elect the Assured Payment Option (Guaranteed Minimum Income Benefit,
discussed in Part 3 may apply) with level or increasing payments. In the latter
case your remaining Annuity Account Value in the Investment Funds will be
allocated to the Guaranteed Period Account and applied under the Life
Contingent Annuity. A market value adjustment may apply for any amounts
allocated from a Guarantee Period. At least 45 days prior to the end of each
three year period, we will send you a quote indicating how much future income
could be provided under the Assured Payment Option. The quote would be based on
your current Annuity Account Value, current Guaranteed Rates for the Guarantee
Periods and current purchase rates under the Life Contingent Annuity as of the
date of the quote. The actual amount of future income would depend on the rates
in effect on the Transaction Date.
WITHDRAWAL OPTIONS
The Rollover IRA is an annuity contract, even though you may elect to receive
your benefits in a non-annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while you are alive. Four
withdrawal options are available: Lump Sum Withdrawals, Substantially Equal
Payment Withdrawals, Systematic Withdrawals and Minimum Distribution
Withdrawals. Withdrawals may result in withdrawal charges. See "Part 5:
Deductions and Charges." Special withdrawal rules may apply under the Assured
Payment Option and APO Plus.
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration
Date" in Part 2. Withdrawals may be taxable and subject to tax penalty. See
"Part 7: Tax Aspects of the Certificates."
As a deterrent to early withdrawal (generally prior to age 59 1/2) the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 8: Tax Aspects
of the Certificates."
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LUMP SUM WITHDRAWALS
You may take a Lump Sum Withdrawal at any time subject to a minimum withdrawal
amount of $1,000.
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A request to withdraw more than 90% of the Cash Value as of the Transaction
Date will result in the termination of the Certificate and will be treated as a
surrender of the Certificate for its Cash Value. See "Surrendering the
Certificates to Receive the Cash Value," in Part 3.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal will
be taken. If we have received the information we require, the requested
withdrawal will become effective on the Transaction Date and proceeds will
usually be mailed within seven calendar days thereafter, but we may delay
payment as described in "When Payments Are Made" in Part 3. If we receive only
partially completed information, our Processing Office will contact you for
specific instructions before your request can be processed.
Lump Sum Withdrawals in excess of the 15% free corridor amount may be subject
to a withdrawal charge. While either the Assured Payment Option or APO Plus is
in effect, Lump Sum Withdrawals that exceed the 10% free corridor amount may be
subject to a withdrawal charge. See "Withdrawal Charge" in Part 5.
SUBSTANTIALLY EQUAL PAYMENT WITHDRAWALS
Substantially Equal Payment Withdrawals provide distributions from the Annuity
Account Value of the amounts necessary so that the 10% penalty tax, normally
applicable to distributions made prior to age 59 1/2, does not apply. See
"Penalty Tax on Early Distributions," in Part 7. Once distributions begin, they
should not be changed or stopped until the later of age 59 1/2 or five years
from the date of the first distribution. If you change or stop the
distributions or take a Lump Sum Withdrawal, you may be liable for the 10%
penalty tax that would have otherwise been due on all prior distributions made
under this option and for any interest thereon.
Substantially Equal Payment Withdrawals may be elected at any time if you are
below age 59 1/2. You can elect this option by submitting the proper form. You
select the day and the month when the first withdrawal will be made, but it may
not be sooner than 28 days after the issue of the Certificate. In no event may
you elect to receive the first payment in the same Contract Year in which a
Lump Sum Withdrawal was taken. We will calculate the amount of the distribution
under a method we select and payments will be made monthly, quarterly or
annually as you select. These payments will continue to be made until we
receive written notice from you to cancel this option. Such notice must be
received at our Processing Office at least seven calendar days prior to the
next scheduled withdrawal date. A Lump Sum Withdrawal taken while Substantially
Equal Payment Withdrawals are in effect will cancel such withdrawals. You may
elect to start receiving Substantially Equal Payment Withdrawals again, but in
no event can the payments start in the same Contract Year in which a Lump Sum
Withdrawal was taken. We will calculate a new distribution amount.
Unless you specify otherwise, Substantially Equal Payment Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the Investment
Funds. If there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal or the total amount of the withdrawal, as
applicable, will be withdrawn from the Guarantee Periods in order of the
earliest Expiration Date(s) first.
Substantially Equal Payment Withdrawals are not subject to a withdrawal charge.
SYSTEMATIC WITHDRAWALS
This option may be elected if you are age 59 1/2 to 70 1/2. Systematic
Withdrawals provide level percentage or level amount payouts. You may choose to
receive Systematic Withdrawals on a monthly, quarterly or annual frequency. You
select a dollar amount or percentage of the Annuity Account Value to be
withdrawn, subject to a maximum of 1.2% monthly, 3.6% quarterly and 15.0%
annually, but in no event may any payment be less than $250. If at the time a
Systematic Withdrawal is to be made, the withdrawal amount would be less than
$250, no payment will be made and your Systematic Withdrawal election will
terminate.
You select the date of the month when the withdrawals will be made, but you may
not choose a date later than the 28th day of the month. If no date is selected,
withdrawals will be made on the same calendar day of the month as the Contract
Date. The commencement of payments under the Systematic Withdrawal option may
not be elected to start sooner than 28 days after issue of the Certificate.
You may elect Systematic Withdrawals at any time by completing the proper form
and sending it to our Processing Office. You may change the payment frequency
of your Systematic Withdrawals once each Contract Year or cancel this
withdrawal option at any time by sending notice in a form satisfactory to us.
The notice must be received at our Processing Office at least seven calendar
days prior to the next scheduled withdrawal date. You may also change the
amount or percentage of your Systematic Withdrawals once in each Contract Year.
However, you may not change the amount or percentage in any Contract Year where
you have previously taken another withdrawal under the Lump Sum Withdrawal
option described above.
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Unless you specify otherwise, Systematic Withdrawals will be withdrawn on a pro
rata basis from your Annuity Account Value in the Investment Funds. If there is
insufficient value or no value in the Investment Funds, any additional amount
of the withdrawal required or the total amount of the withdrawal, as
applicable, will be withdrawn from the Guarantee Periods in order of the
earliest Expiration Date(s) first.
Systematic Withdrawals are not subject to a withdrawal charge, except to the
extent that, when added to a Lump Sum Withdrawal previously taken in the same
Contract Year, the Systematic Withdrawal exceeds the 15% free corridor amount.
See "Withdrawal Charge" in Part 5.
MINIMUM DISTRIBUTION WITHDRAWALS
Minimum Distribution Withdrawals provide distributions from the Annuity Account
Value of the amounts necessary to meet minimum distribution requirements set
forth in the Code. This option may be elected in the year in which you attain
age 70 1/2. You can elect Minimum Distribution Withdrawals by submitting the
proper election form. The minimum amount we will pay out is $250. You may elect
Minimum Distribution Withdrawals for each Certificate you own, subject to our
rules then in effect. Currently, Minimum Distribution Withdrawal payments will
be made annually.
Unless you specify otherwise, Minimum Distributions Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the Investment
Funds. If there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal required or the total amount of the
withdrawal, as applicable, will be withdrawn from the Guarantee Periods in
order of the earliest Expiration Date(s) first.
Minimum Distribution Withdrawals are not subject to a withdrawal charge, except
to the extent that, when added to a Lump Sum Withdrawal previously taken in the
same Contract Year, the Minimum Distribution Withdrawal exceeds the 15% free
corridor amount. See "Withdrawal Charge" in Part 5.
Example
The chart below illustrates the pattern of payments, under Minimum Distribution
Withdrawals for a male who purchases the Rollover IRA at age 70 with a single
contribution of $100,000, with payments commencing at the end of the first
Contract Year.
PATTERN OF MINIMUM DISTRIBUTION WITHDRAWALS
$100,000 SINGLE CONTRIBUTION FOR A
SINGLE LIFE-MALE AGE 70
[THE FOLLOWING TABLE WAS REPRESENTED
AS AN AREA GRAPH IN THE PROSPECTUS]
Assumes 6.0% Rate of Return
Amount
Age Withdrawn
----- ---------
70 $6,250
75 7,653
80 8,667
85 8,770
90 6,931
95 3,727
100 1,179
[END OF GRAPHICALLY REPRESENTED DATA]
Payments are calculated each year based on the Annuity Account Value at the end
of each year, using the recalculation method of determining payments. (See
"Part 1--Minimum Distribution Withdrawals" in the SAI.) Payments are made
annually, and it is further assumed that no Lump Sum Withdrawals are taken.
This example assumes an annual rate of return of 6.0% compounded annually for
both the Investment Funds and the Guaranteed Period Account. This rate of
return is for illustrative purposes only and is not intended to represent an
expected or guaranteed rate of return. Your investment results will vary. In
addition, this example does not reflect any charges that may be applicable
under the Rollover IRA. Such charges would effectively reduce the actual
return.
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HOW WITHDRAWALS AND TRANSFERS AFFECT YOUR GUARANTEED MINIMUM DEATH BENEFIT
AND GUARANTEED MINIMUM INCOME BENEFIT
Except as described in the next sentence, each withdrawal and transfer will
cause a reduction in your current Guaranteed Minimum Death Benefit and
Guaranteed Minimum Income Benefit benefit base (described below) on a pro rata
basis. Your current Guaranteed Minimum Death Benefit and Guaranteed Minimum
Income Benefit benefit base will be reduced on a dollar-for-dollar basis as
long as the sum of your withdrawals and transfers from the Investment Funds in
any Contract Year is 6% or less of the beginning of Contract Year Guaranteed
Minimum Death Benefit. Once a withdrawal or transfer is made that causes
cumulative withdrawals and transfers from the Investment Funds in a Contract
Year to exceed 6% of the beginning of Contract Year Guaranteed Minimum Death
Benefit, that withdrawal or transfer and any subsequent withdrawals and
transfers in that Contract Year will cause a pro rata reduction to occur.
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Reduction on a dollar-for-dollar basis means your current Guaranteed Minimum
Death Benefit and Guaranteed Minimum Income Benefit benefit base will be
reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis
means that we calculate the percentage of the Annuity Account Value as of the
Transaction Date that is being withdrawn and we reduce your current Guaranteed
Minimum Death Benefit and Guaranteed Minimum Income Benefit benefit base by
that same percentage. For example, if your Annuity Account Value is $10,000 and
you withdraw $4,000 you have withdrawn 40% ($4,000/$10,000) of your Annuity
Account Value. If your Guaranteed Minimum Death Benefit was $20,000 prior to
the withdrawal, it would be reduced by $8,000 ($20,000 x .40) and your new
Guaranteed Minimum Death Benefit after the withdrawal would be $12,000 ($20,000
- -$8,000).
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your Guaranteed Minimum Death
Benefit or Guaranteed Minimum Income Benefit.
GUARANTEED MINIMUM INCOME BENEFIT BENEFIT BASE
The Guaranteed Minimum Income Benefit benefit base is equal to the portion of
the initial contribution allocated to the Investment Funds on the Contract
Date. Thereafter, the Guaranteed Minimum Income Benefit benefit base is
credited with interest at 6% (3% for amounts in the Alliance Money Market and
Alliance Intermediate Government Securities Funds) on each Contract Date
anniversary through the Annuitant's age 80, and 0% thereafter, and is adjusted
for any subsequent contributions and transfers into the Investment Funds and
transfers and withdrawals from such Funds. The Guaranteed Minimum Income
Benefit benefit base will also be reduced by any withdrawal charge remaining on
the Transaction Date that you exercise Guaranteed Minimum Income Benefit.
Your Guaranteed Minimum Income Benefit benefit base is applied to guaranteed
minimum annuity factors to determine the Guaranteed Minimum Income Benefit. The
guaranteed minimum annuity factors are based on (i) interest at 2.5% if
Guaranteed Minimum Income Benefit is exercised within 30 days following a
Contract Date anniversary in years 7 through 9 and at 3% if exercised within 30
days following the 10th or later Contract Date anniversary, and (ii) mortality
tables that assume increasing longevity. These interest and mortality factors
are generally more conservative than the basis underlying current annuity
factors, which means that they would produce less periodic income for an equal
amount applied.
Your Guaranteed Minimum Income Benefit benefit base does not create an Annuity
Account Value or a Cash Value and is used solely for purposes of calculating
the Guaranteed Minimum Income Benefit.
ANNUITY BENEFITS
Income annuity options provide periodic payments over a specified period of
time which may be fixed or may be based on your life. Annuity forms of payment
are calculated as of the Annuity Commencement Date, which is on file with our
Processing Office. You can change the Annuity Commencement Date by writing to
our Processing Office any time before the Annuity Commencement Date. However,
you may not choose a date later than the 28th day of any month. Also, no
Annuity Commencement Date will be later than the Processing Date which follows
your 90th birthday (may be different in some states).
Before the Annuity Commencement Date, we will send you a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay you a
fixed annuity benefit on the "normal form" indicated for your Certificate as of
your Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or (2)
the Cash Value for any period certain only annuity form except that if the
period certain is more than five years, the amount applied will be no less than
95% of the Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an annuity benefit prior
to an Expiration Date will result in a market value adjustment. See "Market
Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 2.
ANNUITY FORMS
o Life Annuity: An annuity which guarantees payments for the rest of your
life. Payments end with the last monthly payment before your death.
Because there is no death benefit associated with this annuity form, it
provides the highest monthly payment of any of the life income annuity
options, so long as you are living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of your life. In addition, if you die before a specific
period of time (the "certain period") has ended, payments will continue
to your beneficiary for the balance of the certain period. Certain
periods may be 5, 10, 15 or 20 years. A life annuity with a certain
period of 10 years is the normal form of annuity under the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to you
for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments will
continue to your beneficiary until that amount has been recovered. This
option is available only as a fixed annuity.
35
<PAGE>
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The annuity forms outlined above are available in both fixed and variable form,
unless otherwise indicated. Fixed annuity payments are guaranteed by us and
will be based either on the tables of guaranteed annuity payments in your
Certificate or on our then current annuity rates, whichever is more favorable
for you. Variable income annuities may be funded through the Investment Funds
through the purchase of annuity units. The amount of each variable annuity
payment may fluctuate, depending upon the performance of the Investment Funds.
That is because the annuity unit value rises and falls depending on whether the
actual rate of net investment return (after deduction of charges) is higher or
lower than the assumed base rate. See "Annuity Unit Values" in the SAI.
Variable income annuities may also be available by separate prospectus through
the Investment Funds of other separate accounts we offer.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here. Your registered representative
can provide details.
For each annuity benefit, we will issue a separate written agreement putting
the benefit into effect. Before we pay any annuity benefit, we require the
return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
annuity form, your age (or your and the joint Annuitant's ages) and in certain
instances, the sex of the Annuitant(s). Once an annuity form is chosen and
payments have commenced, no change can be made.
If, at the time you elect an annuity form, the amount to be applied is less
than $2,000 or the initial payment under the form elected is less than $20
monthly, we reserve the right to pay the Annuity Account Value in a single sum
rather than as payments under the annuity form chosen.
36
<PAGE>
PART 5: DEDUCTIONS AND CHARGES
CHARGES DEDUCTED FROM THE
ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options
you select, subject to certain restrictions. We then periodically deduct
certain amounts from your Annuity Account Value. Unless otherwise indicated,
the charges described below and under "Charges Deducted from the Investment
Funds" below will not be increased by us for the life of the Certificates. We
may reduce certain charges under sponsored arrangements. See "Sponsored
Arrangements" below. Charges are deducted proportionately from all the
Investment Funds in which your Annuity Account Value is invested on a pro rata
basis, except as noted below.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that (i) a Lump Sum Withdrawal or cumulative withdrawals during a
Contract Year exceed the free corridor amount, or (ii) if the Certificate is
surrendered to receive its Cash Value. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
If the Assured Payment Option or APO Plus is in effect, the withdrawal charge
will be imposed as a percentage of contributions (less withdrawals), less the
amount applied under the Life Contingent Annuity.
The applicable withdrawal charge percentage is determined by the Contract Year
in which the excess withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn or
surrendered. For purposes of the table, for each contribution, the Contract
Year in which we receive that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the
beginning of the Contract Year, minus any amount previously withdrawn
during that Contract Year.
While either the Assured Payment Option or APO Plus is in effect, the free
corridor amount is 10% of the Annuity Account Value at the beginning of the
Contract Year.
There is no withdrawal charge if a Lump Sum Withdrawal is taken to satisfy
minimum distribution requirements under the Certificate. A free corridor amount
is not applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn up
to the free corridor amount are not considered a withdrawal of any
contributions.
The withdrawal charge is to help cover sales expenses.
Combined Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit
Charge (Plan A)
We deduct a charge annually on each Processing Date for providing the Combined
Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit (Plan
A). The charge is equal to a percentage of the Guaranteed Minimum Death Benefit
in effect on the Processing Date. The percentage is equal to 0.45% for the 6%
to Age 80 Benefit and 0.30% for the 6% to Age 70 Benefit.
Guaranteed Minimum Death Benefit Only Benefit Charge (Plan B)
We deduct a charge annually on each Processing Date for providing the
Guaranteed Minimum Death Benefit Only Benefit (Plan B). The charge is equal to
a percentage of the Guaranteed Minimum Death Benefit in effect on the
Processing Date. The percentage is equal to 0.20%.
<PAGE>
Charges for State Premium and Other
Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium taxes,
that might be imposed in your state. Generally we deduct this charge from the
amount applied to provide an annuity benefit. In certain states, however, we
may deduct the charge for taxes from contributions. The current tax charge that
might be imposed varies by state and ranges from 0% to 2.25%.
CHARGES DEDUCTED FROM THE
INVESTMENT FUNDS
Mortality and Expense Risks Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for mortality
37
<PAGE>
and expense risks. The daily charge is at the rate of 0.002477%, which is
equivalent to an annual rate of 0.90%, on the assets in each Investment Fund.
The mortality risk assumed is the risk that Annuitants as a group will live for
a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables, shown
in each Certificate, will differ from actual mortality experience. Lastly, we
assume a mortality risk to the extent that at the time of death, the Guaranteed
Minimum Death Benefit exceeds the Cash Value of the Certificate. The expense
risk assumed is the risk that it will cost us more to issue and administer the
Certificates than we expect.
Administration Charge
We will deduct a daily charge from the assets in each Investment Fund, to
compensate us for administration expenses under the Certificates. The daily
charge is at a rate of 0.000692% (equivalent to an annual rate of 0.25%) on the
assets in each Investment Fund. We reserve the right to increase this charge to
an annual rate of 0.35%, the maximum permitted under the Certificates.
HR TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HR Trust's assets, the 12b-1
fee, direct operating expenses of HR Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of HR Trust (such
as brokerage commissions and other expenses related to the purchase and sale of
securities), are reflected in each Portfolio's daily share price. The maximum
investment advisory fees paid annually by the Portfolios cannot be changed
without a vote by shareholders. They are as follows:
AVERAGE DAILY NET ASSETS
<TABLE>
<CAPTION>
FIRST NEXT NEXT NEXT
$750 $750 $1 $2.5
MILLION MILLION BILLION BILLION THEREAFTER
--------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Alliance
Conservative
Investors..... 0.475% 0.425% 0.375% 0.350% 0.325%
Alliance
Growth
Investors .... 0.550% 0.500% 0.450% 0.425% 0.400%
Alliance
Growth &
Income ....... 0.550% 0.525% 0.500% 0.480% 0.470%
Alliance
Common Stock 0.475% 0.425% 0.375% 0.355% 0.345%*
Alliance
Global........ 0.675% 0.600% 0.550% 0.530% 0.520%
Alliance
International 0.900% 0.825% 0.800% 0.780% 0.770%
Alliance
Aggressive
Stock ........ 0.625% 0.575% 0.525% 0.500% 0.475%
Alliance Small
Cap Growth.... 0.900% 0.850% 0.825% 0.800% 0.775%
Alliance Money
Market ....... 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance
Intermediate
Gov't
Securities .. 0.500% 0.475% 0.450% 0.430% 0.420%
Alliance High
Yield ........ 0.600% 0.575% 0.550% 0.530% 0.520%
Alliance
Equity Index
Fund.......... 0.325% 0.300% 0.275% 0.255% 0.245%
</TABLE>
- ------------
* On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
Investment advisory fees are established under HR Trust's investment advisory
agreements between HR Trust and its investment adviser, Alliance. The Rule
12b-1 Plan provides that HR Trust, on behalf of each Portfolio may pay annually
up to 0.25% of the average daily net assets of a Portfolio attributable to its
Class IB shares in respect of activities primarily intended to result in the
sale of the Class IB shares. The 12b-1 fee, which may be waived at our
discretion, may be increased only by action of the Board of Trustees of HR
Trust up to a maximum of 0.50% per annum. All of these fees and expenses are
described more fully in the HR Trust prospectus.
<PAGE>
EQ TRUST CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQ Trust's assets, the 12b-1
fee, other direct operating expenses of EQ Trust (such as trustees' fees,
expenses of independent auditors and legal counsel, administrative service
fees, custodian fees, and liability insurance), and certain investment-related
expenses of EQ Trust (such as brokerage commissions and other expenses related
to the purchase and sale of securities), are reflected in each Portfolio's
daily share price. The investment management fees paid annually by the
Portfolios cannot be changed without a vote by shareholders.
They are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS
- ----------------------------------------------
<S> <C>
EQ/Putnam Balanced .................... 0.55%
EQ/Putnam Growth and Income Value .... 0.55
MFS Emerging Growth Companies ......... 0.55
MFS Research .......................... 0.55
Merrill Lynch Basic Value Equity ..... 0.55
Merrill Lynch World Strategy .......... 0.70
Morgan Stanley Emerging Markets Equity 1.15
T. Rowe Price Equity Income ........... 0.55
T. Rowe Price International Stock .... 0.75
Warburg Pincus Small Company Value ... 0.75
</TABLE>
Investment management fees are established under EQ Trust's Investment
Management Agreement be-
38
<PAGE>
tween EQ Trust and its investment manager, EQ Financial. EQ Financial has
entered into expense limitation agreements with EQ Trust, with respect to each
Portfolio, pursuant to which EQ Financial has agreed to waive or limit its fees
and total annual operating expenses (expressed as a percentage of the
Portfolio's average daily net assets) to 0.85% each for the EQ/Putnam Growth &
Income Value, MFS Research, Merrill Lynch Basic Value Equity, T. Rowe Price
Equity, and MFS Emerging Growth Companies Portfolios; 0.90% for the EQ/Putnam
Balanced Portfolio; 1.00% for Warburg Pincus Small Company Value Portfolio;
1.20% each for T. Rowe Price International Stock and Merrill Lynch World
Strategy Portfolios; and 1.75% for Morgan Stanley Emerging Markets Equity
Portfolio. See the prospectus for EQ Trust for more information.
The Rule 12b-1 Plan provides that EQ Trust, on behalf of each Portfolio, may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily intended
to result in the sale of the Class IB shares. The Rule 12b-1 Plan fees, which
may be waived in the discretion of EDI, may be increased only by action of the
Board of Trustees of EQ Trust up to a maximum of 0.50% per annum. All of these
fees and expenses are described more fully in the EQ Trust prospectus.
SPONSORED ARRANGEMENTS
For certain sponsored arrangements, we may reduce the withdrawal charge or
change the minimum initial contribution requirements. Under the Assured Payment
Option and APO Plus, we may increase Guaranteed Rates and reduce purchase rates
under the Life Contingent Annuity. We may also change the guaranteed minimum
death benefit and the guaranteed minimum income benefit. We may offer
Investment Funds investing in Class IA shares of HR Trust and EQ Trust, which
are not subject to the 12b-1 fee. Sponsored arrangements include those in which
an employer allows us to sell Certificates to its employees or retirees on an
individual basis.
Our costs for sales, administration, and mortality generally vary with the size
and stability of the sponsoring organization among other factors. We take all
these factors into account when reducing charges. To qualify for reduced
charges, a sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in existence. Sponsored arrangements
that have been set up solely to buy Certificates or that have been in existence
less than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in effect
when a Certificate is approved for issue. We may change these rules from time
to time. Any variation in the withdrawal charge will reflect differences in
costs or services and will not be unfairly discriminatory.
Sponsored arrangements may be governed by the Code, the Employee Retirement
Income Security Act of 1974 (ERISA), or both. We make no representations as to
the impact of those and other applicable laws on such programs. WE RECOMMEND
THAT EMPLOYERS PURCHASING OR MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER A
SPONSORED ARRANGEMENT SEEK THE ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
Charges may be reduced or eliminated when sales are made in a manner that
results in savings of sales and administrative expenses, such as sales through
persons who are compensated by clients for recommending investments and receive
no commission or reduced commissions in connection with the sale of the
Certificates. In no event will a reduction or elimination of charges be
permitted where it would be unfairly discriminatory.
39
<PAGE>
PART 6: VOTING RIGHTS
HR TRUST AND EQ TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of HR Trust and EQ Trust.
Since we own the assets of the Separate Account, we are the legal owner of the
shares and, as such, have the right to vote on certain matters. Among other
things, we may vote:
o to elect each trust's Board of Trustees,
o to ratify the selection of independent auditors for each trust, and
o on any other matters described in each trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because HR Trust is a Massachusetts business trust and EQ Trust is a Delaware
business trust, annual meetings are not required. Whenever a shareholder vote
is taken, we will give Certificate Owners the opportunity to instruct us how to
vote the number of shares attributable to their Certificates. If we do not
receive instructions in time from all Certificate Owners, we will vote the
shares of a Portfolio for which no instructions have been received in the same
proportion as we vote shares of that Portfolio for which we have received
instructions. We will also vote any shares that we are entitled to vote
directly because of amounts we have in an Investment Fund in the same
proportions that Certificate Owners vote.
Each share of each trust is entitled to one vote. Fractional shares will be
counted. Voting generally is on a Portfolio-by-Portfolio basis except that
shares will be voted on an aggregate basis when universal matters, such as
election of Trustees and ratification of independent auditors, are voted upon.
However, if the Trustees determine that shareholders in a Portfolio are not
affected by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQ Trust shares currently are sold only to
our separate accounts. HR Trust shares are held by other separate accounts of
ours and by separate accounts of insurance companies affiliated and
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 the Rollover IRA Certificate Owners, we
currently do not foresee any disadvantages arising out of this. HR 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 HR Trust's response to
any of those events insufficiently protects our Certificate Owners, we will see
to it that appropriate action is taken to protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner approval,
Certificate Owners will be entitled to one vote for each Accumulation Unit they
have in the Investment Funds. Each Certificate Owner who has elected a variable
annuity payout may cast the number of votes equal to the dollar amount of
reserves we are holding for that annuity in an Investment Fund divided by the
Accumulation Unit Value for that Investment Fund. We will cast votes
attributable to any amounts we have in the Investment Funds in the same
proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
40
<PAGE>
PART 7: TAX ASPECTS OF THE CERTIFICATES
TAX-QUALIFIED INDIVIDUAL RETIREMENT ANNUITIES (IRAS)
This prospectus contains the information which the Internal Revenue Service
(IRS) requires to be disclosed to an individual before he or she purchases an
IRA.
The Rollover IRA Certificate is designed to qualify as an IRA under Section
408(b) of the Code. Your rights under the Rollover IRA cannot be forfeited.
This Part covers some of the special tax rules that apply to individual
retirement arrangements. You should be aware that an IRA is subject to certain
restrictions in order to qualify for its special treatment under the Federal
tax law.
This prospectus provides our general understanding of applicable Federal income
tax rules, but does not provide detailed tax information and does not address
issues such as state income and other taxes or Federal gift and estate taxes.
Please consult a tax adviser when considering the tax aspects of the Rollover
IRA Certificates.
Further information on IRA tax matters can be obtained from any IRS district
office. Additional information regarding IRAs, including a discussion of
required distributions, can be found in IRS Publication 590, entitled
"Individual Retirement Arrangements (IRAs)," which is generally updated
annually.
The Rollover IRA Certificate has been approved by the IRS as to form for use as
an IRA. This IRS approval is a determination only as to the form of the annuity
and does not represent a determination of the merits of the annuity as an
investment, and may not address certain features under the Certificates.
Cancellation
You can cancel a Certificate issued as an IRA by following the directions in
Part 3 under "Free Look Period." Since there may be adverse tax consequences if
a Certificate is cancelled (and because we are required to report to the IRS
certain distributions from cancelled IRAs), you should consult with a tax
adviser before making any such decision. If you cancel this Certificate, you
may establish a new individual retirement arrangement if at the time you meet
the requirements for establishing an individual retirement arrangement.
Contributions to IRAs
Individuals may make three different types of contributions to purchase an IRA,
or as later additions to an existing IRA: "regular" contributions out of
earnings, tax-free "rollover" contributions from tax-qualified plans, or direct
custodian-to-custodian transfers from other individual retirement arrangements
("direct transfers").
The initial contribution to the Certificate must be either a rollover or a
direct custodian-to-custodian transfer. See "Tax-Free Transfers and Rollovers,"
discussed below. Any subsequent contributions you make may be any of rollovers,
direct transfers or "regular" IRA contributions. See "Contributions Under the
Certificates" in Part 3. The immediately following discussion relates to
"regular" IRA contributions. For the reasons noted in "Tax-Free Transfers and
Rollovers" below, you should consult with your tax adviser before making any
subsequent contributions to an IRA which is intended to serve as a "conduit"
IRA.
Generally, $2,000 is the maximum amount of deductible and nondeductible
contributions which may be made to all IRAs by an individual in any taxable
year. The above limit may be less when the individual's earnings are below
$2,000. This limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into an IRA.
The amount of IRA contributions for a tax year that an individual can deduct
depends on whether the individual (or the individual's spouse, if a joint
return is filed) is covered by an employer-sponsored tax-favored retirement
plan. If the individual's spouse does not work or elects to be treated as
having no compensation, the individual and the individual's spouse may
contribute up to $4,000 to individual retirement arrangements (but no more than
$2,000 to any one individual retirement arrangement). The non-working spouse
owns his or her individual retirement arrangements, even if the working spouse
makes contributions to purchase the spousal individual retirement arrangements.
<PAGE>
If neither the individual nor the individual's spouse is covered during any
part of the taxable year by an employer-sponsored tax-favored retirement plan
(including a qualified plan, a tax sheltered account or annuity under Section
403(b) of the Code (TSA) or a simplified employee pension plan), then
regardless of adjusted gross income (AGI), each working spouse may make
deductible contributions to an IRA for each tax year (MAXIMUM PERMISSIBLE
DOLLAR DEDUCTION) up to the lesser of $2,000 or 100% of compensation. In
certain cases, individuals covered by a tax-favored retirement plan include
persons eligible to participate in the plan although not actually
participating. Whether or not a person is covered by a retirement plan will be
reported on an employee's Form W-2.
41
<PAGE>
If the individual is single and covered by a retirement plan during any part of
the taxable year, the deduction for IRA contributions phases out with AGI
between $25,000 and $35,000. If the individual is married and files a joint
return, and either the individual or the spouse is covered by a tax-favored
retirement plan during any part of the taxable year, the deduction for IRA
contributions phases out with AGI between $40,000 and $50,000. If the
individual is married, files a separate return and is covered by a tax-favored
retirement plan during any part of the taxable year, the deduction for IRA
contributions phases out with AGI between $0 and $10,000. Married individuals
filing separate returns must take into account the retirement plan coverage of
the other spouse, unless the couple has lived apart for the entire taxable
year. If AGI is below the phase-out range, an individual is entitled to the
Maximum Permissible Dollar Deduction. In computing the partial deduction for
IRA contributions the individual must round the amount of the deduction to the
nearest $10. The permissible deduction for IRA contributions is a minimum of
$200 if AGI is less than the amount at which the deduction entirely phases out.
If the individual (or the individual's spouse, unless the couple has lived
apart the entire taxable year and their filing status is married, filing
separately) is covered by a tax-favored retirement plan, the deduction for IRA
contributions must be computed using one of two methods. Under the first
method, the individual determines AGI and subtracts $25,000 if the individual
is a single person, $40,000 if the individual is married and files a joint
return with the spouse, or $0 if the individual is married and files a separate
return. The resulting amount is the individual's Excess AGI. The individual
then determines the limit on the deduction for IRA contributions using the
following formula:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Maximum Adjusted
Permissible Dollar
$10,000-Excess AGI Dollar Deduction
$10,000 X Deduction = Limit
</TABLE>
Under the second method, the individual determines his or her Excess AGI and
then refers to the table in Appendix IV originally prepared by the IRS to
determine the deduction.
Contributions may be made for a tax year until the deadline for filing a
Federal income tax return for that tax year (without extensions). No
contributions are allowed for the tax year in which an individual attains age
70 1/2 or any tax year after that. A working spouse age 70 1/2 or over,
however, can contribute up to the lesser of $2,000 or 100% of "earned income"
to a spousal individual retirement arrangement for a non-working spouse until
the year in which the non-working spouse reaches age 70 1/2.
An individual not eligible to deduct part or all of the IRA contribution may
still make nondeductible contributions on which earnings will accumulate on a
tax-deferred basis. The deductible and nondeductible contributions to the
individual's IRA (or the nonworking spouse's IRA) may not, however, together
exceed the maximum $2,000 per person limit. See "Excess Contributions" below.
Individuals must keep their own records of deductible and nondeductible
contributions in order to prevent double taxation on the distribution of
previously taxed amounts. See "Distributions from IRA Certificates" below.
An individual making nondeductible contributions in any taxable year, or any
individual who has made nondeductible contributions to an IRA in prior years
and is receiving amounts from any IRA must file the required information with
the IRS. Moreover, individuals making nondeductible IRA contributions must
retain all income tax returns and records pertaining to such contributions
until interests in all IRAs are fully distributed.
Excess Contributions
Excess contributions to an IRA are subject to a 6% excise tax for the year in
which made and for each year thereafter until withdrawn. In the case of
"regular" IRA contributions any contribution in excess of the lesser of $2,000
or 100% of compensation or earned income is an "excess contribution," (without
regard to the deductibility or nondeductibility of IRA contributions under this
limit). Also, any "regular" contributions made after you reach age 70 1/2 are
excess contributions. In the case of rollover IRA contributions, excess
contributions are amounts which are not eligible to be rolled over (for
example, after tax contributions to a qualified plan or minimum distributions
required to be made after age 70 1/2). An excess contribution (rollover or
"regular") which is withdrawn, however, before the time for filing the
individual's Federal income tax return for the tax year (including extensions)
is not includable in income and therefore is not subject to the 10% penalty tax
on early distributions (discussed below under "Penalty Tax on Early
Distributions"), provided any earnings attributable to the excess contribution
are also withdrawn and no tax deduction is taken for the excess contribution.
The withdrawn earnings on the excess contribution, however, would be includable
in the individual's gross income and would be subject to the 10% penalty tax.
If excess contributions are not withdrawn before the time for filing the
individual's Federal income tax return for
42
<PAGE>
the year (including extensions), "regular" contributions may still be withdrawn
after that time if the IRA contribution for the tax year did not exceed $2,000
and no tax deduction was taken for the excess contribution; in that event, the
excess contribution would not be includable in gross income and would not be
subject to the 10% penalty tax. Lastly, excess "regular" contributions may also
be removed by underutilizing the allowable contribution limits for a later
year.
If excess rollover contributions are not withdrawn before the time for filing
the individual's Federal tax return for the year (including extensions) and the
excess contribution occurred as a result of incorrect information provided by
the plan, any such excess amount can be withdrawn if no tax deduction was taken
for the excess contribution. As above, excess rollover contributions withdrawn
under those circumstances would not be includable in gross income and would not
be subject to the 10% penalty tax.
Tax-Free Transfers and Rollovers
Rollover contributions may be made to an IRA from these sources: (i) qualified
plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii) other
individual retirement arrangements.
The rollover amount must be transferred to the Certificate either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within
60 days of the date the proceeds from another individual retirement arrangement
or an eligible rollover distribution from a qualified plan or TSA were
received. Generally the taxable portion of any distribution from a qualified
plan or TSA is an eligible rollover distribution and may be rolled over
tax-free to an IRA unless the distribution is (i) a required minimum
distribution under Section 401(a)(9) of the Code; or (ii) one of a series of
substantially equal periodic payments made (not less frequently than annually)
(a) for the life (or life expectancy) of the plan participant or the joint
lives (or joint life expectancies) of the plan participant and his or her
designated beneficiary, or (b) for a specified period of ten years or more.
Under some circumstances, amounts from a Certificate may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" IRA treatment, the
source of funds used to establish the IRA must be a rollover contribution from
the qualified plan and the entire amount received from the IRA (including any
earnings on the rollover contribution) must be rolled over into another
qualified plan within 60 days of the date received. Similar rules apply in the
case of a TSA. If you make a contribution to the Certificate which is from an
eligible rollover distribution and you commingle such contribution with other
contributions, you may not be able to roll over these eligible rollover
distribution contributions and earnings to another qualified plan (or TSA, as
the case may be) at a future date, unless the Code permits.
Under the conditions and limitations of the Code, an individual may elect for
each IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers and
can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Certificate
and rolled over into other individual retirement arrangements unless the
distribution was received under an inherited IRA. Tax-free rollovers are also
available to the surviving spouse beneficiary of a deceased individual, or a
spousal alternate payee of a qualified domestic relations order applicable to a
qualified plan. In some cases, IRAs can be transferred on a tax-free basis
between spouses or former spouses incidental to a judicial decree of divorce or
separation.
Distributions from IRA Certificates
Income or gains on contributions under IRAs are not subject to Federal income
tax until benefits are distributed to the individual. Distributions include
withdrawals from your Certificate, surrender of your Certificate and annuity
payments from your Certificate. Death benefits are also distributions. Except
as discussed below, the amount of any distribution from an IRA is fully
includable as ordinary income by the individual in gross income.
If the individual has made non-deductible IRA contributions, those
contributions are recovered tax-free when distributions are received. The
individual must keep records of all nondeductible contributions. At the end of
each tax year in which the individual has received a distribution, the
individual determines a ratio of the total nondeductible IRA contributions
(less any amounts previously withdrawn tax-free) to the total account balances
of all IRAs held by the individual at the end of the tax year (including
rollover IRAs) plus all IRA distributions made during such tax year. The
resulting ratio is then multiplied by all distributions from the IRA during
that tax year to determine the nontaxable portion of each distribution.
In addition, a distribution (other than a required minimum distribution
received after age 70 1/2) is not
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taxable if (1) the amount received is a return of excess contributions which
are withdrawn, as described under "Excess Contributions" above, (2) the entire
amount received is rolled over to another individual retirement arrangement
(see "Tax-Free Transfers and Rollovers" above) or (3) in certain limited
circumstances, where the IRA acts as a "conduit," the entire amount is paid
into a qualified plan or TSA that permits rollover contributions.
Distributions from an IRA are not entitled to the special favorable five-year
averaging method (or, in certain cases, favorable ten-year averaging and
long-term capital gain treatment) available in certain cases to distributions
from qualified plans.
Required Minimum Distributions
The minimum distribution rules require IRA owners to start taking annual
distributions from their retirement plans by age 70 1/2. The distribution
requirements are designed to provide for distribution of the owner's interest
in the IRA over the owner's life expectancy. Whether the correct amount has
been distributed is calculated on a year by year basis; there are no provisions
in the Code to allow amounts taken in excess of the required amount to be
carried over or carried back and credited to other years.
Generally, an individual must take the first required minimum distribution with
respect to the calendar year in which the individual turns age 70 1/2. The
individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2, or to delay taking it
until the three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date," which
is the April 1st of the calendar year following the calendar year in which the
individual turns age 70 1/2.) If the individual chooses to delay taking the
first annual minimum distribution, then the individual will have to take two
minimum distributions in that year--the delayed one for the first year and the
one actually for that year. Once minimum distributions begin, they must be made
at some time every year.
There are two approaches to taking minimum distributions--"account based" or
"annuity based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
An account based minimum distribution approach may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. An annuity based approach involves application of
the Annuity Account Value to an annuity for the life of the individual or the
joint lives of the individual and a designated beneficiary, or for a period
certain not extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options are
best for your own personal situation. Individuals who are participants in more
than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Your required minimum distribution for any taxable year is calculated by taking
into account the required minimum distribution from each of your individual
retirement arrangements. The IRS, however, does not require that you make the
required distribution from each individual retirement arrangement that you
maintain. As long as the total amount distributed annually satisfies your
overall minimum distribution requirement, you may choose to take your annual
required distribution from any one or more individual retirement arrangements
that you maintain.
An individual may recompute his or her minimum distribution amount each year
based on the individual's current life expectancy as well as that of the
spouse. No recomputation is permitted, however, for a beneficiary other than a
spouse. If there is an insufficient distribution in any year, a 50% tax may be
imposed on the amount by which the minimum required to be distributed exceeds
the amount actually distributed. The penalty tax may be waived by the Secretary
of the Treasury in certain limited circumstances. Failure to have distributions
made as the Code and Treasury regulations require may result in
disqualification of your IRA. See "Tax Penalty for Insufficient Distributions"
below.
Except as described in the next sentence, if the individual dies after
distribution in the form of an annuity has begun, or after the Required
Beginning Date, payment of the remaining interest must be made at least as
rapidly as under the method used prior to the individual's death. (The IRS has
indicated that an exception to the rule that payment of the remaining interest
must be made at least as rapidly as under the method used prior to the
individual's death applies if the beneficiary of the IRA is the surviving
spouse. In some circumstances, the surviving spouse may elect to "make the IRA
his or her own" and halt distributions until he or she reaches age 70 1/2).
If an individual dies before the Required Beginning Date and before
distributions in the form of an
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annuity begin, distributions of the individual's entire interest under the
Certificate must be completed within five years after death, unless payments to
a designated beneficiary begin within one year of the individual's death and
are made over the beneficiary's life or over a period certain which does not
extend beyond the beneficiary's life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay the
commencement of such payments up until the individual would have attained
70 1/2. In the alternative, a surviving spouse may elect to roll over the
inherited IRA into the surviving spouse's own IRA.
Taxation of Death Benefits
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if distribution had been made to
the individual.
If you elect to have your spouse be the sole primary beneficiary and to be the
successor Annuitant and Certificate Owner, then your surviving spouse
automatically becomes both the successor Certificate Owner and Annuitant, and
no death benefit is payable until the surviving spouse's death.
Guaranteed Minimum Death Benefit
The Code provides that no part of an individual retirement account may be
invested in life insurance contracts. Treasury Regulations provide that an
individual retirement account may be invested in an annuity contract which
provides a death benefit of the greater of premiums paid or the contract's cash
value. Your Certificate provides a minimum death benefit guarantee that in
certain circumstances may be greater than either of contributions made or the
Annuity Account Value. Although there is no ruling regarding the type of
minimum death benefit guarantee provided by the Certificate, Equitable Life
believes that the Certificate's minimum death benefit guarantee should not
adversely affect the qualification of the Certificate as an IRA. Nevertheless,
it is possible that the IRS could disagree, or take the position that some
portion of the charge in the Certificate for the minimum death benefit
guarantee should be treated for Federal income tax purposes as a taxable
partial withdrawal from the Certificate. If this were so, such a deemed
withdrawal would also be subject to tax penalty for Certificate Owners under
age 59 1/2.
Tax Considerations for the Income Manager Assured Payment Option and APO Plus
Although the Life Contingent Annuity does not have a Cash Value, it will be
assigned a value for tax purposes which will generally change each year. This
value must be taken into account when determining the amount of required
minimum distributions from your IRA even though the Life Contingent Annuity may
not be providing a source of funds to satisfy such required minimum
distribution. Accordingly, before you apply any IRA funds under the Assured
Payment Option or APO Plus or terminate such Options, you should be aware of
the tax considerations discussed below. Consult with your tax adviser to
determine the impact of electing the Assured Payment Option and APO Plus in
view of your own particular situation.
When funds have been allocated to the Life Contingent Annuity, you will
generally be required to determine your required minimum distribution by
annually recalculating your life expectancy. The Assured Payment Option and APO
Plus will not be available if you have previously made a different election.
Recalculation is no longer required once the only payments you or your spouse
receive are under the Life Contingent Annuity.
If prior to the date payments are to start under the Life Contingent Annuity,
you surrender your Certificate, or withdraw any remaining Annuity Account
Value, it may be necessary for you to satisfy your required minimum
distribution by accelerating the start date of payments for your Life
Contingent Annuity, or to the extent available, take distributions from other
IRA funds you may have. Alternatively you may convert your IRA Life Contingent
Annuity under the IRA Rollover to a non-qualifed Life Contingent Annuity. This
would be viewed as a distribution of the value of the Life Contingent Annuity
from the IRA, and therefore, would be a taxable event. However, since the Life
Contingent Annuity would no longer be part of an IRA, its value would not have
to be taken into account in determining future required minimum distributions.
If you have elected a Joint and Survivor form of the Life Contingent Annuity,
the joint Annuitant must be your spouse. You must determine your required
minimum distribution by annually recalculating both your life expectancy and
your spouse's life expectancy. The Assured Payment Option and APO Plus will not
be available if you have previously made a different election. Recalculation is
no longer required once the only payments you or your spouse receive are under
the Life Contingent Annuity. The value of such an annuity will change in the
event of your death or the death of your spouse. For this reason, it is
important that we be informed if you or your spouse dies before the Life
Contingent Annuity has started payments so that a lower valuation can be made.
Otherwise a higher tax value may result in an overstatement of the amount that
would be necessary to satisfy your required minimum distribution amount.
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Allocations of funds to the Life Contingent Annuity may prevent the
Certificate from later receiving "conduit" IRA treatment. See "Tax-Free
Transfers and Rollovers" above.
Prohibited Transaction
An IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the tax year in which
the event occurred. If this happens, the individual must include in Federal
gross income for that year an amount equal to the fair market value of the IRA
Certificate as of the first day of that tax year, less the amount of any
nondeductible contributions not previously withdrawn. Also, the early
distribution penalty tax of 10% will apply if the individual has not reached
age 59 1/2 before the first day of that tax year. See "Penalty Tax on Early
Distributions" below.
PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of IRA distributions will be subject to a 10% penalty tax
unless the distribution is made (1) on or after your death, (2) because you
have become disabled, (3) on or after the date when you reach age 59 1/2, or
(4) in accordance with the exception outlined below if you are under 59 1/2.
Also not subject to penalty tax are IRA distributions used to pay certain
extraordinary medical expenses or medical insurance premiums for defined
unemployed individuals.
A payout over your life or life expectancy (or joint and survivor lives or life
expectancies), which is part of a series of substantially equal periodic
payments made at least annually, is also not subject to penalty tax. To permit
you to meet this exception, Equitable Life has two options: Substantially Equal
Payment Withdrawals and the Assured Payment Option with level payments, both of
which are described in Part 4. If you are a Rollover IRA Certificate Owner who
will be under age 59 1/2 as of the date the first payment is expected to be
received and you choose either option, Equitable Life will calculate the
substantially equal annual payments under a method we will select based on
guidelines issued by the IRS (currently contained in IRS Notice 89-25, Question
and Answer 12). Although Substantially Equal Payment Withdrawals and Assured
Payment Option level payments are not subject to the 10% penalty tax, they are
taxable as discussed in "Distributions from IRA Certificates," above. Once
Substantially Equal Payment Withdrawals or Assured Payment Option level
payments begin, the distributions should not be stopped or changed until the
later of your attaining age 59 1/2 or five years after the date of the first
distribution, or the penalty tax, including an interest charge for the prior
penalty avoidance, may apply to all withdrawals. Also, it is possible that the
IRS could view any additional withdrawal or payment you take from your
Certificate as changing your pattern of Substantially Equal Payment Withdrawals
or IRA Assured Payment Option payments for purposes of determining whether the
penalty applies.
Where a taxpayer under age 59 1/2 purchases an individual retirement annuity
contract calling for substantially equal periodic payments during a fixed
period, continuing afterwards under a joint life contingent annuity with a
reduced payment to the survivor (e.g., a joint and 50% to survivor), the
question might be raised whether payments will not be substantially equal for
the joint lives of the taxpayer and survivor, as the payments will be reduced
at some point. In issuing our information returns, we code the substantially
equal periodic payments from such a contract as eligible for an exception from
the early distribution penalty. We believe that any change in payments to the
survivor would come within the statutory provision covering change of payments
on account of death. As there is no direct authority on this point, however, if
you are under age 59 1/2, you should discuss this item with your own tax
adviser when electing a reduced survivorship option.
TAX PENALTY FOR INSUFFICIENT
DISTRIBUTIONS
Failure to make required distributions discussed above in "Required Minimum
Distributions" may cause the disqualification of the IRA. Disqualification may
result in current taxation of your entire benefit. In addition a 50% penalty
tax may be imposed on the difference between the required distribution amount
and the amount actually distributed, if any.
We do not automatically make distributions from a Certificate before the
Annuity Commencement Date unless a request has been made. It is your
responsibility to comply with the minimum distribution rules. We will notify
you when our records show that your age 70 1/2 is approaching. If you do not
select a method, we will assume you are taking your minimum distribution from
another IRA that you maintain. You should consult with your tax adviser
concerning these rules and their proper application to your situation.
TAX PENALTY FOR EXCESS DISTRIBUTIONS OR ACCUMULATION
A 15% excise tax is imposed on an individual's aggregate excess distributions
from all tax-favored
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retirement plans. The excise tax is in addition to the ordinary income tax due,
but is reduced by the amount (if any) of the early distribution penalty tax
imposed by the Code. This tax is temporarily suspended for distributions to the
individual for the years 1997, 1998 and 1999. However, the excise tax continues
to apply for estate tax purposes. In certain cases the estate tax imposed on a
deceased individual's estate will be increased if the accumulated value of the
individual's interest in tax-favored retirement plans is excessive. The
aggregate accumulations will be subject to excise tax in 1997 if they exceed
the present value of a hypothetical life annuity paying $160,000 a year.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax from IRA
distributions, unless the recipient elects not to be subject to income tax
withholding. The rate of withholding will depend on the type of distribution
and, in certain cases, the amount of the distribution. Special withholding
rules apply to foreign recipients and United States citizens residing outside
the United States. If a recipient does not have sufficient income tax withheld
or does not make sufficient estimated income tax payments, however, the
recipient may incur penalties under the estimated income tax rules. Recipients
should consult their tax advisers to determine whether they should elect out of
withholding. Requests not to withhold Federal income tax must be made in
writing prior to receiving benefits under the Certificate. Our Processing
Office will provide forms for this purpose. No election out of withholding is
valid unless the recipient provides us with the correct taxpayer identification
number and a United States residence address.
Certain states have indicated that income tax withholding will apply to
payments made from the Certificates to residents. In some states, a recipient
may elect out of state withholding. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. If
you need more information concerning a particular state or any required forms,
call our Processing Office at the toll-free number and consult your tax
adviser.
Periodic payments are generally subject to wage-bracket type withholding (as if
such payments were payments of wages by an employer to an employee) unless the
recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and claiming
three withholding exemptions. There is an annual threshold of taxable income
from periodic annuity payments which is exempt from withholding based on this
assumption. For 1997, a recipient of periodic payments (e.g., monthly or annual
payments) which total less than a $14,400 taxable amount will generally be
exempt from Federal income tax withholding, unless the recipient specifies a
different choice of withholding exemptions. A withholding election may be
revoked at any time and remains effective until revoked. If a recipient fails
to provide a correct taxpayer identification number, withholding is made as if
the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally be
subject to withholding at a flat 10% rate. A recipient who provides a United
States residence address and a correct taxpayer identification number will
generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make withholding
elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than the Certificate Owner, a Federal generation skipping
tax may be payable with respect to the benefit at rates similar to the maximum
estate tax rate in effect at the time. The generation skipping tax provisions
generally apply to transfers which would also be subject to the gift and estate
tax rules. Individuals are generally allowed an aggregate generation skipping
tax exemption of $1 million. Because these rules are complex, you should
consult with your tax adviser for specific information, especially where
benefits are passing to younger generations, as opposed to a spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account
for taxes. Equitable Life can set up reserves for such taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers among the Investment Funds or between the Guaranteed Period Account
and one or more Investment Funds are not taxable.
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TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities and individual retirement arrangements. In addition, the
Treasury Department may amend existing regulations, issue new regulations, or
adopt new interpretations of existing laws. State tax laws or, if you are not a
United States resident, foreign tax laws, may affect the tax consequences to
you or the beneficiary. These laws may change from time to time without notice
and, as a result, the tax consequences may be altered. There is no way of
predicting whether, when or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
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PART 8: INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life at December 31, 1996 and 1995 and for each of the
three years in the period ended December 31, 1996 included in Equitable Life's
Annual Report on Form 10-K, incorporated by reference in the prospectus, have
been examined by Price Waterhouse LLP, independent accountants, whose reports
thereon are incorporated herein by reference. Such consolidated financial
statements and consolidated financial statement schedules have been
incorporated herein by reference in reliance upon the reports of Price
Waterhouse LLP given upon their authority as experts in accounting and
auditing.
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PART 9: INVESTMENT PERFORMANCE
This Part presents performance data for each of the Investment Funds included
in the tables below. The performance data were calculated by two methods. The
first method presented in the tables under "Standardized Performance Data,"
reflects all applicable fees and charges including the combined Guaranteed
Minimum Death Benefit/Guaranteed Minimum Income Benefit benefit charge, but
not the charge for tax such as premium taxes.
The second method presented in the tables under "Rate of Return Data for
Investment Funds," also reflects all applicable fees and charges, but does not
reflect the withdrawal charge, the combined Guaranteed Minimum Death Benefit
and Guaranteed Minimum Income Benefit benefit charge, or the charge for tax
such as premium taxes. These additional charges would effectively reduce the
rates of return credited to a particular Certificate.
HR Trust Portfolios
The performance data shown below for the Investment Funds investing in Class IB
shares or HR Trust Portfolios (other than the Alliance Small Cap Growth
Portfolio which commenced operations on May 1, 1997), and have been adjusted
for the fees and charges applicable under the Certificates. However, for the
Alliance Growth & Income, Alliance International, Alliance Conservative
Investors and Alliance Intermediate Government Securities Portfolios (under
which Class IB shares were not available prior to the date of this prospectus)
and for the other Portfolios prior to October 1996, when Class IB shares were
not available for under such Portfolios, do not reflect 12b-1 fees, which would
effectively reduce such investment performance.
The performance data for the Alliance Money Market and Common Stock Investment
Funds that invest in corresponding HR Trust Portfolios, for periods prior to
March 22, 1985, reflect the investment results of two open-end management
separate accounts (the "predecessor separate accounts") which were reorganized
in unit investment trust form. The "Since Inception" figures for these
Investment Funds are based on the date of inception of the predecessor separate
accounts. These performance data have been adjusted to reflect the maximum
investment advisory fee payable for the corresponding Portfolio of HR Trust, as
well as an assumed charge of 0.06% for direct operating expenses.
EQ Trust Portfolios
The Investment Funds of the Separate Account that invest in Class IB shares of
Portfolios of EQ Trust have only recently been established and no Certificates
funded by those Investment Funds have been issued as of the date of this
Prospectus. EQ Trust commenced operations on May 1, 1997. Therefore, no actual
performance data for any of these Portfolios are available. In this connection,
see the discussion immediately following the tables below.
See "Part 2: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
STANDARDIZED PERFORMANCE DATA
The standardized performance data in the following tables illustrate the
average annual total return of the Investment Funds over the periods shown,
assuming a single initial contribution of $1,000 and the surrender of the
Certificate at the end of each period. These tables (which reflect the first
calculation method described above) are prepared in a manner prescribed by the
SEC for use when we advertise the performance of the Separate Account. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
Each calculation assumes that the $1,000 contribution was allocated to only one
Investment Fund, no transfers or subsequent contributions were made and no
amounts were allocated to any other Investment Option under the Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of a
Certificate which is surrendered on December 31, 1996 by the $1,000
contribution made at the beginning of each period illustrated. The result of
that calculation is the total growth rate for the period. Then we annualize
that growth rate to obtain the average annual percentage increase (decrease)
during the period shown. When we "annualize," we assume that a single rate of
return applied each year during the period will produce the ending value,
taking into account the effect of compounding.
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STANDARDIZED PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION*
- ------------------------------------- -------- ------- ------- -------- ------------
<S> <C> <C> <C> <C> <C>
HR TRUST
- ----------
Alliance Conservative Investors -3.01% 3.61% 5.20% -- 6.60%
Alliance Growth Investors 4.24 8.24 8.65 -- 12.44
Alliance Growth & Income 11.70 11.01 -- -- 8.04
Alliance Common Stock 15.76 14.24 13.64 14.14% 13.57
Alliance Global 6.20 9.72 11.42 -- 9.26
Alliance International 1.54 -- -- -- 13.25
Alliance Aggressive Stock 13.71 12.66 9.70 16.91 18.36
Alliance Money Market -2.95 1.89 2.15 4.23 5.43
Alliance Intermediate Govt.
Securities -4.43 0.85 3.47 -- 4.85
Alliance High Yield 14.39 9.69 12.59 -- 9.69
Alliance Equity Index 13.97 -- -- -- 16.42
</TABLE>
The table below illustrates the growth of an assumed investment of $1,000, with
fees and charges deducted on the standardized basis described above for the
first method of calculation.
STANDARDIZED PERFORMANCE DATA
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION*
- ------------------------------------- ------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
HR TRUST
- ----------
Alliance Conservative Investors $ 970 $1,112 $1,288 -- $ 1,668
Alliance Growth Investors 1,042 1,268 1,514 -- 2,555
Alliance Growth & Income 1,117 1,368 -- -- 1,362
Alliance Common Stock 1,158 1,491 1,895 $3,752 14,485
Alliance Global 1,062 1,321 1,717 -- 2,424
Alliance International 1,015 -- -- -- 1,132
Alliance Aggressive Stock 1,137 1,430 1,589 4,770 6,388
Alliance Money Market 971 1,058 1,112 1,514 2,332
Alliance Intermediate Govt.
Securities 956 1,026 1,186 -- 1,328
Alliance High Yield 1,144 1,320 1,809 -- 2,522
Alliance Equity Index 1,140 -- -- -- 1,578
</TABLE>
- ------------
* For all the Portfolios of HR Trust other than the Alliance Equity Index,
the tables reflect the withdrawal charge and charges under a Certificate
with the 0.45% Combined Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit charge. The values shown for the Alliance Equity
Index Portfolio reflect the withdrawal charge and charges under a
Certificate with the 0.20% Guaranteed Minimum Death Benefit Only Benefit
charge.
** The "Since Inception" dates for the Portfolios of HR Trust are as follows:
Alliance Conservative Investors (October 2, 1989); Alliance Growth
Investors (October 2, 1989); Alliance Growth & Income (October 1, 1993);
Alliance Common Stock (January 13, 1976); Alliance Global (August 27,
1987); Alliance International (April 3, 1995); Alliance Aggressive Stock
(January 27, 1986); Alliance Money Market (July 13, 1981); and Alliance
Intermediate Government Securities (April 1, 1991); and Alliance High Yield
(January 2, 1987).
<PAGE>
Additional investment performance information appears in the attached HR Trust
and EQ Trust prospectuses.
The Alliance Small Cap Growth Portfolio of HR Trust commenced operations on May
1, 1997. Therefore, no actual historical performance data are available.
However, historical performance of a composite of six other advisory accounts
managed by Alliance is described in the attached HR Trust prospectus. According
to that prospectus, these accounts have substantially the same investment
objectives and policies, and are managed in accordance with essentially the
same investment strategies and techniques, as those of the Alliance Small Cap
Growth Portfolio. It should be noted that these accounts are not subject to
certain of the requirements and restrictions to which the Alliance Small Cap
Growth Portfolio is subject and that they are managed for
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tax exempt clients of Alliance, who may have different investment goals. The
investment performance information included in the HR Trust prospectus for all
Portfolios other than the Alliance Small Cap Portfolio is based on actual
historical performance.
The investment performance data for HR Trust's Alliance Small Cap Portfolio and
for each of the Portfolios of EQ Trust, contained in the HR Trust and the EQ
Trust prospectuses, are provided by those prospectuses to illustrate the past
performance of each respective Portfolio advisor in managing a substantially
similar investment vehicles as measured against specified market indices and do
not represent the past or future performance of any Portfolio. None of the
performance data contained in the HR Trust and EQ Trust prospectuses reflects
fees and charges imposed under your Certificate, which fees and charges would
reduce such performance figures. Therefore, the performance data for each of
the Portfolios described in the EQ Trust prospectus and for the Alliance Small
Cap Portfolio in the HR Trust propsectus may be of limited use and are not
intended to be a substitute for actual performance of the corresponding
Portfolios, nor are such results an estimate or guarantee of future performance
for these Portfolios.
RATE OF RETURN DATA FOR INVESTMENT FUNDS
The following tables (which reflect the second calculation method described
above) provide you with information on rates of return on an annualized,
cumulative and year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of return
reflect performance over a stated period of time. Annualized rates of return
represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality and
expense risks charge and the administration charge or any withdrawal charge
under the Certificates. Comparisons with these benchmarks, therefore, are of
limited use. We include them because they are widely known and may help you to
understand the universe of securities from which each Portfolio is likely to
select its holdings. Benchmark data reflect the reinvestment of dividend
income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
ALLIANCE CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond
Composite Index and 30% Standard & Poor's 500 Index.
ALLIANCE GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate
Bond Index and 70% Standard & Poor's 500 Index.
ALLIANCE GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index
and 25% Value Line Convertible Index.
ALLIANCE COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
ALLIANCE GLOBAL: August 27, 1987; Morgan Stanley Capital International World
Index.
ALLIANCE INTERNATIONAL: April 3, 1995; Morgan Stanley Capital International
Europe, Australia, Far East Index.
ALLIANCE AGGRESSIVE STOCK: January 27, 1986; 50% Standard & Poor's Mid-Cap
Total Return Index and 50% Russell 2000 Small Stock Index.
ALLIANCE EQUITY INDEX: [to be inserted by amendment]
ALLIANCE MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill
Index.
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman
Intermediate Government Bond Index.
ALLIANCE HIGH YIELD: January 2, 1987; Merrill Lynch Master High Yield.
ALLIANCE EQUITY INDEX FUND: March 1, 1994; Standard & Poor's 500 Index.
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity products,
including managed separate accounts of insurance companies. According to Lipper
Analytical Services, Inc., the data are presented net of investment management
fees, direct operating expenses and asset-based charges applicable under
annuity contracts. Lipper data provide a more accurate picture than market
benchmarks of the Rollover IRA performance relative to other variable annuity
products.
52
<PAGE>
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
-------- --------- ---------
<S> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 5.47% 6.08%
Lipper Income 8.95 8.91 9.55
Benchmark 8.78 10.14 9.64
ALLIANCE GROWTH INVESTORS 11.24 9.98 9.47
Lipper Flexible
Portfolio 12.51 9.26 9.30
Benchmark 16.94 15.84 13.02
ALLIANCE GROWTH & INCOME 18.70 12.69 --
Lipper Growth & Income 19.96 15.39 --
Benchmark 21.28 17.93 --
ALLIANCE COMMON STOCK 22.76 15.85 14.38
Lipper Growth 18.78 14.80 12.39
Benchmark 22.96 19.66 15.20
ALLIANCE GLOBAL 13.20 11.42 12.18
Lipper Global 17.89 8.49 10.29
Benchmark 13.48 12.91 10.82
ALLIANCE INTERNATIONAL 8.54 -- --
Lipper International 13.36 -- --
Benchmark 6.05 -- --
ALLIANCE AGGRESSIVE STOCK 20.71 14.31 10.53
Lipper Small Company
Growth 16.55 12.70 17.53
Benchmark 17.85 14.14 14.80
ALLIANCE MONEY MARKET 4.05 3.80 3.11
Lipper Money Market 3.82 3.60 2.93
Benchmark 5.25 5.07 4.37
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 2.57 2.80 4.38
Lipper Gen. U.S.
Government 1.57 3.99 5.21
Benchmark 4.06 5.37 6.23
ALLIANCE HIGH YIELD 21.39 11.41 13.32
Lipper
High Current Yield 12.46 7.93 11.47
Benchmark 11.06 9.59 12.76
ALLIANCE EQUITY INDEX 20.97 -- --
Lipper S&P Index 21.10 -- --
--
Benchmark 22.96 --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SINCE
10 YEARS 15 YEARS 20 YEARS INCEPTION
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS -- -- -- 7.77%
Lipper Income -- -- -- 9.55
Benchmark -- -- -- 10.42
ALLIANCE GROWTH INVESTORS -- -- -- 14.22
Lipper Flexible
Portfolio -- -- -- 9.99
Benchmark -- -- -- 12.73
ALLIANCE GROWTH & INCOME -- -- -- 11.47
Lipper Growth & Income -- -- -- 14.78
Benchmark -- -- -- 17.24
ALLIANCE COMMON STOCK 14.48% 15.16% 14.16% 13.90
Lipper Growth 13.08 14.04 13.60 13.42
Benchmark 15.28 16.79 14.55 14.63
ALLIANCE GLOBAL -- -- -- 10.42
Lipper Global -- -- -- 3.65
Benchmark -- -- -- 7.44
ALLIANCE INTERNATIONAL -- -- -- 10.90
Lipper International -- -- -- 14.33
Benchmark -- -- -- 8.74
ALLIANCE AGGRESSIVE STOCK 17.23 -- -- 18.79
Lipper Small Company
Growth 16.29 -- -- 16.47
Benchmark 14.29 -- -- 13.98
ALLIANCE MONEY MARKET 4.68 5.87 -- 6.07
Lipper Money Market 4.52 5.72 -- 5.89
Benchmark 5.67 6.72 -- 6.97
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES -- -- -- 5.75
Lipper Gen. U.S.
Government -- -- -- 6.76
Benchmark -- -- -- 7.43
ALLIANCE HIGH YIELD -- -- -- 10.13
Lipper
High Current Yield -- -- -- 9.13
Benchmark -- -- -- 11.24
ALLIANCE EQUITY INDEX -- -- -- 18.92
Lipper S&P Index -- -- -- 18.87
Benchmark -- -- -- 20.90
</TABLE>
53
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
-------- --------- ---------
<S> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 17.34% 34.32%
Lipper Income 8.95 29.47 58.37
Benchmark 8.78 33.60 58.40
ALLIANCE GROWTH INVESTORS 11.24 33.03 57.18
Lipper Flexible
Portfolio 12.51 30.84 56.65
Benchmark 16.94 55.46 84.42
ALLIANCE GROWTH & INCOME 18.70 43.09 --
Lipper Growth & Income 19.96 53.82 --
Benchmark 21.28 63.99 --
ALLIANCE COMMON STOCK 22.76 55.49 95.76
Lipper Growth 18.78 51.65 80.51
Benchmark 22.96 71.34 102.85
ALLIANCE GLOBAL 13.20 38.31 77.66
Lipper Global 17.89 28.45 63.87
Benchmark 13.48 43.95 67.12
ALLIANCE INTERNATIONAL 8.54 -- --
Lipper International 13.36 -- --
Benchmark 6.05 -- --
ALLIANCE AGGRESSIVE STOCK 20.71 49.35 64.99
Lipper Small Company
Growth 16.55 43.42 142.70
Benchmark 17.85 48.69 99.38
ALLIANCE MONEY MARKET 4.05 11.83 16.52
Lipper Money Market 3.82 11.18 15.58
Benchmark 5.25 15.99 23.86
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57 8.63 23.89
Lipper Gen. U.S.
Government 1.57 12.45 28.92
Benchmark 4.06 16.98 35.30
ALLIANCE HIGH YIELD 21.39 38.28 86.89
Lipper High
Current Yield 12.46 25.77 72.39
Benchmark 11.06 31.63 82.29
ALLIANCE EQUITY INDEX 20.97 -- --
Lipper S&P Index 21.10 -- --
Benchmark 22.96 -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SINCE
10 YEARS 15 YEARS 20 YEARS INCEPTION
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS -- -- -- 72.02%
Lipper Income -- -- -- 94.21
Benchmark -- -- -- 105.23
ALLIANCE GROWTH INVESTORS -- -- -- 162.01
Lipper Flexible
Portfolio -- -- -- 100.79
Benchmark -- -- -- 138.49
ALLIANCE GROWTH & INCOME -- -- -- 42.30
Lipper Growth & Income -- -- -- 56.73
Benchmark -- -- -- 67.75
ALLIANCE COMMON STOCK 286.77% 731.08% 1,313.81% 1,429.67
Lipper Growth 243.70 627.03 1,185.21 1,298.19
Benchmark 314.34 925.25 1,416.26 1,655.74
ALLIANCE GLOBAL -- -- -- 152.53
Lipper Global -- -- -- 39.73
Benchmark -- -- -- 95.62
ALLIANCE INTERNATIONAL -- -- -- 19.76
Lipper International -- -- -- 26.53
Benchmark -- -- -- 15.78
ALLIANCE AGGRESSIVE STOCK 390.16 -- -- 556.01
Lipper Small Company
Growth 352.31 -- -- 428.32
Benchmark 280.32 -- -- 318.19
ALLIANCE MONEY MARKET 57.94 135.33 -- 148.77
Lipper Money Market 55.73 130.46 -- 141.99
Benchmark 73.61 165.31 -- 184.26
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- 37.89
Lipper Gen. U.S.
Government -- -- -- 45.71
Benchmark -- -- -- 51.07
ALLIANCE HIGH YIELD -- -- -- 162.22
Lipper High
Current Yield -- -- -- 142.30
Benchmark -- -- -- 190.43
ALLIANCE EQUITY INDEX -- -- -- 63.39
Lipper S&P Index -- -- -- 63.19
Benchmark -- -- -- 71.28
</TABLE>
54
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
--------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS -- -- -- -- -- 2.79%
ALLIANCE GROWTH
INVESTORS -- -- -- -- -- 3.53
ALLIANCE GROWTH
& INCOME -- -- -- -- -- --
ALLIANCE COMMON
STOCK** (3.09)% 31.90% 16.02% 6.21% 21.03% 24.16
ALLIANCE GLOBAL -- -- -- (13.62) 9.61 25.29
ALLIANCE
INTERNATIONAL -- -- -- -- -- --
ALLIANCE
AGGRESSIVE
STOCK -- -- 33.83 6.06 (0.03) 41.86
ALLIANCE MONEY
MARKET** 9.59 7.22 5.39 5.41 6.09 7.93
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- -- -- --
ALLIANCE HIGH
YIELD -- -- -- 3.49 8.48 3.93
ALLIANCE EQUITY
INDEX -- -- -- -- -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02% 3.99%
ALLIANCE GROWTH
INVESTORS 9.39 47.19 3.69 13.95 (4.27) 24.92 11.24
ALLIANCE GROWTH
& INCOME -- -- -- (0.55) (1.72) 22.65 18.70
ALLIANCE COMMON
STOCK** (9.17) 36.30 2.03 23.29 (3.26) 30.93 22.76
ALLIANCE GLOBAL (7.15) 29.06 (1.65) 30.60 4.02 17.45 13.20
ALLIANCE
INTERNATIONAL -- -- -- -- -- 10.34 8.54
ALLIANCE
AGGRESSIVE
STOCK 6.92 84.73 (4.28) 15.41 (4.92) 30.13 20.71
ALLIANCE MONEY
MARKET** 6.99 4.97 2.37 1.78 2.82 4.53 4.05
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- 11.30 4.38 9.27 (5.47) 12.03 2.57
ALLIANCE HIGH
YIELD (2.26) 23.03 11.02 21.74 (3.90) 18.54 21.39
ALLIANCE EQUITY
INDEX -- -- -- -- 0.11 34.92 20.97
</TABLE>
- ------------
* Returns do not reflect the withdrawal charge, the Combined GMDB/GMIB
Benefit charge and any charge for tax such as premium taxes.
** Prior to 1984 the Year-by-Year Rates of Return were:
<TABLE>
<CAPTION>
1976 1977 1978 1979 1980 1981 1982 1983
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE
COMMON STOCK 9.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22% 24.67%
ALLIANCE MONEY
MARKET -- -- -- -- -- 5.71 11.72 7.70
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may describe
general economic and market conditions affecting the Separate Account and each
respective trust and may present the performance of the Investment Funds or
compare it (1) that of other insurance company separate accounts or mutual
funds included in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS 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 which are shown under "Benchmarks" and "Portfolio Inception Dates and
Comparative Benchmarks" in this Part 2, or (3) data developed by us derived
from such indices or averages. The Morningstar Variable Annuity/Life Report
consists of nearly 700 variable life and annuity funds, all of which report
their data net of investment management fees, direct operating expenses and
separate account charges. VARDS is a monthly reporting service that monitors
approximately 760 variable life and variable annuity funds on performance and
account information. Advertisements or other communications furnished to
present or prospective Certificate Owners may also include evaluations of an
Investment Fund or Portfolio by financial publications that are nationally
recognized such as Barron's, Morningstar's Variable Annuity Sourcebook,
Business Week, Chicago Tribune, Forbes, Fortune, Institutional Investor,
Investment Adviser, Investment Dealer's Digest, Investment Management Weekly,
Los Angeles Times, Money, Money Management Letter, Kiplinger's Personal
Finance, Financial Planning, National Underwriter, Pension & Investments, USA
Today, Investor's Daily, The New York Times, and The Wall Street Journal.
ALLIANCE MONEY MARKET FUND AND ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES
FUND YIELD INFORMATION
The current yield and effective yield of the Alliance Money Market Fund and
Alliance Intermediate Government Securities Fund may appear in reports and
promotional material to current or prospective Certificate Owners.
Alliance Money Market Fund
Current yield for the Alliance Money Market Fund will be based on net changes
in a hypothetical investment over a given seven-day period, exclusive of
capital changes, and then "annualized" (assuming that the same seven-day result
would occur each week for 52 weeks). "Effective yield" is calculated in
55
<PAGE>
a manner similar to that used to calculate current yield, but when annualized,
any income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings
are compounded weekly. Alliance Money Market Fund yields and effective yields
assume the deduction of all Certificate charges and expenses other than the
withdrawal charge, combined Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit benefit charge and any charge for tax such as premium
tax. The effective yields for the Alliance Money Market Fund when used for
Special Dollar Cost Averaging program, assume no Certificate charges are
deducted. See "Part 5: Alliance Money Market Fund and Alliance Intermediate
Government Securities Fund Yield Information" in the SAI.
Alliance Intermediate Government Securities Fund
Current yield for the Alliance Intermediate Government Securities Fund will be
based on net changes in a hypothetical investment over a given 30-day period,
exclusive of capital changes, and then "annualized" (assuming that the 30-day
result would occur each month for 12 months). "Effective yield" is calculated
in a manner similar to that used to calculate current yield, but when
annualized, any income earned by the investment is assumed to be reinvested.
The "effective yield" will be higher than the "current yield" because any
earnings are compounded monthly.
Alliance Intermediate Government Securities Fund yields and effective yields
assume the deduction of all Certificate charges and expenses other than the
withdrawal charge, combined Guaranteed Minimum Death Benefit/Guaranteed Minimum
Income Benefit benefit charge and any charge for tax such as premium tax. See
"Part 5: Alliance Money Market Fund and Alliance Intermediate Government
Securities Fund Yield Information" in the SAI.
56
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- -----------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined and
how it would be applied to a withdrawal, assuming that $100,000 were allocated
on February 15, 1998 to a Guarantee Period with an Expiration Date of February
15, 2007 at a Guaranteed Rate of 7.00% resulting in a Maturity Value at the
Expiration Date of $183,846, and further assuming that a withdrawal of $50,000
were made on February 15, 2002.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2002
---------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2002 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value................... $144,048 $119,487
(2) Guaranteed Period Amount................ 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ....... 12,968 (11,593)
On February 15, 2002 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000 / (1)] . $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)]............ 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ...... 85,581 76,229
(7) Maturity Value.......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value................... 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates have
increased (from 7.00% to 9.00% in the example), a portion of a negative market
value adjustment is realized. On the other hand, if a withdrawal is made when
rates have decreased (from 7.00% to 5.00% in the example), a portion of a
positive market value adjustment is realized.
57
<PAGE>
APPENDIX II: GUARANTEED MINIMUM DEATH BENEFIT EXAMPLE
- -----------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the Guaranteed Minimum Death Benefit (see "Guaranteed Minimum Death
Benefit" in Part 4); and
(2) the death benefit provided with respect to the Guaranteed Period
Account (see "Death Benefit Amount" in Part 3).
The following is an example illustrating the calculation of the Guaranteed
Minimum Death Benefit. Assuming $100,000 is allocated to the Investment Funds
(with no allocation to the Fixed Income Series), no subsequent contributions,
no transfers and no withdrawals, the Guaranteed Minimum Death Benefit for an
Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
NON-NEW YORK NEW YORK
END OF GUARANTEED GUARANTEED
CONTRACT ANNUITY MINIMUM MINIMUM
YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT
- ---------- --------------- ----------------- -----------------
<S> <C> <C> <C>
1 $105,000 $106,000 $105,000(2)
2 $115,500 $112,360 $115,500(2)
3 $132,825 $119,102 $132,825(2)
4 $106,260 $126,248 $132,825(3)
5 $116,886 $133,823 $132,825(3)
6 $140,263 $141,852 $140,263(2)
7 $140,263 $150,363 $140,263(3)
</TABLE>
The Annuity Account Values for Contract Years 1 through 8 are determined based
on hypothetical rates of return of 5.00%, 10.00%, 15.00%, 20.00%, 10.00%,
20.00% and 0.00%, respectively.
6% TO AGE 80 BENEFIT
(1) For Contract Years 1 through 7, the Guaranteed Minimum Death Benefit
equals the initial contribution increased by 6%.
NEW YORK
(2) At the end of Contract Years 1, 2, and 3 again at the end of Contract
Year 6, the Guaranteed Minimum Death Benefit is equal to the current
Annuity Account Value.
(3) At the end of Contract Years 4, 5 and 7, the Guaranteed Minimum Death
Benefit is equal to the Guaranteed Minimum Death Benefit at the end of
the prior year since it is equal to or higher than the current Annuity
Account Value.
58
<PAGE>
APPENDIX III: EXAMPLE OF PAYMENTS UNDER THE ASSURED PAYMENT
OPTION AND APO PLUS
- -----------------------------------------------------------------------------
The second column in the chart below illustrates the payments for a male age 70
who purchased the Assured Payment Option on April 15, 1997 with a single
contribution of $100,000, with increasing annual payments. The payments are to
commence on February 15, 1998. It assumes that the fixed period is 15 years and
that the Life Contingent Annuity will provide payments on a Single Life basis.
Based on Guaranteed Rates for the Guarantee Periods and the current purchase
rate for the Life Contingent Annuity, on April 15, 1997, the initial payment
would be $7,178.53 and would increase in each three year period to a final
payment of $10,510.08. The first payment under the Life Contingent Annuity
would be $11,561.09.
Alternatively as shown in the third and fourth columns, this individual could
purchase APO Plus with the same $100,000 contribution, with the same fixed
period and the Life Contingent Annuity on a Single Life basis. Assuming
election of the Alliance Common Stock Fund based on Guaranteed Rates for the
Guarantee Periods and the current purchase rate for the Life Contingent
Annuity, on April 15, 1997, the same initial payment of $7,178.53 would be
purchased under APO Plus. However, unlike the payment under the Assured Payment
Option that will increase every three years, this initial payment under APO
Plus is not guaranteed to increase. Therefore, only $79,640.00 is needed to
purchase the initial payment stream, and the remaining $20,360.00 is invested
in the Investment Funds. Any future increase in payments under APO Plus will
depend on the investment performance in the Alliance Common Stock Fund.
Assuming hypothetical average annual rates of return of 0% and 8% (after
deduction of charges) for the Investment Fund, the Annuity Account Value in the
Investment Fund would grow to $20,360.00 and $25,647.73 respectively after
three years. A portion of this amount is used to purchase the increase in the
payments at the beginning of the fourth year. The remainder will stay in the
Investment Fund to be drawn upon for the purchase of increases in payments at
the end of each third year thereafter during the fixed period and at the end of
the fixed period under the Life Contingent Annuity. Based on Guaranteed Rates
for the Guarantee Periods and purchase rates for the Life Contingent Annuity as
of April 15, 1997, the third and fourth columns illustrate the increasing
payments that would be purchased under APO Plus assuming 0% and 8% rates of
return respectively.
Under both options, while the Certificate Owner is living payments increase
annually after the 16th year under the Life Contingent Annuity based on the
increase, if any, in the Consumer Price Index, but in no event greater than 3%
per year.
ANNUAL PAYMENTS
<TABLE>
<CAPTION>
ILLUSTRATIVE ILLUSTRATIVE
GUARANTEED INCREASING PAYMENTS PAYMENTS PAYMENTS
UNDER THE UNDER UNDER
YEARS ASSURED PAYMENT OPTION APO PLUS AT 0% APO PLUS AT 8%
- ------- ------------------------------ -------------- --------------
<S> <C> <C> <C>
1-3 $ 7,178.53 $7,178.53 $ 7,178.53
4-6 7,896.38 7,380.16 7,754.69
7-9 8,686.02 7,732.40 8,553.00
10-12 9,554.62 8,084.63 9,367.45
13-15 10,510.08 8,399.11 10,151.22
16 11,561.09 8,626.70 10,839.98
</TABLE>
As described above, a portion of the illustrated contribution is applied to the
Life Contingent Annuity. This amount will generally be larger under the Assured
Payment Option than under APO Plus, and conversely a smaller portion of the
contribution will be allocated to Guarantee Periods under the former than the
latter. In this illustration, $81,843.99 is allocated under the Assured Payment
Option to the Guarantee Periods and under APO Plus, $89,778.56 is allocated to
the Guarantee Periods and the Investment Fund. The balance of the $100,000
($18,156.01 and $10,221.44, respectively) is applied to the Life Contingent
Annuity.
The rates of return of 0% and 8% are for illustrative purposes only and are not
intended to represent an expected or guaranteed rate of return. Your investment
results will vary. Payments will also depend on the Guaranteed Rates and Life
Contingent Annuity purchase rates in effect as of the Transaction Date. It is
assumed that no Lump Sum Withdrawals are taken.
59
<PAGE>
APPENDIX IV: IRS TAX DEDUCTION TABLE
- -----------------------------------------------------------------------------
If your Maximum Permissible Dollar Deduction is $2,000, use this table to
estimate the amount of your contribution which will be deductible.
<TABLE>
<CAPTION>
EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION
- ------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 $2,000 $2,550 $1,490 $5,050 $990 $ 7,550 $490
50 1,990 2,600 1,480 5,100 980 7,600 480
100 1,980 2,650 1,470 5,150 970 7,650 470
150 1,970 2,700 1,460 5,200 960 7,700 460
200 1,960 2,750 1,450 5,250 950 7,750 450
250 1,950 2,800 1,440 5,300 940 7,800 440
300 1,940 2,850 1,430 5,350 930 7,850 430
350 1,930 2,900 1,420 5,400 920 7,900 420
400 1,920 2,950 1,410 5,450 910 7,950 410
450 1,910 3,000 1,400 5,500 900 8,000 400
500 1,900 3,050 1,390 5,550 890 8,050 390
550 1,890 3,100 1,380 5,600 880 8,100 380
600 1,880 3,150 1,370 5,650 870 8,150 370
650 1,870 3,200 1,360 5,700 860 8,200 360
700 1,860 3,250 1,350 5,750 850 8,250 350
750 1,850 3,300 1,340 5,800 840 8,300 340
800 1,840 3,350 1,330 5,850 830 8,350 330
850 1,830 3,400 1,320 5,900 820 8,400 320
900 1,820 3,450 1,310 5,950 810 8,450 310
950 1,810 3,500 1,300 6,000 800 8,500 300
1,000 1,800 3,550 1,290 6,050 790 8,550 290
1,050 1,790 3,600 1,280 6,100 780 8,600 280
1,100 1,780 3,650 1,270 6,150 770 8,650 270
1,150 1,770 3,700 1,260 6,200 760 8,700 260
1,200 1,760 3,750 1,250 6,250 750 8,750 250
1,250 1,750 3,800 1,240 6,300 740 8,800 240
1,300 1,740 3,850 1,230 6,350 730 8,850 230
1,350 1,730 3,900 1,220 6,400 720 8,900 220
1,400 1,720 3,950 1,210 6,450 710 8,950 210
1,450 1,710 4,000 1,200 6,500 700 9,000 200
1,500 1,700 4,050 1,190 6,550 690 9,050 200
1,550 1,690 4,100 1,180 6,600 680 9,100 200
1,600 1,680 4,150 1,170 6,650 670 9,150 200
1,650 1,670 4,200 1,160 6,700 660 9,200 200
1,700 1,660 4,250 1,150 6,750 650 9,250 200
1,750 1,650 4,300 1,140 6,800 640 9,300 200
1,800 1,640 4,350 1,130 6,850 630 9,350 200
1,850 1,630 4,400 1,120 6,900 620 9,400 200
1,900 1,620 4,450 1,110 6,950 610 9,450 200
1,950 1,610 4,500 1,100 7,000 600 9,500 200
2,000 1,600 4,550 1,090 7,050 590 9,550 200
2,050 1,590 4,600 1,080 7,100 580 9,600 200
2,100 1,580 4,650 1,070 7,150 570 9,650 200
2,150 1,570 4,700 1,060 7,200 560 9,700 200
2,200 1,560 4,750 1,050 7,250 550 9,750 200
2,250 1,550 4,800 1,040 7,300 540 9,800 200
2,300 1,540 4,850 1,030 7,350 530 9,850 200
2,350 1,530 4,900 1,020 7,400 520 9,900 200
2,400 1,520 4,950 1,010 7,450 510 9,950 200
2,450 1,510 5,000 1,000 7,500 500 10,000 0
2,500 1,500
</TABLE>
- ------------
Excess AGI = Your AGI minus your THRESHOLD LEVEL:
If you are single, your Threshold Level is $25,000.
If you are married, your Threshold Level is $40,000.
If you are married and file a separate tax return, your
Excess AGI = your AGI.
60
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C> <C>
Part 1: Minimum Distribution Withdrawals 2
Part 2: Accumulation Unit Values 2
Part 3: Annuity Unit Values 2
Part 4: Custodian and Independent Accountants 3
Part 5: Alliance Money Market Fund and Alliance
Intermediate Government Securities Fund Yield
Information 3
Part 6: Long-Term Market Trends 5
Part 7: Financial Statements 7
</TABLE>
HOW TO OBTAIN A ROLLOVER IRA STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an INCOME MANAGER Rollover IRA SAI:
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
61
<PAGE>
May 1, 1997
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
PROFILE OF INCOME MANAGER(SM) ACCUMULATOR
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
This Profile is a summary of some of the more important points that you should
know and consider before purchasing a Certificate. The Certificate is more
fully described in the prospectus which accompanies this Profile. Please read
the prospectus carefully.
1. THE ANNUITY CERTIFICATE. The Accumulator Certificate is a combination
variable and fixed deferred annuity issued by Equitable Life. It is designed to
provide for the accumulation of savings and for retirement income through the
investment of after-tax money during an accumulation phase. You may invest in
Investment Funds where your Certificate's value may vary up or down depending
upon the investment performance. You may also invest in Guarantee Periods, or
"GIROs" that when held to maturity provide guaranteed interest rates that we
have set and a guarantee of principal. If you make any transfers or withdrawals
from a GIRO before maturity, its investment value may increase or decrease
due to interest rate changes. Earnings under your Certificate accumulate on a
tax-deferred basis until amounts are distributed. Amounts distributed may be
subject to income tax.
The Investment Funds offer a potential for better returns than the interest
rates guaranteed when GIROs are held to maturity, but the Investment Funds
involve risk and you can lose money. You may make transfers among the
Investment Funds and GIROs. The value of GIROs prior to their maturity
fluctuates and you can lose money on premature transfers or withdrawals.
The Certificate provides a number of distribution methods during the
accumulation phase and for converting to annuity income. The amount accumulated
under your Certificate during the accumulation phase will affect the amount of
distribution or annuity benefits you receive.
2. ANNUITY PAYMENTS. When you are ready to start receiving income, annuity
income is available by applying your Certificate's value to the Income Manager
(Life Annuity with a Period Certain). You can also have your Certificate's
value applied to any of the following five ANNUITY BENEFITS: (1) Life Annuity -
payments for your life (assuming you are the annuitant), (2) Life Annuity -
Period Certain - payments for your life, but with payments continuing to the
beneficiary for the balance of the 5, 10, 15 or 20 years (as you select) if you
die before the end of the selected period; (3) Life Annuity - Refund Certain -
payments for your life, with payments continuing to the beneficiary after your
death until any remaining amount applied to this option runs out; and (4)
Period Certain Annuity - payments for a specified period of time, usually 5,
10, 15 or 20 years, with no life contingencies. Options (2) and (3) are also
available as a Joint and Survivor Annuity - payments for your life, and after
your death, continuation of payments to the survivor for life. Annuity Benefits
(other than the Refund Certain only available on a fixed basis) are available
as a fixed annuity, or as a variable annuity, where the dollar amount of your
payments will depend upon the investment performance of the Investment Funds.
Once you begin receiving annuity payments, you cannot change your annuity
benefit.
--------------------
baseBUILDER is a service mark of
The Equitable Life Assurance Socity of the United States.
1
<PAGE>
3. PURCHASE. You can purchase a Certificate with $5,000 or more. You may add
additional amounts of $1,000 or more at any time (subject to certain
restrictions). Subject to certain age restrictions, you may purchase the
baseBUILDERSM guaranteed benefits, in the form of a Combined Guaranteed Minimum
Death Benefit and Guaranteed Minimum Income Benefit (Plan A). If you do not
elect the combined benefit, the Guaranteed Minimum Death Benefit is provided
under the Certificate at a lower charge (Plan B). Both benefits are discussed
below. You choose the one that best suits your needs.
4. INVESTMENT OPTIONS. You may invest in any or all of the following Investment
Funds, which invest in shares of corresponding portfolios of The Hudson River
Trust (HR Trust) and EQ Advisors Trust, (EQ Trust). The portfolios are
described in the prospectuses for HR Trust and EQ Trust.
<TABLE>
<CAPTION>
HR TRUST INVESTMENT FUNDS EQ TRUST INVESTMENT FUNDS
- ------------------------- --------------------------
<S> <C> <C>
Alliance Conservative Investors EQ/Putnam Balanced Morgan Stanley Emerging
Alliance Growth Investors EQ/Putnam Growth & Markets Equity*
Alliance Growth & Income Income Value T. Rowe Price Equity
Alliance Common Stock MFS Emerging Growth Income
Alliance Global Companies T. Rowe Price
Alliance International MFS Research International Stock
Alliance Aggressive Stock Merrill Lynch Basic Warburg Pincus Small
Alliance Small Cap Growth Value Equity Company Value
Alliance Money Market Merrill Lynch World
Alliance Intermediate Strategy
Government Securities
Alliance High Yield
</TABLE>
* The Morgan Stanley Emerging Markets Equity Fund will be available on or about
September 2, 1997.
You may also invest in one or more GIROs currently maturing in years 1998
through 2007.
5. EXPENSES. The Certificate has expenses as follows: For Plan A -- there is an
annual charge as a percentage of the Guaranteed Minimum Death Benefit. The
percentage is equal to 0.45%. For Plan B -- the percentage is equal to 0.20%.
As a percentage of assets in the Investment Funds, a daily charge is deducted
for mortality and expense risks at an annual rate of 0.90%; a daily charge is
deducted for administration expenses at an annual rate of 0.25%.
The charges for the portfolios of HR Trust range from 0.64% to 1.33% of the
average daily net assets of HR Trust portfolios, depending upon HR Trust
portfolios selected (based on 1996 other expenses). The charges for the
portfolios of EQ Trust range from 0.85% to 1.75% of the average daily assets of
EQ Trust portfolio. These amounts are based on restated values during 1996 and,
for EQ Trust, a current expense cap. The 12b-1 fees for the portfolios of HR
Trust and EQ Trust are 0.25% of the average daily net assets of HR Trust and EQ
Trust, respectively. Charges for state premium and other applicable taxes may
also apply at the time you elect to start receiving annuity payments.
2
<PAGE>
A withdrawal charge is imposed as a percentage of each contribution withdrawn
in excess of a free corridor amount, or if the Certificate is surrendered. The
free corridor amount for withdrawals (other than surrender) is 15% of the
Certificate's value at the beginning of the year. When applicable, the
withdrawal charge is determined in accordance with the table below, based on
the year a contribution is withdrawn. The year in which we receive your
contribution is "Year 1."
<TABLE>
<CAPTION>
Year of Contribution Withdrawal
1 2 3 4 5 6 7 8+
------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The following chart is designed to help you understand the charges in the
Certificate. The "Total Annual Charges" column shows the combined total of the
Certificate charges deducted as a percentage of assets in the Investment Funds
and the portfolio charges, as shown in the first two columns. The last two
columns show you two examples of the charges, in dollars, that you would pay
under a Certificate and include the benefit based charge for the baseBUILDER
combined Guaranteed Minimum Death and Income Benefits equal to 0.45% of the
Guaranteed Minimum Death Benefit in effect on each Contract Date anniversary.
The examples assume that you invested $1,000 in a Certificate which earns 5%
annually and that you withdraw your money: (1) at the end of year 1, and (2)
at the end of year 10. For year 1, the Total Annual Charges are assessed as
well as the withdrawal charge. For year 10, the example shows the aggregate
of all the annual charges assessed for the 10 years, but there is no withdrawal
charge. No charges for state premium and other applicable taxes are assumed
in the examples.
<TABLE>
<CAPTION>
EXAMPLES
TOTAL ANNUAL TOTAL ANNUAL TOTAL Total Annual
CERTIFICATE PORTFOLIO ANNUAL Expenses at End of:
INVESTMENT FUND CHARGES CHARGES CHARGES (1) (2)
1 Year 10 Years
<S> <C> <C> <C> <C> <C>
EQ TRUST
- --------
EQ/Putnam Balanced 1.15% 0.90% 2.05% $90.74 $293.88
EQ/Putnam Growth & Income Value 1.15 0.85 2.00 90.24 288.87
MFS Emerging Growth Companies 1.15 0.85 2.00 90.24 288.87
MFS Research 1.15 0.85 2.00 90.24 288.87
Merrill Lynch Basic Value Equity 1.15 0.85 2.00 90.24 288.87
Merrill Lynch World Strategy 1.15 1.20 2.35 93.72 323.50
Morgan Stanley Emerging Markets
Equity 1.15 1.75 2.90 99.19 375.62
T. Rowe Price Equity Income 1.15 0.85 2.00 90.24 288.87
T. Rowe Price International
Stock 1.15 1.20 2.35 93.72 323.50
Warburg Pincus Small
Company Value 1.15 1.00 2.15 91.73 303.84
HR TRUST
- --------
Alliance Conservative
Investors 1.15% 0.80% 1.95% $89.74 $275.75
Alliance Growth Investors 1.15 0.84 1.99 90.14 279.80
Alliance Growth & Income 1.15 0.85 2.00 90.24 280.80
Alliance Common Stock 1.15 0.66 1.81 88.35 261.52
Alliance Global 1.15 0.98 2.13 91.53 293.80
Alliance International 1.15 1.33 2.48 95.01 328.00
Alliance Aggressive Stock 1.15 0.83 1.98 90.04 278.79
Alliance Small Cap Growth 1.15 1.25 2.40 94.22 ---
Alliance Money Market 1.15 0.64 1.79 88.15 259.45
Alliance Intermediate
Government Securities 1.15 0.84 1.99 90.14 279.80
Alliance High Yield 1.15 0.91 2.06 90.84 286.83
</TABLE>
For Investment Funds investing in portfolios with less than 10 years of
operations, charges have been estimated. The charges reflect any expense waiver
or limitation. For more detailed information, see the Fee Table in the
prospectus.
6. TAXES. In most cases, your earnings are not taxed until distributions are
made from your Certificate. If you are younger than age 59 1/2 when you receive
any distributions, you may be charged an additional 10% Federal tax penalty on
the amount received.
3
<PAGE>
7. ACCESS TO YOUR MONEY. During the accumulation phase, you may receive
distributions under your Certificate through the following WITHDRAWAL OPTIONS:
(1) Lump Sum Withdrawals of at least $1,000 may be taken at any time, and (2)
Systematic Withdrawals, paid monthly, quarterly or annually, subject to certain
restrictions, including a maximum percentage of your Certificate's value. You
also have access to your Certificate's value by surrendering the Certificate.
All or a portion of a withdrawal may be subject to a withdrawal charge to the
extent that the withdrawal exceeds the free corridor amount. A free corridor
amount does not apply to a surrender. Withdrawals and surrenders may be subject
to income tax and may be subject to a tax penalty. Withdrawals from GIROs
prior to their maturity may result in a market value adjustment.
8. PERFORMANCE. During the accumulation phase, your Certificate's value in the
Investment Funds may vary up or down depending upon the investment performance
of the Investment Funds you have selected. The following chart shows total
returns for certain Investment Funds for the time periods shown. The results
indicated reflect all of the charges, except for the Combined Guaranteed
Minimum Death Benefit and Guaranteed Minimum Income Benefit Charge for the
optional combined guaranteed benefits and the withdrawal charge. If included,
these two charges would reduce the performance numbers shown below. Past
performance is not a guarantee of future results.
The performance data for the Alliance Growth & Income, Alliance International,
Alliance Conservative Investors, Alliance Intermediate Government Securities
(under which portfolios of HR Trust with a 12b-l fee were not previously
available) and the for other Investment Funds prior to October 16, 1996, do not
reflect the 12b-1 fee. There is no performance data for the Alliance Small Cap
Growth Fund and the Investment Funds investing in EQ Trust portfolios as such
Investment Funds were not available prior to May 1, 1997.
<TABLE>
<CAPTION>
CALENDAR YEAR
INVESTMENT FUND 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors 3.99% 19.02% (5.20)% 9.54% 4.50% 18.51% 5.14% 2.79% -- --
Alliance Growth Investors 11.24 24.92 (4.27) 13.95 3.69 47.19 9.39 3.53 -- --
Alliance Growth & Income 18.70 22.65 (1.72) (0.55) -- -- -- -- -- --
Alliance Common Stock 22.76 30.93 (3.26) 23.29 2.03 36.30 (9.17) 24.16 21.03% 6.21%
Alliance Global 13.20 17.45 4.02 30.60 (1.65) 29.06 (7.15) 25.29 9.61 (13.62)
Alliance International 8.54 10.34 ---- --- --- --- -- -- -- --
Alliance Aggressive Stock 20.71 30.13 (4.92) 15.41 (4.28) 84.73 6.92 41.86 (0.03) 6.06
Alliance Money Market 4.05 4.53 2.82 1.78 2.37 4.97 6.99 7.93 6.09 5.41
Alliance Intermediate
Government Securities 5.27 12.03 (5.47) 9.27 4.38 11.30 -- -- -- --
Alliance High Yield 21.39 18.54 (3.90) 21.74 11.02 23.03 (2.26) 3.93 8.48 3.49
</TABLE>
9. DEATH BENEFIT. If you die (assuming you are the annuitant) before amounts
are applied under an annuity benefit, the named beneficiary will be paid a
death benefit. The death benefit is equal to (1) your Certificate's value in
the Investment Funds, or if greater, the Guaranteed Minimum Death Benefit, and
(2) the amount of the death benefit provided with respect to GIRO's.
The Guaranteed Minimum Death Benefit is equal to a "6% to Age 80
Benefit for ages 20 to 79." For ages 80 to 83 a return of the
money you have invested in the Investment Funds will apply.
4
<PAGE>
We add interest to the initial amount at 6% (3% for amounts in the
Alliance Money Market and Intermediate Government Securities Fund) through
the annuitant's age 80.
Annual Ratchet to Age 80 (Available in New York only) -- This is the
amount reset each year through the annuitant's age 80 to your
Certificate's value, if it is higher than the prior year's Guaranteed
Minimum Death Benefit.
-----------------------------------------------------
10. OTHER INFORMATION.
GUARANTEED MINIMUM INCOME BENEFIT. The Guaranteed Minimum Income Benefit,
as part of the baseBUILDER, is an optional benefit that provides a minimum
amount of guaranteed lifetime income for your future. When you are ready to
convert (during specified periods of time) your Certificate's value to the
Income Manager (Life Annuity with a Period Certain) the minimum amount of
lifetime income that will be provided will be the greater of (i) your
Guaranteed Minimum Income Benefit or (ii) your Certificate's current value
in the Investment Funds, applied at current annuity factors.
Investment performance is not guaranteed. The Guaranteed Minimum Income Benefit
provides a safety net for your future income.
QUALIFIED PLANS. If the Certificates will be purchased by certain types of
plans qualified under Section 401(a), or 401(k) of the Internal Revenue Code,
please consult your tax adviser first. Any discussion of taxes in this profile
does not apply.
FREE LOOK. You can examine the Certificate for a period of 10 days after you
receive it, and return it to us for a refund. The free look period is longer in
some states.
Your refund will equal your Certificate's value, reflecting any investment gain
or loss, in the Investment Funds, and any increase or decrease in the value of
any amounts held in the GIRO's, through the date we receive your Certificate.
Some states may require that we calculate the refund differently.
PRINCIPAL ASSURANCE. This option is designed to assure the return of your
original amount invested on a GIRO maturity date, by putting a portion of your
money in a particular GIRO, and the balance in the Investment Funds in any way
you choose. Assuming that you make no transfers or withdrawals of the portion
in the GIRO, such amount will grow to your original investment upon maturity.
DOLLAR COST AVERAGING. Special Dollar Cost Averaging - You can elect when you
apply for your Certificate to put your money into the Alliance Money Market
Fund and have a it transferred from the Alliance Money Market Fund into the
other Investment Funds on a monthly basis over the first twelve months in which
case
5
<PAGE>
Certificate charges will not be deducted. General Dollar Cost Averaging - You
can elect at any time to put money into the Alliance Money Market Funds and
have a dollar amount or percentage transferred from the Alliance Money Market
Fund into the other Investment Funds on a periodic basis over a longer period
of time, and all applicable charges deducted from the value in the Alliance
Money Market Fund will apply. Dollar cost averaging does not assure a profit
or protect against a loss should market prices decline.
REPORTS. We will provide you with an annual statement of your Certificate's
values as of the last day of each year, and three additional reports of your
Certificate's values each year. You also will be provided with written
confirmations of each financial transaction, and copies of annual and
semi-annual statements of HR Trust and EQ Trust.
You may call toll-free at 1-800-789-7771 for a recording of daily Investment
Fund values and guaranteed rates applicable to GIRO's.
11. INQUIRIES. If you need more information, please contact your agent. You may
also contact us, at:
The Equitable Life Assurance Society of the United States
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Telephone 1-800-789-7771 and Fax 1-201-583-2224
6
<PAGE>
INCOME MANAGER(SM) ACCUMULATOR
PROSPECTUS DATED MAY 1, 1997
---------
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- ------------------------------------------------------------------------------
This prospectus describes certificates The Equitable Life Assurance Society
of the United States (EQUITABLE LIFE, WE, OUR and US) offers under a
combination variable and fixed deferred annuity contract (ACCUMULATOR) issued
on a group basis or as individual contracts. Enrollment under a group
contract will be evidenced by issuance of a certificate. Certificates and
individual contracts each will be referred to as "Certificates." Accumulator
Certificates are issued as non-qualified annuities for after-tax
contributions. A minimum initial contribution of $5,000 is required to put
the Certificate into effect.
The Accumulator is designed to provide for the accumulation of retirement
savings and for income. Contributions accumulate on a tax-deferred basis and
can be later distributed under a number of different methods which are
designed to be responsive to the owner's (CERTIFICATE OWNER, YOU and YOUR)
objectives.
The Accumulator offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 21
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the
GUARANTEED PERIOD ACCOUNT.
We invest each Investment Fund in Class IB shares of a corresponding
portfolio (PORTFOLIO) of The Hudson River Trust (HR TRUST) or EQ Advisors
Trust (EQ TRUST), mutual funds whose shares are purchased by separate
accounts of insurance companies. The prospectuses for HR Trust and EQ Trust,
both of which accompany this prospectus, describe the investment objectives,
policies and risks of the Portfolios.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
EQUITY SERIES:
- ----------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY INTERNATIONAL EQUITY AGGRESSIVE EQUITY
<S> <C> <C>
Alliance Common Stock Alliance Global Alliance Aggressive Stock
Alliance Growth & Income Alliance International Alliance Small Cap Growth
EQ/Putnam Growth & Income Value Morgan Stanley Emerging Markets Equity MFS Emerging Growth Companies
MFS Research T. Rowe Price International Stock Warburg Pincus Small Company Value
Merrill Lynch Basic Value Equity
T. Rowe Price Equity Income
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES FIXED INCOME SERIES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Conservative Investors AGGRESSIVE FIXED INCOME DOMESTIC FIXED INCOME
Alliance Growth Investors Alliance High Yield Alliance Intermediate Government Securities
EQ/Putnam Balanced Alliance Money Market
Merrill Lynch World Strategy
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). Each Guarantee Period has its
own Guaranteed Rates. The Guarantee Periods currently available have
Expiration Dates of February 15, in years 1998 through 2007.
You may choose from a variety of payout options, including Income Manager
payout annuity options and our other variable annuities and fixed annuities.
This prospectus provides information about the Accumulator that prospective
investors should know before investing. You should read it carefully and
retain it for future reference. The prospectus is not valid unless
accompanied by current prospectuses for HR Trust and EQ Trust, both of which
you should also read carefully.
Registration statements relating to Separate Account No. 45 (SEPARATE
ACCOUNT) and interests under the Guarantee Periods have been filed with the
Securities and Exchange Commission (SEC). The statement of additional
information (SAI), dated May 1, 1997, which is part of the registration
statement for the Separate Account, is available free of charge upon request
by writing to our Processing Office or calling 1-800-789-7771, our toll-free
number. The SAI has been incorporated by reference into this prospectus. The
Table of Contents for the SAI appears at the back of this prospectus.
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- ------------------------------------------------------------------------------
Copyright 1997 The Equitable Life Assurance Society of the United States,
New York, New York 10104.
All rights reserved. baseBUILDER is a service mark of The Equitable Life
Assurance Society of the United States.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(EXCHANGE ACT) after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated
by reference in this prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated herein by reference shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified and superseded, to constitute a part of
this prospectus. Equitable Life files its Exchange Act documents and reports,
including its annual and quarterly reports on Form 10-K and Form 10-Q,
electronically pursuant to EDGAR under CIK No. 0000727920. The SEC maintains
a web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 557-1234).
2
<PAGE>
PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
FEE TABLE PAGE 5
PART 1: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE
INVESTMENT FUNDS PAGE 9
Equitable Life 9
Separate Account No. 45 9
HR Trust 10
HR Trust's Manager and Adviser 10
EQ Trust 10
EQ Trust's Manager and Advisers 10
Investment Policies and Objectives of HR
Trust's and EQ Trust's Portfolios 11
PART 2: THE GUARANTEED PERIOD
ACCOUNT PAGE 13
Guarantee Periods 13
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 14
Investments 15
PART 3: PROVISIONS OF THE
CERTIFICATES AND SERVICES
WE PROVIDE PAGE 16
What is the Accumulator? 16
Availability of the Certificates 16
Contributions Under the Certificates 16
Methods of Payment 16
Allocation of Contributions 16
Free Look Period 17
Annuity Account Value 17
Transfers Among Investment Options 17
Dollar Cost Averaging 18
baseBUILDER Benefits 18
Death Benefit 19
How Death Benefit Payment is Made 19
When the Certificate Owner Dies
Before the Annuitant 20
Guaranteed Minimum Income Benefit 20
Withdrawal Options 21
Cash Value 23
Surrendering the Certificates to
Receive the Cash Value 23
When Payments are Made 23
Annuity Benefits and Payout Annuity Options 23
Assignment 25
Services We Provide 25
Distribution of the Certificates 25
PART 4: DEDUCTIONS AND CHARGES PAGE 27
Charges Deducted from the Annuity
Account Value 27
Charges Deducted from the Investment
Funds 28
HR Trust Charges to Portfolios 28
EQ Trust Charges to Portfolios 28
Group or Sponsored Arrangements 29
Other Distribution Arrangements 29
PART 5: VOTING RIGHTS PAGE 30
HR Trust and EQ Trust Voting Rights 30
Voting Rights of Others 30
Separate Account Voting Rights 30
Changes in Applicable Law 30
PART 6: TAX ASPECTS OF THE CERTIFICATES PAGE 31
Tax Changes 31
Taxation of Non-Qualified Annuities 31
Federal and State Income Tax
Withholding 32
Other Withholding 33
Special Rules for Certificates Issued in
Puerto Rico 33
Impact of Taxes to Equitable Life 33
Transfers Among Investment Options 33
PART 7: INDEPENDENT ACCOUNTANTS PAGE 34
PART 8: INVESTMENT PERFORMANCE PAGE 35
Standardized Performance Data 35
Rate of Return Data for Investment
Funds 37
Communicating Performance Data 40
Alliance Money Market Fund and Alliance
Intermediate Government Securities Fund
Yield Information 40
APPENDIX I: MARKET VALUE
ADJUSTMENT EXAMPLE PAGE 42
APPENDIX II: QUALIFIED PLAN CERTIFICATES PAGE 43
APPENDIX III: GUARANTEED MINIMUM
DEATH BENEFIT EXAMPLE PAGE 44
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS PAGE 45
</TABLE>
3
<PAGE>
GENERAL TERMS
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE--The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT--The individual who is the measuring life for determining benefits
under the Certificates.
ANNUITY ACCOUNT VALUE--The sum of the amounts in the Investment Options under
the Accumulator Certificate. See "Annuity Account Value" in Part 3.
ANNUITY COMMENCEMENT DATE--The date on which Annuity Benefit payments
automatically commence.
BASEBUILDER (SERVICE MARK) --Protection benefits, consisting of the
Guaranteed Minimum Death Benefit and the Guaranteed Minimum Income Benefit.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns an Accumulator Certificate and has the
right to exercise all rights under the Certificate.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The effective date of the Certificates. This is usually the
Business Day we receive the initial contribution at our Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EQ TRUST--EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants, Inc.
(EQ Financial) is the manager of EQ Trust and has appointed advisers for each
of the Portfolios.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEED MINIMUM DEATH BENEFIT--The minimum amount payable with respect to
the Investment Funds, upon the death of the Annuitant.
GUARANTEED MINIMUM INCOME BENEFIT--The minimum amount of future guaranteed
lifetime income provided with respect to the Investment Funds.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificates. Guarantee Periods
may also be referred to as Guaranteed Interest Rate Options (GIROs).
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
HR TRUST--The Hudson River Trust, a mutual fund in which the assets of
separate accounts of insurance companies are invested. Alliance Capital
Management L.P. (Alliance) is the manager and adviser to HR Trust.
INVESTMENT FUNDS--The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS--The choices for investment: the Investment Funds and each
available Guarantee Period.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
PORTFOLIOS--The portfolios of HR Trust and EQ Trust that correspond to the
Investment Funds of the Separate Account.
PROCESSING DATE--The day when we deduct certain charges from the Annuity
Account Value. If the Processing Date is not a Business Day, it will be on
the next succeeding Business Day. The Processing Date will be once each year
on each anniversary of the Contract Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 3.
SAI--The statement of additional information for the Separate Account under
the Certificates.
<PAGE>
SEPARATE ACCOUNT--Equitable Life's Separate Account No. 45.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
VALUATION PERIOD--Each Business Day together with any preceding non-business
days.
4
<PAGE>
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them on the same basis with other similar products.
The table reflects both the charges of the Separate Account and the expenses
of HR Trust and EQ Trust. Charges for applicable taxes such as state or local
premium taxes may also apply. For a complete description of the charges under
the Certificate, see "Part 4: Deductions and Charges." For a complete
description of each Trust's charges and expenses, see the prospectuses for HR
Trust and EQ Trust.
As explained in Part 2, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. See "Part 4: Deductions and
Charges." A market value adjustment (either positive or negative) also may be
applicable as a result of a withdrawal, transfer or surrender of amounts from
a Guarantee Period. See "Part 2: The Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted upon surrender
or for certain withdrawals. The applicable withdrawal charge percentage is
determined by the Contract Year in which the withdrawal is made or the
Certificate is surrendered beginning with "Contract Year 1" with respect to
each contribution withdrawn or surrendered. For each contribution, the
Contract Year in which we receive that contribution is "Contract
Year 1")(1)
<TABLE>
<CAPTION>
CONTRACT
YEAR
- ----------
<S> <C>
1................ 7.00%
2................ 6.00
3................ 5.00
4................ 4.00
5................ 3.00
6................ 2.00
7................ 1.00
8+............... 0.00
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GUARANTEED BENEFIT EXPENSE (DEDUCTED FROM ANNUITY ACCOUNT VALUE)(2)
COMBINED GUARANTEED MINIMUM DEATH BENEFIT AND GUARANTEED MINIMUM INCOME BENEFIT
BENEFIT (PLAN A)................................................................. 0.45%
GUARANTEED MINIMUM DEATH BENEFIT ONLY BENEFIT (PLAN B) ........................... 0.20%
THESE CHARGES ARE CALCULATED AS A PERCENTAGE OF THE GUARANTEED MINIMUM DEATH
BENEFIT.
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH INVESTMENT FUND)
MORTALITY AND EXPENSE RISKS....................................................... 0.90%
ADMINISTRATION(3)................................................................. 0.25%
-------
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES........................................... 1.15%
=======
</TABLE>
- ------------
See footnotes on next page.
5
<PAGE>
HR TRUST AND EQ TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET
ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
--------------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
CONSERVATIVE GROWTH GROWTH & COMMON ALLIANCE ALLIANCE
HR TRUST INVESTORS INVESTORS INCOME STOCK GLOBAL INTERNATIONAL
- -------- -------------- ----------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.48% 0.53% 0.55% 0.38% 0.65% 0.90%
12b-1 Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.07% 0.06% 0.05% 0.03% 0.08% 0.18%
-------------- ----------- ----------- ---------- ---------- -------------
TOTAL HR TRUST ANNUAL
EXPENSES(5) 0.80% 0.84% 0.85% 0.66% 0.98% 1.33%
============== =========== =========== ========== ========== =============
ALLIANCE
ALLIANCE ALLIANCE ALLIANCE INTERMEDIATE ALLIANCE
AGGRESSIVE SMALL MONEY GOVT. HIGH
HR TRUST STOCK CAP GROWTH MARKET SECURITIES YIELD
- -------- -------------- ------------ ----------- -------------- ------------
Investment Advisory Fee 0.55% 0.90% 0.35% 0.50% 0.60%
12-b Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.03% 0.10% 0.04% 0.09% 0.06%
-------------- ------------ ----------- -------------- ------------
TOTAL HR TRUST ANNUAL
EXPENSES(5) 0.83% 1.25% 0.64% 0.84% 0.91%
============== ============ =========== ============== ============
MFS MERRILL
EQ/PUTNAM EMERGING LYNCH
EQ/PUTNAM GROWTH & GROWTH MFS BASIC VALUE
EQ TRUST BALANCED INCOME VALUE COMPANIES RESEARCH EQUITY
- -------- ------------- ------------ ----------- ---------- -------------
Investment Advisory Fee 0.55% 0.55% 0.55% 0.55% 0.55%
12b-1 Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.10% 0.05% 0.05% 0.05% 0.05%
------------- ------------ ----------- ---------- -------------
TOTAL EQ TRUST ANNUAL
EXPENSES(6) 0.90% 0.85% 0.85% 0.85% 0.85%
============= ============ =========== ========== =============
MORGAN
MERRILL STANLEY T. ROWE WARBURG
LYNCH EMERGING T. ROWE PRICE PINCUS SMALL
WORLD MARKETS PRICE EQUITY INTERNATIONAL COMPANY
EQ TRUST STRATEGY EQUITY INOME STOCK VALUE
- -------- -------------- ------------- ------------- ------------- -------------
Investment Advisory Fee 0.70% 1.15% 0.55% 0.75% 0.65%
12b-1 Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.25% 0.35% 0.05% 0.20% 0.10%
-------------- ------------- ------------- ------------- -------------
TOTAL EQ TRUST ANNUAL
EXPENSES(6) 1.20% 1.75% 0.85% 1.20% 1.00%
============== ============= ============= ============= =============
</TABLE>
Notes:
(1) Deducted upon a withdrawal with respect to amounts in excess of the 15%
free corridor amount, and upon surrender of a Certificate. See "Part 5:
Deductions and Charges," "Withdrawal Charge."
(2) The Guaranteed Minimum Death Benefit is applicable to the Investment
Funds. This charge is deducted annually on each Processing Date. See
"Combined Guaranteed Minimum Death Benefit and Guaranteed Minimum Income
Benefit Benefit Charge (Plan A)" and "Guaranteed Minimum Death Benefit
Only Charge (Plan B)" in Part 4.
(3) We reserve the right to increase this charge to an annual rate of 0.35%,
the maximum permitted under the Certificates.
(4) The Class IB shares of HR Trust and EQ Trust are subject to fees imposed
under distribution plans (herein, the "Rule 12b-1 Plans") adopted by HR
Trust and EQ Trust pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended. The Rule 12b-1 Plans provide that HR Trust and
EQ Trust, on behalf of each Portfolio, may pay annually up to 0.25% of
the average daily net assets of a Portfolio attributable to its Class IB
shares in respect of activities primarily intended to result in the sale
of the Class IB shares.
(5) The amounts shown for the Portfolios of HR Trust (other than Alliance
Small Cap Growth) have been restated to reflect advisory fees which went
into effect as of May 1, 1997. "Other Expenses" are based on average
daily net assets in each Portfolio during 1996. The amounts shown for
the Alliance Small Cap Growth Portfolio are estimated for the current
fiscal year as this Portfolio commenced operations on May 1, 1997. The
investment advisory fee for each Portfolio may vary from year to year
depending upon the average daily net assets of the respective Portfolio
of HR Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. See "HR Trust Charges to Portfolios" in
Part 4.
<PAGE>
(6) "Other Expenses" shown are based on estimated amounts (after expense
waiver or limitation) for the current fiscal year, as EQ Trust commenced
operations on May 1, 1997. The maximum investment advisory fees cannot
be increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will fluctuate from year to year depending on
actual expenses, but pursuant to agreement, cannot together with other
fees specified exceed the total annual expenses specified. See "EQ Trust
Charges to Portfolios" in Part 4.
6
<PAGE>
EXAMPLES
- --------
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit Benefit (Plan A) and under the Guaranteed Minimum
Death Benefit Only Benefit (Plan B) in the two situations noted below
assuming a $1,000 contribution invested in one of the Investment Funds
listed, and a 5% annual return on assets.(1)
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
COMBINED GUARANTEED MINIMUM DEATH BENEFIT AND
GUARANTEED MINIMUM INCOME BENEFIT BENEFIT (PLAN A) ELECTION
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD CERTIFICATE AT THE END OF EACH PERIOD
SHOWN, THE EXPENSES WOULD BE: SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors $89.74 $120.55 $154.64 $275.75 $24.51 $ 75.92 $130.68 $283.83
Alliance Growth
Investors 90.14 121.76 156.67 279.80 24.91 77.12 132.69 287.85
Alliance Growth &
Income 90.24 122.06 157.17 280.80 25.01 77.42 133.19 288.87
Alliance Common Stock 88.35 116.35 147.61 261.52 23.12 71.71 123.63 269.57
Alliance Global 91.53 125.95 163.66 293.80 26.30 81.30 139.67 301.85
Alliance International 95.01 136.36 180.97 328.00 29.78 91.73 157.01 336.07
Alliance Aggressive
Stock 90.04 121.46 156.17 278.79 24.81 76.82 132.19 286.85
Small Cap Growth 94.22 134.00 -- -- 28.99 89.36 -- --
Alliance Money Market 88.15 115.75 146.59 259.45 22.92 71.11 122.61 267.51
Alliance Intermediate
Gov't Securities 90.14 121.76 156.67 279.80 24.91 77.12 132.69 287.85
Alliance High Yield 90.84 123.86 160.17 286.83 25.61 79.22 136.19 294.89
EQ TRUST
- --------
EQ/Putnam Balanced $90.74 $123.56 -- -- $25.51 $ 78.91 -- --
EQ/Putnam Growth &
Income Value 90.24 122.06 -- -- 25.01 77.42 -- --
MFS Emerging Growth
Companies 90.24 122.06 -- -- 25.01 77.42 -- --
MFS Research 90.24 122.06 -- -- 25.01 77.42 -- --
Merrill Lynch Basic
Value Equity 90.24 122.06 -- -- 25.01 77.42 -- --
Merrill Lynch World
Strategy 93.72 132.50 -- -- 28.49 87.87 -- --
Morgan Stanley
Emerging Market
Equity 99.19 148.78 -- -- 33.96 104.14 -- --
T. Rowe Price Equity
Income 90.24 122.06 -- -- 25.01 77.42 -- --
T. Rowe Price
International Stock 93.72 132.50 -- -- 28.49 87.87 -- --
Warburg Pincus Small
Company Value 91.73 126.55 -- -- 26.50 81.90 -- --
</TABLE>
- ------------
See footnote on next page.
7
<PAGE>
GUARANTEED MINIMUM DEATH BENEFIT ONLY BENEFIT (PLAN B) ELECTION
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD CERTIFICATE AT THE END OF EACH PERIOD
SHOWN, THE EXPENSES WOULD BE: SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors $89.74 $115.25 $143.62 $248.28 $21.86 $67.64 $116.31 $251.89
Alliance Growth
Investors 90.14 116.46 145.64 252.38 22.26 68.84 118.33 255.98
Alliance Growth &
Income 90.24 116.76 146.16 253.43 22.36 69.14 118.83 257.01
Alliance Common Stock 88.35 111.05 136.55 233.84 20.47 63.42 109.21 237.42
Alliance Global 91.53 120.66 152.69 266.60 23.65 73.04 125.36 270.18
Alliance International 95.01 131.11 170.11 301.30 27.13 83.49 142.78 304.87
Alliance Aggressive
Stock 90.04 116.16 145.14 251.37 22.16 68.54 117.82 254.95
Small Cap Growth 94.22 128.73 -- -- 26.34 81.12 -- --
Alliance Money Market 88.15 110.44 135.53 231.77 20.27 62.82 108.21 235.35
Alliance Intermediate
Gov't Securities 90.14 116.46 145.64 252.38 22.26 68.84 118.33 255.98
Alliance High Yield 90.84 118.56 149.17 259.51 22.96 70.95 121.86 263.11
EQ TRUST
- --------
EQ/Putnam Balanced $90.74 $118.26 -- -- $22.86 $70.65 -- --
EQ/Putnam Growth &
Income Value 90.24 116.76 -- -- 22.36 69.14 -- --
MFS Emerging Growth
Companies 90.24 116.76 -- -- 22.36 69.14 -- --
MFS Research 90.24 116.76 -- -- 22.36 69.14 -- --
Merrill Lynch Basic
Value Equity 90.24 116.76 -- -- 22.36 69.14 -- --
Merrill Lynch World
Strategy 93.72 127.24 -- -- 25.84 79.62 -- --
Morgan Stanley
Emerging Market
Equity 99.19 143.56 -- -- 31.31 95.94 -- --
T. Rowe Price Equity
Income 90.24 116.76 -- -- 22.36 69.14 -- --
T. Rowe Price
International Stock 93.72 127.24 -- -- 25.84 79.62 -- --
Warburg Pincus Small
Company Value 91.73 121.26 -- -- 23.85 73.64 -- --
</TABLE>
- ------------
Note:
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity at the end of any of the periods shown in the
examples. If the amount applied to purchase an annuity is less than
$2,000, or the initial payment is less than $20 we may pay the amount to
the payee in a single sum instead of as payments under an annuity form.
See "Income Annuity Options" in Part 4. The examples do not reflect
charges for applicable taxes such as state or local premium taxes that
may also be deducted in certain jurisdictions.
8
<PAGE>
PART 1: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Our home office is located at
1290 Avenue of the Americas, New York, New York 10104. We are authorized to
sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico and the Virgin Islands. We maintain local offices
throughout the United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996 AXA, beneficially owned
63.8% of the outstanding common stock of the Holding Company (assuming
conversion of convertible preferred stock held by AXA). Under its investment
arrangements with Equitable Life 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 Life. AXA, a
French company, is the holding company for an international group of
insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $239.8 billion of assets as of December 31, 1996.
SEPARATE ACCOUNT NO. 45
Separate Account No. 45 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment
Company Act of 1940, as amended (1940 Act). This registration does not
involve any supervision by the SEC of the management or investment policies
of the Separate Account. The Separate Account has several Investment Funds,
each of which invests in shares of a corresponding Portfolio of HR Trust and
EQ Trust. Because amounts allocated to the Investment Funds are invested in a
mutual fund, investment return and principal will fluctuate and the
Certificate Owner's Accumulation Units may be worth more or less than the
original cost when redeemed.
Under the New York Insurance Law, the portion of the Separate Account's
assets equal to the reserves and other liabilities relating to the
Certificates are not chargeable with liabilities arising out of any other
business we may conduct. Income, gains or losses, whether or not realized,
from assets of the Separate Account are credited to or charged against the
Separate Account without regard to our other income gains or losses. We are
the issuer of the Certificates, and the obligations set forth in the
Certificates (other than those of Annuitants or Certificate Owners) are our
obligations.
In addition to contributions made under the Accumulator Certificates, we may
allocate to the Separate Account monies received under other contracts,
certificates, or agreements. Owners of all such contracts, certificates or
agreements will participate in the Separate Account in proportion to the
amounts they have in the Investment Funds that relate to their contracts,
certificates or agreements. We may retain in the Separate Account assets that
are in excess of the reserves and other liabilities relating to the
Accumulator Certificates or to other contracts, certificates or agreements,
or we may transfer the excess to our General Account.
We reserve the right, subject to compliance with applicable law; (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove
Investment Funds (or sub-funds) from, the Separate Account, or to add other
separate accounts; (2) to combine any two or more Investment Funds or
sub-funds thereof; (3) to transfer the assets we determine to be the share of
the class of contracts to which the Certificates belong from any Investment
Fund to another Investment Fund; (4) to operate the Separate Account or any
Investment Fund as a management investment company under the 1940 Act, in
which case charges and expenses that otherwise would be assessed against an
underlying mutual fund would be assessed against the Separate Account; (5) to
deregister the Separate Account under the 1940 Act, provided that such action
conforms with the requirements of applicable law; (6) to restrict or
eliminate any voting rights as to the Separate Account; and (7) to cause one
or more Investment Funds to invest some or all of their assets in one or more
other trusts or investment companies. If any changes are made that result in
a material change in the underlying investment policy of an Investment Fund,
you will be notified as required by law.
9
<PAGE>
HR TRUST
HR 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
Portfolio of HR Trust. HR Trust commenced operations in January 1976 with a
predecessor of its Alliance Common Stock Portfolio. HR Trust does not impose
a sales charge or "load" for buying and selling its shares. All dividend
distributions to HR Trust are reinvested in full and fractional shares of the
Portfolio to which they relate. Investment Funds that invest in Portfolios of
HR Trust purchase Class IB shares of a corresponding Portfolio of HR Trust.
More detailed information about HR Trust, its investment objectives,
policies, restrictions, risks, expenses, the Rule 12b-1 Plan relating to
Class IB shares, and all other aspects of its operations appears in its
prospectus which accompanies this prospectus or in its statement of
additional information.
HR TRUST'S MANAGER AND ADVISER
HR Trust is managed and advised by Alliance Capital Management L.P.
(Alliance), which is registered with the SEC as an investment adviser under
the 1940 Act. Alliance, a publicly-traded limited partnership, is indirectly
majority-owned by Equitable Life. On December 31, 1996, Alliance was managing
approximately $182.8 billion in assets. Alliance acts as an investment
adviser to various separate accounts and general accounts of Equitable Life
and other affiliated insurance companies. Alliance also provides management
and consulting services to mutual funds, endowment funds, insurance
companies, foreign entities, qualified and non-tax qualified corporate funds,
public and private pension and profit-sharing plans, foundations and
tax-exempt organizations.
Alliance's main office is located at 1345 Avenue of the Americas, New York,
New York 10105.
EQ TRUST
EQ Trust is an open-end management investment company. As a "series type" of
mutual fund, EQ Trust issues different series of stock, each of which relates
to a different Portfolio of EQ Trust. EQ Trust commenced operations on May 1,
1997. EQ Trust does not impose a sales charge or "load" for buying and
selling its shares. All dividend distributions to EQ Trust are reinvested in
full and fractional shares of the Portfolio to which they relate. Investment
Funds that invest in Portfolios of EQ Trust purchase Class IB shares of a
corresponding Portfolio of EQ Trust. More detailed information about EQ
Trust, its investment objectives, policies and restrictions, risks, expenses,
the Rule 12b-1 Plan relating to the Class IB shares, and all other aspects of
its operations appears in its prospectus which accompanies this prospectus
and in its statement of additional information.
EQ TRUST'S MANAGER AND ADVISERS
EQ Trust is managed by EQ Financial Consultants, Inc. (EQ Financial) which,
subject to supervision and direction of the Trustees of EQ Trust, has overall
responsibility for the general management of EQ Trust. EQ Financial is an
investment adviser registered under the 1940 Act, and a broker-dealer
registered under the Exchange Act. EQ Financial is a Delaware corporation and
an indirect, wholly-owned subsidiary of Equitable Life.
EQ Financial's main office is located at 1290 Avenue of the Americas, New
York, New York 10104.
EQ Financial has entered into investment advisory agreements with Putnam
Investments, Massachusetts Financial Services Company, Merrill Lynch Asset
Management, L.P., Morgan Stanley Asset Management Inc., T. Rowe Price
Associates, Inc. and Rowe Price-Fleming International, Inc., and Warburg,
Pincus Counsellors, Inc., which serve as advisers to EQ/Putnam, MFS, Merrill
Lynch, Morgan Stanley, T. Rowe Price, and Warburg Pincus Portfolios,
respectively, of EQ Trust.
10
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF HR TRUST'S PORTFOLIOS AND EQ TRUST'S
PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of
each Portfolio will affect its return and its risks. There is no guarantee
that these objectives will be achieved. Set forth below is a summary of the
investment policies and objectives of each Portfolio. This summary is
qualified in its entirety by reference to the prospectuses for HR Trust and
EQ Trust, both of which accompany this prospectus. Please read the
prospectuses for each of the trusts carefully before investing.
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- ----------- ------------------- ---------
<S> <C> <C>
HR TRUST
Alliance Conservative Diversified mix of publicly-traded, fixed-income and High total return without, in
Investors equity securities; asset mix and security selection the adviser's opinion, undue
are primarily based upon factors expected to reduce risk to principal
risk. The Portfolio is generally expected to hold
approximately 70% of its assets in fixed income
securities and 30% in equity securities.
Alliance Growth Investors Diversified mix of publicly-traded, fixed-income and High total return consistent
equity securities; asset mix and security selection with the adviser's
based upon factors expected to increase possibility of determination of reasonable
high long-term return. The Portfolio is generally risk
expected to hold approximately 70% of its assets in
equity securities and 30% in fixed income securities.
Alliance Growth & Income Primarily income producing common stocks and High total return through a
securities convertible into common stocks. combination of current income
and capital appreciation
Alliance Common Stock Primarily common stock and other equity-type Long-term growth of capital
instruments. and increasing income
Alliance Global Primarily equity securities of non-United States as Long-term growth of capital
well as United States companies.
Alliance International Primarily equity securities selected principally to Long-term growth of capital
permit participation in non-United States companies
with prospects for growth.
Alliance Aggressive Stock Primarily common stocks and other equity-type Long-term growth of capital
securities issued by quality small and intermediate
sized companies with strong growth prospects and in
covered options on those securities.
Alliance Small Cap Growth Primarily U.S. common stocks and other equity type Long-term growth of capital
securities issued by smaller companies with favorable
growth prospects.
Alliance Money Market Primarily high quality U.S. dollar denominated money High level of current income
market instruments. while preserving assets and
maintaining liquidity
Alliance Intermediate Primarily debt securities issued or guaranteed by the High current income
Government Securities U.S. government, its agencies and instrumentalities. consistent with relative
Each investment will have a final maturity of not more stability of principal
than 10 years or a duration not exceeding that of a
10-year Treasury note.
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PORTFOLIO INVESTMENT POLICY OBJECTIVE
- --------- ------------------- ---------
Alliance High Yield Primarily a diversified mix of high yield, High return by maximizing
fixed-income securities involving greater volatility current income and, to the
of price and risk of principal and income than high extent consistent with that
quality fixed-income securities. The medium and lower objective, capital
quality debt securities in which the Portfolio may appreciation
invest are known as "junk bonds."
EQ TRUST
- --------
EQ/Putnam Balanced A well-diversified portfolio of stocks and bonds that Balanced investment
will produce both capital growth and current income.
EQ/Putnam Growth & Primarily common stocks that offer potential for Capital growth and,
Income Value capital growth, consistent with the Portfolio's secondarily, current income
investment objective, common stocks that offer
potential for current income.
MFS Emerging Growth Primarily (i.e., at least 80% of its assets under Long-term growth of capital
Companies normal circumstances) in common stocks of emerging
growth companies that the Portfolio adviser believes
are early in their life cycle but which have the
potential to become major enterprises.
MFS Research A substantial portion of assets invested in common Long-term growth of capital
stock or securities convertible into common stock of and future income
companies believed by the Portfolio adviser to possess
better than average prospects for long-term growth.
Merrill Lynch Basic Value Investment in securities, primarily equities, that the Capital appreciation and,
Equity Portfolio adviser believes are undervalued and secondarily, income
therefore represent basic investment value.
Merrill Lynch World Investment primarily in a portfolio of equity and High total investment return
Strategy fixed income securities, including convertible
securities, of U.S. and foreign issuers.
Morgan Stanley Emerging Primarily equity securities of emerging market country Long-term capital
Markets Equity* (i.e., foreign) issuers. appreciation
T. Rowe Price Equity Primarily dividend paying common stocks of established Substantial dividend income
Income companies. and also capital appreciation
T. Rowe Price International Primarily common stocks of established non-United Long-term growth of capital
Stock States companies.
Warburg Pincus Small Primarily in a portfolio of equity securities of small Long-term capital
Company Value capitalization companies (i.e., companies having appreciation
market capitalizations of $1 billion or less at the
time of initial purchase) that the Portfolio adviser
considers to be relatively undervalued.
</TABLE>
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* Will be available on or about September 2, 1997.
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PART 2: THE GUARANTEED PERIOD ACCOUNT
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. The Guaranteed
Rate for each allocation is the annual interest rate applicable to new
allocations to that Guarantee Period, which was in effect on the Transaction
Date for the allocation. We may establish different Guaranteed Rates under
different classes of Certificates. We use the term GUARANTEED PERIOD AMOUNT
to refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
on any Business Day, therefore, will be the sum of the present value of the
Maturity Value in each Guarantee Period, using the Guaranteed Rate in effect
for new allocations to each such Guarantee Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1998 through 2007. Not all Guarantee Periods will be available
for Annuitants ages 76 and above. See "Allocation of Contributions" in Part
4. Also, the Guarantee Periods may not be available for investment in all
states. As Guarantee Periods expire we expect to add maturity years so that
generally 10 are available at any time.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no transfers or withdrawals are made and no charges
are allocated to the Guarantee Period). The required amount is the present
value of that Maturity Value at the Guaranteed Rate on the Transaction Date
for the contribution, which may also be expressed as the price per $100 of
Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of April 15, 1997 and the related
price per $100 of Maturity Value for each currently available Guarantee
Period were as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH GUARANTEED
EXPIRATION DATE RATE AS OF PRICE
FEBRUARY 15TH OF APRIL 15, PER $100 OF
MATURITY YEAR 1997 MATURITY VALUE
- ---------------- ------------- --------------
<S> <C> <C>
1998 4.93% $96.05
1999 5.40 90.78
2000 5.64 85.58
2001 5.76 80.65
2002 5.86 75.91
2003 5.94 71.39
2004 6.03 66.99
2005 6.09 62.89
2006 6.17 58.89
2007 6.23 55.16
</TABLE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of
years 1998 through 2002, then according to the above table the lump sum
contribution you would have to make as of April 15, 1997 would be $428.97
(i.e., the sum of the price per $100 of Maturity Value for each maturity year
from 1998 through 2002).
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<PAGE>
The above example is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted, withdrawals or transfers to be made from Guarantee Periods or the
market value adjustment that would apply to such transactions. Actual
calculations will be based on Guaranteed Rates on each actual Transaction
Date, which may differ.
Options at Expiration Date
We will notify you on or before December 31st prior to the Expiration Date of
each Guarantee Period in which you have any Guaranteed Period Amount. You may
elect one of the following options to be effective at the Expiration Date,
subject to the restrictions set forth on the prior page and under "Allocation
of Contributions" in Part 3:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges
which may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR
TRANSFERS, WITHDRAWALS OR SURRENDER
PRIOR TO THE EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a
Guarantee Period prior to its Expiration Date will cause any remaining
Guaranteed Period Amount for that Guarantee Period to be increased or
decreased by a market value adjustment. The amount of the adjustment will
depend on two factors: (a) the difference between the Guaranteed Rate
applicable to the amount being withdrawn and the Guaranteed Rate on the
Transaction Date for new allocations to a Guarantee Period with the same
Expiration Date, and (b) the length of time remaining until the Expiration
Date. In general, if interest rates have risen between the time when an
amount was originally allocated to a Guarantee Period and the time it is
withdrawn, the market value adjustment will be negative, and vice versa; and
the longer the period of time remaining until the Expiration Date, the
greater the impact of the interest rate difference. Therefore, it is possible
that a significant rise in interest rates could result in a substantial
reduction in your Annuity Account Value in the Guaranteed Period Account
related to longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Guarantee Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal (including any withdrawal charges) of a portion of the amount in a
Guarantee Period will be a percentage of the market value adjustment that
would be applicable upon a withdrawal of all funds from a Guarantee Period.
This percentage is determined by (i) dividing the amount of the withdrawal or
transfer from the Guarantee Period by (ii) the Annuity Account Value in such
Guarantee Period prior to the withdrawal or transfer. See Appendix I for an
example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate
in (1)(c) above.
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<PAGE>
INVESTMENTS
Amounts allocated to Guarantee Periods will be held in a "nonunitized"
separate account established by Equitable Life under the laws of New York.
This separate account provides an additional measure of assurance that full
payment of amounts due under the Guarantee Periods will be made. Under the
New York Insurance Law, the portion of the separate account's assets equal to
the reserves and other contract liabilities relating to the Certificates are
not chargeable with liabilities arising out of any other business we may
conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933, as amended
(1933 Act), nor is the general account an investment company under the 1940
Act. Accordingly, the general account is not subject to regulation under the
1933 Act or the 1940 Act. However, the market value adjustment interests
under the Certificates are registered under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in this prospectus for your information that
relates to the general account (other than market value adjustment
interests). The disclosure, however, may be subject to certain generally
applicable provisions of the Federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
15
<PAGE>
PART 3: PROVISIONS OF THE CERTIFICATES AND SERVICES WE PROVIDE
WHAT IS THE ACCUMULATOR?
The Accumulator Certificate is a deferred annuity designed to provide for the
accumulation of retirement savings, and for income at a future date.
Investment Options available are Investment Funds providing variable returns
and Guarantee Periods providing guaranteed interest when held to maturity.
Accumulator Certificates are issued as non-qualified annuities for after-tax
contributions. The provisions of your Certificate may be restricted by
applicable laws or regulations. The Certificates may not be available in all
states.
Earnings generally accumulate on a tax-deferred basis until withdrawn or when
distributions become payable. Withdrawals made prior to age 59 1/2 may be
subject to tax penalty.
When issued with the appropriate endorsement, an Accumulator Certificate may
be purchased by a plan qualified under Section 401(a) of the Code. Such
purchases may not be available in all states. Plan fiduciaries considering
purchase of a Certificate should read the important information in Appendix
II.
AVAILABILITY OF THE CERTIFICATES
The Certificates are available for Annuitant issue ages 20 through 83.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your initial contribution must be at least $5,000. Subsequent contributions
may be made in an amount of at least $1,000 at any time up until the
Annuitant attains age 84. We may refuse to accept any contributions if the
sum of all contributions under all accumulation Certificates with the same
Annuitant would then total more than $1,500,000. We reserve the right to
limit aggregate contributions made after the first Contract Year to 150% of
first year contributions. We may also refuse to accept any contribution if
the sum of all contributions under all Equitable Life annuity accumulation
certificates/contracts that you own would then total more than $2,500,000.
Contributions are credited as of the Transaction Date.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check drawn on a
bank or credit union in the U.S., in U.S. dollars and made payable to
Equitable Life. All checks are accepted subject to collection. Contributions
must be sent to Equitable Life at our Processing Office address designated
for contributions. Your initial contribution must be accompanied by a
completed application which is acceptable to us. In the event the application
information or the application is otherwise not acceptable, we may retain
your contribution for a period not exceeding five Business Days while an
attempt is made to obtain the required information. If the required
information cannot be obtained within those five Business Days, the
Processing Office will inform the agent, on behalf of the applicant, of the
reasons for the delay and return the contribution immediately to the
applicant, unless the applicant specifically consents to our retaining the
contribution until the required information is received by the Processing
Office.
ALLOCATION OF CONTRIBUTIONS
You may choose Self-Directed, Principal Assurance or Dollar Cost Averaging
allocations.
A contribution allocated to an Investment Fund purchases Accumulation Units
in that Investment Fund based on the Accumulation Unit Value for that
Investment Fund computed on the Transaction Date. A contribution allocated to
the Guaranteed Period Account will have the Guaranteed Rate for the specified
Guarantee Period offered on the Transaction Date.
Self-Directed Allocation
You allocate your contributions to one or up to all of the available
Investment Options. Allocations among the Investment Options must be in whole
percentages. Allocation percentages can be changed at any time by writing to
our Processing Office, or by telephone. The change will be effective on the
Transaction Date and will remain in effect for future contributions unless
another change is requested.
<PAGE>
At Annuitant ages 76 and above, allocations to Guarantee Periods must be
limited to those with maturities of five years or less and with maturity
dates no later than the February 15th immediately following the Annuity
Commencement Date.
Principal Assurance
This option (for Annuitant issue ages 20 through 75) assures that your
Maturity Value in a specified
16
<PAGE>
Guarantee Period will equal your initial contribution on the Guarantee
Period's Expiration Date, while at the same time allowing you to invest in
the Investment Funds. It may be elected only at issue of your Certificate and
assumes no withdrawals or transfers from the Guarantee Period. The maturity
year generally may not be later than 10 years nor earlier than seven years
from the Contract Date. In order to accomplish this strategy, we will
allocate a portion of your initial contribution to the selected Guarantee
Period. See "Guaranteed Rates and Price Per $100 of Maturity Value" in Part
2. The balance of your initial contribution and all subsequent contributions
must be allocated under "Self-Directed Allocation" as described above.
FREE LOOK PERIOD
You have the right to examine the Accumulator Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You cancel it
by sending it to our Processing Office. The free look is extended if your
state requires a refund period of longer than 10 days.
Your refund will equal the Annuity Account Value reflecting any investment
gain or loss, and any positive or negative market value adjustment, through
the date we receive your Certificate at our Processing Office. Some states
may require that we calculate the refund differently. If you cancel your
Certificate during the free look period, we may require that you wait six
months before you may apply for a Certificate with us again.
We follow these same procedures if you change your mind before you receive
your Certificate, but after a contribution has been made. See "Part 6: Tax
Aspects of the Certificates" for possible consequences of cancelling your
Certificate during the free look period.
ANNUITY ACCOUNT VALUE
Your Annuity Account Value is the sum of the amounts in the Investment
Options.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal
to the number of Accumulation Units in that Investment Fund times the
Accumulation Unit Value for the Investment Fund for that date. The number of
Accumulation Units in an Investment Fund at any time is equal to the sum of
Accumulation Units purchased by contributions and transfers less the sum of
Accumulation Units redeemed for withdrawals, transfers or deductions for
charges.
The number of Accumulation Units purchased or sold in any Investment Fund
equals the dollar amount of the transaction divided by the Accumulation Unit
Value for that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the corresponding Portfolios of each respective
trust, which in turn reflects the investment income and realized and
unrealized capital gains and losses of the Portfolios, as well as each
trust's fees and expenses. The Accumulation Unit Value is also stated after
deduction of the Separate Account asset charges relating to the Certificates.
A description of the computation of the Accumulation Unit Value is found in
the SAI.
Annuity Account Value in Guaranteed Period
Account
The Annuity Account Value in the Guaranteed Period Account on any Business
Day will be the sum of the present value of the Maturity Value in each
Guarantee Period, using the Guaranteed Rate in effect for new allocations to
such Guarantee Period on such date. (This is equivalent to the Guaranteed
Period Amount increased or decreased by the full market value adjustment.)
The Annuity Account Value, therefore, may be higher or lower than the
contributions (less withdrawals) accumulated at the Guaranteed Rate. At the
Expiration Date the Annuity Account Value in the Guaranteed Period Account
will equal the Maturity Value. See "Part 2: The Guaranteed Period Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject
to the following restrictions.
o Transfers out of a Guarantee Period other than at the Expiration Date
will result in a market value adjustment. See "Part 2: The Guaranteed
Period Account."
o At Annuitant ages 76 and above, transfers to Guarantee Periods must
be limited to those with maturities of five years or less and with
maturity dates no later than the February 15th immediately following
the Annuity Commencement Date.
o Transfers may not be made to a Guarantee Period with an Expiration
Date in the current calendar year, or if the Guaranteed Rate is 3%.
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Transfer requests must be made directly to our Processing Office. Your
request for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which
the amounts are to be transferred. Your transfer request may be in writing or
by telephone.
For telephone transfer requests, procedures have been established by
Equitable Life that are considered to be reasonable and are designed to
confirm that instructions communicated by telephone are genuine. Such
procedures include requiring certain personal identification information
prior to acting on telephone instructions and providing written confirmation.
In light of the procedures established, Equitable Life will not be liable for
following telephone instructions that it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must
be on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer
to or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in
writing.
DOLLAR COST AVERAGING
We offer two Dollar Cost Averaging programs as described below. The main
objective of dollar cost averaging is to attempt to shield your investment
from short term price fluctuations. Since the same dollar amounts are
transferred to other Investment Funds periodically, more Accumulation Units
are purchased in an Investment Fund if the value per Accumulation Unit is low
and fewer Accumulation Units are purchased if the value per Accumulation Unit
is high. Therefore, a lower average value per Accumulation Unit may be
achieved over the long term. This plan of investing allows you to take
advantage of market fluctuations but does not assure a profit or protect
against a loss in declining markets.
Special Dollar Cost Averaging
For Certificate Owners who (at issue of the Certificate) want to dollar cost
average their entire initial contribution from the Alliance Money Market Fund
into the other Investment Funds monthly over a period of twelve months, we
offer a Special Dollar Cost Averaging program under which the mortality and
expense risks and administration charges normally deducted from the Alliance
Money Market Fund will not be deducted. See "Charges Deducted from the
Investment Funds" in Part 4.
General Dollar Cost Averaging
If you have at least $5,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage
of your Annuity Account Value transferred from the Alliance Money Market Fund
to other Investment Funds on a monthly, quarterly or annual basis. This
program may be elected at any time.
The minimum amount that may be transferred on each Transaction Date is $250.
The maximum amount which may be transferred is equal to the Annuity Account
Value in the Alliance Money Market Fund at the time the option is elected,
divided by the number of transfers scheduled to be made each Contract Year.
Dollar cost averaging may not be elected while the systematic withdrawal
option is in effect.
The transfer date will be the same calendar day of the month as the Contract
Date. If, on any transfer date, the Annuity Account Value in the Alliance
Money Market Fund is equal to or less than the amount you have elected to
have transferred, the entire amount will be transferred and the dollar cost
averaging option will end. You may change the transfer amount once each
Contract Year, or cancel this option by sending us satisfactory notice to our
Processing Office at least seven calendar days before the next transfer date.
BASEBUILDER BENEFITS
The baseBUILDER option provides guaranteed benefits in the form of a Combined
Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit. The
combined benefit (Plan A) is available for Annuitant issue ages 20 through 75
for which there is a charge. See "Combined Guaranteed Minimum Death Benefit
and Guaranteed Minimum Income Benefit Charge" in Part 5). If you do not elect
the combined benefit, the Guaranteed Minimum Death Benefit is still provided
under the Certificate at a lower charge.
If the Annuitant is age 76 or older and you are interested in the Combined
Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit, ask
your agent for a copy of the prospectus supplement describing this benefit.
The combined benefit (Plan A) is not currently available in New York.
18
<PAGE>
DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of proof satisfactory to us of the Annuitant's death
prior to the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the
time you apply for the Certificate. While the Certificate is in effect, you
may change your beneficiary by writing to our Processing Office. The change
will be effective on the date the written submission was signed. The death
benefit payable will be determined as of the date we receive such proof of
death and any required instructions as to the method of payment.
The death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the Guaranteed Minimum Death Benefit defined below; and
(2) the death benefit provided with respect to the Guaranteed Period
Account which is equal to the Annuity Account Value in the
Guaranteed Period Account or, if greater, the sum of the Guaranteed
Period Amounts in each Guarantee Period. See "Part 2: The
Guaranteed Period Account."
Guaranteed Minimum Death Benefit
Your Guaranteed Minimum Death Benefit is the minimum amount payable with
respect to the Investment Funds upon the death of the Annuitant.
Applicable to Certificate issued in all states except New York for Annuitant
issue ages 20 through 79.
6% to Age 80 Benefit--On the Contract Date, the Guaranteed Minimum Death
Benefit is equal to the portion of the initial contribution allocated to the
Investment Funds. Thereafter, the Guaranteed Minimum Death Benefit is
credited with interest at 6% (3% for amounts in the Alliance Money Market and
Alliance Intermediate Government Securities Funds) on each Contract Date
anniversary through the Annuitant's age 80 (or on the date of the Annuitant's
death, if earlier), and 0% thereafter, and is adjusted for any subsequent
contributions and transfers into the Investment Funds and transfers and
withdrawals from such Funds.
Applicable to Certificates issued in New York Annuitant issue age 20 through
79
Guaranteed Minimum Death Benefit--On the Contract Date, the Guaranteed
Minimum Death Benefit is equal to the initial contribution. Thereafter, the
Guaranteed Minimum Death Benefit is reset through the Annuitant's age 80 to
the Annuity Account Value on a Contract Date anniversary if higher than the
current Guaranteed Minimum Death Benefit, and is adjusted for any subsequent
contributions and withdrawals.
Upon your death, the Guaranteed Minimum Death Benefit will be reset to the
Annuity Account Value in the Investment Funds, plus the sum of the Guaranteed
Period Amounts in each Guarantee Period, if greater than the Guaranteed
Minimum Death Benefit determined above.
Applicable to Certificates issued in all states for Annuitant issue ages 80
through 83
On the Contract Date, the GMDB is equal to the portion of the initial
contribution allocated to the Investment Funds. Thereafter, the GMDB is equal
to such portion of the initial contribution plus (a) any subsequent
contributions an transfers into the Investment Funds, less (b) any transfers
and withdrawals from such Funds.
Withdrawals will reduce your Guaranteed Minimum Death Benefit, see "How
Withdrawals and Transfer Affect Your Guaranteed Minimum Death Benefit and
Guaranteed Minimum Income Benefit" below.
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
benefit you have chosen under your Certificate. If no annuity benefit has
been chosen at the time of the Annuitant's death, the beneficiary will
receive the death benefit in a lump sum. However, subject to any exceptions
in the Certificate, Equitable Life's rules then in effect and any other
applicable requirements under the Code, the beneficiary may elect to apply
the death benefit to one or more annuity benefit offered by Equitable Life.
See "Annuity Benefits and Distribution Options" below. Note that if you are
both the Certificate Owner and the Annuitant, only a life annuity or an
annuity that does not extend beyond the life expectancy of the beneficiary
may be elected.
<PAGE>
Successor Annuitant
If you are both the Certificate Owner and the Annuitant and you elect your
spouse to be both the sole primary beneficiary and the successor Annuitant/
Certificate Owner, then no death benefit is payable until your surviving
spouse's death.
On the Processing Date following your death, if the successor
Annuitant/Certificate Owner election was elected at issue of your Certificate
and is in effect at your death, the Guaranteed Minimum Death Benefit will be
reset at the greater of the current Guaranteed Minimum Death Benefit and the
cur-
19
<PAGE>
rent Annuity Account Value in the Investment Funds. In determining whether
the Guaranteed Minimum Death Benefit will continue to grow, we can use the
age (as of the Processing Date) of the successor Annuitant/Certificate Owner.
WHEN THE CERTIFICATE OWNER DIES
BEFORE THE ANNUITANT
When you are not the Annuitant and you die before the Annuity Commencement
Date, the beneficiary named to receive the death benefit upon the Annuitant's
death will automatically succeed as Certificate Owner (unless you name a
different person as a successor Owner in a written form acceptable to us and
send it to our Processing Office). The Certificate provides that the original
Certificate Owner's entire interest in the Certificate be completely
distributed to the named beneficiary by the fifth anniversary of such Owner's
death (unless an annuity benefit is elected and payments begin within one
year after the Certificate Owner's death and are made over the beneficiary's
life or over a period not to exceed the beneficiary's life expectancy). If an
annuity benefit has not been elected, as described above, on the fifth
anniversary of your death, we will pay any Annuity Account Value remaining on
such date, less any applicable withdrawal charge. If the successor
Certificate Owner is your surviving spouse, no distributions are required as
long as both the surviving spouse and the Annuitant are living.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit provides a minimum amount of guaranteed
lifetime income with respect to the Investment Funds when you exchange your
Accumulator Certificate for an Income Manager (Life Annuity with a Period
Certain) certificate. The Income Manager provides payments during a period
certain with payments continuing for life thereafter.
On the Transaction Date that you exercise your Guaranteed Minimum Income
Benefit, the annual lifetime income that will be provided under the Income
Manager (Life Annuity with a Period Certain) will be the greater of (i) your
Guaranteed Minimum Income Benefit, and (ii) the income provided by
application of your Annuity Account Value in the Investment Funds at our then
current annuity factors. The Guaranteed Minimum Income Benefit does not
provide an Annuity Account Value or guarantee performance of your Investment
Funds. Because it is based on conservative actuarial factors, the level of
lifetime income that it guarantees may often be less than the level that
would be provided by application of your Annuity Account Value at current
annuity factors. It should therefore be regarded as a safety net.
If you have any Annuity Account Value in the Guaranteed Period Account under
your Accumulator Certificate as of the Transaction Date that you exercise
your Guaranteed Minimum Income Benefit, such Annuity Account Value will also
be applied (at current annuity factors) toward the purchase of payments under
the Income Manager (Life Annuity with a Period Certain). Such Annuity Account
Value will increase the payments provided by the Guaranteed Minimum Income
Benefit. A market value adjustment may apply.
Illustrated below are Guaranteed Minimum Income Benefit amounts per $100,000
of initial contribution, for a male age 60 (at issue) on Contract Date
anniversaries as indicated below, assuming allocation only to the Investment
Funds (excluding the Alliance Money Market and Alliance Intermediate
Government Securities Funds), no subsequent contributions, transfers or
withdrawals.
<TABLE>
<CAPTION>
GUARANTEED MINIMUM
INCOME BENEFIT ANNUAL
CONTRACT DATE INCOME PAYABLE
ANNIVERSARY AT FOR LIFE WITH
ELECTION 10 YEAR CERTAIN
- -------------- ---------------------
<S> <C>
7 $ 8,992
10 12,160
15 18,358
</TABLE>
Withdrawals and transfers will reduce your Guaranteed Minimum Income Benefit,
see "How Withdrawals and Transfers Affect Your Guaranteed Minimum Death
Benefit and Guaranteed Minimum Income Benefit" below.
The Guaranteed Minimum Income Benefit may be exercised only within 30 days
following the 7th or later Contract Date anniversary under your Accumulator
Certificate. However, it may not be exercised earlier than the Annuitant's
age 60, nor later than the Annuitant's age 83; except that for Annuitant's
issue ages 20 to 44, it may be exercised following the 15th or later Contract
Date anniversary.
When you exercise your Guaranteed Minimum Income Benefit, you will receive an
Income Manager (Life Annuity with a Period Certain) certificate in exchange,
with at least the minimum annual income specified and a period certain based
on the Annuitant's age at the time the benefit is exercised as follows:
20
<PAGE>
<TABLE>
<CAPTION>
LEVEL PAYMENTS*
-----------------
ANNUITANT'S AGE
AT ELECTION PERIOD CERTAIN YEARS
----------------- ----------------------
<S> <C>
60 to 75 10
76 10
77 10
78 10
79 10
80 10
81 9
82 8
83 7
</TABLE>
- ------------
* Other forms and period certains may also be available.
Payments will start one payment mode from the Contract Date of the Income
Manager certificate.
Each year on your Contract Date anniversary, if you are eligible to exercise
your Guaranteed Minimum Income Benefit, we will send you an eligibility notice
illustrating how much income could be provided on the Contract Date
anniversary. You may then notify us within 30 days following the Contract
Date anniversary if you want to exercise Guaranteed Minimum Income Benefit by
submitting the proper form and returning your Accumulator Certificate. The
amount of income you actually receive will be determined on the Transaction
Date that we receive your properly completed exercise notice.
You may also apply your Cash Value at any time to an Income Manager (Life
Annuity with a Period Certain) payout annuity or, you may always apply your
Annuity Account Value to any of our other life annuity benefits. The annuity
benefits are discussed below. These benefits differ from the Income Manager
and may provide higher or lower income levels, but do not have all the
features of the Income Manager. You may request an illustration from your
agent.
The Income Manager (Life Annuity with a Period Certain) is offered through
our prospectus for the Income Manager, a copy of which may be obtained from
your agent. We will also provide a prospectus with the eligibility notice.
You should read it carefully before you decide to exercise your Guaranteed
Minimum Income Benefit.
Successor Annuitant/Certificate Owner
If the successor Annuitant/Certificate Owner election (discussed above) was
elected at issue of the Certificate and is in effect at your death, the
Guaranteed Minimum Income Benefit will continue to be available on Contract
Date anniversaries seven and later based on the Contract Date of the
Accumulator Certificate, provided the Guaranteed Minimum Income Benefit is
exercised as specified above based on the age of the successor
Annuitant/Certificate Owner.
WITHDRAWAL OPTIONS
The Accumulator is an annuity contracts, even though you may elect to receive
your benefits in a non-annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while the Annuitant is
alive. Two withdrawal options are available: Lump Sum Withdrawals and
Systematic Withdrawals. Withdrawals in excess of the 15% free corridor amount
may result in withdrawal charges. See "Part 4: Deductions and Charges."
Withdrawals may also be taxable and subject to tax penalty. See "Part 6: Tax
Aspects of the Certificates."
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration
Date" in Part 2.
As a deterrent to early withdrawal (generally prior to age 59 1/2) the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 7: Tax Aspects
of the Certificates."
LUMP SUM WITHDRAWALS
You may take Lump Sum Withdrawals at any time subject to a minimum withdrawal
amount of $1,000. A request to withdraw more than 90% of the Cash Value as of
the Transaction Date will result in the termination of the Certificate and
will be treated as a surrender of the Certificate for its Cash Value. See
"Surrendering the Certificates to Receive the Cash Value," below.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal
will be taken. If we have received the information we require, the requested
withdrawal will become effective on the Transaction Date and proceeds will
usually be mailed within seven calendar days thereafter, but we may delay
payment as described in "When Payments Are Made" below. If we receive only
partially completed information, our Processing Office will contact you for
specific instructions before your request can be processed.
SYSTEMATIC WITHDRAWALS
Systematic Withdrawals provide level percentage or level amount payouts. You
may choose to receive Systematic Withdrawals on a monthly, quarterly or
21
<PAGE>
annual basis. You select a dollar amount or percentage of the Annuity Account
Value to be withdrawn, subject to a maximum of 1.2% monthly, 3.6% quarterly
and 15.0% annually, but in no event may any payment be less than $250. If at
the time a Systematic Withdrawal is to be made, the withdrawal amount would
be less than $250, no payment will be made and your Systematic Withdrawal
election will terminate.
You select the date of the month when the withdrawals will be made, but you
may not choose a date later than the 28th day of the month. If no date is
selected, withdrawals will be made on the same calendar day of the month as
the Contract Date. The commencement of payments under the Systematic
Withdrawal option may not be elected to start sooner than 28 days after issue
of the Certificate.
You may elect Systematic Withdrawals at any time by completing the proper
form and sending it to our Processing Office. You may change the payment
frequency of your Systematic Withdrawals once each Contract Year or cancel
this withdrawal option at any time by sending notice in a form satisfactory
to us. The notice must be received at our Processing Office at least seven
calendar days prior to the next scheduled withdrawal date. You may also
change the amount or percentage of your Systematic Withdrawals once in each
Contract Year. However, you may not change the amount or percentage in any
Contract Year where you have previously taken another withdrawal under the
Lump Sum Withdrawals option described above.
Unless you specify otherwise, Systematic Withdrawals will be withdrawn on a
pro rata basis from your Annuity Account Value in the Investment Funds. If
there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal required or the total amount of the
withdrawal, as applicable, will be withdrawn from the Guarantee Periods in
order of the earliest Expiration Date(s) first.
HOW WITHDRAWALS AND TRANSFERS AFFECT YOUR GUARANTEED MINIMUM DEATH BENEFIT
AND GUARANTEED MINIMUM INCOME BENEFIT
Except as described in the next sentence, each withdrawal and transfer will
cause a reduction in your current Guaranteed Minimum Death Benefit and
Guaranteed Minimum Income Benefit benefit base (described below) on a pro
rata basis. Your current Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit benefit base will be reduced on a dollar-for-dollar
basis as long as the sum of your withdrawals and transfers from the
Investment Funds in any Contract Year is 6% or less of the beginning of
Contract Year Guaranteed Minimum Death Benefit. Once a withdrawal or transfer
is made that causes cumulative withdrawals and transfers from the Investment
Funds in a Contract Year to exceed 6% of the beginning of Contract Year
Guaranteed Minimum Death Benefit, that withdrawal or transfer and any
subsequent withdrawals and transfers in that Contract Year will cause a pro
rata reduction to occur.
Reduction on a dollar-for-dollar basis means your current Guaranteed Minimum
Death Benefit and Guaranteed Minimum Income Benefit benefit base will be
reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis
means that we calculate the percentage of the Annuity Account Value as of the
Transaction Date that is being withdrawn and we reduce your current
Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit
benefit base by that same percentage. For example, if your Annuity Account
Value is $10,000 and you withdraw $4,000 you have withdrawn 40%
($4,000/$10,000) of your Annuity Account Value. If your Guaranteed Minimum
Death Benefit was $20,000 prior to the withdrawal, it would be reduced by
$8,000 ($20,000 x .40) and your new Guaranteed Minimum Death Benefit after
the withdrawal would be $12,000 ($20,000 -$8,000).
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your Guaranteed Minimum
Death Benefit or Guaranteed Minimum Income Benefit.
GUARANTEED MINIMUM INCOME BENEFIT BENEFIT BASE
The Guaranteed Minimum Income Benefit benefit base is equal to the portion of
the initial contribution allocated to the Investment Funds on the Contract
Date. Thereafter, the Guaranteed Minimum Income Benefit benefit base is
credited with interest at 6% (3% for amounts in the Alliance Money Market and
Alliance Intermediate Government Securities Funds) on each Contract Date
anniversary through the Annuitant's age 80, and 0% thereafter, and is
adjusted for any subsequent contributions and transfers into the Investment
Funds and transfers and withdrawals from such Funds. The Guaranteed Minimum
Income Benefit benefit base will also be reduced by any withdrawal charge
remaining on the Transaction Date that you exercise the Guaranteed Minimum
Income Benefit.
Your Guaranteed Minimum Income Benefit benefit base is applied to guaranteed
minimum annuity factors to determine the Guaranteed Minimum Income Benefit.
The guaranteed minimum annuity
22
<PAGE>
factors are based on (i) interest at 2.5% if the Guaranteed Minimum Income
Benefit is exercised within 30 days following a Contract Date anniversary in
years 7 through 9 and at 3% if exercised within 30 days following the 10th or
later Contract Date anniversary, and (ii) mortality tables that assume
increasing longevity. These interest and mortality factors are generally more
conservative than the basis underlying current annuity factors, which means
that they would produce less periodic income for an equal amount applied.
Your Guaranteed Minimum Income Benefit benefit base does not create an
Annuity Account Value or a Cash Value and is used solely for purposes of
calculating your Guaranteed Minimum Income Benefit.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward
or downward market value adjustment. See "Part 2: The Guaranteed Period
Account." We do not guarantee any minimum Cash Value except for amounts in a
Guarantee Period held to the Expiration Date. On any date before the Annuity
Commencement Date while the Certificate is in effect, the Cash Value is equal
to the Annuity Account Value less any withdrawal charge. The free corridor
amount will not apply when calculating the withdrawal charge applicable upon
a surrender. See "Part 4: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
the Annuitant is living and before the Annuity Commencement Date. For a
surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate will be terminated
as of that date.
You may receive the Cash Value in a single sum payment or apply it under one
or more of the annuity benefits described below. We will usually pay the Cash
Value within seven calendar days, but we may delay payment as described in
"When Payments are Made" below.
For the tax consequences of surrenders, see "Part 6: Tax Aspects of the
Certificates."
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds,
payment of any portion of the Annuity Account Value (less any applicable
withdrawal charge) from the Investment Funds, and, upon surrender, payment of
the Cash Value from the Investment Funds will be made within seven calendar
days after the Transaction Date. Payments or application of proceeds from the
Investment Funds can be deferred for any period during which (1) the New York
Stock Exchange is closed or trading on it is restricted, (2) sales of
securities or determination of the fair value of an Investment Fund's assets
is not reasonably practicable because of an emergency, or (3) the SEC, by
order, permits us to defer payment in order to protect persons with interest
in the Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account (other than for death benefits) for up to six
months while you are living. We may also defer payments for any amount
attributable to a contribution made in the form of a check for a reasonable
amount of time (not to exceed 15 days) to permit the check to clear.
ANNUITY BENEFITS AND PAYOUT ANNUITY
OPTIONS
The Accumulator Certificates offer annuity benefits and Income Manager payout
annuity options, described below, for providing retirement income.
ANNUITY BENEFITS
Annuity benefits under the Accumulator provide periodic payments over a
specified period of time which may be fixed or may be based on the
Annuitant's life. Annuity forms of payment are calculated as of the Annuity
Commencement Date, which is on file with our Processing Office. You can
change the Annuity Commencement Date by writing to our Processing Office any
time before the Annuity Commencement Date. However, you may not choose a date
later than the 28th day of any month. Also, based on the issue age of the
Annuitant, the Annuity Commencement Date may not be later than the Processing
Date which follows the Annuitant's 90th birthday (may be different in some
states).
Before the Annuity Commencement Date, we will send a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay fixed
annuity benefits on the "normal form" indicated for your Certificate as of
the Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or
(2) the Cash Value
23
<PAGE>
for any period certain only annuity form except that if the period certain is
more than five years, the amount applied will be no less than 95% of the
Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an annuity benefit prior
to an Expiration Date will result in a market value adjustment. See "Market
Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 2.
Annuity Forms
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with
this annuity form, it provides the highest monthly payment of any of the
life income annuity options, so long as the Annuitant is living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before a specified period of time (the "certain period") has ended,
payments will continue to the beneficiary for the balance of the certain
period. Certain periods may be 5, 10, 15 or 20 years. A life annuity
with a certain period of 10 years is the normal form of annuity under
the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
This option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The annuity forms outlined above are available in both fixed and variable
form, unless otherwise indicated. Fixed annuity payments are guaranteed by us
and will be based either on the tables of guaranteed annuity payments in your
Certificate or on our then current annuity rates, whichever is more favorable
for the Annuitant. Variable income annuities may be funded through the
Investment Funds through the purchase of annuity units. The amount of each
variable annuity payment may fluctuate, depending upon the performance of the
Investment Funds. That is because the annuity unit value rises and falls
depending on whether the actual rate of net investment return (after
deduction of charges) is higher or lower than the assumed base rate. See
"Annuity Unit Values" in the SAI. Variable income annuities may also be
available by separate prospectus through Investment Funds of other separate
accounts we offer.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here. Your registered representative
can provide details.
For each annuity benefit, we will issue a separate written agreement putting
the benefit into effect. Before we pay any annuity benefit, we require the
return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
annuity form, the Annuitant's age (or the Annuitant's and joint Annuitant's
ages) and in certain instances, the sex of the Annuitant(s). Once an annuity
form is chosen and payments have commenced, no change can be made.
If, at the time you elect an annuity form, the amount to be applied is less
than $2,000 or the initial payment under the form elected is less than $20
monthly, we reserve the right to pay the Annuity Account Value in a single
sum rather than as payments under the annuity form chosen.
<PAGE>
INCOME MANAGER PAYOUT ANNUITY OPTIONS
You may apply your Annuity Account Value to an Income Manager (Life Annuity
with a Period Certain) certificate. The Income Manager is designed to provide
guaranteed level or increasing annual payments for the Annuitant's life or
for the Annuitant's life and the life of a joint Annuitant.
If you apply a part of the Annuity Account Value under an Income Manager
payout annuity, it will be considered a withdrawal and may be subject to
withdrawal charges. See "Withdrawal Options" above. If 100% of the Annuity
Account Value is applied from an Accumulator Certificate at a time when the
dollar amount of the withdrawal charge is greater than 2% of remaining
contributions (after withdrawals), such withdrawal charge will not be
deducted. However, a new withdrawal charge schedule will apply under the new
certificate. For purposes of the new certificate withdrawal charge schedule,
the year in which your Annuity Account Value is applied under the new
certificate will be "Contract
24
<PAGE>
Year 1." If 100% of the Annuity Account Value is applied from the Accumulator
when the dollar amount of the withdrawal charge is 2% or less, such
withdrawal charge will not be deducted and there will be no withdrawal charge
schedule under the new certificate. You should consider the timing of your
purchase as it relates to the potential for withdrawal charges under the new
certificate. No subsequent contributions will be permitted under the Income
Manager certificate.
You may also apply your Annuity Account Value to purchase the Income Manager
(Period Certain) once withdrawal charges are no longer in effect. This
version of the Income Manager provides for annual payments for a specified
period. No withdrawal charges will apply under this Income Manager
certificate.
The Income Manager payout annuities are described in our prospectus for the
Income Manager. Copies of the most current version are available from your
agent. To purchase an Income Manager Payout Annuity, we also require the
return of your Certificate. An Income Manager payout annuities certificate
will be issued to put one of these options into effect. Depending upon your
circumstances, this may be accomplished on a tax-free basis. Consult your tax
adviser.
ASSIGNMENT
The Certificates may be assigned at any time before the Annuity Commencement
Date and for any purpose other than as collateral or security for a loan.
Equitable Life will not be bound by an assignment unless it is in writing and
we have received it at our Processing Office. In some cases, an assignment
may have adverse tax consequences. See "Part 6: Tax Aspects of the
Certificates."
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the
calendar year;
o Three additional reports of your Certificate values each year;
o Annual and semi-annual statements of each trust; and
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for arecording of daily Accumulation Unit Values
and Guaranteed Rates applicable to the Guarantee Periods. Also call
during our regular business hours to speak to one of our customer
service representatives.
O PROCESSING OFFICE
O FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
O FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
O FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
O FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY
EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive, 4th Floor
Secaucus, NJ 07096
<PAGE>
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI),
an indirect wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI is
registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's
principal business address is 1290 Avenue of the Americas, New York, New York
10104. EDI was paid a fee of $1,204,370 for 1996 and $126,914 for 1995 for
its services under its "Distribution Agreement" with Equitable Life and the
Separate Account.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents. Broker-dealer sales
compensation for EDI and its affiliates will generally not
25
<PAGE>
exceed six percent of total contributions made under a Certificate. EDI may
also receive compensation and reimbursement for its marketing services under
the terms of its distribution agreement with Equitable Life. Broker-dealers
receiving sales compensation will generally pay a portion thereof to their
registered representatives as commission related to sales of the
Certificates. The offering of the Certificates is intended to be continuous.
26
<PAGE>
PART 4: DEDUCTIONS AND CHARGES
CHARGES DEDUCTED FROM THE
ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options
you select, subject to certain restrictions. We then periodically deduct
certain amounts from your Annuity Account Value. Unless otherwise indicated,
the charges described below and under "Charges Deducted from the Investment
Funds" below will not be increased by us for the life of the Certificates. We
may reduce certain charges under group or sponsored arrangements. See "Group
or Sponsored Arrangements" below. Charges are deducted proportionately from
all the Investment Funds in which your Annuity Account Value is invested on a
pro rata basis, except as noted below.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that a withdrawal exceeds the free corridor amount, or if the
Certificate is surrendered to receive its Cash Value. We determine the
withdrawal charge separately for each contribution in accordance with the
table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For each contribution, the Contract Year in which we receive
that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the
beginning of the Contract Year minus any amount previously withdrawn
during that Contract Year.
Any withdrawal requested that exceeds the free corridor amount will be
subject to the withdrawal charge. The 15% free corridor amount is not
applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge, the Federal income tax law
treats earnings as withdrawn first. See "Part 6: Tax Aspects of the
Certificates."
The withdrawal charge is to help cover sales expenses.
For Certificates issued to a charitable remainder trust, the free corridor
amount will be changed to be the greater of (1) the current Annuity Account
Value, less contributions that have not been withdrawn (earnings in the
Certificate) and (2) the free corridor amount defined above.
Combined Guaranteed Minimum Death Benefit and Guaranteed Minimum Income
Benefit Charge (Plan A)
We deduct a charge annually on each Processing Date for providing the
Combined Guaranteed Minimum Death Benefit and Guaranteed Minimum Income
Benefit (Plan A). The charge is equal to a percentage of the Guaranteed
Minimum Death Benefit in effect on the Processing Date. The percentage is
equal to 0.45%.
Guaranteed Minimum Death Benefit Only Benefit Charge (Plan B)
We deduct a charge annually on each Processing Date for providing the
Guaranteed Minimum Death Benefit Only Benefit (Plan B). The charge is equal
to a percentage of the Guaranteed Minimum Death Benefit in effect on the
Processing Date. The percentage is equal to 0.20%.
<PAGE>
Charges for State Premium and Other Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium
taxes, that might be imposed in your state. Generally we deduct this charge
from the amount applied to provide an annuity benefit. In certain states,
however, we may deduct the charge for taxes from contributions. The current
tax charge
27
<PAGE>
that might be imposed varies by state and ranges from 0% to 3.5% (the rate is
1% in Puerto Rico and 5% in the Virgin Islands).
CHARGES DEDUCTED FROM THE
INVESTMENT FUNDS
Mortality and Expense Risks Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for mortality and expense risks. The daily charge is at the
rate of 0.002477%, which is equivalent to an annual rate of 0.90%, on the
assets in each Investment Fund.
The mortality risk assumed is the risk that Annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables,
shown in each Certificate, will differ from actual mortality experience.
Lastly, we assume a mortality risk to the extent that at the time of death,
the Guaranteed Minimum Death Benefit exceeds the Cash Value of the
Certificate. The expense risk assumed is the risk that it will cost us more
to issue and administer the Certificates than we expect.
Administration Charge
We will deduct a daily charge from the assets in each Investment Fund, to
compensate us for a portion of the administration expenses under the
Certificates. The daily charge is at a rate of 0.000692% (equivalent to an
annual rate of 0.25%) on the assets in each Investment Fund. We reserve the
right to increase the charge to an annual rate of 0.35% the maximum permitted
under the Certificates.
HR TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HR Trust's assets, the 12b-1
fee, direct operating expenses of HR Trust (such as trustees' fees, expenses
of independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of HR Trust
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
maximum investment advisory fees paid annually by the Portfolios cannot be
changed without a vote by shareholders. They are as follows:
<TABLE>
<CAPTION>
FIRST NEXT NEXT NEXT
$750 $750 $1 $2.5
MILLION MILLION BILLION BILLION THEREAFTER
--------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Alliance
Conservative
Investors..... 0.475% 0.425% 0.375% 0.350% 0.325%
Alliance
Growth
Investors .... 0.550% 0.500% 0.450% 0.425% 0.400%
Alliance
Growth &
Income ....... 0.550% 0.525% 0.500% 0.480% 0.470%
Alliance
Common Stock 0.475% 0.425% 0.375% 0.355% 0.345%*
Alliance
Global........ 0.675% 0.600% 0.550% 0.530% 0.520%
Alliance
International 0.900% 0.825% 0.800% 0.780% 0.770%
Alliance
Aggressive
Stock ........ 0.625% 0.575% 0.525% 0.500% 0.475%
Alliance Small
Cap Growth.... 0.900% 0.850% 0.825% 0.800% 0.775%
Alliance Money
Market ....... 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance
Intermediate
Gov't
Securities .. 0.500% 0.475% 0.450% 0.430% 0.420%
Alliance High
Yield ........ 0.600% 0.575% 0.550% 0.530% 0.520%
</TABLE>
- ------------
* On assets in excess of $10 billion, the management feee for the
Alliance Common Stock Portfolio is reduced to 0.335% of average daily
net assets.
<PAGE>
Investment advisory fees are established under HR Trust's investment advisory
agreements between HR Trust and its investment adviser, Alliance.
The Rule 12b-1 Plan provides that the HR Trust, on behalf of each Portfolio
may pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fee, which
may be waived in the discretion of EDI may be increased only by action of the
Board of Trustees of HR Trust up to a maximum of 0.50% per annum. All of
these fees and expenses are described more fully in the HR Trust prospectus.
EQ TRUST CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQ Trust's assets, the 12b-1
fee, other direct operating expenses of EQ Trust (such as trustees' fees,
expenses of independent auditors and legal counsel, administrative service
fees, custodian fees, and liability insurance), and certain
investment-related expenses of EQ Trust (such as brokerage commissions and
other expenses related to the purchase and sale of securities), are reflected
in each Portfolio's daily share price. The investment management
28
<PAGE>
fees paid annually by the Portfolios cannot be changed without a vote by
shareholders. They are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET
ASSETS
---------------------
<S> <C>
EQ/Putnam Balanced................... 0.55%
EQ/Putnam Growth and Income Value ... 0.55%
MFS Emerging Growth Companies ....... 0.55%
MFS Research......................... 0.55%
Merrill Lynch Basic Value Equity ... 0.55%
Merrill Lynch World Strategy ....... 0.70%
Morgan Stanley Emerging Markets
Equity.............................. 1.15%
T. Rowe Price Equity Income.......... 0.55%
T. Rowe Price International Stock ... 0.75%
Warburg Pincus Small Company Value .. 0.75%
</TABLE>
Investment management fees are established under EQ Trust's Investment
Management Agreement between EQ Trust and its investment manager, EQ
Financial. EQ Financial has entered into expense limitation agreements with
EQ Trust, with respect to each Portfolio, pursuant to which EQ Financial has
agreed to waive or limit its fees and total annual operating expenses
(expressed as a percentage of the Portfolios' average daily net assets) to
0.85% each for the EQ/Putnam Growth & Income Value, MFS Research, Merrill
Lynch Basic Value Equity, T. Rowe Price Equity, and MFS Emerging Growth
Companies Portfolios; 0.90% for the EQ/Putnam Balanced Portfolio; 1.00% for
Warburg Pincus Small Company Value Portfolio; 1.20% each for T. Rowe Price
International Stock and Merrill Lynch World Strategy Portfolios; and 1.75%
for Morgan Stanley Emerging Markets Equity Portfolio. See the prospectus for
EQ Trust for more information.
The Rule 12b-1 Plan provides that EQ Trust, on behalf of each Portfolio, may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fees, which
may be waived in the discretion of EDI, may be increased only by action of
the Board of Trustees of EQ Trust up to a maximum of 0.50% per annum. All of
these fees and expenses are described more fully in the EQ Trust prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal
charge or change the minimum initial contribution requirements. We may also
change the guaranteed minimum death benefit and the guaranteed minimum income
benefit. We may offer Investment Funds investing in Class IA shares of HR
Trust and EQ Trust, which are not subject to 12b-1 Plan fees. Group
arrangements include those in which a trustee or an employer, for example,
purchases contracts covering a group of individuals on a group basis.
Sponsored arrangements include those in which an employer allows us to sell
Certificates to its employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these
factors into account when reducing charges. To qualify for reduced charges, a
group or sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy Certificates or that have
been in existence less than six months will not qualify for reduced charges.
We may also establish different Guaranteed Rates for the Guarantee Periods
under different classes of Certificates for group or sponsored arrangements.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the withdrawal charge will reflect
differences in costs or services and will not be unfairly discriminatory.
Group and sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR
MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE
ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
Charges may be reduced or eliminated when sales are made in a manner that
results in savings of sales and administrative expenses, such as sales
through persons who are compensated by clients for recommending investments
and receive no commission or reduced commissions in connection with the sale
of the Certificates. In no event will a reduction or elimination charges be
permitted where it would be unfairly discriminatory.
29
<PAGE>
PART 5: VOTING RIGHTS
HR TRUST AND EQ TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of HR Trust and EQ Trust.
Since we own the assets of the Separate Account, we are the legal owner of
the shares and, as such, have the right to vote on certain matters. Among
other things, we may vote:
o to elect each trust's Board of Trustees,
o to ratify the selection of independent auditors for each trust, and
o on any other matters described in each trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because HR Trust is a Massachusetts business trust and EQ Trust is a Delaware
business trust, annual meetings are not required. Whenever a shareholder vote
is taken, we will give Certificate Owners the opportunity to instruct us how
to vote the number of shares attributable to their Certificates. If we do not
receive instructions in time from all Certificate Owners, we will vote the
shares of a Portfolio for which no instructions have been received in the
same proportion as we vote shares of that Portfolio for which we have
received instructions. We will also vote any shares that we are entitled to
vote directly because of amounts we have in an Investment Fund in the same
proportions that Certificate Owners vote.
Each share of each trust is entitled to one vote. Fractional shares will be
counted. Voting generally is on a Portfolio-by-Portfolio basis except that
shares will be voted on an aggregate basis when universal matters, such as
election of Trustees and ratification of independent auditors, are voted
upon. However, if the Trustees determine that shareholders in a Portfolio are
not affected by a particular matter, then such shareholders generally would
not be entitled to vote on that matter.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQ Trust shares currently are sold only to
our separate accounts. HR Trust shares are held by other separate accounts of
ours and by separate accounts of insurance companies affiliated and
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 the Accumulator Certificate Owners, we
currently do not foresee any disadvantages arising out of this. HR 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 HR Trust's
response to any of those events insufficiently protects our Certificate
Owners, we will see to it that appropriate action is taken to protect our
Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner
approval, Certificate Owners will be entitled to one vote for each
Accumulation Unit they have in the Investment Funds. Each Certificate Owner
who has elected a variable annuity payout may cast the number of votes equal
to the dollar amount of reserves we are holding for that annuity in an
Investment Fund divided by the Accumulation Unit Value for that Investment
Fund. We will cast votes attributable to any amounts we have in the
Investment Funds in the same proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
30
<PAGE>
PART 6: TAX ASPECTS OF THE CERTIFICATES
This prospectus generally covers our understanding of the current Federal
income tax rules that apply to a non-qualified annuity purchased with only
after-tax dollars. This part does not apply to Qualified Plan Certificates
discussed in Appendix II.
This prospectus does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Accumulator Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities. In addition, the Treasury Department may amend
existing regulations, issue new regulations, or adopt new interpretations of
existing laws. State tax laws or, if you are not a United States resident,
foreign tax laws, may affect the tax consequences to you or the beneficiary.
These laws may change from time to time without notice and, as a result, the
tax consequences may be altered. There is no way of predicting whether, when
or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
TAXATION OF NON-QUALIFIED ANNUITIES
Equitable Life has designed the Accumulator Certificate to qualify as an
"annuity" for purposes of Federal income tax law. Gains in the Annuity
Account Value of the Certificate generally will not be taxable to an
individual until a distribution occurs, either by a withdrawal of part or all
of its value or as a series of periodic payments. However, there are some
exceptions to this rule: (1) if a Certificate fails the investment
diversification requirements; (2) if an individual transfers a Certificate as
a gift to someone other than a spouse (or divorced spouse), any gain in its
Annuity Account Value will be taxed at the time of transfer; (3) the
assignment or pledge of any portion of the value of a Certificate will be
treated as a distribution of that portion of the Certificate; and (4) when an
insurance company (or its affiliate) issues more than one non-qualified
deferred annuity certificate or contract during any calendar year to the same
taxpayer, the certificates or contracts are required to be aggregated in
computing the taxable amount of any distribution.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Certificate
unless an exception under the Code applies.
Withdrawals
Prior to the Annuity Commencement Date, any withdrawals which do not
terminate your total interest in the Certificate are taxable to you as
ordinary income to the extent there has been a gain in the Annuity Account
Value and is subject to income tax withholding. See "Federal and State Income
Tax Withholding" below. The balance of the distribution is treated as a
return of the "investment" or "basis" in the Certificate and is not taxable.
Generally, the investment or basis in the Certificate equals the
contributions made, less any amounts previously withdrawn which were not
taxable. Special rules may apply if contributions made to another annuity
certificate or contract prior to August 14, 1982 are transferred to a
Certificate in a tax-free exchange. To take advantage of these rules, you
must notify us prior to such an exchange.
If you surrender or cancel the Certificate, the distribution is taxable to
the extent it exceeds the investment in the Certificate.
Annuity Payments
Once annuity payments begin, a portion of each payment is considered to be a
tax-free recovery of investment based on the ratio of the investment to the
expected return under the Certificate. The remainder of each payment will be
taxable. In the case of a variable annuity, special rules apply if the
payments received in a year are less than the amount permitted to be
recovered tax-free. In the case of a life annuity, after the total investment
has been recovered, future payments are fully taxable. If payments cease as a
result of death, a deduction for any unrecovered investment will be allowed.
Early Distribution Penalty Tax
In addition to income tax, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date the taxpayer attains age 59 1/2, (2) made on or after the taxpayer's
death, (3) attributable to the disabil-
31
<PAGE>
ity of the taxpayer, (4) part of a series of substantially equal installments
as an annuity for the life (or life expectancy) of the taxpayer or the joint
lives (or joint life expectancies) of the taxpayer and a beneficiary, or (5)
with respect to income allocable to amounts contributed to an annuity
certificate or contract prior to August 14, 1982 which are transferred to the
Certificate in a tax-free exchange.
Payments as a Result of Death
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 3, the beneficiary is generally
subject to the same tax treatment as would apply to you, had you surrendered
the Certificate (discussed above).
If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a lump sum death benefit first becomes payable and
before any benefit is actually paid. The tax computation will reflect your
investment in the Certificate.
The Certificate provides a minimum guaranteed death benefit that in certain
circumstances may be greater than either the contributions made or the
Annuity Account Value. This provision provides investment protection against
an untimely termination of a Certificate on the death of an Annuitant at a
time when the Certificate's Annuity Account Value might otherwise have
provided a lower benefit. Although we do not believe that the provision of
this benefit should have any adverse tax effect, it is possible that the IRS
could take a contrary position and could assert that some portion of the
charges for the minimum guaranteed death benefit should be treated for
Federal income tax purposes as a partial withdrawal from the Certificate. If
this were so, such a deemed withdrawal could be taxable, and for Certificate
Owners under age 59 1/2, also subject to tax penalty.
Special distribution requirements apply upon the death of the owner of a
non-qualified annuity. That is, in the case of a contract where the owner and
annuitant are different, even though the annuity contract could continue
because the annuitant has not died, Federal tax law requires that the person
who succeeds as owner of the contract take distribution of the contract
within a specified period of time.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax on the taxable
portion of annuity payments, unless the recipient elects not to be subject to
income tax withholding. The rate of withholding will depend on the type of
distribution and, in certain cases, the amount of the distribution. Special
withholding rules apply to foreign recipients and United States citizens
residing outside the United States. If a recipient does not have sufficient
income tax withheld or does not make sufficient estimated income tax
payments, however, the recipient may incur penalties under the estimated
income tax rules. Recipients should consult their tax advisers to determine
whether they should elect out of withholding. Requests not to withhold
Federal income tax must be made in writing prior to receiving benefits under
the Certificate. Our Processing Office will provide forms for this purpose.
No election out of withholding is valid unless the recipient provides us with
the correct taxpayer identification number and a United States residence
address.
Certain states have indicated that income tax withholding will apply to
payments from the Certificates made to residents. In some states, a recipient
may elect out of state withholding. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. If
you need more information concerning a particular state or any required
forms, call our Processing Office at the toll-free number and consult your
tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1997, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,400
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemption. A
withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
32
<PAGE>
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than you, a Federal generation skipping tax may be
payable with respect to the benefit at rates similar to the maximum estate
tax rate in effect at the time. The generation skipping tax provisions
generally apply to transfers which would also be subject to the gift and
estate tax rules. Individuals are generally allowed an aggregate generation
skipping tax exemption of $1 million. Because these rules are complex, you
should consult with your tax adviser for specific information, especially
where benefits are passing to younger generations, as opposed to a spouse or
child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
SPECIAL RULES FOR CERTIFICATES ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from Accumulator Certificates
as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents
is excludable from U.S. taxation. Income from Accumulator Certificates is
also subject to Puerto Rico tax. The computation of the taxable portion of
amounts distributed from a Certificate may differ in the two jurisdictions.
Therefore, an individual might have to file both U.S. and Puerto Rico tax
returns, showing different amounts of income for each. Puerto Rico generally
provides a credit against Puerto Rico tax for U.S. tax paid. Depending on an
individual's personal situation and the timing of the different tax
liabilities, an individual may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account
for taxes. Equitable Life can set up reserves for such taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers among the Investment Funds or between the Guaranteed Period Account
and one or more Investment Funds are not taxable.
33
<PAGE>
PART 7: INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life at December 31, 1996 and 1995 and for each of the
three years in the period ended December 31, 1996 included in Equitable
Life's Annual Report on Form 10-K, incorporated by reference in the
prospectus, have been examined by Price Waterhouse LLP, independent
accountants, whose reports thereon are incorporated herein by reference. Such
consolidated financial statements and consolidated financial statement
schedules have been incorporated herein by reference in reliance upon the
reports of Price Waterhouse LLP given upon their authority as experts in
accounting and auditing.
34
<PAGE>
PART 8: INVESTMENT PERFORMANCE
This Part presents performance data for each of the Investment Funds included
in the tables below. The performance data are calculated by two methods. The
first method presented in the tables under "Standardized Performance Data,"
reflects all applicable fees and charges, including the combined Guaranteed
Minimum Death Benefit/Guaranteed Minimum Income Benefit Benefit charge, but
not the charge for tax such as premium taxes.
The second method, presented in the tables under "Rate of Return Data for
Investment Funds," also reflects all applicable fees and charges, but does
not reflect the withdrawal charge, the Combined Guaranteed Minimum Death
Benefit and Guaranteed Minimum Income Benefit Benefit charge, or the charge
for tax such as premium taxes. These additional charges would effectively
reduce the rates of return credited to a particular Certificate.
HR Trust Portfolios
The performance data shown for the Investment Funds investing in Class IB
shares of HR Trust Portfolios are based on the actual investment results of
the Portfolios (other than the Alliance Small Cap Growth Portfolio which
commenced operations on May 1, 1997), and have been adjusted for the fees and
charges applicable under the Certificates. However, the investment results
for the Alliance Growth & Income, Alliance International, Alliance
Conservative Investors and Alliance Intermediate Government Securities
Portfolios (under which Class IB shares were not available prior to the date
of this prospectus) and for the other Portfolios prior to October 1996, when
Class IB shares were not available for under such Portfolios, do not reflect
12b-1 fees, which would effectively reduce such investment performance.
The performance data for the Alliance Money Market and Common Stock
Investment Funds that invest in corresponding HR Trust Portfolios, for
periods prior to March 22, 1985, reflect the investment results of two
open-end management separate accounts (the "predecessor separate accounts")
which were reorganized in unit investment trust form. The "Since Inception"
figures for these Investment Funds are based on the date of inception of the
predecessor separate accounts. These performance data have been adjusted to
reflect the maximum investment advisory fee payable for the corresponding
Portfolio of HR Trust, as well as an assumed charge of 0.06% for direct
operating expenses.
EQ Trust Portfolios
The Investment Funds of the Separate Account that invest in Class IB shares
of Portfolios of EQ Trust have only recently been established and no
Certificates funded by those Investment Funds have been issued as of the date
of this Prospectus. EQ Trust commenced operations on May 1, 1997. Therefore,
no actual historical performance data for any of these Portfolios are
available. In this connection, see the discussion immediately following the
tables below.
See "Part 2: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
STANDARDIZED PERFORMANCE DATA
The standardized performance data in the following tables illustrate the
average annual total return of the Investment Funds over the periods shown,
assuming a single initial contribution of $1,000 and the surrender of the
Certificate at the end of each period. These tables (which reflect the first
calcu lation method described above) are prepared in a manner prescribed by
the SEC for use when we advertise the performance of the Separate Account. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
Each calculation assumes that the $1,000 contribution was allocated to only
one Investment Fund, no transfers or subsequent contributions were made and
no amounts were allocated to any other Investment Option under the
Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of
a Certificate which is surrendered on December 31, 1996 by the $1,000
contribution made at the beginning of each period illustrated. The result of
that calculation is the total growth rate for the period. Then we annualize
that growth rate to obtain the average annual percentage increase (decrease)
during the period shown. When we "annualize," we assume that a single rate of
return applied each year during the period will produce the ending value,
taking into account the effect of compounding.
35
<PAGE>
STANDARDIZED PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION*
---------- -------- ------- ------- -------- ------------
<S> <C> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors -3.01% 3.61% 5.20% -- 6.60%
Alliance Growth Investors 4.24 8.24 8.65 -- 12.44
Alliance Growth & Income 11.70 11.01 -- -- 8.04
Alliance Common Stock 15.76 14.24 13.64 14.14% 13.57
Alliance Global 6.20 9.72 11.42 -- 9.26
Alliance International 1.54 -- -- -- 13.25
Alliance Aggressive Stock 13.71 12.66 9.70 16.91 18.36
Alliance Money Market -2.95 1.89 2.15 4.23 5.43
Alliance Intermediate Govt.
Securities -4.43 0.85 3.47 -- 4.85
Alliance High Yield 14.39 9.69 12.59 -- 9.69
</TABLE>
The table below illustrates the growth of an assumed investment of $1,000,
with fees and charges deducted on the standardized basis described above for
the first method of calculation.
STANDARDIZED PERFORMANCE DATA
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION*
---------- ------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors $ 970 $1,112 $1,288 -- $ 1,668
Alliance Growth Investors 1,042 1,268 1,514 -- 2,555
Alliance Growth & Income 1,117 1,368 -- -- 1,362
Alliance Common Stock 1,158 1,491 1,895 $3,752 14,485
Alliance Global 1,062 1,321 1,717 -- 2,424
Alliance International 1,015 -- -- -- 1,132
Alliance Aggressive Stock 1,137 1,430 1,589 4,770 6,388
Alliance Money Market 971 1,058 1,112 1,514 2,332
Alliance Intermediate Govt.
Securities 956 1,026 1,186 -- 1,328
Alliance High Yield 1,144 1,320 1,809 -- 2,522
</TABLE>
- ------------
* The tables reflect the withdrawal charge and charges under a Certificate
with the 0.45% Combined Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit charge.
** The "Since Inception" dates for the Portfolios of HR Trust are as
follows: Alliance Conservative Investors (October 2, 1989); Alliance
Growth Investors (October 2, 1989); Alliance Growth & Income (October 1,
1993); Alliance Common Stock (January 13, 1976); Alliance Global (August
27, 1987); Alliance International (April 3, 1995); Alliance Aggressive
Stock (January 27, 1986); Alliance Money Market (July 13, 1981); and
Alliance Intermediate Government Securities (April 1, 1991); and Alliance
High Yield (January 2, 1987).
Additional investment performance information appears in the attached HR
Trust and EQ Trust prospectuses.
The Alliance Small Cap Growth Portfolio of HR Trust commenced operations on
May 1, 1997. Therefore, no actual historical performance data are available.
However, historical performance a composite of six other advisory accounts
managed by Alliance is described in the attached HR Trust prospectus.
According to that prospectus, these accounts have substantially the same
investment objectives and policies, and are managed in accordance with
essentially the same investment strategies and techniques, as those of the
Alliance Small Cap Growth Portfolio. It should be noted that these accounts
are not subject to certain of the requirements and restrictions to which the
Alliance Small Cap Growth Portfolio is subject and that they are managed for
tax exempt clients of Alliance, who may have different investment goals. The
investment performance
36
<PAGE>
information included in the HR Trust prospectus for all Portfolios other than
the Alliance Small Cap Portfolio is based on actual historical performance.
The investment performance date for HR Trust's Alliance Small Cap Portfolio
and for each of the Portfolios of EQ Trust, contained in the HR Trust and the
EQ Trust prospectuses, are provided by those prospectuses to illustrate the
past performance of each respective Portfolio advisor in managing a
substantially similar investment vehicles as measured against specified
market indices and do not represent the past or future performance of any
Portfolio. None of the performance data contained in the HR Trust and EQ
Trust prospectuses reflects fees and charges imposed under your Certificate,
which fees and charges would reduce such performance figures. Therefore, the
performance data for each of the Portfolios described in the EQ Trust
prospectus and for the Alliance Small Cap Portfolio in the HR Trust
prospectus may be of limited use and are not intended to be a substitute for
actual performance of the corresponding Portfolios, nor are such results an
estimate or guarantee of future performance for these Portfolios.
RATE OF RETURN DATA FOR INVESTMENT FUNDS
The following tables (which reflect the second calculation method described
above) provide you with information on rates of return on an annualized,
cumulative and year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of
return reflect performance over a stated period of time. Annualized rates of
return represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality
and expense risks charge and the administration charge, or any withdrawal
charge under the Certificates. Comparisons with these benchmarks, therefore,
are of limited use. We include them because they are widely known and may
help you to understand the universe of securities from which each Portfolio
is likely to select its holdings. Benchmark data reflect the reinvestment of
dividend income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
ALLIANCE CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond
Composite Index and 30% Standard & Poor's 500 Index.
ALLIANCE GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate
Bond Index and 70% Standard & Poor's 500 Index.
ALLIANCE GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index
and 25% Value Line Convertible Index.
ALLIANCE COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
ALLIANCE GLOBAL: August 27, 1987; Morgan Stanley Capital International World
Index.
ALLIANCE INTERNATIONAL: April 3, 1995; Morgan Stanley Capital International
Europe, Australia, Far East Index.
ALLIANCE AGGRESSIVE STOCK: January 27, 1986; 50% Standard & Poor's Mid-Cap
Total Return Index and 50% Russell 2000 Small Stock Index.
ALLIANCE MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill
Index.
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman
Intermediate Government Bond Index.
ALLIANCE HIGH YIELD: January 2, 1987; Merrill Lynch Master High Yield.
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity products,
including managed separate accounts of insurance companies. According to
Lipper Analytical Services, Inc., the data are presented net of investment
management fees, direct operating expenses and asset-based charges applicable
under annuity contracts. Lipper data provide a more accurate picture than
market benchmarks of the Accumulator performance relative to other variable
annuity products.
37
<PAGE>
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
-------- --------- ---------
<S> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 5.47% 6.08%
Lipper Income 8.95 8.91 9.55
Benchmark 8.78 10.14 9.64
ALLIANCE GROWTH INVESTORS 11.24 9.98 9.47
Lipper Flexible Portfolio 12.51 9.26 9.30
Benchmark 16.94 15.84 13.02
ALLIANCE GROWTH & INCOME 18.70 12.69 --
Lipper Growth & Income 19.96 15.39 --
Benchmark 21.28 17.93 --
ALLIANCE COMMON STOCK 22.76 15.85 14.38
Lipper Growth 18.78 14.80 12.39
Benchmark 22.96 19.66 15.20
ALLIANCE GLOBAL 13.20 11.42 12.18
Lipper Global 17.89 8.49 10.29
Benchmark 13.48 12.91 10.82
ALLIANCE INTERNATIONAL 8.54 -- --
Lipper International 13.36 -- --
Benchmark 6.05 -- --
ALLIANCE AGGRESSIVE STOCK 20.71 14.31 10.53
Lipper Small Company
Growth 16.55 12.70 17.53
Benchmark 17.85 14.14 14.80
ALLIANCE MONEY MARKET 4.05 3.80 3.11
Lipper Money Market 3.82 3.60 2.93
Benchmark 5.25 5.07 4.37
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 2.57 2.80 4.38
Lipper Gen. U.S.
Government 1.57 3.99 5.21
Benchmark 4.06 5.37 6.23
ALLIANCE HIGH YIELD 21.39 11.41 13.32
Lipper Var. Ann.
High Current Yield 12.46 7.93 11.47
Benchmark 11.06 9.59 12.76
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SINCE
10 YEARS 15 YEARS 20 YEARS INCEPTION
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS -- -- -- 7.77%
Lipper Income -- -- -- 9.55
Benchmark -- -- -- 10.42
ALLIANCE GROWTH INVESTORS -- -- -- 14.22
Lipper Flexible Portfolio -- -- -- 9.99
Benchmark -- -- -- 12.73
ALLIANCE GROWTH & INCOME -- -- -- 11.47
Lipper Growth & Income -- -- -- 14.78
Benchmark -- -- -- 17.24
ALLIANCE COMMON STOCK 14.48% 15.16% 14.16% 13.90
Lipper Growth 13.08 14.04 13.60 13.42
Benchmark 15.28 16.79 14.55 14.63
ALLIANCE GLOBAL -- -- -- 10.42
Lipper Global -- -- -- 3.65
Benchmark -- -- -- 7.44
ALLIANCE INTERNATIONAL -- -- -- 10.90
Lipper International -- -- -- 14.33
Benchmark -- -- -- 8.74
ALLIANCE AGGRESSIVE STOCK 17.23 -- -- 18.79
Lipper Small Company
Growth 16.29 -- -- 16.47
Benchmark 14.29 -- -- 13.98
ALLIANCE MONEY MARKET 4.68 5.87 -- 6.07
Lipper Money Market 4.52 5.72 -- 5.89
Benchmark 5.67 6.72 -- 6.97
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES -- -- -- 5.75
Lipper Gen. U.S.
Government -- -- -- 6.76
Benchmark -- -- -- 7.43
ALLIANCE HIGH YIELD -- -- -- 10.13
Lipper Var. Ann.
High Current Yield -- -- -- 9.13
Benchmark -- -- -- 11.24
</TABLE>
38
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
-------- --------- ---------
<S> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 17.34% 34.32%
Lipper Income 8.95 29.47 58.37
Benchmark 8.78 33.60 58.40
ALLIANCE GROWTH INVESTORS 11.24 33.03 57.18
Lipper Flexible Portfolio 12.51 30.84 56.65
Benchmark 16.94 55.46 84.42
ALLIANCE GROWTH & INCOME 18.70 43.09 --
Lipper Growth & Income 19.96 53.82 --
Benchmark 21.28 63.99 --
ALLIANCE COMMON STOCK 22.76 55.49 95.76
Lipper Growth 18.78 51.65 80.51
Benchmark 22.96 71.34 102.85
ALLIANCE GLOBAL 13.20 38.31 77.66
Lipper Global 17.89 28.45 63.87
Benchmark 13.48 43.95 67.12
ALLIANCE INTERNATIONAL 8.54 -- --
Lipper International 13.36 -- --
Benchmark 6.05 -- --
ALLIANCE AGGRESSIVE STOCK 20.71 49.35 64.99
Lipper Small Company
Growth 16.55 43.42 142.70
Benchmark 17.85 48.69 99.38
ALLIANCE MONEY MARKET 4.05 11.83 16.52
Lipper Money Market 3.82 11.18 15.58
Benchmark 5.25 15.99 23.86
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57 8.63 23.89
Lipper Gen. U.S.
Government 1.57 12.45 28.92
Benchmark 4.06 16.98 35.30
ALLIANCE HIGH YIELD 21.39 38.28 86.89
Lipper Var. Ann. High
Current Yield 12.46 25.77 72.39
Benchmark 11.06 31.63 82.29
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SINCE
10 YEARS 15 YEARS 20 YEARS INCEPTION
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS -- -- -- 72.02%
Lipper Income -- -- -- 94.21
Benchmark -- -- -- 105.23
ALLIANCE GROWTH INVESTORS -- -- -- 162.01
Lipper Flexible Portfolio -- -- -- 100.79
Benchmark -- -- -- 138.49
ALLIANCE GROWTH & INCOME -- -- -- 42.30
Lipper Growth & Income -- -- -- 56.73
Benchmark -- -- -- 67.75
ALLIANCE COMMON STOCK 286.77% 731.08% 1,313.81% 1,429.67
Lipper Growth 243.70 627.03 1,185.21 1,298.19
Benchmark 314.34 925.25 1,416.26 1,655.74
ALLIANCE GLOBAL -- -- -- 152.53
Lipper Global -- -- -- 39.73
Benchmark -- -- -- 95.62
ALLIANCE INTERNATIONAL -- -- -- 19.76
Lipper International -- -- -- 26.53
Benchmark -- -- -- 15.78
ALLIANCE AGGRESSIVE STOCK 390.16 -- -- 556.01
Lipper Small Company
Growth 352.31 -- -- 428.32
Benchmark 280.32 -- -- 318.19
ALLIANCE MONEY MARKET 57.94 135.33 -- 148.77
Lipper Money Market 55.73 130.46 -- 141.99
Benchmark 73.61 165.31 -- 184.26
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- 37.89
Lipper Gen. U.S.
Government -- -- -- 45.71
Benchmark -- -- -- 51.07
ALLIANCE HIGH YIELD -- -- -- 162.22
Lipper Var. Ann. High
Current Yield -- -- -- 142.30
Benchmark -- -- -- 190.43
</TABLE>
39
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
--------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS -- -- -- -- -- 2.79%
ALLIANCE
GROWTH
INVESTORS -- -- -- -- -- 3.53
ALLIANCE
GROWTH &
INCOME -- -- -- -- -- --
ALLIANCE
COMMON
STOCK** (3.09)% 31.90% 16.02% 6.21% 21.03% 24.16
ALLIANCE
GLOBAL -- -- -- (13.62) 9.61 25.29
ALLIANCE
INTERNATIONAL -- -- -- -- -- --
ALLIANCE
AGGRESSIVE
STOCK -- -- 33.83 6.06 (0.03) 41.86
ALLIANCE MONEY
MARKET** 9.59 7.22 5.39 5.41 6.09 7.93
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- -- -- --
ALLIANCE HIGH
YIELD -- -- -- 3.49 8.48 3.93
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02% 3.99%
ALLIANCE
GROWTH
INVESTORS 9.39 47.19 3.69 13.95 (4.27) 24.92 11.24
ALLIANCE
GROWTH &
INCOME -- -- -- (0.55) (1.72) 22.65 18.70
ALLIANCE
COMMON
STOCK** (9.17) 36.30 2.03 23.29 (3.26) 30.93 22.76
ALLIANCE
GLOBAL (7.15) 29.06 (1.65) 30.60 4.02 17.45 13.20
ALLIANCE
INTERNATIONAL -- -- -- -- -- 10.34 8.54
ALLIANCE
AGGRESSIVE
STOCK 6.92 84.73 (4.28) 15.41 (4.92) 30.13 20.71
ALLIANCE MONEY
MARKET** 6.99 4.97 2.37 1.78 2.82 4.53 4.05
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- 11.30 4.38 9.27 (5.47) 12.03 5.27
ALLIANCE HIGH
YIELD (2.26) 23.03 11.02 21.74 (3.90) 18.54 21.39
</TABLE>
- ------------
* Returns do not reflect the withdrawal charge, the Combined Guaranteed
Minimum Death Benefit/Guaranteed Minimum Income Benefit charge and any
charge for tax such as premium taxes.
** Prior to 1984 the Year-by-Year Rates of Return were:
<TABLE>
<CAPTION>
1976 1977 1978 1979 1980 1981 1982 1983
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE COMMON STOCK 8.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22% 24.67%
ALLIANCE MONEY MARKET -- -- -- -- -- 5.71 11.72 7.70
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may
describe general economic and market conditions affecting the Separate
Account and, each respective trust and may present the performance of the
Investment Funds or compare it (1) that of other insurance company separate
accounts or mutual funds included in the rankings prepared by Lipper
Analytical Services, Inc., Morningstar, Inc., VARDS 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 which are shown under "Benchmarks" and
"Portfolio Inception Dates and Comparative Benchmarks" in this Part 2 or (3)
data developed by us derived from such indices or averages. The Morningstar
Variable Annuity/Life Report consists of nearly 700 variable life and annuity
funds, all of which report their data net of investment management fees,
direct operating expenses and separate account charges. VARDS is a monthly
reporting service that monitors approximately 760 variable life and variable
annuity funds on performance and account information. Advertisements or other
communications furnished to present or prospective Certificate Owners may
also include evaluations of an Investment Fund or Portfolio by financial
publications that are nationally recognized such as Barron's, Morningstar's
Variable Annuity Sourcebook, Business Week, Chicago Tribune, Forbes, Fortune,
Institutional Investor, Investment Adviser, Investment Dealer's Digest,
Investment Management Weekly, Los Angeles Times, Money, Money Management
Letter, Kiplinger's Personal Finance, Financial Planning, National
Underwriter, Pension & Investments, USA Today, Investor's Daily, The New York
Times, and The Wall Street Journal.
ALLIANCE MONEY MARKET FUND AND ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES
FUND YIELD INFORMATION
The current yield and effective yield of the Money Market Fund and
Intermediate Government Securities Fund may appear in reports and promotional
material to current or prospective Certificate Owners.
Alliance Money Market Fund
Current yield for the Alliance Money Market Fund will be based on net changes
in a hypothetical investment over a given seven-day period, exclusive of
capital changes, and then "annualized" (assuming that the same seven-day
result would occur each week for 52 weeks). "Effective yield" is calculated
in
40
<PAGE>
a manner similar to that used to calculate current yield, but when
annualized, any income earned by the investment is assumed to be reinvested.
The "effective yield" will be slightly higher than the "current yield"
because any earnings are compounded weekly. Alliance Money Market Fund yields
and effective yields assume the deduction of all Certificate charges and
expenses other than the withdrawal charge, Combined Guaranteed Minimum Death
Benefit/Guaranteed Minimum Income Benefit charge and any charge for tax such
as premium tax. See "Part 4: Alliance Money Market Fund and Alliance
Intermediate Government Securities Fund Yield Information" in the SAI.
Alliance Intermediate Government Securities Fund
Current yield for the Alliance Intermediate Government Securities Fund will
be based on net changes in a hypothetical investment over a given 30-day
period, exclusive of capital changes, and then "annualized" (assuming that
the same 30-day result would occur each month for 12 months). "Effective
yield" is calculated in a manner similar to that used to calculate current
yield, but when annualized, any income earned by the investment is assumed to
be reinvested. The "effective yield" will be slightly higher than the
"current yield" because any earnings are compounded monthly.
Alliance Intermediate Government Securities Fund yields and effective yields
assume the deduction of all Certificate charges and expenses other than the
withdrawal charge, Combined Guaranteed Minimum Death Benefit/Guaranteed
Minimum Income Benefit Charge and any charge for tax such as premium tax. The
yields and effective yields for the Alliance Money Market Fund when used for
the Special Dollar Cost Averaging program, assume no Certificate charges are
deducted. See "Part 4: Alliance Money Market Fund and Alliance Intermediate
Government Securities Fund Yield Information" in the SAI.
41
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- -----------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1998 to a Guarantee Period with an Expiration Date
of February 15, 2007 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2002.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2002
---------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2002 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value................... $144,048 $119,487
(2) Guaranteed Period Amount................ 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ....... 12,968 (11,593)
February 15, 2002 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000
(divided by) (1)] ...................... $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)]............ 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ...... 85,581 76,229
(7) Maturity Value.......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value................... 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
42
<PAGE>
APPENDIX II: QUALIFIED PLAN CERTIFICATES
- -----------------------------------------------------------------------------
CONTRIBUTIONS
When issued with the appropriate endorsement, Accumulator Certificates may be
used as an investment vehicle for a defined contribution plan maintained by
an employer and which is a tax qualified plan within the meaning of Section
401(a) for the Code.
When issued in connection with such a qualified plan, we will only accept
employer contributions from a trust under a plan qualified under Section
401(a) of the Code. If the plan contains a cash or deferred arrangement
within the meaning of Section 401(k) of the Code, contributions may include
employee pre-tax and employer matching or other employer contributions, but
not employee after-tax contributions to the plan.
CERTIFICATE OWNER, ANNUITANT AND BENEFICIARY
The Certificate Owner must be the trustee of a trust for a qualified plan
maintained by the employer. The Annuitant must be the participant/employee
and the beneficiary under the Certificate must be the Certificate Owner.
PURCHASE CONSIDERATIONS
Any trustee considering a purchase of the Accumulator should discuss with its
tax adviser whether this is an appropriate investment vehicle for the
employer's plan. The form of Certificate and this prospectus should be
reviewed in full, and the following factors, among others, should be noted.
This Certificate accepts transfer contributions only and not regular, ongoing
payroll contributions. For 401(k) plans, no employee after-tax contributions
are accepted. Further, Equitable will not perform or provide any plan record
keeping services with respect to this Certificate. The plan's administrator
will be solely responsible for performing or providing for all such services.
There is no loan feature offered under the Certificates, so if the plan
provides for loans and a participant takes a loan from the plan, other plan
assets must be used as the source of the loan and any loan repayments must be
credited to other investment vehicles and/or accounts available under the
plan.
Finally, because the method of purchasing the Certificates and the features
of the Certificates may appeal more to plan participants who are older and
tend to be highly paid, and because certain features of the Certificates are
available only to plan participants who meet certain minimum and/or maximum
age requirements, plan trustees should discuss with their advisers whether
the purchase of the Certificates would cause the plan to engage in prohibited
discrimination in contributions, benefits or otherwise.
43
<PAGE>
APPENDIX III: GUARANTEED MINIMUM DEATH BENEFIT EXAMPLE
- -----------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the Guaranteed Minimum Death Benefit (see "Guaranteed Minimum Death
Benefit" in Part 4); and
(2) the death benefit provided with respect to the Guaranteed Period
Account (see "Death Benefit Amount" in Part 3).
The following is an example illustrating the calculation of the Guaranteed
Minimum Death Benefit. Assuming $100,000 is allocated to the Investment Funds
(with no allocation to the Fixed Income Series), no subsequent contributions,
no transfers and no withdrawals, the Guaranteed Minimum Death Benefit for an
Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
NON-NEW YORK NEW YORK
END OF GUARANTEED GUARANTEED
CONTRACT ANNUITY MINIMUM MINIMUM
YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT
---------- --------------- ---------------- -----------------
<S> <C> <C> <C>
1 $105,000 $106,000 $105,000(2)
2 $115,500 $112,360 115,500(2)
3 $132,825 $119,102 132,825(2)
4 $106,260 $126,248 132,825(3)
5 $116,886 $133,823 132,825(3)
6 $140,263 $141,852 140,263(2)
7 $140,263 $150,363 140,263(3)
</TABLE>
The Annuity Account Values for Contract Years 1 through 8 are determined
based on hypothetical rates of return of 5.00%, 10.00%, 15.00%, (20.00)%,
10.00%, 20.00% and 0.00%, respectively.
6% TO AGE 80 BENEFIT
(1) For Contract Years 1 through 7, the Guaranteed Minimum Death Benefit
equals the initial contribution increased by 6%.
NEW YORK
(2) At the end of Contract Years 1, 2, and 3 and again at the end of
Contract Year 6, the Guaranteed Minimum Death Benefit is equal to the
current Annuity Account Value.
(3) At the end of Contract Years 4, 5, and 7, the Guaranteed Minimum Death
Benefit at the end of the prior year since it is equal to or higher
than the current Annuity Account Value.
44
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Part 1: Accumulation Unit Values 2
Part 2: Annuity Unit Values 2
Part 3: Custodian and Independent Accountants 3
Part 4: Money Market Fund and Intermediate 3
Government Securities Fund Yield Information
Part 5: Long-Term Market Trends 4
Part 6: Key Factors in Retirement Planning
Part 7: Financial Statements 6
</TABLE>
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Accumulator SAI:
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
45
<PAGE>
SUPPLEMENT DATED MAY 1, 1997 TO ROLLOVER IRA AND
CHOICE INCOME PLAN PROSPECTUS, DATED OCTOBER 17, 1996
- -----------------------------------------------------------------------------
This supplement dated May 1, 1997, updates certain information in the
Rollover IRA and Choice Income Plan prospectus of The Equitable Life
Assurance Society of the United States (EQUITABLE LIFE), dated October 17,
1996. You should read this supplement in conjunction with the prospectus. You
should keep the supplement and the prospectus for future reference. We have
filed with the Securities and Exchange Commission (SEC) our statement of
additional information (SAI) dated May 1, 1997. If you have previously
received, but do not presently have, a copy of the prospectus, you may obtain
an additional copy of the prospectus, as well as a copy of the SAI, from us,
free of charge, if you write to Equitable Life, Income Management Group, P.O.
Box 1547, Secaucus, NJ 07096-1547, call (800) 789-7771 or if you only need a
copy of the SAI, you may mail in the SAI request form located at the end of
the supplement. The SAI has been incorporated by reference into this
supplement.
In the supplement, each section of the prospectus in which a change has been
made is identified and the number of each prospectus page on which a change
occurs is also noted. Special terms used in the prospectus have the same
meaning in the supplement unless otherwise noted.
ON THE COVER PAGE OF THE PROSPECTUS THE THIRD (INCLUDING THE CHART OF
INVESTMENT OPTIONS) AND FOURTH PARAGRAPHS ARE REPLACED BY THE FOLLOWING
PARAGRAPHS:
The Rollover IRA offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 21
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in
the GUARANTEED PERIOD ACCOUNT.
We invest each Investment Fund in Class IA shares of a corresponding
portfolio (PORTFOLIO) of The Hudson River Trust (HR TRUST) or Class IB
shares of a corresponding Portfolio of EQ Advisors Trust (EQ TRUST), mutual
funds whose shares are purchased by separate accounts of insurance
companies. The prospectuses for HR Trust and EQ Trust, both of which
accompany this supplement, describe the investment objectives, policies and
risks of the Portfolios.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
EQUITY SERIES
- ---------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY INTERNATIONAL EQUITY AGGRESSIVE EQUITY
<S> <C> <C>
Alliance Common Stock Alliance Global Alliance Aggressive Stock
Alliance Growth & Income Alliance International Alliance Small Cap Growth
EQ/Putnam Growth & Income Value Morgan Stanley Emerging Markets MFS Emerging Growth Companies
MFS Research Equity Warburg Pincus Small Company Value
Merrill Lynch Basic Value Equity T. Rowe Price International Stock
T. Rowe Price Equity Income
---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES FIXED INCOME SERIES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Conservative Investors AGGRESSIVE FIXED INCOME DOMESTIC FIXED INCOME
Alliance Growth Investors Alliance High Yield Alliance Intermediate Government Securities
EQ/Putnam Balanced Alliance Money Market
Merrill Lynch World Strategy
------------------------------------------------------------------------------------------------------------------
</TABLE>
THE FOLLOWING SENTENCE IS ADDED AT THE END OF THE FIFTH PARAGRAPH:
The Guarantee Periods currently available have Expiration Dates of
February 15 in years 1998 through 2007 under the Rollover IRA and 1998
through 2012 under the Choice Income Plan.
THROUGHOUT THE PROSPECTUS ANY REFERENCE TO THE INVESTMENT FUNDS AND GUARANTEE
PERIODS REFER TO THE INVESTMENT FUNDS AND GUARANTEE PERIODS SET FORTH ABOVE.
- -----------------------------------------------------------------------------
Copyright 1997
The Equitable Life Assurance Society of the United States,
New York, New York 10104.
All rights reserved.
<PAGE>
THROUGHOUT THE PROSPECTUS (EXCEPT WHERE OTHERWISE NOTED) THE REFERENCE TO
"TRUST" IS REPLACED BY "HR TRUST AND EQ TRUST."
ON PAGE 2, UNDER THE HEADING "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" REPLACE THE ENTIRE SECTION WITH THE FOLLOWING SECTION:
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (EXCHANGE ACT) after the date hereof and prior to the termination
of the offering of the securities offered hereby shall be deemed to be
incorporated by reference in the prospectus and the supplement and to be a
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of the
prospectus and the supplement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified and superseded, to constitute a part of the
prospectus and the supplement. Equitable Life files its Exchange Act
documents and reports, including its annual and quarterly reports on Form
10-K and Form 10-Q, electronically pursuant to EDGAR under CIK No.
0000727920. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the SEC. The address of the site is
http://www.sec.gov.
Equitable Life will provide without charge to each person to whom a
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
ON PAGE 4, UNDER THE HEADING "GENERAL TERMS"
ADD THE FOLLOWING DEFINITIONS:
EQ TRUST--EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants,
Inc. (EQ Financial) is the manager of EQ Trust and has appointed advisers
for each of the Portfolios.
HR TRUST--The Hudson River Trust, a mutual fund in which the assets of
separate accounts of insurance companies are invested. Alliance Capital
Management L.P. (Alliance) is the adviser to HR Trust.
DELETE THE DEFINITION FOR "TRUST."
2
<PAGE>
ON PAGES 6, 7 AND 8 REPLACE THE "FEE TABLE" SECTION WITH THE FOLLOWING
SECTION:
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them with other similar products. The table reflects
both the charges of the Separate Account and the expenses of HR Trust and EQ
Trust. Charges for applicable taxes such as state or local premium taxes may
also apply. For a complete description of each trust's charges and expenses,
see the prospectuses for the HR Trust and EQ Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. However, if there is insufficient
value in the Investment Funds, all or a portion of the distribution fee and
the annual contract fee, if any, may be deducted from your Annuity Account
Value in the Guaranteed Period Account rather than from the Investment Funds.
See "Part 7: Deductions and Charges." A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
DISTRIBUTION FEE (SALES LOAD) AS A PERCENTAGE OF EACH CONTRIBUTION
RECEIVED DURING THE FIRST CONTRACT YEAR (deducted annually on
each of the first seven Processing Dates)(1) ............................. 0.20%
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (percentage deducted upon
surrender or for certain withdrawals. The applicable withdrawal charge
percentage is determined by the Contract Year in which the withdrawal is made
or the Certificate is surrendered beginning with "Contract Year 1" with
respect to each contribution withdrawn or surrendered. For each contribution,
the Contract Year in which we receive that contribution is "Contract Year
1")(2)
<TABLE>
<CAPTION>
CONTRACT
YEAR
<S> <C>
1 ....... 7.00%
2 ....... 6.00
3 ....... 5.00
4 ....... 4.00
5 ....... 3.00
6 ....... 2.00
7 ....... 1.00
8+ ...... 0.00
</TABLE>
<TABLE>
<CAPTION>
Combined GMDB
GMDB/GMIB Only
Benefit Benefit
(Plan A) (Plan B)
----------- ---------
<S> <C> <C>
GMDB/GMIB CHARGES (percentage deducted annually on each Processing Date
as a percentage of the guaranteed minimum death benefit then in effect)(3) . 0.45% 0.20%
ANNUAL CONTRACT FEE (DEDUCTED FROM ANNUITY ACCOUNT VALUE ON EACH PROCESSING
DATE)(4)
If the initial contribution is less than $25,000 ........................... $30
If the initial contribution is $25,000 or more ............................. $0
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH
INVESTMENT FUND)
- ----------------------------------------------------------------------------
Mortality and Expense Risk Charge ........................................... 0.90%
Asset Based Administrative Charge ........................................... 0.25%
------
Total Separate Account Annual Expenses ..................................... 1.15%
======
</TABLE>
3
<PAGE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH
PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
-----------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
CONSERVATIVE GROWTH GROWTH & COMMON ALLIANCE
HR TRUST INVESTORS INVESTORS INCOME STOCK GLOBAL
- ----------------------------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.48% 0.53% 0.55% 0.38% 0.65%
Other Expenses 0.07% 0.06% 0.05% 0.03% 0.08%
-------------- ----------- ---------- ---------- ----------
TOTAL TRUST ANNUAL
EXPENSES(5) 0.55% 0.59% 0.60% 0.41% 0.73%
============== =========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE ALLIANCE ALLIANCE INTERMEDIATE ALLIANCE
ALLIANCE AGGRESSIVE SMALL CAP MONEY GOVT. HIGH
HR TRUST INTERNATIONAL STOCK GROWTH MARKET SECURITIES YIELD
- ----------------------------- --------------- ------------ ----------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.90% 0.55% 0.90% 0.35% 0.50% 0.60%
Other Expenses 0.18% 0.03% 0.10% 0.04% 0.09% 0.06%
--------------- ------------ ----------- ---------- -------------- ----------
TOTAL TRUST ANNUAL
EXPENSES(5) 1.08% 0.58% 1.00% 0.39% 0.59% 0.66%
=============== ============ =========== ========== ============== ==========
</TABLE>
<TABLE>
<CAPTION>
EQ/PUTNAM MFS MERRILL
GROWTH & EMERGING LYNCH
EQ/PUTNAM INCOME GROWTH MFS BASIC VALUE
EQ TRUST BALANCED VALUE COMPANIES RESEARCH EQUITY
- -------------------------------- ----------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.55% 0.55% 0.55% 0.55% 0.55%
12b-1 Fee(6) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.10% 0.05% 0.05% 0.05% 0.05%
----------- ----------- ----------- ---------- -------------
TOTAL EQ TRUST ANNUAL
EXPENSES(7) 0.90% 0.85% 0.85% 0.85% 0.85%
=========== =========== =========== ========== =============
</TABLE>
<TABLE>
<CAPTION>
MORGAN T. ROWE WARBURG
MERRILL STANLEY T. ROWE PRICE PINCUS
LYNCH EMERGING PRICE INTERNA- SMALL
WORLD MARKETS EQUITY TIONAL COMPANY
EQ TRUST STRATEGY EQUITY INCOME STOCK VALUE
- -------------------------------- ---------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.70% 1.15% 0.55% 0.75% 0.65%
12b-1 Fee(6) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.25% 0.35% 0.05% 0.20% 0.10%
---------- ---------- --------- ---------- ---------
TOTAL EQ TRUST ANNUAL
EXPENSES(7) 1.20% 1.75% 0.85% 1.20% 1.00%
========== ========== ========= ========== =========
</TABLE>
- ------------
Notes:
(1) The amount deducted is based on contributions that have not been
withdrawn. The distribution fee will not apply while the IRA Assured
Payment Option or IRA APO Plus is in effect. See "Part 7: Deductions
and Charges," "Distribution Fee."
(2) Deducted upon a withdrawal with respect to amounts in excess of the
15% (10% under the IRA Assured Payment Option and IRA APO Plus) free
corridor amount, and upon a surrender. See "Part 7: Deductions and
Charges," "Withdrawal Charge." We reserve the right to impose an
administrative charge of the lesser of $25 and 2.0% of the amount
withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. See "Withdrawal Processing Charge" also in Part 7.
(3) The guaranteed minimum death benefit (GMDB) is described under
"Death Benefit," "GMDB" and the guaranteed minimum income benefit
(GMIB) is described under "GMIB" both of which are in Part 5. The
0.45% charge covers a 6% to Age 80 Benefit or, if a combined 6% to
Age 70 Benefit is elected, the charge is 0.30%. See "Part 7:
Deductions and Charges," "Charges for Combined GMDB/GMIB Benefit
(Plan A)" and "Charges for GMDB Only Benefit (Plan B)."
(4) This charge is incurred at the beginning of the Contract Year and
deducted on the Processing Date. See "Part 7: Deductions and
Charges," "Annual Contract Fee."
(5) The amounts shown for the Portfolios of HR Trust (other than
Alliance Small Cap Growth) have been restated to reflect advisory
fees which went into effect as of May 1, 1997. "Other Expenses" are
based on the average daily net assets in each Portfolio for the year
ended December 31, 1996. The amounts shown for the Alliance Small
Cap Growth Portfolio are estimated for the current fiscal year as
this Portfolio commenced operations on May 1, 1997. The investment
advisory fee for each Portfolio may vary from year to year depending
upon the average daily net assets of the respective Portfolio of HR
Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. See "HR Trust Charges to Portfolios"
in Part 7.
(6) The Class IB shares of EQ Trust are subject to fees imposed under a
distribution plan (herein, the "Rule 12b-1 Plan") adopted by EQ
Trust pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended. The Rule 12b-1 Plan provides that EQ Trust, on
behalf of each Portfolio, may pay annually up to 0.25% of the
average daily net assets of a Portfolio attributable to its Class IB
shares in respect of activities primarily intended to result in the
sale of the Class IB shares. The 12b-1 fee may be increased only by
action of the Board of Trustees of EQ Trust up to a maximum of 0.50%
per annum.
(7) "Other Expenses" shown are based on estimated amounts (after expense
waiver or limitation) for the current fiscal year, as EQ Trust
commenced operations on May 1, 1997. The maximum investment advisory
fees cannot be increased without a vote of that Portfolio's
shareholders. The other direct operating expenses will fluctuate
from year to year depending on actual expenses, but pursuant to
agreement, cannot together with other fees specified exceed the
total annual expenses specified. See "EQ Trust Charges to
Portfolios" in Part 7.
4
<PAGE>
EXAMPLES
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined GMDB/GMIB Benefit (Plan A) with a 6% to Age 80
Benefit and under the GMDB Only Benefit (Plan B) in the two situations noted
below assuming a $1,000 contribution invested in one of the Investment Funds
listed, and a 5% annual return on assets.(1) The annual contract fee was
computed based on an initial contribution of $10,000.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
COMBINED GMDB/GMIB BENEFIT (PLAN A) ELECTION
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD
SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors $ 90.26 $125.78 $164.15 $290.05
Alliance Growth Investors 90.65 126.98 166.16 294.09
Alliance Growth & Income 90.75 127.28 166.66 295.10
Alliance Common Stock 88.86 121.57 157.10 275.76
Alliance Global 92.05 131.17 173.15 308.12
Alliance International 95.53 141.59 190.48 342.39
Alliance Aggressive Stock 90.55 126.68 165.66 293.08
Alliance Small Cap Growth 94.73 139.22 -- --
Alliance Money Market 88.67 120.98 156.09 273.71
Alliance Intermediate
Government Securities 90.65 126.98 166.16 294.09
Alliance High Yield 91.35 129.08 169.66 301.13
EQ TRUST
- --------
EQ Putnam Balanced $ 93.74 $136.25 -- --
EQ/Putnam Growth & Income
Value 93.24 134.75 -- --
MFS Emerging Growth
Companies 93.24 134.75 -- --
MFS Research 93.24 134.75 -- --
Merrill Lynch Basic Value
Equity 93.24 134.75 -- --
Merrill Lynch World
Strategy 96.72 145.15 -- --
Morgan Stanley Emerging
Markets Equity 102.19 161.34 -- --
T. Rowe Price Equity
Income 93.24 134.75 -- --
T. Rowe Price
International Stock 96.72 145.15 -- --
Warburg Pincus Small
Company Value 94.73 139.22 -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH
PERIOD SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors $27.03 $ 83.14 $142.17 $298.10
Alliance Growth Investors 27.42 84.33 144.17 302.14
Alliance Growth & Income 27.52 84.63 144.67 303.14
Alliance Common Stock 25.63 78.93 135.12 283.82
Alliance Global 28.82 88.53 151.17 316.17
Alliance International 32.30 98.96 168.51 350.45
Alliance Aggressive Stock 27.32 84.03 143.67 301.14
Alliance Small Cap Growth 31.50 96.57 -- --
Alliance Money Market 25.44 78.34 134.11 281.77
Alliance Intermediate
Government Securities 27.42 84.33 144.17 302.14
Alliance High Yield 28.12 86.43 147.67 309.17
EQ TRUST
- --------
EQ/Putnam Balanced $30.51 $ 93.60 -- --
EQ/Putnam Growth & Income
Value 30.01 92.10 -- --
MFS Emerging Growth
Companies 30.01 92.10 -- --
MFS Research 30.01 92.10 -- --
Merrill Lynch Basic Value
Equity 30.01 92.10 -- --
Merrill Lynch World
Strategy 33.49 102.51 -- --
Morgan Stanley Emerging
Markets Equity 38.96 118.70 -- --
T. Rowe Price Equity
Income 30.01 92.10 -- --
T. Rowe Price
International Stock 33.49 102.51 -- --
Warburg Pincus Small
Company Value 31.50 96.57 -- --
</TABLE>
- ------------
* See footnote on next page.
5
<PAGE>
GMDB ONLY BENEFIT (PLAN B) ELECTION
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD
SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors $ 90.26 $120.46 $153.06 $262.23
Alliance Growth Investors 90.65 121.66 155.07 266.33
Alliance Growth & Income 90.75 121.96 155.58 267.36
Alliance Common Stock 88.86 116.24 145.96 247.74
Alliance Global 92.05 125.87 162.12 280.56
Alliance International 95.53 136.32 179.54 315.32
Alliance Aggressive Stock 90.55 121.35 154.55 265.29
Alliance Small Cap Growth 94.73 133.93 -- --
Alliance Money Market 88.67 115.65 144.95 245.67
Alliance Intermediate
Government Securities 90.65 121.66 155.07 266.33
Alliance High Yield 91.35 123.77 158.60 273.47
EQ TRUST
- --------
EQ/Putnam Balanced $ 93.74 $130.95 -- --
EQ/Putnam Growth & Income
Value 93.24 129.45 -- --
MFS Emerging Growth
Companies 93.24 129.45 -- --
MFS Research 93.24 129.45 -- --
Merrill Lynch Basic Value
Equity 93.24 129.45 -- --
Merrill Lynch World
Strategy 96.72 139.88 -- --
Morgan Stanley Emerging
Markets Equity 102.19 156.12 -- --
T. Rowe Price Equity
Income 93.24 129.45 -- --
T. Rowe Price
International Stock 96.72 139.88 -- --
Warburg Pincus Small
Company Value 94.73 133.93 -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH
PERIOD SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors $24.38 $ 74.85 $127.74 $265.82
Alliance Growth Investors 24.77 76.04 129.75 269.91
Alliance Growth & Income 24.87 76.34 130.25 270.93
Alliance Common Stock 22.98 70.63 120.64 251.32
Alliance Global 26.17 80.25 136.79 284.15
Alliance International 29.65 90.70 154.21 318.91
Alliance Aggressive Stock 24.67 75.74 129.24 268.88
Alliance Small Cap Growth 28.85 88.31 -- --
Alliance Money Market 22.79 70.02 119.62 249.24
Alliance Intermediate
Government Securities 24.77 76.04 129.75 269.91
Alliance High Yield 25.47 78.15 133.28 277.06
EQ TRUST
- --------
EQ/Putnam Balanced $27.86 $ 85.34 -- --
EQ/Putnam Growth & Income
Value 27.36 83.84 -- --
MFS Emerging Growth
Companies 27.36 83.84 -- --
MFS Research 27.36 83.84 -- --
Merrill Lynch Basic Value
Equity 27.36 83.84 -- --
Merrill Lynch World
Strategy 30.84 94.26 -- --
Morgan Stanley Emerging
Markets Equity 36.31 110.50 -- --
T. Rowe Price Equity
Income 27.36 83.84 -- --
T. Rowe Price
International Stock 30.84 94.26 -- --
Warburg Pincus Small
Company Value 28.85 88.31 -- --
</TABLE>
- ------------
Notes:
(1) The amount accumulated from the $1,000 contribution could not be
paid in the form of an annuity at the end of any of the periods
shown in the examples. If the amount applied to purchase an annuity
is less than $2,000, or the initial payment is less than $20 we may
pay the amount to the payee in a single sum instead of as payments
under an annuity form. See "Income Annuity Options" in Part 6. The
examples do not reflect charges for applicable taxes such as state
or local premium taxes that may also be deducted in certain
jurisdictions.
6
<PAGE>
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on May 1, 1995.
The following table shows the Accumulation Unit Values, as of May 1, 1995
and the last Business Day for the periods shown. There are no Accumulation
Unit Values for Alliance Small Cap Growth, Alliance High Yield and the
Investment Funds investing in Class IB shares of EQ Trust Portfolios as
such Investment Funds were not available prior to the date of this
supplement.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
-------------------------------
MAY 1, 1995 DECEMBER 1995 DECEMBER 1996 MARCH 1997
------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
Alliance Conservative
Investors $ 14.647383 $ 16.549050 $ 17.209382 $ 17.209382
Alliance Growth
Investors 20.073331 23.593613 26.260729 $ 26.260729
Alliance Growth &
Income 10.376155 11.989601 14.231408 14.231408
Alliance Common
Stock 102.335691 124.519251 152.955877 152.955877
Alliance Global 19.478146 22.293921 25.253539 25.253538
Alliance International 10.125278 11.033925 11.976127 11.976127
Alliance Aggressive
Stock 44.025496 54.591448 65.938687 65.938687
Alliance Money Market 23.150932 23.830754 24.810781 24.810781
Alliance Intermediate
Govt. Securities 12.498213 13.424767 13.770322 13.770322
Alliance High Yield 19.578616 21.602062 13.770322 26.238452
</TABLE>
ON PAGE 9, UNDER THE HEADING "TRANSFERS," DELETE THE SECOND SENTENCE.
ON PAGE 10, UNDER THE HEADING "IRA ASSURED PAYMENT OPTION," DELETE THE THIRD
PARAGRAPH.
ON PAGE 12, UNDER THE HEADING "EQUITABLE LIFE,"
REPLACE THE THIRD SENTENCE OF THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Our home office is located at 1290 Avenue of the Americas, New York, New
York 10104.
REPLACE THE SECOND AND THIRD PARAGRAPHS WITH THE FOLLOWING PARAGRAPHS:
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996, AXA beneficially owned
63.8% of the outstanding shares of common stock of the Holding Company
(assuming conversion of convertible preferred stock held by AXA). Under its
investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $239.8 billion of assets as of December 31, 1996.
ON PAGES 12 AND 13, REPLACE THE HEADING "THE TRUST" WITH "HR TRUST" AND ADD
THE FOLLOWING SENTENCE AFTER THE FIFTH SENTENCE OF THE FIRST PARAGRAPH:
Investment Funds that invest in Portfolios of HR Trust purchase Class IA
shares of a corresponding Portfolio of HR Trust.
7
<PAGE>
ON PAGE 13, UNDER THE HEADING "THE TRUST'S INVESTMENT ADVISER" AND IN THE
FIRST SENTENCE OF THE PARAGRAPH UNDER THE HEADING REPLACE "THE TRUST" WITH
"HR TRUST."
IN THE FIRST PARAGRAPH OF THIS SECTION REPLACE THE THIRD SENTENCE WITH THE
FOLLOWING SENTENCE:
On December 31, 1996, Alliance was managing approximately $182.8 billion in
assets.
DELETE THE SECOND PARAGRAPH.
ON PAGE 13, INSERT THE FOLLOWING SECTIONS AFTER THE LAST PARAGRAPH:
EQ TRUST
EQ Trust is an open-end management investment company. As a "series type"
of mutual fund, EQ Trust issues different series of stock, each of which
relates to a different Portfolio of EQ Trust. EQ Trust commenced operations
on May 1, 1997. EQ Trust does not impose a sales charge or "load" for
buying and selling it shares. All dividend distributions to EQ Trust are
reinvested in full and fractional shares of the Portfolio to which they
relate. Investment Funds that invest in Portfolios of EQ Trust purchase
Class IB shares of a corresponding Portfolio of EQ Trust. More detailed
information about EQ Trust, its investment objectives, policies and
restrictions, risks, expenses, the Rule 12b-1 Plan relating to the Class IB
shares, and all other aspects of its operations appears in its prospectus
which accompanies this supplement and in its statement of additional
information.
EQ TRUST'S MANAGER AND ADVISERS
EQ Trust is managed by EQ Financial Consultants, Inc. (EQ Financial) which,
subject to supervision and direction of the Trustees of EQ Trust, has
overall responsibility for the general management of EQ Trust. EQ Financial
is an investment adviser registered under the 1940 Act, and a broker-dealer
registered under the Exchange Act. EQ Financial is a Delaware corporation
and an indirect, wholly-owned subsidiary of Equitable Life.
EQ Financial's main office is located at 1290 Avenue of the Americas, New
York, NY 10104.
EQ Financial has entered into investment advisory agreements with Putnam
Investments, Massachusetts Financial Services Company, Merrill Lynch Asset
Management, L.P, Morgan Stanley Asset Management, Inc., T. Rowe Price
Associates, Inc. and T. Rowe Price-Fleming International, Inc., and
Warburg, Pincus Counsellors, Inc., each of which serve as advisers to
EQ/Putnam, MFS, Merrill Lynch, Morgan Stanley, T. Rowe Price, and Warburg
Pincus Portfolios respectively of EQ Trust.
ON PAGE 14, UNDER THE HEADING "INVESTMENT POLICIES AND OBJECTIVES OF THE
TRUST'S PORTFOLIOS"
ADD THE FOLLOWING SENTENCES TO THE END OF THE FIRST PARAGRAPH:
Set forth below is a summary of the investment policies and objectives of
each Portfolio. This summary is qualified in its entirely by reference to
the prospectus for HR Trust and EQ Trust both of which accompany this
supplement. Please read the prospectuses for each of the trusts carefully
before investing.
DELETE THE DESCRIPTION OF "AGGRESSIVE STOCK" AND INSERT THE FOLLOWING
DESCRIPTIONS:
<TABLE>
<CAPTION>
<S> <C> <C>
Alliance Aggressive Primarily common stocks and other equity-type securities Long-term growth of
Stock issued by quality small and intermediate sized companies capital
with strong growth prospects and in covered options on
those securities.
Alliance Small Cap Primarily U.S. common stocks and other equity type Long-term growth of
Growth securities issued by smaller companies with favorable capital
growth prospects.
8
<PAGE>
Alliance High Yield Primarily a diversified mix of high yield, fixed-income High return by
securities involving greater volatility of price and maximizing current
risk of principal and income than high quality income and, to the
fixed-income securities. The medium and lower quality extent consistent with
debt securities in which the Portfolio may invest are that objective, capital
known as "junk bonds." appreciation
</TABLE>
INSERT THE FOLLOWING DESCRIPTIONS AFTER THE DESCRIPTION OF "INTERMEDIATE
GOVERNMENT SECURITIES:"
<TABLE>
<CAPTION>
<S> <C> <C>
EQ/Putnam Balanced A well-diversified portfolio of stocks and bonds that Balanced investment
will produce both capital growth and current income.
EQ/Putnam Growth & Primarily common stocks that offer potential for Capital growth and,
Income Value capital growth, consistent with the Portfolios' secondarily, current
investment objective, common stocks that offer income
potential for current income.
MFS Emerging Growth Primarily (i.e., at lest 80% of its assets uder normal Long-term growth of
Companies circumstances) in common stocks of emerging growth capital
companies that the Portfolio adviser believes are early
in their life cycle but which have the potential to
become major enterprises.
MFS Research A substantial portion of assets invested in common Long-term growth of
stock or securities convertible into common stock of capital and future
companies believed by the Portfolio adviser to possess income
better than average prospects for long-term growth.
Merrill Lynch Basic Investment in securities, primarily equities, that the Capital appreciation
Value Equity Portfolio adviser believes are undervalued and and, secondarily, income
therefore represent basic investment value.
Merrill Lynch World Investment primarily in a portfolio of equity and fixed High total investment
Strategy income securities, including convertible securities of return
U.S. and foreign issuers.
Morgan Stanley Emerging Primarily equity securities of emerging market country Long-term capital
Markets Equity* (i.e. foreign) issuers. appreciation
T. Rowe Price Equity Primarily dividend paying common stocks of established Substantial dividend
Income companies. income and also capital
appreciation
T. Rowe Price Primarily common stocks of established non-United Long-term growth of
International Stock States companies. capital
Warburg Pincus Small Primarily in a portfolio of equity securities of small Long-term capital
Company Value capitalization companies (i.e., companies having market appreciation
capitalizations of $1 billion or less at the time of
initial purchase) that the Portfolio adviser considers
to be relatively undervlaued.
</TABLE>
- ------------
* Will be available on or about September 2, 1997.
9
<PAGE>
ON PAGE 15, REPLACE THE FIRST AND SECOND PARAGRAPHS WITH THE FOLLOWING
PARAGRAPHS:
This Part presents performance data for each of the Investment Funds
included in the tables below. The performance data were calculated by two
methods. The first method presented in the tables under "SEC Standardized
Performance Data," reflects all applicable fees and charges, including the
Combined GMDB/GMIB Benefit charge, but not the charges for any applicable
taxes such as premium taxes.
The second method presented in the tables under "Rate of Return Data for
Investment Funds," also reflects all applicable fees and charges, but does
not reflect the distribution fee, the withdrawal charge, the Combined
GMDB/GMIB Benefit charge, the annual contract fee or the charge for tax
such as premium taxes. These additional charges would effectively reduce
the rates of return credited to a particular Certificate.
HR Trust Portfolios
The performance data shown for the Investment Funds investing in Class IA
shares of HR Trust Portfolios (other than the Alliance Small Cap Growth
Portfolio which commenced operations on May 1, 1997) are based on the
actual investment results of the Portfolios, and have been adjusted for the
fees and charges applicable under the Certificates.
The performance data for the Alliance Money Market and Alliance Common
Stock Investment Funds that invest in corresponding HR Trust Portfolios,
for periods prior to March 22, 1985, reflect the investment results of two
open-end management separate accounts (the "predecessor separate accounts")
which were reorganized in unit investment trust form. The "Since inception"
figures for these Investment Funds are based on the date of inception of
the predecessor separate accounts. These performance data have been
adjusted to reflect the maximum investment advisory fee payable for the
corresponding Portfolio of HR Trust, as well as an assumed charge of 0.06%
for direct operating expenses.
EQ Trust Portfolios
The Investment Funds of the Separate Account that invest in Class IB shares
of Portfolios of EQ Trust have only recently been established and no
Certificates funded by those Investment Funds have been issued as of the
date of this supplement. EQ Trust commenced operations on May 1, 1997.
Therefore, no actual historical performance data for any of these
Portfolios are available. In this connection, see the discussion
immediately following the tables below.
REPLACE THE HEADING "PERFORMANCE DATA FOR A CERTIFICATE" WITH "STANDARDIZED
PERFORMANCE DATA."
IN THE FIRST SENTENCE OF THE THIRD PARAGRAPH UNDER THIS HEADING CHANGE THE
DATE FROM "DECEMBER 31, 1995" TO "DECEMBER 31, 1996."
10
<PAGE>
ON PAGES 15 AND 16, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING
TABLES AND FOOTNOTES:
STANDARDIZED PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ----------- --------- ------- ------- -------- -------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative
Investors (3.31)% 3.16% 4.76% -- 6.20%
Alliance Growth Investors 4.00 7.81 8.23 -- 12.10
Alliance Growth & Income 11.40 10.57 -- -- 7.57
Alliance Common Stock 15.54 13.83 13.23 13.84% 13.38
Alliance Global 5.98 9.32 11.03 -- 8.87
Alliance International 1.24 -- -- -- 6.02
Alliance Aggressive Stock 13.49 12.24 9.26 16.64 18.14
Alliance Money Market (3.19) 1.47 1.70 3.86 5.14
Alliance Intermediate Govt.
Securities (4.73) 0.39 3.02 -- 4.43
Alliance High Yield 14.16 9.26 12.21 -- 9.33
</TABLE>
STANDARDIZED PERFORMANCE DATA
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ----------- ------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative
Investors $ 967 $1,098 $1,262 -- $ 1,618
Alliance Growth Investors 1,040 1,253 1,485 -- 2,494
Alliance Growth & Income 1,114 1,352 -- -- 1,339
Alliance Common Stock 1,155 1,475 1,862 $3,657 13,975
Alliance Global 1,060 1,307 1,687 -- 2,340
Alliance International 1,012 -- -- -- 1,124
Alliance Aggressive Stock 1,135 1,414 1,557 4,660 6,257
Alliance Money Market 968 1,045 1,088 1,461 2,230
Alliance Intermediate Govt.
Securities 953 1,012 1,161 -- 1,297
Alliance High Yield 1,142 1,304 1,779 -- 2,441
</TABLE>
- ------------
* The tables reflect charges under a Certificate with the 0.45% GMDB/GMIB
charge.
** The "Since Inception" dates for the Portfolios of HR Trust are as
follows: Alliance Conservative Investors (October 2, 1989); Alliance
Growth Investors (October 2, 1989); Alliance Growth & Income (October 1,
1993); Alliance Common Stock (January 13, 1976); Alliance Global (August
27, 1987); Alliance International (April 3, 1995); Alliance Aggressive
Stock (January 27, 1986); Alliance Small Cap Growth (May 1, 1997);
Alliance Money Market (July 13, 1981); Alliance Intermediate Government
Securities (April 1, 1991); an Alliance High Yield (January 2, 1987).
ON PAGE 16, INSERT THE FOLLOWING PARAGRAPH BEFORE THE "RATE OF RETURN DATA
FOR INVESTMENT FUNDS" SECTION:
Additional investment performance information appears in the attached HR
Trust and EQ Trust prospectuses.
The Alliance Small Cap Growth Portfolio of HR Trust commenced operations
on May 1, 1997. Therefore, no actual historical performance data are
available. However, historical performance of a composite of six other
advisory accounts managed by Alliance is described in the attached HR
Trust prospectus. According to that prospectus, these accounts have
substantially the same investment objectives and policies, and are
managed in accordance with essentially the same investment strategies and
techniques, as those of the
11
<PAGE>
Alliance Small Cap Growth Portfolio. It should be noted that these
accounts are not subject to certain of the requirements and restrictions
to which the Alliance Small Cap Growth Portfolio is subject and that they
are managed for tax exempt clients of Alliance, who may have different
investment goals. The investment performance information included in the
HR Trust prospectus for all Portfolios other than the Alliance Small Cap
Portfolio is based on actual historical performance.
The investment performance data for HR Trust's Alliance Small Cap
Portfolio and for each of the Portfolios of EQ Trust, contained in the HR
Trust and the EQ Trust prospectuses, are provided by those prospectuses
to illustrate the past performance of each respective Portfolio adviser
in managing a substantially similar investment vehicles as measured
against specified market indices and do not represent the past or future
performance of any Portfolio. None of the performance data contained in
the HR Trust and EQ Trust prospectuses reflects fees and charges imposed
under your Certificate, which fees and charges would reduce such
performance figures. Therefore, the performance data for each of the
Portfolios described in the EQ Trust prospectus and for the Alliance
Small Cap Portfolio in the HR Trust prospectus may be of limited use and
are not intended to be a substitute for actual performance of the
corresponding Portfolios, nor are such results an estimate or guarantee
of future performance for these Portfolios.
ON PAGE 17, INSERT THE FOLLOWING SECTION UNDER THE HEADING "PORTFOLIO
INCEPTION DATES AND COMPARATIVE BENCHMARKS:"
ALLIANCE HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master
Index.
12
<PAGE>
ON PAGES 17, 18 AND 19, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING
TABLES AND FOOTNOTES:
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 5.47% 6.08% -- -- -- 7.77%
Lipper Income 8.95 8.91 9.55 -- -- -- 9.55
Benchmark 8.78 10.14 9.64 -- -- -- 10.42
ALLIANCE GROWTH
INVESTORS 11.30 10.00 9.48 -- -- -- 14.23
Lipper Flexible Portfolio 12.51 9.26 9.30 -- -- -- 9.99
Benchmark 16.94 15.84 13.02 -- -- -- 12.73
ALLIANCE GROWTH &
INCOME 18.70 12.69 -- -- -- -- 11.47
Lipper Growth & Income 19.96 15.39 -- -- -- -- 14.78
Benchmark 21.28 17.93 -- -- -- -- 17.24
ALLIANCE COMMON STOCK 22.84 15.87 14.39 14.49% 15.17% 14.17% 13.90
Lipper Growth 18.78 14.80 12.39 13.08 14.04 13.60 13.42
Benchmark 22.96 19.66 15.20 15.28 16.79 14.55 14.63
ALLIANCE GLOBAL 13.28 11.44 12.19 -- -- -- 10.43
Lipper Global 17.89 8.49 10.29 -- -- -- 3.65
Benchmark 13.48 12.91 10.82 -- -- -- 7.44
ALLIANCE INTERNATIONAL 8.54 -- -- -- -- -- 10.90
Lipper International 13.36 -- -- -- -- -- 14.33
Benchmark 6.05 -- -- -- -- -- 8.74
ALLIANCE AGGRESSIVE STOCK 20.79 14.33 10.55 17.24 -- -- 18.79
Lipper Small Company
Growth 16.55 12.70 17.53 16.29 -- -- 16.47
Benchmark 17.85 14.14 14.80 14.29 -- -- 13.98
ALLIANCE MONEY MARKET 4.11 3.82 3.12 4.68 5.85 -- 6.05
Lipper Money Market 3.82 3.60 2.93 4.52 5.72 -- 5.89
Benchmark 5.25 5.07 4.37 5.67 6.72 -- 6.97
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57% 2.80% 4.38% -- -- -- 5.75%
Lipper Gen. U.S.
Government 1.57 3.99 5.21 -- -- -- 6.76
Benchmark 4.06 5.37 6.23 -- -- -- 7.43
ALLIANCE HIGH YIELD 21.46 11.43 13.34 -- -- -- 10.13
Lipper High Yield 12.46 7.93 11.47 -- -- -- 9.13
Benchmark 11.06 9.59 12.76 -- -- -- 11.24
</TABLE>
13
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 17.34% 34.32% -- -- -- 72.02%
Lipper Income 8.95 29.47 58.37 -- -- -- 94.21
Benchmark 8.78 33.60 58.40 -- -- -- 105.23
ALLIANCE GROWTH
INVESTORS 11.30 33.11 57.28 -- -- -- 162.18
Lipper Flexible Portfolio 12.51 30.84 56.65 -- -- -- 100.79
Benchmark 16.94 55.46 84.42 -- -- -- 138.49
ALLIANCE GROWTH &
INCOME 18.70 43.09 -- -- -- -- 42.30
Lipper Growth & Income 19.96 53.82 -- -- -- -- 56.73
Benchmark 21.28 63.99 -- -- -- -- 67.75
ALLIANCE COMMON STOCK 22.84 55.58 95.88 287.01% 731.70% 1,314.86% 1,430.82
Lipper Growth 18.78 51.65 80.51 243.70 627.03 1,185.21 1,298.19
Benchmark 22.96 71.34 102.85 314.34 925.25 1,416.26 1,655.74
ALLIANCE GLOBAL 13.28 38.40 77.77 -- -- -- 152.69
Lipper Global 17.89 28.45 63.87 -- -- -- 39.73
Benchmark 13.48 43.95 67.12 - -- -- 95.62
ALLIANCE INTERNATIONAL 8.54 -- -- -- -- -- 19.76
Lipper International 13.36 -- -- -- -- -- 26.53
Benchmark 6.05 -- -- -- -- -- 15.78
ALLIANCE AGGRESSIVE STOCK 20.79 49.45 65.10 390.47 -- -- 556.42
Lipper Small Company
Growth 16.55 43.42 142.70 352.31 -- -- 428.32
Benchmark 17.85 46.89 99.38 280.32 -- -- 318.19
ALLIANCE MONEY MARKET 4.11 11.90 16.59 58.03 134.78 -- 148.19
Lipper Money Market 3.82 11.18 15.58 55.73 130.46 -- 141.99
Benchmark 5.25 15.99 23.86 73.61 165.31 -- 184.26
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57 8.63 23.89 -- -- -- 37.89
Lipper Gen. U.S.
Government 1.57 12.45 28.92 -- -- -- 45.71
Benchmark 4.06 16.98 35.30 -- -- -- 51.07
ALLIANCE HIGH YIELD 21.46 38.37 87.00 -- -- -- 162.38
Lipper High Yield 12.46 25.77 72.39 -- -- -- 142.30
Benchmark 11.06 31.63 82.29 -- -- -- 190.43
</TABLE>
- ------------
* See footnotes on next page.
14
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
--------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS -- -- -- -- -- 2.79%
ALLIANCE GROWTH
INVESTORS -- -- -- -- -- 3.53
ALLIANCE GROWTH
& INCOME -- -- -- -- -- --
ALLIANCE COMMON
STOCK** (3.09)% 31.91% 16.02% 6.21% 21.03% 24.16
ALLIANCE GLOBAL -- -- -- (13.62) 9.61 25.29
ALLIANCE
INTERNATIONAL -- -- -- -- -- --
ALLIANCE
AGGRESSIVE
STOCK -- -- 33.83 6.06 (0.03) 41.86
ALLIANCE MONEY
MARKET** 9.59 6.91 5.39 5.41 6.09 7.93
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- -- -- --
ALLIANCE HIGH
YIELD -- -- -- 3.49 8.48 3.93
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02% 3.99%
ALLIANCE GROWTH
INVESTORS 9.39 47.19 3.69 13.95 (4.27) 24.92 11.30
ALLIANCE GROWTH
& INCOME -- -- -- (0.55) (1.72) 22.65 18.70
ALLIANCE COMMON
STOCK** (9.17) 36.30 2.03 23.39 (3.26) 30.93 22.84
ALLIANCE GLOBAL (7.15) 29.06 (1.65) 30.60 4.02 17.45 13.28
ALLIANCE
INTERNATIONAL -- -- -- -- -- 10.34 8.54
ALLIANCE
AGGRESSIVE
STOCK 6.92 84.73 (4.28) 15.41 (4.92) 30.13 20.79
ALLIANCE MONEY
MARKET** 6.99 4.97 2.37 1.78 2.82 4.53 4.11
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- 11.30 4.38 9.27 (5.47) 12.03 2.57
ALLIANCE HIGH
YIELD (2.26) 23.03 11.02 21.74 (3.90) 18.54 21.46
</TABLE>
- ------------
* Returns do not reflect the distribution fee, the withdrawal charge, the
Combined GMDB/GMIB Benefit charge, the annual contract fee and any
charge for tax such as premium taxes.
<TABLE>
<CAPTION>
** Prior to 1984 the Year-by-Year Rates of Return were: 1976 1977 1978 1979 1980 1981 1982 1983
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE COMMON STOCK 8.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22% 24.67%
ALLIANCE MONEY MARKET -- -- -- -- -- 5.71 11.72 7.70%
</TABLE>
15
<PAGE>
ON PAGE 27, UNDER THE HEADING "TRANSFERS AMONG INVESTMENT OPTIONS," DELETE
THE FIRST BULLETED PARAGRAPH.
ON PAGE 28, UNDER THE HEADING "DOLLAR COST AVERAGING."
REPLACE THE FIRST SENTENCE IN THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE.
If you have at least $10,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage
of your Annuity Account Value transferred from the Alliance Money Market
Fund to other Investment Funds on a monthly, quarterly, or annual basis.
REPLACE THE SECOND AND THIRD SENTENCES IN THE SECOND PARAGRAPH WITH THE
FOLLOWING SENTENCES.
The minimum amount that may be transferred on each Transaction Date is
$250. The maximum amount which may be transferred is equal to the Annuity
Account Value in the Alliance Money Market Fund at the time the option is
elected, divided by the number of transfers scheduled to made each Contract
Year.
ON PAGE 31, UNDER THE HEADING, "DISTRIBUTION OF THE CERTIFICATES," REPLACE
THE FOURTH AND FIFTH SENTENCES OF THE FIRST PARAGRAPH WITH THE FOLLOWING TWO
SENTENCES.
EDI's principal business address is 1290 Avenue of the Americas, New York,
New York 10104. EDI was paid a fee of $1,204,370 for 1996 and $126,914 for
1995 for its services under its "Distribution Agreement" with Equitable
Life and the Separate Account.
ON PAGE 33, UNDER THE SUB-HEADING "PAYMENTS," DELETE THE SECOND PARAGRAPH.
ON PAGE 43, DELETE THE SECTION WITH THE HEADING "TRUST CHARGES TO
PORTFOLIOS," AND REPLACE WITH THE FOLLOWING SECTION.
HR TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HR Trust's assets, direct
operating expenses of HR Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of HR Trust
(such as brokerage commissions and other expenses related to the purchase
and sale of securities), are reflected in each Portfolio's daily share
price. The maximum investment advisory fees paid annually by the Portfolios
cannot be changed without a vote by shareholders. They are as follows:
AVERAGE DAILY NET ASSETS
<TABLE>
<CAPTION>
FIRST NEXT NEXT NEXT
$750 MILLION $750 MILLION $1 BILLION $2.5 BILLION THEREAFTER
------------ -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative Investors ..... 0.475% 0.425% 0.375% 0.350% 0.325%
Alliance Growth Investors............ 0.550% 0.500% 0.450% 0.425% 0.400%
Alliance Growth & Income............. 0.550% 0.525% 0.500% 0.480% 0.470%
Alliance Common Stock................ 0.475% 0.425% 0.375% 0.355% 0.345%*
Alliance Global...................... 0.675% 0.600% 0.550% 0.530% 0.520%
Alliance International............... 0.900% 0.825% 0.800% 0.780% 0.770%
Alliance Aggressive Stock............ 0.625% 0.575% 0.525% 0.500% 0.475%
Alliance Small Cap Growth............ 0.900% 0.850% 0.825% 0.800% 0.775%
Alliance Money Market................ 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance Intermediate Govt
Securities ......................... 0.500% 0.475% 0.450% 0.430% 0.420%
Alliance High Yield.................. 0.600% 0.575% 0.550% 0.530% 0.520%
</TABLE>
- ------------
* On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
Investment advisory fees are established under HR Trust's investment advisory
agreements between HR Trust and its investment adviser, Alliance. All of
these fees and expenses are described more fully in the HR Trust prospectus.
EQ TRUST CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQ Trust's assets, the 12b-1
fee, other direct operating expenses of EQ Trust (such as trustees' fees,
expenses of independent auditors and legal counsel, administrative service
fees, custodian fees, and liability insurance), and certain
investment-related expenses of EQ
16
<PAGE>
Trust (such as brokerage commissions and other expenses related to the
purchase and sale of securities), are reflected in each Portfolio's daily
share price. The investment management fees paid annually by the Portfolios
cannot be changed without a vote by shareholders. They are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS
------------------------
<S> <C>
EQ/Putnam Balanced..................... 0.55%
EQ/Putnam Growth & Income Value ....... 0.55%
MFS Emerging Growth Companies.......... 0.55%
MFS Research........................... 0.55%
Merrill Lynch Basic Value Equity ...... 0.55%
Merrill Lynch World Strategy........... 0.70%
Morgan Stanley Emerging Markets
Equity................................ 1.15%
T. Rowe Price Equity Income ........... 0.55%
T. Rowe Price International Stock .... 0.75%
Warburg Pincus Small Company Value ... 0.75%
</TABLE>
Investment management fees are established under EQ Trust's Investment
Management Agreement between EQ Trust and its investment manager, EQ
Financial. EQ Financial has entered into expense limitation agreements with
EQ Trust, with respect to each Portfolio, pursuant to which EQ Financial has
agreed to waive or limit its fees and total annual operating expenses
(expressed as a percentage of the Portfolios' average daily net assets) to
0.85% each for the EQ/Putnam Growth & Income Value, MFS Research, Merrill
Lynch Basic Value Equity, T. Rowe Price Equity, and MFS Emerging Growth
Companies Portfolios; 0.90% for the EQ/Putnam Balanced Portfolio; 1.00% for
Warburg Pincus Small Company Value Portfolio; 1.20% each for T. Rowe Price
International Stock and Merrill Lynch World Strategy Portfolios; and 1.75%
for Morgan Stanley Emerging Markets Equity Portfolio. See the prospectus for
EQ Trust for more information.
The Rule 12b-1 Plan provides that EQ Trust, on behalf of each Portfolio, may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fees, which
may be waived in the discretion of EDI, may be increased only by action of
the Board of Trustees of EQ Trust up to a maximum of 0.50% per annum. All of
these fees and expenses are described more fully in the EQ Trust prospectus.
ON PAGE 44, UNDER THE HEADING "TRUST VOTING RIGHTS"
REPLACE THE FIRST SENTENCE OF THE SECOND PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Because HR Trust is a Massachusetts business trust and EQ Trust is a
Delaware business trust, annual meetings are not required.
ON PAGE 44, UNDER THE HEADING "VOTING RIGHTS OF OTHERS," REPLACE THE FIRST
TWO SENTENCES OF THE PARAGRAPH WITH THE FOLLOWING SENTENCES:
Currently we control each trust. EQ Trust shares currently are sold only to
our separate accounts. HR Trust shares are hold by other separate accounts
of insurance companies affiliated and unaffiliated with us.
ON PAGE 45, UNDER THE SUB-HEADING "CONTRIBUTIONS TO IRAS," REPLACE THE SECOND
SENTENCE OF THE FOURTH PARAGRAPH WITH THE FOLLOWING SENTENCE:
If the individual's spouse does not work or elects to be treated as having
no compensation, the individual and the individual's spouse may contribute
up to $2,000 to individual retirement arrangements (but no more than $2,000
to any one individual retirement arrangement).
ON PAGE 46, REPLACE THE SECOND SENTENCE OF THE FIFTH PARAGRAPH WITH THE
FOLLOWING SENTENCE:
The deductible and nondeductible contributions to the individual's IRA (or
the nonworking spouse's IRA) may not, however, together exceed the maximum
$2,000 per person limit.
ON PAGE 46, UNDER THE SUB-HEADING "EXCESS CONTRIBUTIONS," REPLACE THE LAST
SENTENCE ON THIS PAGE WITH THE FOLLOWING SENTENCE:
If excess contributions are not withdrawn before the time for filing the
individual's Federal income tax return for the year (including extensions),
"regular" contributions may still be withdrawn after that time if
17
<PAGE>
the IRA contribution for the tax year did not exceed $2,000 and no tax
deduction was taken for the excess contribution; in that event, the excess
contribution would not be includable in gross income and would not be
subject to the 10% penalty tax.
ON PAGE 50, UNDER THE HEADING "PENALTY TAX ON EARLY DISTRIBUTIONS," ADD THE
FOLLOWING SENTENCE AT THE END OF THE FIRST PARAGRAPH:
Also not subject to penalty tax are IRA distributions used to pay certain
extraordinary medical expenses or medical insurance premiums for defined
unemployed individuals.
ON PAGE 50, UNDER THE HEADING "TAX PENALTY FOR EXCESS DISTRIBUTIONS OR
ACCUMULATION," REPLACE THE TWO PARAGRAPHS WITH THE FOLLOWING PARAGRAPH:
A 15% excise tax is imposed on an individual's aggregate excess
distributions from all tax-favored retirement plans, including IRAs. The
excise tax is in addition to the ordinary income tax due, but is reduced by
the amount (if any) of the early distribution penalty tax imposed by the
Code. This tax is temporarily suspended for distributions to the individual
for the years 1997, 1998 and 1999. However, the excise tax continues to
apply for estate tax purposes. In certain cases the estate tax imposed on a
deceased individual's estate will be increased if the accumulated value of
the individual's interest in tax-favored retirement plans is excessive. The
aggregate accumulations will be subject to excise tax in 1997 if they
exceed the present value of a hypothetical life annuity paying $160,000 a
year.
ON PAGE 51, UNDER THE HEADING "FEDERAL AND STATE INCOME TAX WITHHOLDING,"
REPLACE THE FOURTH SENTENCE OF THE THIRD PARAGRAPH WITH THE FOLLOWING
SENTENCE:
For 1997, a recipient of periodic payments (e.g., monthly or annual
payments) which total less than a $14,400 taxable amount will generally be
exempt from Federal income tax withholding, unless the recipient specifies
a different choice of withholding exemptions.
18
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
----
Part 1: Minimum Distribution Withdrawals
Part 2: Accumulation Unit Values 2
Part 3: Annuity Unit Values 2
Part 4: Custodian and Independent Accountants 3
Part 5: Alliance Money Market Fund and Alliance Intermediate 3
Government Securities Fund Yield Information
Part 6: Long-Term Market Trends 4
Part 7: Financial Statements 6
</TABLE>
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me a Rollover IRA SAI:
(Supplement dated May 1, 1997 to Rollover IRA and Choice
Income Plan Prospectus dated October 17, 1996)
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
<PAGE>
INCOME MANAGER (SERVICE MARK)
PROSPECTUS FOR ROLLOVER IRA
AND CHOICE INCOME PLAN
DATED OCTOBER 17, 1996
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
This prospectus describes individual retirement annuity (IRA) certificates
The Equitable Life Assurance Society of the United States (EQUITABLE LIFE,
WE, OUR and US) offers under a combination variable and fixed deferred
annuity contract (ROLLOVER IRA) issued on a group basis or as individual
contracts. Enrollment under a group contract will be evidenced by issuance of
a certificate. Certificates and individual contracts each will be referred to
as "Certificates." Under the Rollover IRA we will accept only initial
contributions that are rollover contributions or that are direct transfers
from other individual retirement arrangements, as described in this
prospectus. A minimum initial contribution of $10,000 is required to put a
Certificate into effect.
The Rollover IRA is designed to provide retirement income. Contributions
accumulate on a tax-deferred basis and can be distributed under a number of
different methods which are designed to be responsive to the owner's
(CERTIFICATE OWNER, YOU and YOUR) objectives. The distribution methods
include the Choice Income Plan featuring the IRA ASSURED PAYMENT OPTION, IRA
Assured Payment Option Plus (IRA APO PLUS), and a variety of payout options,
including variable annuities and fixed annuities. The IRA Assured Payment
Option and IRA APO Plus are also available for election in the application if
you are interested in receiving distributions rather than accumulating funds.
The Rollover IRA offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 9
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the
GUARANTEED PERIOD ACCOUNT.
<TABLE>
<CAPTION>
INVESTMENT FUNDS
- ----------------------------------------------------------------- GUARANTEE PERIODS
ASSET ALLOCATION SERIES: EQUITY SERIES: FIXED INCOME SERIES: EXPIRATION DATES:
- ------------------------ -------------- -------------------- -----------------
<S> <C> <C> <C>
O CONSERVATIVE INVESTORS O GROWTH & INCOME O MONEY MARKET FEBRUARY 15,
O GROWTH INVESTORS O COMMON STOCK O INTERMEDIATE O 1997 THROUGH 2007
O GLOBAL GOVERNMENT O 1997 THROUGH 2011
O INTERNATIONAL SECURITIES
O AGGRESSIVE STOCK
</TABLE>
We invest each Investment Fund in shares of a corresponding portfolio
(PORTFOLIO) of The Hudson River Trust (TRUST), a mutual fund whose shares are
purchased by separate accounts of insurance companies. The prospectus for the
Trust, which accompanies this prospectus, describes the investment
objectives, policies and risks of the Portfolios.
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). Each Guarantee Period has its
own Guaranteed Rates.
This prospectus provides information about the Rollover IRA that prospective
investors should know before investing. You should read it carefully and
retain it for future reference. The prospectus is not valid unless
accompanied by a current prospectus for the Trust, which you should also read
carefully.
Registration statements relating to Separate Account No. 45 (SEPARATE
ACCOUNT) and interests under the Guarantee Periods have been filed with the
Securities and Exchange Commission (SEC). The statement of additional
information (SAI), dated October 17, 1996, which is part of the registration
statement for the Separate Account, is available free of charge upon request
by writing to our Processing Office or calling 1-800-789-7771, our toll-free
number. The SAI has been incorporated by reference into this prospectus. The
Table of Contents for the SAI appears at the back of this prospectus.
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
Copyright 1996
The Equitable Life Assurance Society of the United States,
New York, New York 10019.
All rights reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1995 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE
ACT) after the date hereof and prior to the termination of the offering of
the securities offered hereby shall be deemed to be incorporated by reference
in this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this prospectus.
Equitable Life files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically
pursuant to EDGAR under CIK No. 0000727920.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 787
Seventh Avenue, New York, New York 10019. Attention: Corporate Secretary
(telephone: (212) 554-1234).
2
<PAGE>
PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
FEE TABLE PAGE 6
Condensed Financial Information 8
PART 1: SUMMARY PAGE 9
What is the Rollover IRA? 9
Investment Options 9
Contributions 9
Transfers 9
Free Look Period 9
Services We Provide 9
Death Benefits 10
Guaranteed Minimum Income Benefit (GMIB) 10
Surrendering the Certificates 10
Distribution Methods 10
Taxes 11
Deductions from Annuity
Account Value 11
Deductions from Investment Funds 11
Trust Charges to Portfolios 11
PART 2: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE INVESTMENT FUNDS PAGE 12
Equitable Life 12
Separate Account No. 45 12
The Trust 12
The Trust's Investment Adviser 13
Investment Policies and Objectives of
the Trust's Portfolios 14
PART 3: INVESTMENT PERFORMANCE PAGE 15
Performance Data for a Certificate 15
Rate of Return Data for Investment
Funds 16
Communicating Performance Data 19
Money Market Fund and Intermediate
Government Securities Fund Yield
Information 20
PART 4: THE GUARANTEED PERIOD ACCOUNT PAGE 21
Guarantee Periods 21
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 22
Modal Payment Portion 23
Death Benefit Amount 23
Investments 23
PART 5: PROVISIONS OF THE CERTIFICATES
AND SERVICES WE PROVIDE PAGE 25
Availability of the Certificates 25
Contributions Under the Certificates 25
Methods of Payment 25
Allocation of Contributions 26
Free Look Period 26
Annuity Account Value 27
Transfers Among Investment Options 27
Dollar Cost Averaging 28
Death Benefit 28
GMIB 29
Cash Value 31
Surrendering the Certificates to
Receive the Cash Value 31
When Payments are Made 31
Assignment 31
Distribution of the Certificates 31
PART 6: DISTRIBUTION METHODS UNDER THE
CERTIFICATES PAGE 32
IRA Assured Payment Option 32
IRA APO Plus 35
Withdrawal Options 37
Income Annuity Options 39
PART 7: DEDUCTIONS AND CHARGES PAGE 41
Charges Deducted from the Annuity
Account Value 41
Charges Deducted from the Investment
Funds 42
Trust Charges to Portfolios 43
Sponsored Arrangements 43
Other Distribution Arrangements 43
PART 8: VOTING RIGHTS PAGE 44
Trust Voting Rights 44
Voting Rights of Others 44
Separate Account Voting Rights 44
Changes in Applicable Law 44
PART 9: TAX ASPECTS OF THE CERTIFICATES PAGE 45
Tax-Qualified Individual Retirement
Annuities (IRAs) 45
Penalty Tax on Early Distributions 50
Tax Penalty for Insufficient
Distributions 50
Tax Penalty for Excess Distributions or
Accumulation 50
Federal and State Income Tax
Withholding 51
Other Withholding 51
Impact of Taxes to Equitable Life 51
Transfers Among Investment Options 51
Tax Changes 51
PART 10: INDEPENDENT ACCOUNTANTS PAGE 52
APPENDIX I: MARKET VALUE
ADJUSTMENT EXAMPLE PAGE 53
APPENDIX II: GUARANTEED MINIMUM
DEATH BENEFIT (GMDB) EXAMPLE PAGE 54
APPENDIX III: GMIB EXAMPLES PAGE 55
APPENDIX IV: EXAMPLE OF PAYMENTS
UNDER THE IRA ASSURED PAYMENT
OPTION AND IRA APO PLUS PAGE 56
APPENDIX V: IRS TAX DEDUCTION TABLE PAGE 57
STATEMENT OF ADDITIONAL
INFORMATION TABLE OF CONTENTS PAGE 58
</TABLE>
3
<PAGE>
GENERAL TERMS
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE--The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT--The individual who is the measuring life for determining annuity
benefits.
ANNUITY ACCOUNT VALUE--The sum of the amounts in the Investment Options under
the Certificate. See "Annuity Account Value" in Part 5.
ANNUITY COMMENCEMENT DATE--The date on which amounts will be applied under an
income annuity option.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns a Rollover IRA Certificate and has the
right to exercise all rights under the Certificate. The Certificate Owner
must also be the Annuitant.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The date on which you are enrolled under the group annuity
contract, or the effective date of the individual contract. This is usually
the Business Day we receive the initial contribution at our Processing
Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificates.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods
and the Modal Payment Portion of such Account.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
INVESTMENT FUNDS--The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS--The choices for investment: the Investment Funds and each
available Guarantee Period.
IRA--An individual retirement annuity, as defined in Section 408(b) of the
Code.
IRA ASSURED PAYMENT OPTION--A distribution option which provides guaranteed
lifetime income. The IRA Assured Payment Option may be elected in the
application or elected as a distribution option at a later date. Under this
option amounts are allocated to the Guaranteed Period Account and the Life
Contingent Annuity. No amounts may be allocated to the Investment Funds.
IRA APO PLUS--A distribution option which provides guaranteed lifetime
income. IRA APO Plus may be elected in the application or as a distribution
option at a later date. Under this option amounts are allocated to the
Guaranteed Period Account, the Life Contingent Annuity and to the Investment
Funds. The amount in the Investment Funds is then systematically converted to
increase the guaranteed lifetime income.
LIFE CONTINGENT ANNUITY--Provides guaranteed lifetime income beginning at a
future date. Amounts may only be applied under the Life Contingent Annuity
through election of the IRA Assured Payment Option and IRA APO Plus.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
MODAL PAYMENT PORTION--Under the IRA Assured Payment Option and IRA APO Plus,
the portion of the Guaranteed Period Account from which payments, other than
payments due on an Expiration Date, are made.
PORTFOLIOS--The portfolios of the Trust that correspond to the Investment
Funds of the Separate Account.
PROCESSING DATE--The day when we deduct certain charges from the Annuity
Account Value. If the
4
<PAGE>
Processing Date is not a Business Day, it will be on the next succeeding
Business Day. The Processing Date will be once each year on each anniversary
of the Contract Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 1.
SAI--The statement of additional information for the Separate Account under
the Rollover IRA.
SEPARATE ACCOUNT--Equitable Life's Separate Account No. 45.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
TRUST--The Hudson River Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested.
VALUATION PERIOD--Each Business Day together with any preceding non-business
days.
5
<PAGE>
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them with other similar products. The table reflects
both the charges of the Separate Account and the expenses of the Trust.
Charges for applicable taxes such as state or local premium taxes may also
apply. For a complete description of the charges under the Certificate, see
"Part 7: Deductions and Charges." For a complete description of the Trust's
charges and expenses, see the prospectus for the Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. However, if there is insufficient
value in the Investment Funds, all or a portion of the distribution fee and
the annual contract fee, if any, may be deducted from your Annuity Account
Value in the Guaranteed Period Account rather than from the Investment Funds.
See "Part 7: Deductions and Charges." A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
DISTRIBUTION FEE (SALES LOAD) AS A PERCENTAGE OF EACH CONTRIBUTION
RECEIVED DURING THE FIRST CONTRACT YEAR
(deducted annually on each of the first seven Processing Dates)(1) ............................. 0.20%
</TABLE>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (percentage deducted upon
surrender or for certain withdrawals. The applicable withdrawal charge
percentage is determined by the Contract Year in which the withdrawal
is contract made or the Certificate is surrendered beginning with "Contract
Year 1" with respect to each contribution withdrawn or surrendered. for each
year contribution, the Contract Year in which we receive that contribution
is "Contract Year 1")(2)
<TABLE>
<CAPTION>
CONTRACT
YEAR
- --------
<S> <C>
1 .................. 7.00%
2 .................. 6.00
3 .................. 5.00
4 .................. 4.00
5 .................. 3.00
6 .................. 2.00
7 .................. 1.00
8+ .................. 0.00
</TABLE>
<TABLE>
<CAPTION>
Combined
GMDB/GMIB GMDB Only
Benefit Benefit
(Plan A) (Plan B)
-------- --------
<S> <C> <C>
GMDB/GMIB CHARGES (percentage deducted annually on each Processing Date
as a percentage of the guaranteed minimum death benefit then in effect)(3) .... 0.45% 0.20%
ANNUAL CONTRACT FEE (DEDUCTED FROM ANNUITY ACCOUNT VALUE ON EACH PROCESSING DATE)(4)
- -----------------------------------------------------------------------------------
If the initial contribution is less than $25,000 .............................. $30
If the initial contribution is $25,000 or more ................................ $0
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH INVESTMENT FUND)
- -----------------------------------------------------------------------------------
Mortality and Expense Risk Charge ............................................. 0.90%
Asset Based Administrative Charge ............................................. 0.25%
-------
Total Separate Account Annual Expenses ...................................... 1.15%
=======
</TABLE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS IN EACH PORTFOLIO)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
-----------------------------------------------------------
CONSERVATIVE GROWTH GROWTH & COMMON
INVESTORS INVESTORS INCOME STOCK GLOBAL
-------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.55% 0.52% 0.55% 0.35% 0.53%
Other Expenses 0.04% 0.04% 0.05% 0.03% 0.08%
-------------- ----------- ---------- -------- --------
TOTAL TRUST ANNUAL EXPENSES(5) 0.59% 0.56% 0.60% 0.38% 0.61%
============== =========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
AGGRESSIVE MONEY GOVT.
INTERNATIONAL STOCK MARKET SECURITIES
--------------- ------------ -------- --------------
<S> <C> <C> <C> <C>
Investment Advisory Fee 0.90% 0.46% 0.40% 0.50%
Other Expenses 0.13% 0.03% 0.04% 0.07%
--------------- ------------ -------- --------------
TOTAL TRUST ANNUAL EXPENSES(5) 1.03% 0.49% 0.44% 0.57%
=============== ============ ======== ==============
</TABLE>
6
<PAGE>
- ------------
Notes:
(1) The amount deducted is based on contributions that have not been
withdrawn. The distribution fee will not apply while the IRA Assured
Payment Option or IRA APO Plus is in effect. See "Part 7: Deductions and
Charges," "Distribution Fee."
(2) Deducted upon a withdrawal with respect to amounts in excess of the 15%
(10% under the IRA Assured Payment Option and IRA APO Plus) free
corridor amount, and upon a surrender. See "Part 7: Deductions and
Charges," "Withdrawal Charge." We reserve the right to impose an
administrative charge of the lesser of $25 and 2.0% of the amount
withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. See "Withdrawal Processing Charge" also in Part 7.
(3) The guaranteed minimum death benefit (GMDB) is described under "Death
Benefit," "GMDB" and the guaranteed minimum income benefit (GMIB) is
described under "GMIB" both of which are in Part 5. The 0.45% charge
covers a 6% to Age 80 Benefit or, if a combined 6% to Age 70 Benefit is
elected, the charge is 0.30%. See "Part 7: Deductions and Charges,"
"Charges for Combined GMDB/GMIB Benefit (Plan A)" and "Charges for GMDB
Only Benefit (Plan B)."
(4) This charge is incurred at the beginning of the Contract Year and
deducted on the Processing Date. See "Part 7: Deductions and Charges,"
"Annual Contract Fee."
(5) Expenses shown for all Portfolios are for the fiscal year ended December
31, 1995. The amount shown for the International Portfolio, which was
established on April 3, 1995, is annualized. The investment advisory fee
for each Portfolio may vary from year to year depending upon the average
daily net assets of the respective Portfolio of the Trust. The maximum
investment advisory fees, however, cannot be increased without a vote of
that Portfolio's shareholders. The other direct operating expenses will
also fluctuate from year to year depending on actual expenses. See
"Trust Charges to Portfolios" in Part 7.
EXAMPLES
- --------
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined GMDB/GMIB Benefit (Plan A) with a 6% to Age 80
Benefit and under the GMDB Only Benefit (Plan B) in the two situations noted
below assuming a $1,000 contribution invested in one of the Investment Funds
listed, and a 5% annual return on assets.(1) The annual contract fee was
computed based on an initial contribution of $10,000.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
COMBINED GMDB/GMIB BENEFIT (PLAN A) ELECTION
- -----------------------------------------------------------------------------
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN,
THE EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $90.65 $126.98 $166.16 $294.09
Growth Investors 90.36 126.08 164.65 291.07
EQUITY SERIES:
Growth & Income 90.75 127.28 166.66 295.10
Common Stock 88.57 120.68 155.59 272.70
Global 90.85 127.58 167.16 296.11
International 95.03 140.10 188.01 337.54
Aggressive Stock 89.66 123.98 161.13 283.94
FIXED INCOME SERIES:
Money Market 89.16 122.48 158.61 278.85
Intermediate Govt.
Securities 90.46 126.38 165.15 292.07
</TABLE>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $27.42 $84.33 $144.17 $302.14
Growth Investors 27.13 83.44 142.67 299.12
EQUITY SERIES:
Growth & Income 27.52 84.63 144.67 303.14
Common Stock 25.34 78.03 133.60 280.74
Global 27.62 84.93 145.17 304.15
International 31.80 97.46 166.03 345.61
Aggressive Stock 26.43 81.33 139.14 292.01
FIXED INCOME SERIES:
Money Market 25.93 79.83 136.62 286.89
Intermediate Govt.
Securities 27.23 83.74 143.18 300.13
</TABLE>
7
<PAGE>
GMDB ONLY BENEFIT (PLAN B) ELECTION
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN,
THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $90.65 $121.66 $155.07 $266.33
Growth Investors 90.36 120.76 153.56 263.26
EQUITY SERIES:
Growth & Income 90.75 121.96 155.58 267.36
Common Stock 88.57 115.35 144.45 244.62
Global 90.85 122.27 156.09 268.38
International 95.03 134.82 177.05 310.42
Aggressive Stock 89.66 118.65 150.02 256.04
FIXED INCOME SERIES:
Money Market 89.16 117.15 147.48 250.85
Intermediate Govt.
Securities 90.46 121.06 154.06 264.27
</TABLE>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $24.77 $76.04 $129.75 $269.91
Growth Investors 24.48 75.15 128.24 266.84
EQUITY SERIES:
Growth & Income 24.87 76.34 130.25 270.93
Common Stock 22.69 69.72 119.11 248.19
Global 24.97 76.64 130.75 271.94
International 29.15 89.21 151.74 314.02
Aggressive Stock 23.78 73.04 124.70 259.62
FIXED INCOME SERIES:
Money Market 23.28 71.53 122.16 254.45
Intermediate Govt.
Securities 24.58 75.45 128.74 267.85
</TABLE>
- ------------
Notes:
(1) The amount accumulated could not be paid in the form of an annuity at
the end of any of the periods shown in the examples. If the amount
applied to purchase an annuity is less than $2,000, or the initial
payment is less than $20 we may pay the amount to the payee in a single
sum instead of as payments under an annuity form. See "Income Annuity
Options" in Part 6. The examples do not reflect charges for applicable
taxes such as state or local premium taxes that may also be deducted in
certain jurisdictions.
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on May 1, 1995. The
following table shows the Accumulation Unit Values, as of May 1, 1995 and the
last Business Day for the periods shown.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
-------------------------------
MAY 1, 1995 DECEMBER 1995 SEPTEMBER 1996
------------- --------------- --------------
<S> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $ 14.647383 $ 16.549050 $ 16.558882
Growth Investors 20.073331 23.593613 25.115630
EQUITY SERIES:
Growth & Income 10.376155 11.989601 13.060119
Common Stock 102.335691 124.519251 141.022624
Global 19.478146 22.293921 24.080727
International 10.125278 11.033925 11.735219
Aggressive Stock 44.025496 54.591448 64.680156
FIXED INCOME SERIES:
Money Market 23.150932 23.830754 24.547344
Intermediate Govt.
Securities 12.498213 13.424767 13.535782
</TABLE>
8
<PAGE>
PART 1: SUMMARY
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE ROLLOVER IRA?
The Rollover Individual Retirement Annuity (IRA) is designed to provide for
retirement income through the investment of rollover contributions, direct
transfers from other individual retirement arrangements and additional IRA
contributions. The Rollover IRA features a combination of Investment Options,
consisting of Investment Funds providing variable returns and Guarantee
Periods providing guaranteed interest. The Rollover IRA also makes available
distribution methods under the Choice Income Plan which includes the IRA
Assured Payment Option and IRA APO Plus (which can be applied for in the
application or at a later date). Withdrawal options and fixed and variable
income annuity options are also available.
The Rollover IRA and/or the IRA Assured Payment Option and IRA APO Plus may
not be available in all states. These Certificates are not available in
Puerto Rico.
INVESTMENT OPTIONS
The Rollover IRA offers the following Investment Options which permit you to
create your own strategy for retirement savings. All available Investment
Options may be selected under a Certificate.
INVESTMENT FUNDS
o Asset Allocation Series: the Conservative Investors and Growth Investors
Funds
o Equity Series: the Growth & Income, Common Stock, Global, International
and Aggressive Stock Funds
o Fixed Income Series: the Money Market and Intermediate Government
Securities Funds
GUARANTEE PERIODS
o Guarantee Periods (may not be available in all states) maturing in each
of calendar years 1997 through 2007.
o Guarantee Periods maturing in 1997 through 2011 under the IRA Assured
Payment Option and IRA APO Plus.
CONTRIBUTIONS
o To put a Certificate into effect, you must contribute at least $10,000
in the form of either a rollover contribution or a direct
custodian-to-custodian transfer from one or more other individual
retirement arrangements.
o Subsequent contributions may be made in an amount of at least $1,000.
Subsequent contributions must not exceed $2,000 for any taxable year,
except for additional rollover contributions or direct transfers, both
of which are unlimited.
TRANSFERS
Under the Rollover IRA, you may make an unlimited number of transfers among
the Investment Funds. However, there are restrictions for transfers to and
from the Guaranteed Period Account and among the Guarantee Periods. Transfers
from a Guarantee Period may result in a market value adjustment. Transfers
among Investment Options are free of charge. Transfers among the Investment
Options are not taxable.
FREE LOOK PERIOD
You have the right to examine the Rollover IRA Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You may
cancel it by sending it to our Processing Office. Your refund will equal the
Annuity Account Value, reflecting any investment gain or loss, and any
positive or negative market value adjustment, through the date we receive
your Certificate at our Processing Office.
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the
calendar year;
o Three additional reports of your Certificate values each year;
o Annual and semi-annual statements of the Trust; and
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values
and Guaranteed Rates applicable to the Guarantee Periods. Also call
during our regular business hours to speak to one of our customer
service representatives.
O PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
9
<PAGE>
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
DEATH BENEFITS
If you die before the Annuity Commencement Date, the Rollover IRA provides a
death benefit. The beneficiary will be paid the greater of the Annuity
Account Value in the Investment Funds and the guaranteed minimum death
benefit (GMDB), plus any death benefit provided with respect to the
Guaranteed Period Account.
There are two plans available under the Certificates for providing guaranteed
benefits, Plan A and Plan B. Plan A provides both a GMDB and a guaranteed
minimum income benefit (described below). Plan B provides a GMDB only.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
The GMIB, available under the Combined GMDB/ GMIB Benefit (Plan A), may not
currently be available in all states.
When you elect the IRA Assured Payment Option, the GMIB provides a minimum
guaranteed lifetime income under such option with respect to amounts applied
from the Investment Funds. Any amounts in the Guaranteed Period Account will
be applied to increase the payments provided under the GMIB. A market value
adjustment may apply.
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time before
the Annuity Commencement Date while the Annuitant is living. Withdrawal
charges and a market value adjustment may apply. A surrender may also be
subject to income tax and tax penalty.
DISTRIBUTION METHODS
IRA ASSURED PAYMENT OPTION
The IRA Assured Payment Option (which requires a minimum amount applied of
$10,000) provides guaranteed lifetime income. You may elect to receive
payments on a monthly, quarterly or annual basis during a fixed period.
Payments during the fixed period represent distributions of the Maturity
Values of serially maturing Guarantee Periods on their Expiration Dates or,
distributions from amounts in the Modal Payment Portion of the Guaranteed
Period Account. During the fixed period you can take withdrawals from your
Annuity Account Value. After the fixed period ends, payments are made out of
the Life Contingent Annuity.
The Life Contingent Annuity does not have a Cash Value or an Annuity Account
Value. There is no death benefit under the Life Contingent Annuity and income
is paid only if you (or a joint Annuitant) are living at the date annuity
benefits begin.
A $2.50 charge will be deducted from each payment made on a monthly or
quarterly basis.
IRA APO PLUS
IRA APO Plus is a variation of the IRA Assured Payment Option. IRA APO Plus
enables you to keep a portion of your Annuity Account Value in the Investment
Funds while periodically converting such Annuity Account Value to increase
the guaranteed lifetime income under the IRA Assured Payment Option. When you
elect IRA APO Plus, a portion of your initial contribution or Annuity Account
Value, as applicable, is allocated to the IRA Assured Payment Option to
provide a minimum guaranteed lifetime income, and the remaining contribution
or Annuity Account Value is allocated to the Investment Funds. Every three
years during the fixed period, a portion of the remaining Annuity Account
Value in the Investment Funds is applied to increase the guaranteed payments
under the IRA Assured Payment Option.
WITHDRAWAL OPTIONS
o Lump Sum Withdrawals--Before the Annuity Commencement Date while the
Certificate is in effect, you may take Lump Sum Withdrawals from your
Certificate at any time. The minimum withdrawal amount is $1,000.
o Substantially Equal Payment Withdrawals--If you are below age 59 1/2,
this withdrawal option is designed to allow you to withdraw funds
annually and not have a 10% penalty tax apply. This is accomplished by
distribution of substantially equal periodic payments over your life
expectancy or over the joint life expectancies of you and your spouse.
If you change or stop such distributions before the later of age 59 1/2
or five years from the date of the first distribution, the 10% penalty
tax may apply on all prior distributions.
o Systematic Withdrawals--You may also withdraw funds under our Systematic
Withdrawal option, where the minimum withdrawal amount is $250. These
withdrawals are available if you are age 59 1/2 to 70 1/2.
10
<PAGE>
o Minimum Distribution Withdrawals--You may also withdraw funds annually
under our Minimum Distribution Withdrawals option, which is designed to
meet the minimum distribution requirements set forth in the Code. The
minimum withdrawal amount is $250.
Withdrawals may be subject to a withdrawal charge and withdrawals from
Guarantee Periods prior to their Expiration Date will result in a market
value adjustment. Withdrawals may be subject to income tax and tax penalty.
INCOME ANNUITY OPTIONS
The Certificates also provide income annuity options to which amounts may be
applied at the Annuity Commencement Date. The income annuity options are
offered on a fixed and variable basis.
TAXES
Generally, any earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject
to tax penalty.
DEDUCTIONS FROM ANNUITY
ACCOUNT VALUE
Distribution Fee
We deduct a sales load annually in an amount of 0.20% of each contribution
received during the first Contract Year. This sales load is deducted on each
of the first seven Processing Dates. The amount deducted is based on
contributions that have not been withdrawn. The distribution fee will not be
deducted while the IRA Assured Payment Option or IRA APO Plus is in effect.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of the initial and each
subsequent contribution if (i) a Lump Sum Withdrawal or cumulative
withdrawals during a Contract Year exceed the free corridor amount, or (ii)
the Certificate is surrendered. The free corridor amount is 15% under the
Rollover IRA and 10% under the IRA Assured Payment Option and IRA APO Plus.
We determine the withdrawal charge separately for each contribution in
accordance with the table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For purposes of the table, for each contribution the Contract
Year in which we receive that contribution is "Contract Year 1."
Withdrawal Processing Charge
We reserve the right to impose an administrative charge of the lesser of $25
and 2.0% of the amount withdrawn for each Lump Sum Withdrawal after the fifth
in a Contract Year.
Charges for Combined GMDB/GMIB Benefit (Plan A)
We deduct a charge annually on each Processing Date for providing the
Combined GMDB/GMIB Benefit (Plan A). The charge is equal to a percentage of
the GMDB in effect on the Processing Date. The percentage is equal to 0.45%
for a 6% to Age 80 Benefit and 0.30% for a 6% to Age 70 Benefit.
Charges for GMDB Only Benefit (Plan B)
We deduct a charge annually on each Processing Date for providing the GMDB
Only Benefit (Plan B). The charge is equal to a percentage of the GMDB in
effect on the Processing Date. The percentage is equal to 0.20%.
Annual Contract Fee
The charge will be $30 per Contract Year if your initial contribution is less
than $25,000, and zero if your initial contribution is $25,000 or more. This
charge will not apply while the IRA Assured Payment Option or IRA APO Plus is
in effect.
Charges for State Premium and Other
Applicable Taxes
Generally, we deduct a charge for premium and other applicable taxes from the
Annuity Account Value on the Annuity Commencement Date. The current tax
charge that might be imposed varies by state and ranges from 0 to 2.25%.
DEDUCTIONS FROM INVESTMENT FUNDS
Mortality and Expense Risk Charge
We charge each Investment Fund a daily asset based charge for mortality and
expense risks equivalent to an annual rate of 0.90%.
Asset Based Administrative Charge
We charge each Investment Fund a daily asset based charge to cover a portion
of the administrative expenses under the Certificate equivalent to an annual
rate of 0.25%.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees and other expenses of the Trust are charged daily
against the Trust's assets. These are reflected in the Portfolio's daily
share price and in the daily Accumulation Unit Value for the Investment
Funds.
11
<PAGE>
PART 2: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our home office is located
at 787 Seventh Avenue, New York, New York 10019. We are authorized to sell
life insurance and annuities in all fifty states, the District of Columbia,
Puerto Rico and the Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding common
stock of the Holding Company plus convertible preferred stock. Under its
investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $217.6 billion of assets as of June 30, 1996.
SEPARATE ACCOUNT NO. 45
Separate Account No. 45 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment
Company Act of 1940 (1940 Act). This registration does not involve any
supervision by the SEC of the management or investment policies of the
Separate Account. The Separate Account has several Investment Funds, each of
which invests in shares of a corresponding Portfolio of the Trust. Because
amounts allocated to the Investment Funds are invested in a mutual fund,
investment return and principal will fluctuate and the Certificate Owner's
Accumulation Units may be worth more or less than the original cost when
redeemed.
Under the New York Insurance Law, the portion of the Separate Account's
assets equal to the reserves and other liabilities relating to the
Certificates are not chargeable with liabilities arising out of any other
business we may conduct. Income, gains or losses, whether or not realized,
from assets of the Separate Account are credited to or charged against the
Separate Account without regard to our other income gains or losses. We are
the issuer of the Certificates, and the obligations set forth in the
Certificates (other than those of Annuitants or Certificate Owners) are our
obligations.
In addition to contributions made under the Rollover IRA Certificates, we may
allocate to the Separate Account monies received under other contracts,
certificates, or agreements. Owners of all such contracts, certificates or
agreements will participate in the Separate Account in proportion to the
amounts they have in the Investment Funds that relate to their contracts,
certificates or agreements. We may retain in the Separate Account assets that
are in excess of the reserves and other liabilities relating to the Rollover
IRA Certificates or to other contracts, certificates or agreements, or we may
transfer the excess to our General Account.
We reserve the right, subject to compliance with applicable law; (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove
Investment Funds (or sub-funds) from, the Separate Account, or to add other
separate accounts; (2) to combine any two or more Investment Funds or
sub-funds thereof; (3) to transfer the assets we determine to be the share of
the class of contracts to which the Certificate belongs from any Investment
Fund to another Investment Fund; (4) to operate the Separate Account or any
Investment Fund as a management investment company under the 1940 Act, in
which case charges and expenses that otherwise would be assessed against an
underlying mutual fund would be assessed against the Separate Account; (5) to
deregister the Separate Account under the 1940 Act, provided that such action
conforms with the requirements of applicable law; (6) to restrict or
eliminate any voting rights as to the Separate Account; and (7) to cause one
or more Investment Funds to invest some or all of their assets in one or more
other trusts or investment companies. If any changes are made that result in
a material change in the underlying investment policy of an Investment Fund,
you will be notified as required by law.
THE TRUST
The Trust is an open-end diversified management investment company, more
commonly called a mu-
12
<PAGE>
tual fund. As a "series" type of mutual fund, it issues several different
series of stock, each of which relates to a different Portfolio of the Trust.
The Trust commenced operations in January 1976 with a predecessor of its
Common Stock Portfolio. The Trust does not impose a sales charge or "load"
for buying and selling its shares. All dividend distributions to the Trust
are reinvested in full and fractional shares of the Portfolio to which they
relate. More detailed information about the Trust, its investment objectives,
policies, restrictions, risks, expenses and all other aspects of its
operations appears in its prospectus which accompanies this prospectus or in
its statement of additional information.
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Alliance Capital Management L.P. (Alliance), which is
registered with the SEC as an investment adviser under the Investment
Advisers Act of 1940. Alliance, a publicly-traded limited partnership, is
indirectly majority-owned by Equitable Life. On June 30, 1996, Alliance was
managing over $168 billion in assets. Alliance acts as an investment adviser
to various separate accounts and general accounts of Equitable Life and other
affiliated insurance companies. Alliance also provides management and
consulting services to mutual funds, endowment funds, insurance companies,
foreign entities, qualified and non-tax qualified corporate funds, public and
private pension and profit-sharing plans, foundations and tax-exempt
organizations.
Alliance's record as an investment manager is based, in part, on its ability
to provide a diversity of investment services to domestic, international and
global markets. Alliance prides itself on its ability to attract and retain a
quality, professional work force. Alliance employs more than 188 investment
professionals, including 74 research analysts. Portfolio managers have an
average investment experience of more than 14 years.
Alliance's main office is located at 1345 Avenue of the Americas, New York,
New York 10105.
13
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF THE TRUST'S PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of
each Portfolio will affect its return and its risks. There is no guarantee
that these objectives will be achieved.
The policies and objectives of the Trust's Portfolios are as follows:
<TABLE>
<CAPTION>
Portfolio Investment Policy Objective
- --------------------------- ---------------------------------------------------- -----------------------------
<S> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors Diversified mix of publicly-traded, fixed-income and High total return without, in
equity securities; asset mix and security selection the adviser's opinion, undue
are primarily based upon factors expected to reduce risk to principal
risk. The Portfolio is generally expected to hold
approximately 70% of its assets in fixed income
securities and 30% in equity securities.
Growth Investors Diversified mix of publicly-traded, fixed-income and High total return consistent
equity securities; asset mix and security selection with the adviser's
based upon factors expected to increase possibility determination of reasonable
of high long-term return. The Portfolio is generally risk
expected to hold approximately 70% of its assets in
equity securities and 30% in fixed income
securities.
EQUITY SERIES:
Growth & Income Primarily income producing common stocks and High total return through a
securities convertible into common stocks. combination of current income
and capital appreciation
Common Stock Primarily common stock and other equity-type Long-term growth of capital
instruments. and increasing income
Global Primarily equity securities of non-United States as Long-term growth of capital
well as United States companies.
International Primarily equity securities selected principally to Long-term growth of capital
permit participation in non-United States companies
with prospects for growth.
Aggressive Stock Primarily common stocks and other equity-type Long-term growth of capital
securities issued by medium and other smaller sized
companies with strong growth potential.
FIXED INCOME SERIES:
Money Market Primarily high quality short-term money market High level of current income
instruments. while preserving assets and
maintaining liquidity
Intermediate Government Primarily debt securities issued or guaranteed by High current income
Securities the U.S. government, its agencies and consistent with relative
instrumentalities. Each investment will have a final stability of principal
maturity of not more than 10 years or a duration not
exceeding that of a 10-year Treasury note.
</TABLE>
14
<PAGE>
PART 3: INVESTMENT PERFORMANCE
This Part presents performance data for each of the Investment Funds
calculated by two methods. The first method, used in calculating values for
the two tables in "Performance Data for a Certificate," reflects all
applicable fees and charges other than the charge for tax such as premium
taxes. The second method, used in preparing rates of return for the three
tables in "Rate of Return Data for Investment Funds," reflects all fees and
charges other than the distribution fee, the withdrawal charge, the GMDB/
GMIB charge, the annual contract fee and the charge for tax such as premium
taxes. These additional charges would effectively reduce the rates of return
credited to a particular Certificate.
The Separate Account commenced operations in May 1995 and no Certificates
were issued prior to that date. The calculations of investment performance
shown below are based on the actual investment results of the Portfolios of
the Trust, from which certain fees and charges applicable under the Rollover
IRA have been deducted. The results shown are not an estimate or guarantee of
future investment performance, and do not reflect the actual experience of
amounts invested under a particular Certificate.
See "Part 4: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
PERFORMANCE DATA FOR A CERTIFICATE
The standardized performance data in the following tables illustrate the
average annual total return of the Investment Funds over the periods shown,
assuming a single initial contribution of $1,000 and the surrender of the
Certificate at the end of each period. These tables (which reflect the first
calculation method described above) are prepared in a manner prescribed by
the SEC for use when we advertise the performance of the Separate Account. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
Each calculation assumes that the $1,000 contribution was allocated to only
one Investment Fund, no transfers or subsequent contributions were made and
no amounts were allocated to any other Investment Option under the
Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of
a Certificate which is surrendered on December 31, 1995 by the $1,000
contribution made at the beginning of each period illustrated. The annual
contract fee is computed based on an initial contribution of $10,000. The
result of that calculation is the total growth rate for the period. Then we
annualize that growth rate to obtain the average annual percentage increase
(decrease) during the period shown. When we "annualize," we assume that a
single rate of return applied each year during the period will produce the
ending value, taking into account the effect of compounding.
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION**
- ---------------------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $1,117 $1,160 $1,448 -- $ 1,558
Growth Investors 1,176 1,285 1,994 -- 2,243
EQUITY SERIES:
Growth & Income 1,154 -- -- -- 1,122
Common Stock 1,236 1,484 2,082 $3,458 11,394
Global 1,102 1,519 1,936 -- 2,076
International -- -- -- -- 1,030
Aggressive Stock 1,228 1,350 2,438 -- 5,198
</TABLE>
15
<PAGE>
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995*
(CONTINUED)
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
----------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ----------------------------- ------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
FIXED INCOME SERIES:
Money Market $ 972 $1,020 $1,098 $1,479 $2,156
Intermediate Govt. Securities 1,047 1,083 -- -- 1,265
<FN>
- ------------
* See footnotes below.
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1995*
</TABLE>
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
---------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION**
- ----------------------------- -------- ------- ------- -------- -------------
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors 11.72% 5.07% 7.69% -- 6.53%
Growth Investors 17.62 8.73 14.80 -- 12.23
EQUITY SERIES:
Growth & Income 15.35 -- -- -- 3.90
Common Stock 23.63 14.07 15.80 13.21% 12.94
Global 10.15 14.95 14.12 -- 8.45
International -- -- -- -- 3.04
Aggressive Stock 22.83 10.51 19.51 -- 17.92
FIXED INCOME SERIES:
Money Market (2.77) 0.66 1.89 3.99 5.25
Intermediate Govt. Securities 4.73 2.68 -- -- 4.81
<FN>
- ------------
* The tables reflect charges under a Certificate with the 0.45% GMDB/GMIB
charge.
**The "Since Inception" dates are as follows: Conservative Investors
(October 2, 1989); Growth Investors (October 2, 1989); Growth & Income
(October 1, 1993); Common Stock (January 13, 1976); Global (August 27,
1987); International (April 3, 1995); Aggressive Stock (January 27,
1986); Money Market (July 13, 1981); and Intermediate Govt. Securities
(April 1, 1991). The "Since Inception" numbers for the International
Fund are unannualized.
RATE OF RETURN DATA FOR INVESTMENT FUNDS
The following tables (which reflect the second calculation method described
above) provide you with information on rates of return on an annualized,
cumulative and year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of
return reflect performance over a stated period of time. Annualized rates of
return represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
Performance data of the Money Market and Common Stock Funds for the periods
prior to March 22, 1985, reflect the investment results of two open-end
management separate accounts (the "predecessor separate accounts") which were
reorganized in unit investment trust form. The "Since Inception" figures for
these Funds are based on the date of inception of the predecessor separate
accounts. This performance data has been adjusted to reflect the maximum
investment advisory fee payable for the corresponding Portfolio of the Trust
as well as an assumed charge of 0.06% for direct operating expenses.
Performance data for the remaining Investment Funds reflect (i) the
investment results of the corre-
16
<PAGE>
sponding Portfolios of the Trust from the date of inception of those
Portfolios and (ii) the actual investment advisory fee and direct operating
expenses of the relevant Portfolio.
The performance data for all periods has also been adjusted to reflect the
Separate Account mortality and expense risk charge, and the asset based
administrative charge equal to a total of 1.15% relating to the Certificates,
as well as the Trust's expenses.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality
and expense risk charge and the asset based administrative charge under the
Certificates. Comparisons with these benchmarks, therefore, are of limited
use. We include them because they are widely known and may help you to
understand the universe of securities from which each Portfolio is likely to
select its holdings. Benchmark data reflect the reinvestment of dividend
income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
Asset Allocation Series:
CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond Composite
Index and 30% Standard & Poor's 500 Index.
GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond Index
and 70% Standard & Poor's 500 Index.
Equity Series:
GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index and 25%
Value Line Convertible Index.
COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
GLOBAL: August 27, 1987; Morgan Stanley Capital International World Index.
INTERNATIONAL: April 3, 1995; Morgan Stanley Capital International Europe,
Australia, Far East Index.
AGGRESSIVE STOCK: January 27, 1986; 50% Stan dard & Poor's Mid-Cap Total
Return Index and 50% Russell 2000 Small Stock Index.
Fixed Income Series:
MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill Index.
INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman Intermediate
Government Bond Index.
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity products,
including managed separate accounts of insurance companies. According to
Lipper Analytical Services, Inc., the data are presented net of investment
management fees, direct operating expenses and asset-based charges applicable
under annuity contracts. Lipper data provide a more accurate picture than
market benchmarks of the Rollover IRA performance relative to other variable
annuity products.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
</TABLE>
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE INVESTORS 19.02% 7.32% 8.89% -- -- 8.39%
Lipper Income 21.25 9.65 11.99 -- -- 9.79
Benchmark 24.11 10.41 11.73 -- -- 10.55
GROWTH INVESTORS 24.92 10.87 15.77 -- -- 14.70
Lipper Flexible Portfolio 21.58 9.32 11.43 -- -- 9.44
Benchmark 32.05 13.35 14.70 -- -- 11.97
EQUITY SERIES:
GROWTH & INCOME 22.65 -- -- -- -- 8.40
Lipper Growth & Income 31.18 -- -- -- -- 12.76
Benchmark 34.93 -- -- -- -- 15.45
</TABLE>
17
<PAGE>
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:* (CONTINUED)
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK 30.93% 16.05% 16.80% 13.84% 13.06% 13.47%
Lipper Growth 31.08 12.09 15.53 12.05 12.26 12.25
Benchmark 37.54 15.30 16.57 14.87 14.79 14.24
GLOBAL 17.45 16.86 15.16 -- -- 10.09
Lipper Global 13.87 13.45 9.10 -- -- 2.52
Benchmark 20.72 15.83 11.74 -- -- 6.75
INTERNATIONAL -- -- -- -- -- 10.34**
Lipper International -- -- -- -- -- 12.21**
Benchmark -- -- -- -- -- 9.17**
AGGRESSIVE STOCK 30.13 12.61 20.35 -- -- 18.59
Lipper Small Company Growth 28.19 15.26 25.72 -- -- 16.06
Benchmark 29.69 13.67 20.16 -- -- 13.58
FIXED INCOME SERIES:
MONEY MARKET 4.53 3.04 3.29 4.81 -- 6.19
Lipper Money Market 4.35 2.88 3.10 4.71 -- 6.27
Benchmark 5.74 4.34 4.47 5.77 -- 7.09
INTERMEDIATE GOVERNMENT
SECURITIES 12.03 4.99 -- -- -- 6.43
Lipper Gen. U.S. Government 15.47 6.27 -- -- -- 7.87
Benchmark 14.41 6.74 -- -- -- 8.17
</TABLE>
- ------------
* See footnotes on next page.
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE INVESTORS 19.02% 23.60% 53.06% -- -- 65.42%
Lipper Income 21.25 31.95 76.42 -- -- 79.42
Benchmark 24.11 34.58 74.09 -- -- 87.24
GROWTH INVESTORS 24.92 36.28 108.00 -- -- 135.55
Lipper Flexible Portfolio 21.58 30.92 72.73 -- -- 76.92
Benchmark 32.05 45.64 98.56 -- -- 102.72
EQUITY SERIES:
GROWTH & INCOME 22.65 -- -- -- -- 19.89
Lipper Growth & Income 31.18 -- -- -- -- 31.42
Benchmark 34.93 -- -- -- -- 38.14
COMMON STOCK 30.93 56.29 117.35 265.55% 530.07% 1,146.22
Lipper Growth 31.08 41.29 107.30 215.49 483.45 920.87
Benchmark 37.54 53.30 115.25 300.11 692.18 1,327.94
GLOBAL 17.45 59.57 102.53 -- -- 123.08
Lipper Global 13.87 46.36 55.44 -- -- 23.09
Benchmark 20.72 55.39 74.20 -- -- 72.38
INTERNATIONAL -- -- -- -- -- 10.34**
Lipper International -- -- -- -- -- 12.21**
Benchmark -- -- -- -- -- 9.17**
AGGRESSIVE STOCK 30.13 42.79 152.49 -- -- 443.46
Lipper Small Company
Growth 28.19 55.24 268.67 -- -- 337.96
Benchmark 29.69 46.89 150.49 -- -- 254.09
</TABLE>
18
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:* (CONTINUED)
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
FIXED INCOME SERIES:
MONEY MARKET 4.53% 9.40% 17.55% 59.97% -- 138.38%
Lipper Money Market 4.35 8.87 16.48 58.55 -- 140.42
Benchmark 5.74 13.58 24.45 75.23 -- 170.07
INTERMEDIATE GOVERNMENT
SECURITIES 12.03 15.72 -- -- -- 34.43
Lipper Gen. U.S.
Government 15.47 20.05 -- -- -- 43.43
Benchmark 14.41 21.60 -- -- -- 45.17
</TABLE>
- ------------
* See footnotes below.
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION
SERIES:
CONSERVATIVE
INVESTORS -- -- -- -- -- --
GROWTH INVESTORS -- -- -- -- -- --
EQUITY SERIES:
GROWTH & INCOME -- -- -- -- -- --
COMMON STOCK*** 24.67% (3.09)% 31.91% 16.02% 6.21% 21.03%
GLOBAL -- -- -- -- (13.62) 9.61
INTERNATIONAL -- -- -- -- -- --
AGGRESSIVE STOCK -- -- -- 33.83 6.06 (0.03)
FIXED INCOME SERIES:
MONEY MARKET*** 7.70 9.59 6.91 5.39 5.41 6.09
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- -- -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION
SERIES:
CONSERVATIVE
INVESTORS 2.79% 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02%
GROWTH INVESTORS 3.53 9.39 47.19 3.69 13.95 (4.27) 24.92
EQUITY SERIES:
GROWTH & INCOME -- -- -- -- (0.55) (1.72) 22.65
COMMON STOCK*** 24.16 (9.17) 36.30 2.03 23.39 (3.26) 30.93
GLOBAL 25.29 (7.15) 29.06 (1.65) 30.60 4.02 17.45
INTERNATIONAL -- -- -- -- -- -- 10.34
AGGRESSIVE STOCK 41.86 6.92 84.73 (4.28) 15.41 (4.92) 30.13
FIXED INCOME SERIES:
MONEY MARKET*** 7.93 6.99 4.97 2.37 1.78 2.82 4.53
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- 11.30 4.38 9.27 (5.47) 12.03
<FN>
- ------------
* Returns do not reflect the distribution fee, the withdrawal charge, the
GMDB/GMIB charge, the annual contract fee and any charge for tax such
as premium taxes.
** Unannualized.
***Prior to 1982 the Year-by-Year Rates of Return were:
1976 1977 1978 1979 1980 1981 1982
---- ---- ---- ---- ---- ---- ----
COMMON STOCK 8.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22%
MONEY MARKET -- -- -- -- -- 5.71 11.72
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may
describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance of the Investment Funds
with (1) that of other insurance company separate accounts or mutual funds
included in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS 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 which are shown under "Benchmarks" and "Fund Inception Dates and
Comparative Benchmarks" in this Part 3, or (3) data developed by us derived
from such indices or averages. The Morningstar Variable Annuity/Life Report
consists of nearly 700 variable life and annuity funds, all of which report
their data net of investment management fees, direct operating expenses and
separate account charges. VARDS is a monthly reporting service that monitors
approximately 760 variable life and variable annuity funds on performance and
account information. Advertisements or other communications furnished to
present or prospective Certificate Owners may also include evaluations of an
Investment Fund or Portfolio by financial publications that are nationally
recognized such as Barron's, Morningstar's Variable Annuity Sourcebook,
Business Week, Chicago Tribune, Forbes, Fortune, Institutional Investor,
Investment Adviser, Investment Dealer's Digest, Investment Management Weekly,
Los
19
<PAGE>
Angeles Times, Money, Money Management Letter, Kiplinger's Personal Finance,
Financial Planning, National Underwriter, Pension & Investments, USA Today,
Investor's Daily, The New York Times, and The Wall Street Journal.
MONEY MARKET FUND AND INTERMEDIATE GOVERNMENT SECURITIES FUND YIELD
INFORMATION
The current yield and effective yield of the Money Market Fund and
Intermediate Government Securities Fund may appear in reports and promotional
material to current or prospective Certificate Owners.
Money Market Fund
Current yield for the Money Market Fund will be based on net changes in a
hypothetical investment over a given seven-day period, exclusive of capital
changes, and then "annualized" (assuming that the same seven-day result would
occur each week for 52 weeks). "Effective yield" is calculated in a manner
similar to that used to calculate current yield, but when annualized, any
income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings
are compounded weekly. Money Market Fund yields and effective yields assume
the deduction of all Certificate charges and expenses other than the
distribution fee, withdrawal charge, GMDB/GMIB charge and any charge for tax
such as premium tax. See "Part 5: Money Market Fund and Intermediate
Government Securities Fund Yield Information" in the SAI.
Intermediate Government Securities Fund
Current yield for the Intermediate Government Securities Fund will be based
on net changes in a hypothetical investment over a given 30-day period,
exclusive of capital changes, and then "annualized" (assuming that the 30-day
result would occur each month for 12 months). "Effective yield" is calculated
in a manner similar to that used to calculate current yield, but when
annualized, any income earned by the investment is assumed to be reinvested.
The "effective yield" will be higher than the "current yield" because any
earnings are compounded monthly.
Intermediate Government Securities Fund yields and effective yields assume
the deduction of all Certificate charges and expenses other than the
distribution fee, withdrawal charge, GMDB/GMIB charge and any charge for tax
such as premium tax. See "Part 5: Money Market Fund and Intermediate
Government Securities Fund Yield Information" in the SAI.
20
<PAGE>
PART 4: THE GUARANTEED PERIOD ACCOUNT
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. The Guaranteed
Rate for each allocation is the annual interest rate applicable to new
allocations to that Guarantee Period, which was in effect on the Transaction
Date for the allocation. We may establish different Guaranteed Rates under
different classes of Certificates. We use the term GUARANTEED PERIOD AMOUNT
to refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
with respect to the Guarantee Periods on any Business Day, therefore, will be
the sum of the present value of the Maturity Value in each Guarantee Period,
using the Guaranteed Rate in effect for new allocations to such Guarantee
Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1997 through 2007.
Not all of these Guarantee Periods will be available for ages 76 and above.
See "Allocation of Contributions" in Part 5. Also, the Guarantee Periods may
not be available for investment in all states. As Guarantee Periods expire we
expect to add maturity years so that generally 10 are available at any time.
Under the IRA Assured Payment Option and IRA APO Plus, in addition to the
Guarantee Periods above, Guarantee Periods ending on February 15th for each
of the maturity years 2008 through 2011 are also available.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no transfers or withdrawals are made and no charges
are allocated to the Guarantee Period). The required amount is the present
value of that Maturity Value at the Guaranteed Rate on the Transaction Date
for the contribution, which may also be expressed as the price per $100 of
Maturity Value on such Transaction Date.
<PAGE>
Guaranteed Rates for new allocations as of October 1, 1996 and the related
price per $100 of Maturity Value for each currently available Guarantee
Period were as follows:
</TABLE>
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH GUARANTEED
EXPIRATION DATE RATE AS OF PRICE PER $100
FEBRUARY 15TH OF OCTOBER 1, OF MATURITY
MATURITY YEAR 1996 VALUE
- ---------------- ------------ --------------
<S> <C> <C>
1997 4.21% $98.46
1998 4.80 93.76
1999 5.10 88.86
2000 5.29 84.03
2001 5.41 79.40
2002 5.52 74.90
2003 5.65 70.43
2004 5.66 66.62
2005 5.80 62.34
2006 5.92 58.30
2007 6.03 54.45
</TABLE>
Available under the IRA Assured Payment Option and IRA APO Plus
<TABLE>
<CAPTION>
<S> <C> <C>
2008 5.95% $51.80
2009 5.95 48.88
2010 5.95 46.14
2011 5.95 43.55
</TABLE>
21
<PAGE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of
years 1997 through 2001, then according to the above table the lump sum
contribution you would have to make as of October 1, 1996 would be $444.51
(i.e., the sum of the price per $100 of Maturity Value for each maturity year
from 1997 through 2001).
The above table is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted or withdrawals or transfers from Guarantee Periods. Actual
calculations will also be based on Guaranteed Rates on each actual
Transaction Date, which may differ.
Options at Expiration Date
Under the Rollover IRA, we will notify you on or before December 31st prior
to the Expiration Date of each Guarantee Period in which you have any
Guaranteed Period Amount. You may elect one of the following options to be
effective at the Expiration Date, subject to the restrictions set forth on
the prior page and under "Allocation of Contributions" in Part 5:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges
which may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR TRANSFERS, WITHDRAWALS OR SURRENDER PRIOR TO THE
EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a
Guarantee Period prior to its Expiration Date will cause any remaining
Guaranteed Period Amount for that Guarantee Period to be increased or
decreased by a market value adjustment. The amount of the adjustment will
depend on two factors: (a) the difference between the Guaranteed Rate
applicable to the amount being withdrawn and the Guaranteed Rate on the
Transaction Date for new allocations to a Guarantee Period with the same
Expiration Date, and (b) the length of time remaining until the Expiration
Date. In general, if interest rates have risen between the time when an
amount was originally allocated to a Guarantee Period and the time it is
withdrawn, the market value adjustment will be negative, and vice versa; and
the longer the period of time remaining until the Expiration Date, the
greater the impact of the interest rate difference. Therefore, it is possible
that a significant rise in interest rates could result in a substantial
reduction in your Annuity Account Value in the Guaranteed Period Account
related to longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal of a portion of the amount in a Guarantee Period will be a
percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds from a Guarantee Period. This percentage is
determined by (i) dividing the amount of the withdrawal or transfer from the
Guarantee Period by (ii) the Annuity Account Value in such Guarantee Period
prior to the withdrawal or transfer. See Appendix I for an example.
22
<PAGE>
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate
in (1)(c) above.
MODAL PAYMENT PORTION
Under the IRA Assured Payment Option and IRA APO Plus, a portion of your
contributions or Annuity Account Value is allocated to the Modal Payment
Portion of the Guaranteed Period Account for payments to be made prior to the
Expiration Date of the earliest Guarantee Period we then offer. Such amount
will accumulate interest beginning on the Transaction Date at an interest
rate we set. Interest will be credited daily. Such rate will not be less than
3%.
Upon the expiration of a Guarantee Period, the Guaranteed Period Amount will
be held in the Modal Payment Portion of the Guaranteed Period Account.
Amounts from an expired Guarantee Period held in the Modal Payment Portion of
the Guaranteed Period Account will be credited with interest at a rate equal
to the Guaranteed Rate applicable to the expired Guarantee Period, beginning
on the Expiration Date of such Guarantee Period.
There is no market value adjustment with respect to amounts held in the Modal
Payment Portion of the Guaranteed Period Account.
DEATH BENEFIT AMOUNT
The death benefit provided with respect to the Guaranteed Period Account is
equal to the Annuity Account Value in the Guaranteed Period Account or, if
greater, the sum of the Guaranteed Period Amounts in each Guarantee Period,
plus any amounts in the Modal Payment Portion of the Guaranteed Period
Account. See "Annuity Account Value" in Part 5.
INVESTMENTS
Amounts allocated to Guarantee Periods or the Modal Payment Portion of the
Guaranteed Period Account will be held in a "nonunitized" separate account
established by Equitable Life under the laws of New York. This separate
account provides an additional measure of assurance that full payment of
amounts due under the Guarantee Periods and the Modal Payment Portion of the
Guaranteed Period Account will be made. Under the New York Insurance Law, the
portion of the separate account's assets equal to the reserves and other
contract liabilities relating to the Certificates are not chargeable with
liabilities arising out of any other business we may conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations. Amounts applied under the Life Contingent Annuity become
part of the general account. See "IRA Assured Payment Option," "Life
Contingent Annuity," in Part 6.
23
<PAGE>
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933 (1933 Act),
nor is the general account an investment company under the 1940 Act.
Accordingly, neither the general account nor the Life Contingent Annuity is
subject to regulation under the 1933 Act or the 1940 Act. However, the market
value adjustment interests under the Certificates are registered under the
1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in the prospectus for your information that
relates to the general account (other than market value adjustment interests)
and the Life Contingent Annuity. The disclosure, however, may be subject to
certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
24
<PAGE>
PART 5: PROVISIONS OF THE CERTIFICATES AND SERVICES
WE PROVIDE
THE PROVISIONS DISCUSSED IN THIS PART 5 APPLY WHEN YOUR CERTIFICATE IS
OPERATING PRIMARILY TO ACCUMULATE ANNUITY ACCOUNT VALUE. DIFFERENT RULES MAY
APPLY WHEN YOU ELECT THE IRA ASSURED PAYMENT OPTION OR IRA APO PLUS IN THE
APPLICATION OR AS LATER ELECTED AS A DISTRIBUTION OPTION UNDER YOUR ROLLOVER
IRA AS DISCUSSED IN PART 6. THE PROVISIONS OF YOUR CERTIFICATE MAY BE
RESTRICTED BY APPLICABLE LAWS OR REGULATIONS.
AVAILABILITY OF THE CERTIFICATES
The Rollover IRA Certificates are available for issue ages 20 through 78.
These Certificates may not be available in all states. These Certificates are
not available in Puerto Rico.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your initial contribution must be at least $10,000. We will only accept
initial contributions which are either rollover contributions under Sections
402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code, or direct
custodian-to-custodian transfers from other individual retirement
arrangements. See "Part 9: Tax Aspects of the Certificates."
You may make subsequent contributions in an amount of at least $1,000.
Subsequent contributions may be "regular" IRA contributions (limited to a
maximum of $2,000 a year), rollover contributions as described above, or
direct transfers as described above. Rollover contributions and direct
transfers are not subject to the $2,000 annual limit.
We may refuse to accept any contribution if the sum of all contributions
under all accumulation Certificates with the same Annuitant would then total
more than $1,000,000. We reserve the right to limit aggregate contributions
made after the first Contract Year to 150% of first year contributions. We
may also refuse to accept any contribution if the sum of all contributions
under all Equitable Life annuity accumulation certificates/contracts you own
would then total more than $2,500,000.
"Regular" IRA contributions may no longer be made for the taxable year in
which you attain age 70 1/2 and thereafter. Rollover and direct transfer
contributions may be made until you attain age 84. However, any amount
contributed after you attain age 70 1/2 must be net of your required minimum
distribution for the year in which the rollover or direct transfer
contribution is made. See "Part 9: Tax Aspects of the Certificates." For the
consequences of making a "regular" IRA contribution to your Certificate, also
see Part 9.
Contributions are credited as of the Transaction Date.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check. All
contributions made by check must be drawn on a bank or credit union in the
U.S., in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. All contributions should be sent to Equitable
Life at our Processing Office address designated for contributions.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will be invested at the value next
determined following receipt for contributions allocated to the Investment
Funds. Contributions allocated to the Guaranteed Period Account will receive
the Guaranteed Rate(s) in effect for the applicable Guarantee Period(s) on
the date contributions are received. Wire orders not accompanied by complete
information, may be retained for a period not exceeding five Business Days
while an attempt is made to obtain the required information. If the required
information cannot be obtained within those five Business Days, the
Processing Office will inform the broker-dealer, on behalf of the applicant,
of the reasons for the delay and return the contribution immediately to the
applicant, unless the applicant specifically consents to our retaining the
contribution until the required information is received by the Processing
Office.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate will not be issued until the receipt and
acceptance of a properly completed application. During the time from receipt
of the initial contribution
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<PAGE>
until a signed application is received from the Certificate Owner, no other
financial transactions may be requested.
If an application is not received within ten days of receipt of the initial
contribution via wire order, or if an incomplete application is received and
cannot be completed within ten days of receipt of the initial contribution,
the amount of the initial contribution will be returned to the applicant with
immediate notification to the broker-dealer. In no event will less than the
full amount of the initial contribution be returned to the applicant.
After your Certificate has been issued, subsequent contributions may be
transmitted by wire.
ALLOCATION OF CONTRIBUTIONS
You have two options from which to choose for allocation of your
contributions: Self-Directed Allocation and Principal Assurance.
Self-Directed Allocation
You design your own investment program by allocating your contributions among
the Investment Options in any way you choose. Your contributions may be
allocated to one or up to all of the available Investment Options at any
time. We allocate contributions among the Investment Options according to
your allocation percentages. Allocations must be in whole percentages.
Allocation percentages can be changed at any time by writing to our
Processing Office, or by telephone. The change will be effective on the
Transaction Date and will remain in effect for future contributions unless
another change is requested. Allocation of the initial contribution is
subject to the provisions for the free look period. See "Free Look Period"
below. Allocation of any contribution to the Guaranteed Period Account is
subject to the following restrictions:
o No more than 60% of any contribution may be allocated to the
Guaranteed Period Account.
o At ages 76 and above, allocations may be made only to Guarantee
Periods with maturities of five years or less; however, in no event
may allocations be made to Guarantee Periods with maturities beyond
the February 15th immediately following the Annuity Commencement
Date.
Principal Assurance
This option (available at issue ages 20 through 75) is designed to assure
that your Maturity Value in a specified Guarantee Period equals your initial
contribution while at the same time allowing you to invest in the Investment
Funds. The maturity year you select for such specified Guarantee Period
generally may not be later than 10 years nor earlier than seven years. Before
you select a year that would extend beyond the year in which you will attain
age 70 1/2 you should consider your ability to take minimum distributions
from other IRA funds that you may have or from the Investment Funds to the
extent possible. See "Required Minimum Distributions" in Part 9.
In order to accomplish this strategy, we will allocate a portion (equal to
the present value) of your initial contribution to a Guarantee Period based
on the year you select. See "Guaranteed Rates and Price Per $100 of Maturity
Value" in Part 4. You may allocate the balance of your contribution to the
Investment Funds in any way you choose. Such allocations to the Investment
Funds must be in whole percentages. Allocation of the portion of your initial
contribution to the Investment Funds is subject to the provisions for the
free look period. See "Free Look Period" below.
Principal Assurance may only be elected at issue of your Certificate and
assumes no withdrawals or transfers of the amount allocated to the specified
Guarantee Period.
Subsequent contributions must be allocated under "Self-Directed Allocation"
described above.
Allocations to the Investment Funds
A contribution allocated to an Investment Fund purchases Accumulation Units
in that Investment Fund based on the Accumulation Unit Value for that
Investment Fund computed on the Transaction Date.
Allocations to the Guaranteed Period Account
Contributions allocated to the Guaranteed Period Account will have the
Guaranteed Rate for the specified Guarantee Period offered on the Transaction
Date.
FREE LOOK PERIOD
You have the right to examine the Rollover IRA Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You cancel it
by sending it to our Processing Office. The free look is extended if your
state requires a refund period of longer than 10 days.
Your refund will equal the Annuity Account Value reflecting any investment
gain or loss, and any positive or negative market value adjustment, through
the date we receive your Certificate at our Processing Office. Some states or
Federal income tax regulations may require that we calculate the refund
differently. In those states that require that we
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<PAGE>
calculate the refund differently, we may require that any portion of your
initial contribution that you request to have allocated to the Investment
Funds, be allocated to the Money Market Fund until the end of the free look
period.
If the IRA Assured Payment Option or IRA APO Plus is elected in the
application for the Certificate, your refund will include any amount applied
under the Life Contingent Annuity. See "IRA Assured Payment Option," "Life
Contingent Annuity" in Part 6.
We follow these same procedures if you change your mind before a Certificate
has been issued, but after a contribution has been made. See "Part 9: Tax
Aspects of the Certificates" for possible consequences of canceling your
Certificate during the free look period.
If you cancel your Certificate during the free look period, we may require
that you wait six months before you may apply for a Certificate with us
again.
ANNUITY ACCOUNT VALUE
The Annuity Account Value is the sum of the Annuity Account Values in the
Investment Funds and the Guaranteed Period Account.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal
to the number of Accumulation Units in that Investment Fund times the
Accumulation Unit Value for the Investment Fund for that date. The number of
Accumulation Units in an Investment Fund at any time is equal to the sum of
Accumulation Units purchased by contributions and transfers less the sum of
Accumulation Units redeemed for withdrawals, transfers or deductions for
charges.
The number of Accumulation Units purchased or sold in any Investment Fund
equals the dollar amount of the transaction divided by the Accumulation Unit
Value for that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the correspond-ing Portfolios of the Trust, which
in turn reflects the investment income and realized and unrealized capital
gains and losses of the Portfolios, as well as the Trust fees and expenses.
The Accumulation Unit Value is also stated after deduction of the Separate
Account asset charges relating to the Certificates. A description of the
computation of the Accumulation Unit Value is found in the SAI.
Annuity Account Value in Guaranteed Period
Account
The Annuity Account Value in the Guaranteed Period Account on any Business
Day will be the sum of the present value of the Maturity Value in each
Guarantee Period, using the Guaranteed Rate in effect for new allocations to
such Guarantee Period on such date. (This is equivalent to the Guaranteed
Period Amount increased or decreased by the full market value adjustment.)
The Annuity Account Value, therefore, may be higher or lower than the
contributions (less withdrawals) accumulated at the Guaranteed Rate. At the
Expiration Date the Annuity Account Value in the Guaranteed Period Account
will equal the Maturity Value. While the IRA Assured Payment Option or IRA
APO Plus is in effect, the Annuity Account Value will include any amount in
the Modal Payment Portion of the Guaranteed Period Account. However, amounts
held in the Modal Payment Portion of the Guaranteed Period Account are not
subject to a market value adjustment. See "Part 4: The Guaranteed Period
Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject
to the following restrictions.
o Transfers are permitted to or from a Guarantee Period once per
quarter during each Contract Year. Such transfers may be made at any
time during each quarter.
o Transfers out of a Guarantee Period other than at the Expiration Date
will result in a market value adjustment. See "Part 4: The Guaranteed
Period Account."
o Transfers to Guarantee Periods are subject to the restrictions set
forth under "Guarantee Periods and Expiration Dates" in Part 4 and
are limited based on your age. See "Allocation of Contributions"
above.
Transfer requests must be made directly to our Processing Office. Your
request for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which
the amounts are to be transferred. Your transfer request may be in writing or
by telephone.
For telephone transfer requests, procedures have been established by
Equitable Life that are considered to be reasonable and are designed to
confirm that instructions communicated by telephone are genuine. Such
procedures include requiring certain
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<PAGE>
personal identification information prior to acting on telephone instructions
and providing written confirmation. In light of the procedures established,
Equitable Life will not be liable for following telephone instructions that
it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must
be on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer
to or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in
writing.
DOLLAR COST AVERAGING
If you have at least $10,000 of Annuity Account Value in the Money Market
Fund, you may choose to have a specified dollar amount transferred from the
Money Market Fund to other Investment Funds on a monthly basis. The main
objective of dollar cost averaging is to attempt to shield your investment
from short term price fluctuations. Since the same dollar amount is
transferred to other Investment Funds each month, more Accumulation Units are
purchased in an Investment Fund if the value per Accumulation Unit is low and
fewer Accumulation Units are purchased if the value per Accumulation Unit is
high. Therefore, a lower average value per Accumulation Unit may be achieved
over the long term. This plan of investing allows you to take advantage of
market fluctuations but does not assure a profit or protect against a loss in
declining markets.
The dollar cost averaging option may be elected at the time you apply for the
Certificate or at a later date. The minimum amount that may be transferred
each month is $250. The maximum amount which may be transferred is equal to
the Annuity Account Value in the Money Market Fund at the time the option is
elected, divided by 12.
The transfer date will be the same calendar day each month as the Contract
Date. If, on any transfer date, the Annuity Account Value in the Money Market
Fund is equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred and the dollar cost
averaging option will end. You may change the transfer amount once each
Contract Year, or cancel this option by sending us satisfactory notice to our
Processing Office at least seven calendar days before the next transfer date.
DEATH BENEFIT
Generally, upon receipt of proof satisfactory to us of your death prior to
the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the
time you apply for the Certificate. While the Certificate is in effect, you
may change your beneficiary by writing to our Processing Office. The change
will be effective on the date the written submission was signed. The death
benefit payable will be determined as of the date we receive such proof of
death and any required instructions as to the method of payment.
The death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB defined below; and
(2) the death benefit provided with respect to the Guaranteed Period
Account. See "Part 4: The Guaranteed Period Account."
There are two plans available under the Certificates for providing guaranteed
benefits, Plan A and Plan B. Plan A (available for Annuitant issue ages 20
through 75) provides a Combined GMDB/GMIB Benefit. Plan B provides a GMDB
Only Benefit, and has a lower charge. The GMDB and the GMIB are discussed
below.
For Annuitant issue ages 20 through 75, you must elect the Combined GMDB/GMIB
Benefit (Plan A) or the GMDB Only Benefit (Plan B) in the application. Once
elected, the plan may not be changed. For Annuitant issue ages 76 through 78,
for Certificates issued in New York and in states where the GMIB is not
currently available, the GMDB Only Benefit (Plan B) will apply.
For the specific charges, see "Part 7: Deductions and Charges."
GMDB
Applicable to Certificates issued in all states except New York
- ---------------------------------------------------------------
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to (a) the GMDB determined on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. In addition, interest (see below) is credited to and becomes part of
the GMDB on each Processing Date.
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o 6% to Age 80 Benefit--interest will be credited at the effective annual
GMDB interest rate of 6% (3% for amounts in the Fixed Income Series)
through age 80, and 0% thereafter. Contributions, transfers and
withdrawals during the Contract Year will be taken into account.
Applicable to Certificates issued in New York for Annuitant issue ages 20
through 78
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to (a) the GMDB calculated on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. Additionally, on each Processing Date the GMDB is reset at the greater
of the current GMDB and the current Annuity Account Value in the Investment
Funds, not to exceed a cap as described below. The cap does not apply on the
seventh Processing Date. The cap is equal to (a) the portion of the initial
contribution allocated to the Investment Funds, plus (b) any subsequent
contributions and transfers into the Investment Funds, less (c) any transfers
and withdrawals from such Funds, plus (d) interest (see below) that is
credited on each Processing Date, plus (e) any amount by which the GMDB is
increased because the cap did not apply on the seventh Processing Date.
o 6% to Age 80 Cap--interest will be credited at the effective annual GMDB
interest rate of 6% (3% for amounts in the Fixed Income Series) through
age 80, and 0% thereafter.
See Appendix II for an example of the calculation of the GMDB.
How Withdrawals and Transfers Affect the GMDB
Withdrawals and transfers out of the Investment Funds will generally cause a
reduction in the GMDB on a dollar-for-dollar basis. However, if on any
Transaction Date, (i) the GMDB exceeds the Annuity Account Value and (ii) the
sum of withdrawals and transfers out of the Investment Funds is greater than
6% of the beginning of the year GMDB, the current GMDB will be reduced on a
pro rata basis on the Transaction Date. The amount of the reduction will be
determined by dividing the amount of the withdrawal by the Annuity Account
Value on the Transaction Date and multiplying this percentage by the current
GMDB.
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your GMDB.
For example, assuming a beginning of year GMDB of $100,000 and a withdrawal
of $5,000, which represents 5% of the beginning of year GMDB
($5,000/$100,000), such withdrawal would cause the current GMDB to be reduced
by $5,000. If a withdrawal in the amount of $10,000, which represents 10% of
the beginning of year GMDB ($10,000/ $100,000) were to be made, assuming a
current Annuity Account Value of $50,000 the current GMDB would be reduced by
20% ($10,000/$50,000), or $20,000 ($100,000 x .20).
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the income
annuity option you have chosen under your Certificate. If no income annuity
option has been chosen at the time of your death, the beneficiary will
receive the death benefit in a lump sum. However, subject to Equitable Life's
rules then in effect and any other applicable requirements under the Code,
the beneficiary may elect to apply the death benefit amount to one or more
income annuity options offered by Equitable Life. See "Income Annuity
Options" in Part 6.
If you elect to have your spouse be both the sole primary beneficiary and the
successor Annuitant/ Certificate Owner, then no death benefit is payable
until your surviving spouse's death.
On the Processing Date following your death, if the successor
Annuitant/Certificate Owner election was elected at issue of the Certificate
and is in effect at your death, the GMDB will be reset at the greater of the
current GMDB and the current Annuity Account Value in the Investment Funds.
The GMDB interest rate will subsequently be credited based on the age (as of
the Processing Date) of the successor Annuitant/Certificate Owner. For such
Certificates, if the Combined GMDB/GMIB Benefit (Plan A) was elected, the
GMIB (discussed below) will continue to be available on Contract Date
anniversaries seven and later based on the Contract Date, provided the GMIB
is exercised as specified under GMIB below, based on the age of the successor
Annuitant/ Certificate Owner.
GMIB
The GMIB, available under the Combined GMDB/ GMIB Benefit (Plan A), may not
currently be available in your state. When it becomes available it will be
added to your Certificate if you then elect the Combined GMDB/GMIB Benefit
(Plan A). State availability information may be obtained from your registered
representative.
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When you elect the IRA Assured Payment Option (discussed in Part 6), the GMIB
provides a minimum amount of guaranteed lifetime income under such option. On
the Transaction Date the amount of the periodic lifetime income to be
provided will be based on the greater of (i) the Annuity Account Value in the
Investment Funds and (ii) an amount equal to the GMDB described above,
reduced by any remaining withdrawal charges; each divided by "guaranteed
maximum annuity purchase rates" under the Certificate. The guaranteed maximum
annuity purchase rates are based on (i) interest at 2.5% if the GMIB is
exercised within 30 days following a Contract Date anniversary in years 7
through 9 and at 3.0% if exercised within 30 days following the 10th or later
Contract Date anniversary and (ii) mortality based on the 1983 Individual
Annuity Mortality Table "a" projected with modified Scale G. The mortality
table used in determining such annuity purchase rates assumes that mortality
will improve in the future and is more conservative than the basis underlying
current annuity purchase rates. Your Annuity Account Value in the Investment
Funds will depend on the performance of such Funds. The amount equal to the
GMDB (as discussed above) does not have an Annuity Account Value or a Cash
Value and is used solely for purposes of calculating the GMIB.
If you have any Annuity Account Value in the Guaranteed Period Account as of
the Transaction Date that you exercise the GMIB, such Annuity Account Value
will also be applied (at current annuity purchase rates) toward providing
payments under the IRA Assured Payment Option. Such Annuity Account Value
will increase the payments provided by the GMIB.
When you exercise the GMIB, we automatically determine whether the
application of your Annuity Account Value in the Investment Funds at current
purchase rates under the IRA Assured Payment Option (with a fixed period as
specified below) would produce higher lifetime income, and if so, the higher
income will be provided.
In addition, you can elect any of our income annuity options. See "Income
Annuity Options" in Part 6.
The GMIB applies only if your election of the IRA Assured Payment Option
meets the following conditions:
o The IRA Assured Payment Option is elected within 30 days following
the 7th or later Contract Date anniversary; provided it is not
elected earlier than your age 60, nor later than age 83.
o The fixed period you select is as indicated below, based on your age at
the time of election and the type of payments selected:
<TABLE>
<CAPTION>
LEVEL PAYMENTS
--------------
AGE FIXED PERIOD
- ----------------------- --------------------
<S> <C>
60 through 75 10 years
76 through 78 85 less your age
79 through 83 7 years
INCREASING PAYMENTS
-------------------
AGE FIXED PERIOD
- ----------------------- --------------------
60 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
</TABLE>
o Payments start one payment mode after the IRA Assured Payment Option
goes into effect.
Each year on your Contract Date anniversary, if you are eligible to exercise
the GMIB, we will send you a notice of how much income could be provided
under such option on the Contract Date anniversary. You may then notify us
within 30 days following the Contract Date anniversary if you want to
exercise the GMIB by submitting the proper form. The income to be provided
under the IRA Assured Payment Option will be determined on the Transaction
Date that we receive your request and, therefore, may differ from the notice.
It will be based on the GMIB as of such Transaction Date.
The GMDB, which relates to the Investment Funds, will no longer be in effect
if you elect the IRA Assured Payment Option. If you subsequently terminate
the IRA Assured Payment Option and have your Certificate operate under the
Rollover IRA rules, then the GMDB will go back into effect based on your
Annuity Account Value in the Investment Funds as of the Transaction Date that
the Rollover IRA goes into effect.
See Appendix III for examples on the GMIB.
Alternate Combined GMDB/GMIB Benefit (Plan A)
available for issue ages 20 through 65
In addition to a Combined GMDB/GMIB Benefit where GMDB interest is credited
through age 80 (6% to Age 80 Benefit), there is a lower cost benefit where
GMDB interest is credited through age 70 (6% to Age 70 Benefit). If you wish
to elect this alternate benefit, you must do so in the application; otherwise
the 6% to Age 80 Benefit will apply. Once elected, the benefit may not be
changed. This alternate benefit is not available for election if you elect
IRA APO Plus (discussed in Part 6) in the application.
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CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward
or downward market value adjustment. See "Part 4: The Guaranteed Period
Account." We do not guarantee any minimum Cash Value except for amounts in a
Guarantee Period held to the Expiration Date. On any date before the Annuity
Commencement Date while the Certificate is in effect, the Cash Value is equal
to: (1) the Annuity Account Value; (2) less any withdrawal charge; and (3)
less any annual contract fee incurred but not yet deducted. The free corridor
amount will not apply when calculating the withdrawal charge applicable upon
a surrender. See "Part 7: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
you are living and before the Annuity Commencement Date.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate will be terminated
as of that date.
You may receive the Cash Value in a single sum payment or apply it under one
or more of the income annuity options. See "Income Annuity Options" in Part
6. We will usually pay the Cash Value within seven calendar days, but we may
delay payment as described in "When Payments are Made" below.
For the tax consequences of surrenders, see "Part 9: Tax Aspects of the
Certificates."
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds,
payment of any portion of the Annuity Account Value (less any applicable
withdrawal charge) from the Investment Funds, and, upon surrender, payment of
the Cash Value from the Investment Funds will be made within seven calendar
days after the Transaction Date. Payments or application of proceeds from the
Investment Funds can be deferred for any period during which (1) the New York
Stock Exchange is closed or trading on it is restricted, (2) sales of
securities or determination of the fair value of an Investment Fund's assets
is not reasonably practicable because of an emergency, or (3) the SEC, by
order, permits us to defer payment in order to protect persons with interest
in the Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account for up to six months while you are living. We may
also defer payments for any amount attributable to a contribution made in the
form of a check for a reasonable amount of time (not to exceed 15 days) to
permit the check to clear.
ASSIGNMENT
The Certificates are not assignable or transferrable except through surrender
to us. They may not be borrowed against or used as collateral for a loan or
other obligation.
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI),
an indirect wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI is
registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's
principal business address is 787 Seventh Avenue, New York, New York 10019.
For 1995, EDI was paid a fee of $126,914 for its services under its
"Distribution Agreement" with Equitable Life and the Separate Account.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents. Broker-dealer sales
compensation for EDI and its affiliates will generally not exceed six percent
of total contributions made under a Certificate. EDI may also receive
compensation and reimbursement for its marketing services under the terms of
its distribution agreement with Equitable Life. Broker-dealers receiving
sales compensation will generally pay a portion thereof to their registered
representatives as commissions related to sales of the Certificates. The
offering of the Certificates is intended to be continuous.
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PART 6: DISTRIBUTION METHODS UNDER THE CERTIFICATES
THE PROVISIONS DISCUSSED IN THIS PART 6 APPLY WHEN YOU ELECT THE IRA ASSURED
PAYMENT OPTION OR IRA APO PLUS IN THE APPLICATION OR AS A DISTRIBUTION OPTION
AT A LATER DATE, AS WELL AS TO OTHER DISTRIBUTION METHODS UNDER YOUR
CERTIFICATE.
The Rollover IRA Certificates offer several distribution methods specifically
designed to provide retirement income. The Choice Income Plan which includes
the IRA Assured Payment Option and IRA APO Plus, may be elected in the
application or as a distribution option at a later date. In addition, the
Certificates provide for Lump Sum Withdrawals, Substantially Equal Payment
Withdrawals, Systematic Withdrawals and Minimum Distribution Withdrawals.
Fixed and variable income annuity options are also available for amounts to
be applied at the Annuity Commencement Date. The IRA Assured Payment Option
and IRA APO Plus may not be available in all states.
The Certificates are subject to the Code's minimum distribution requirements.
Generally, distributions from these Certificates must commence by April 1 of
the calendar year following the calendar year in which you attain age 70 1/2.
Subsequent distributions must be made by December 31st of each calendar year.
If you do not commence minimum distributions in the calendar year in which
you attain age 70 1/2, and wait until the three month period (January 1 to
April 1) in the next calendar year to commence minimum distributions, then
you must take two required minimum distributions in that calendar year. If
the required minimum distribution is not made, a penalty tax in an amount
equal to 50% of the difference between the amount required to be withdrawn
and the amount actually withdrawn may apply. See "Part 9: Tax Aspects of the
Certificates" for a discussion of various special rules concerning the
minimum distribution requirements.
For IRA retirement benefits subject to minimum distribution requirements, we
will send a form outlining the distribution options available before you
reach age 70 1/2 (if you have not annuitized before that time).
IRA ASSURED PAYMENT OPTION
The IRA Assured Payment Option is designed to provide you with guaranteed
payments for your life (SINGLE LIFE) or for the lifetime of you and a joint
Annuitant you designate (JOINT AND SURVIVOR) through a series of
distributions from the Annuity Account Value that are followed by Life
Contingent Annuity payments. Payments you receive during the fixed period are
designed to pay out the entire Annuity Account Value by the end of the fixed
period and to meet or exceed minimum distribution requirements, if
applicable. See "Minimum Distribution Withdrawals" below. The fixed period
ends with the distribution of the Maturity Value of the last Guarantee
Period, or distribution of the final amount in the Modal Payment Portion of
the Guaranteed Period Account. The fixed period may also be referred to as
the "liquidity period" as during this period, you have access to the Cash
Value through Lump Sum Withdrawals or surrender of the Certificate, with
lifetime income continuing in reduced amounts.
After the fixed period, the payments are made under the Life Contingent
Annuity described below.
You may elect the IRA Assured Payment Option at any time if your initial
contribution or Annuity Account Value is at least $10,000 at the time of
election, by submitting a written request satisfactory to us. The IRA Assured
Payment Option may be elected at ages 59 1/2 through 83. If you are over age
70 1/2, the availability of this option may be restricted under certain
limited circumstances. See "Tax Considerations for the IRA Assured Payment
Option and IRA APO Plus" in Part 9. The IRA Assured Payment Option with level
payments (described below) may be elected at ages as young as 45. However,
there are tax considerations that should be taken into account before
electing level payments under the IRA Assured Payment Option if you are under
age 59 1/2. See "Penalty Tax on Early Distributions" in Part 9. The IRA
Assured Payment Option with increasing payments (described below) may be
elected at ages as young 53 1/2 provided payments do not start before you
attain age 59 1/2.
Once the IRA Assured Payment Option is elected, all amounts currently held
under your Rollover IRA must be allocated to the Guarantee Periods, the Modal
Payment Portion of the Guaranteed Period Account, if applicable, and the Life
Contingent Annuity. See "Allocation of Contributions or Annuity Account
Value" below. Subsequent contributions may be made according to the rules set
forth below and in "Tax-Free Transfers and Rollovers" in Part 9.
Subsequent Contributions under the IRA Assured
Payment Option
Subsequent "regular" IRA contributions may no longer be made for the taxable
year in which you attain age 70 1/2 and thereafter. Subsequent rollover and
direct transfer contributions may be made at any time until the earlier of
(i) when you attain age 84 and (ii) when the Certificate is within seven
years of the end of the fixed period while the IRA Assured Payment Option is
in effect. However, any amount
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<PAGE>
contributed after you attain age 70 1/2 must be net of your required minimum
distribution for the year in which the rollover or direct transfer
contribution is made.
Payments
You may elect to receive monthly, quarterly or annual payments. However, all
payments are made on the 15th of the month. Payments to be made on an
Expiration Date during the fixed period represent distributions of the
Maturity Values of serially maturing Guarantee Periods on their Expiration
Dates. Payments to be made monthly, quarterly or annually on dates other than
an Expiration Date represent distributions from amounts in the Modal Payment
Portion of the Guaranteed Period Account. See "Part 4: The Guaranteed Period
Account."
A $2.50 charge will be deducted from each payment made on a monthly or
quarterly basis under the IRA Assured Payment Option.
You have a choice of receiving level payments during the fixed period and
then under the Life Contingent Annuity. Or, you may elect to receive payments
that increase. During the fixed period, payments are designed to increase by
10% every three years on each third anniversary of the payment start date.
After the end of the fixed period, your first payment under the Life
Contingent Annuity will be 10% greater than the final payment made under the
fixed period. Thereafter, payments will increase annually on each anniversary
of the payment start date under the Life Contingent Annuity based on the
annual increase, if any, in the Consumer Price Index, but in no event greater
than 3% per year.
Payments will generally start one payment mode from the date the IRA Assured
Payment Option goes into effect. Or you may choose to defer the date payments
will start generally for a period of up to 60 months. Deferral of the payment
start date permits you to lock in rates at a time when you may consider
current rates to be high, while permitting you to delay receiving payments if
you have no immediate need to receive income under your Certificate. In
making this decision, you should consider that the amount of income you
purchase is based on the rates applicable on the Transaction Date, so if
rates rise during the interim, your payments may be less than they would have
been if you had elected the IRA Assured Payment Option at a later date.
Deferral of the payment start date is not available above age 80. Before you
elect to defer the date your payments will start, you should consider the
consequences of this decision on the requirement under the Code that you take
minimum distributions each calendar year with respect to the value of your
IRA. See "Required Minimum Distributions" in Part 9. The ability to defer the
payment start date may not be available in all states. Also, if amounts are
applied to the IRA Assured Payment Option as a result of the GMIB (discussed
in Part 5), deferral of the payment start date is not permitted.
Required minimum distributions will be calculated based on the Annuity
Account Value in each Guarantee Period and the deemed value of the Life
Contingent Annuity for tax purposes. If at any time your payment under the
IRA Assured Payment Option would be less than the minimum amount required to
be distributed under minimum distribution rules, we will notify you of the
difference. You will have the option to have an additional amount withdrawn
under your Certificate and such withdrawal will be treated as a Lump Sum
Withdrawal; however, no withdrawal charge will apply. An adjustment will be
made to future scheduled payments. Or, you may take the amount from other IRA
funds you may have. See "Lump Sum Withdrawals" below and "Required Minimum
Distributions" in Part 9.
See Appendix IV for an example of payments purchased under an IRA Assured
Payment Option.
Fixed Period
If you elect level payments, you may select a fixed period of not less than
seven years nor more than 15 years. The maximum fixed period available based
on your age at issue of the Certificate (or age at the time of election if
the IRA Assured Payment Option is elected after issue) is as follows:
<TABLE>
<CAPTION>
AGE* MAXIMUM FIXED PERIOD
- ----------------- --------------------
<S> <C>
45 through 70 15 years
71 through 78 85 less your age
79 through 83 7 years
</TABLE>
The minimum and maximum fixed period will be reduced by each year you defer
the date payments will start.
If you elect increasing payments, you do not have a choice as to the fixed
period. Based on your age at issue of the Certificate (or age at the time of
election if the IRA Assured Payment Option is elected after issue), your
fixed period will be as follows:
<TABLE>
<CAPTION>
AGE* FIXED PERIOD
- ----------------- ----------------
<S> <C>
59 1/2 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
</TABLE>
If you elect increasing payments and defer the date payments will start, your
fixed period will be as follows:
<TABLE>
<CAPTION>
FIXED PERIOD BASED ON
DEFERRAL PERIOD
---------------------------
AGE* 1-36 MONTHS 37-60 MONTHS
- ----------------- ------------- ------------
<S> <C> <C>
53 1/2 through 70 12 years 9 years
71 through 75 9 years 9 years
76 through 80 6 years 6 years
81 through 83 N/A N/A
</TABLE>
* For joint and survivor, the fixed period is based on the age of the younger
Annuitant.
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<PAGE>
If amounts are applied to the IRA Assured Payment Option as a result of the
GMIB, the fixed periods will be as discussed under "GMIB" in Part 5.
Allocation of Contributions or Annuity Account Value
If the IRA Assured Payment Option is elected in the application, then based
on the amount of your initial contribution, your age and sex (and the age and
sex of the joint Annuitant, if applicable), the mode of payment, the form of
payments and the fixed period you select, your entire contribution will be
allocated by us. A portion of the initial contribution will be allocated
among the Guarantee Periods and the Modal Payment Portion of the Guaranteed
Period Account, if applicable, to provide fixed period payments and a portion
will be applied under the Life Contingent Annuity in order to provide the
payments for life. For initial contributions of $500,000 or more, amounts
allocated to the Life Contingent Annuity may also be based on your
underwriting classification. In general, underwriting classification is based
on your medical history and smoker status and may result in a smaller
allocation of amounts to the Life Contingent Annuity if your classification
is lower than our standard class. If the IRA Assured Payment Option is
elected any time after issue of the Rollover IRA Certificate or if you cancel
IRA APO Plus (discussed below) and elect the IRA Assured Payment Option, then
based on your Annuity Account Value and the information you provide as
described above, your entire Annuity Account Value, including any amounts
currently invested in the Investment Funds, will be allocated by us among the
Guarantee Periods, the Modal Payment Portion of the Guaranteed Period
Account, if applicable, and applied under the Life Contingent Annuity. While
the IRA Assured Payment Option is in effect, no amounts may be allocated to
the Investment Funds. If amounts in the Guarantee Periods are transferred, a
market value adjustment may apply.
If you elect the IRA Assured Payment Option in the application and your
initial contribution will come from multiple sources, your application must
also indicate that contributions are to be allocated to the Money Market Fund
under the Rollover IRA described in Part 5. Election of the IRA Assured
Payment Option must include your instructions to apply your Annuity Account
Value, on the date the last such contribution is received, under the IRA
Assured Payment Option as described above.
Any subsequent contributions made while the IRA Assured Payment Option is in
effect must be allocated to the Guarantee Periods and applied to the Life
Contingent Annuity. We will determine the allocation of such contributions,
such that your payments will be increased and the fixed period and date that
payments are to start under the Life Contingent Annuity will remain the same.
Life Contingent Annuity
The Life Contingent Annuity provides lifetime payments starting after the end
of the fixed period. The portion of your contributions or Annuity Account
Value applied under the Life Contingent Annuity does not have a Cash Value or
an Annuity Account Value and, therefore, does not provide for transfers or
withdrawals. Once the fixed period has ended and payments have begun under
the Life Contingent Annuity, subsequent amounts may no longer be applied
under the Life Contingent Annuity.
THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND
ANNUITY INCOME IS PAID ONLY IF YOU (OR A JOINT ANNUITANT) ARE LIVING AT THE
DATE ANNUITY BENEFITS BEGIN. BENEFITS ARE ONLY PAID DURING YOUR LIFETIME AND,
IF APPLICABLE, THE LIFETIME OF A JOINT ANNUITANT. CONSEQUENTLY, YOU SHOULD
CONSIDER THE POSSIBILITY THAT NO AMOUNTS WILL BE PAID UNDER THE LIFE
CONTINGENT ANNUITY IF YOU (OR A JOINT ANNUITANT) DO NOT SURVIVE TO THE DATE
PAYMENTS ARE TO START UNDER SUCH ANNUITY.
You may elect to have the Life Contingent Annuity provide level or increasing
payments on a Single Life or a Joint and 100% to Survivor basis. If you elect
increasing payments, the payments will increase annually based on the
increase, if any, in the Consumer Price Index, but in no event greater than
3% per year. The Life Contingent Annuity may also provide payments on a Joint
and one-half to Survivor or a Joint and two-thirds to Survivor basis.
Payments under the Life Contingent Annuity will be made to you during your
lifetime (and the lifetime of the joint Annuitant, if applicable) on the same
payment mode and date as the payments that were made during the fixed period.
Election Restrictions under Joint and
Survivor
Election of the IRA Assured Payment Option with a Joint and Survivor form of
the Life Contingent Annuity is subject to the following restrictions: (i) the
joint Annuitant must be your spouse; (ii) neither you nor the joint Annuitant
can be over age 83; (iii) under level payments if you elect the Joint and
100% to Survivor form, only the longest fixed period is permitted; and (iv)
the fixed period may be limited by the minimum distribution rules. See
"Required Minimum Distributions" in Part 9.
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<PAGE>
Withdrawals under the IRA Assured
Payment Option
While the IRA Assured Payment Option is in effect, if you take a Lump Sum
Withdrawal as described under "Lump Sum Withdrawals" below (or if a Lump Sum
Withdrawal is made to satisfy minimum distribution requirements under the
Certificate), such withdrawals will be taken from all remaining Guarantee
Periods to which your Annuity Account Value is allocated and the Modal
Payment Portion of the Guaranteed Period Account, if applicable, such that
the amount of the payments and the length of the fixed period will be
reduced, and the date payments are to start under the Life Contingent Annuity
will be accelerated. Additional amounts above the amount of the requested
withdrawal will be withdrawn from the Guaranteed Period Account and applied
to the Life Contingent Annuity to the extent necessary to achieve this
result. As a result, the same pattern of payments will continue in reduced
amounts for your life, and if applicable, the life of your joint Annuitant.
If you have elected increasing payments, the first reduction in your payments
will take place no later than the date of the next planned increase.
Substantially Equal Payment Withdrawals, Systematic Withdrawals and Minimum
Distribution Withdrawals may not be elected while the IRA Assured Payment
Option is in effect. See "Substantially Equal Payment Withdrawals,"
"Systematic Withdrawals" and "Minimum Distribution Withdrawals," below.
Death Benefit
Once you have elected the IRA Assured Payment Option, if a death benefit
becomes payable during the fixed period we will pay the death benefit amount,
as described under "Death Benefit" in Part 5, to the designated beneficiary.
Unless you have elected a Joint and Survivor form under the Life Contingent
Annuity, no payment will be made under the Life Contingent Annuity. The death
benefit payable relates only to the Guarantee Periods under the Certificate;
a death benefit is never payable under the Life Contingent Annuity.
If you have elected a Joint and Survivor form of annuity under the Life
Contingent Annuity, payments will be made to you or the joint Annuitant, if
living on the date payments are to start. The designated beneficiary and the
joint Annuitant must be your spouse.
Termination of the IRA Assured
Payment Option
The IRA Assured Payment Option will be terminated if: (i) you cancel such
option at any time by sending a written request satisfactory to us; (ii) you
submit a subsequent contribution and you do not want it applied under the IRA
Assured Payment Option; (iii) you request a transfer of your Annuity Account
Value as described under "Transfers Among Investment Options" in Part 5,
while the IRA Assured Payment Option is in effect; or (iv) you request a
change in the date the payments are to start under the Life Contingent
Annuity. Once the IRA Assured Payment Option is terminated, in order to
receive distributions from your Annuity Account Value you must utilize the
withdrawal options described under "Withdrawal Options" below. Although the
Life Contingent Annuity will continue in effect and payments will be made if
you or your joint Annuitant, if applicable, are living on the date payments
are to start, additional Life Contingent Annuity payments may not be
purchased. You may elect to start the IRA Assured Payment Option again by
submitting a written request satisfactory to us, but no sooner than three
years after the Option was terminated. If you elected the IRA Assured Payment
Option at age 70 1/2 or older and subsequently terminate this Option,
required minimum distributions must continue to be made with respect to your
Certificate.
Before terminating the IRA Assured Payment Option, you should consider the
implications this may have under the minimum distribution requirements. See
"Tax Considerations for the IRA Assured Payment Option and IRA APO Plus" in
Part 9.
Income Annuity Options and Surrendering
the Certificates
If you elect an annuity benefit as described under "Income Annuity Options"
below, or surrender the Certificate for its Cash Value as described under
"Surrendering the Certificates to Receive the Cash Value" in Part 5, once we
receive your returned Certificate, your Certificate will be returned to you
with a notation that the Life Contingent Annuity is still in effect.
Thereafter, no subsequent contributions will be accepted under the
Certificate and no amounts may be applied under the Life Contingent Annuity.
Withdrawal Charge
While the IRA Assured Payment Option is in effect, withdrawal charges will
not apply to the level or increasing payments made during the fixed period.
Except as necessary to meet minimum distribution requirements under the
Certificate, Lump Sum Withdrawals will be subject to a withdrawal charge and
will have a 10% free corridor available. Upon termination of the IRA Assured
Payment Option, the free corridor will apply as described under "Withdrawal
Charge" in Part 7.
IRA APO PLUS
IRA APO Plus is a variation of the IRA Assured Payment Option. IRA APO Plus
is available at ages 59 1/2 through 83. It may also be elected at ages as
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<PAGE>
young as 53 1/2 provided payments under IRA APO Plus do not start before you
attain age 59 1/2. Except as indicated below, all provisions of the IRA
Assured Payment Option apply to IRA APO Plus. IRA APO Plus enables you to
keep a portion of your Annuity Account Value in the Investment Funds while
periodically converting such Annuity Account Value to increase the guaranteed
lifetime income under the IRA Assured Payment Option. When you elect IRA APO
Plus, a portion of your initial contribution or Annuity Account Value as
applicable is allocated by us to the IRA Assured Payment Option to provide a
minimum guaranteed lifetime income through allocation of amounts to the
Guarantee Periods and the Modal Payment Portion of the Guaranteed Period
Account, if applicable, and application of amounts to the Life Contingent
Annuity. The remaining Annuity Account Value remains in the Investment Funds.
Periodically during the fixed period (as described below), a portion of the
remaining Annuity Account Value in the Investment Funds is applied to
increase the guaranteed level payments under the IRA Assured Payment Option.
IRA APO Plus allows you to remain invested in the Investment Funds for longer
than would be possible if you applied your entire Annuity Account Value all
at once to the IRA Assured Payment Option or to an income annuity option,
while utilizing an "exit strategy" to provide retirement income.
If IRA APO Plus is elected in the application, we may require that the
portion of the initial contribution to be allocated to the Investment Funds,
be allocated to the Money Market Fund until the end of the free look period.
See "Free Look Period" in Part 5.
The fixed period under IRA APO Plus will be based on your age (or the age of
the younger Annuitant if Joint and Survivor is elected) at issue of the
Certificate (or age at the time of election if IRA APO Plus is elected after
issue) and will be the same as the periods indicated for increasing payments
under "IRA Assured Payment Option" above.
You may elect to defer the payment start date as described in "Payments"
under "IRA Assured Payment Option," above. The fixed period will also be as
indicated for deferral of the payment start date for increasing payments
under the IRA Assured Payment Option.
You elect IRA APO Plus in the application or at a later date by submitting
the proper form. IRA APO Plus may not be elected if the IRA Assured Payment
Option is already in effect.
The amount applied under IRA APO Plus is either the initial contribution if
IRA APO Plus is elected at issue of the Certificate, or the Annuity Account
Value if IRA APO Plus is elected after issue of the Certificate. Out of a
portion of the amount applied, level payments are provided under the IRA
Assured Payment Option equal to the initial payment that would have been
provided on the Transaction Date by the allocation of the entire amount to
increasing payments as described in "Payments" under "IRA Assured Payment
Option," above. The difference between the amount required for level payments
and the amount required for increasing payments is allocated to the
Investment Funds in accordance with your instructions. If you have Annuity
Account Value in the Guaranteed Period Account at the time this option is
elected, a market value adjustment may apply as a result of such amounts
being transferred to effect the IRA Assured Payment Option.
On the third February 15th following the date the first payment is made (if
payments are to be made on February 15th, the date of the first payment will
be counted as the first February 15th) during the fixed period while you are
living, a portion of the Annuity Account Value in the Investment Funds is
taken pro rata from the Annuity Account Value in each Investment Fund and is
applied to increase the level payments under the IRA Assured Payment Option.
If a deferral period of three years or more is elected, a portion of the
Annuity Account Value in the Investment Funds will be applied on the February
15th prior to the date the first payment is made, to increase the initial
level payments. If payments are to be made on February 15th, the date of the
first payment will be counted as the first February 15th.
The amount applied is the amount which provides for level payments equal to
the initial payment that would have been provided by the allocation of the
entire Annuity Account Value to increasing payments, as described in the
preceding paragraph. This process is repeated each third year during the
fixed period. The first increased payment will be reflected in the payment
made following three full years of payments and then every three years
thereafter. On the Transaction Date immediately following the last payment
during the fixed period, the remaining Annuity Account Value in the
Investment Funds is first applied to the Life Contingent Annuity to change
the level payments previously purchased to increasing payments. If there is
any Annuity Account Value remaining after the increasing payments are
purchased, this balance is applied to the Life Contingent Annuity to further
increase such increasing payments. If the Annuity Account Value in the
Investment Funds is insufficient to purchase the increasing payments, then
the level payments previously purchased will be increased to the extent
possible.
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<PAGE>
While IRA APO Plus provides a minimum guaranteed lifetime payment under the
IRA Assured Payment Option, the total amount of income that can be provided
over time will depend on the investment performance of the Investment Funds
in which you have Annuity Account Value, as well as the current Guaranteed
Rates and the cost of the Life Contingent Annuity, which may vary.
Consequently, the aggregate amount of guaranteed lifetime income under IRA
APO Plus may be more or less than the amount that could have been purchased
by application at the outset of the entire initial contribution or Annuity
Account Value to the IRA Assured Payment Option.
See Appendix IV for an example of the payments purchased under IRA Assured
Payment Option and IRA APO Plus.
In calculating your required minimum distributions your Annuity Account Value
in the Investment Funds, the Annuity Account Value in each Guarantee Period,
any amount in the Modal Payment Portion of the Guaranteed Period Account, and
the deemed value of the Life Contingent Annuity for tax purposes will be
taken into account as described in "Payments" under "IRA Assured Payment
Option," above. Also see "Required Minimum Distributions" in Part 9.
Allocation of Subsequent Contributions under IRA APO Plus
Any subsequent contributions you make may only be allocated to the Investment
Funds, where it is later applied by us under the IRA Assured Payment Option.
Subsequent contributions will be allocated among the Investment Funds
according to your allocation percentages. Allocation percentages can be
changed at any time by writing to our Processing Office. Subsequent
contributions may no longer be made after the end of the fixed period.
Transfers Among Investment Options under IRA APO Plus
While IRA APO Plus is in effect, you may transfer all or a portion of your
Annuity Account Value in the Investment Funds, among the Investment Funds in
any way you choose. However, you may not transfer Annuity Account Value from
the Investment Funds to the Guaranteed Period Account.
Withdrawals under IRA APO Plus
While IRA APO Plus is in effect, if you take a Lump Sum Withdrawal as
described under "Lump Sum Withdrawals" below (or if a Lump Sum Withdrawal is
made to satisfy minimum distribution requirements under the Certificate),
such withdrawals will be taken on a pro rata basis from your Annuity Account
Value in the Investment Funds unless you specify otherwise. If there is
insufficient value in the Investment Funds the excess will be taken from the
Guarantee Periods and the Modal Payment Portion of the Guaranteed Period
Account, if applicable, as described under "Withdrawals under the IRA Assured
Payment Option" above.
A Lump Sum Withdrawal taken to satisfy minimum distribution requirements
under the Certificate will not be subject to a withdrawal charge.
Death Benefit
Once you have elected IRA APO Plus, if a death benefit becomes payable during
the fixed period we will pay the death benefit amount as described under
"Death Benefit" in Part 5, to the designated beneficiary. Unless you have
elected Joint and Survivor under the Life Contingent Annuity, no payment will
be made under the Life Contingent Annuity. The death benefit relates only to
the Investment Funds and the Guarantee Periods under the Certificate; a death
benefit is never payable under the Life Contingent Annuity.
Termination of IRA APO Plus
You may terminate IRA APO Plus at any time by submitting a request
satisfactory to us. In connection with the termination, you may either (i)
elect to terminate IRA APO Plus at any time and have your Certificate operate
under the Rollover IRA rules (see "Part 5: Provisions of the Certificates and
Services We Provide") or (ii) elect the IRA Assured Payment Option (GMIB,
discussed in Part 5 may apply) with level or increasing payments. In the
latter case your remaining Annuity Account Value in the Investment Funds will
be allocated to the Guaranteed Period Account and applied under the Life
Contingent Annuity. A market value adjustment may apply for any amounts
allocated from a Guarantee Period. At least 45 days prior to the end of each
three year period, we will send you a quote indicating how much future income
could be provided under the IRA Assured Payment Option. The quote would be
based on your current Annuity Account Value, current Guaranteed Rates for the
Guarantee Periods and current purchase rates under the Life Contingent
Annuity as of the date of the quote. The actual amount of future income would
depend on the rates in effect on the Transaction Date.
WITHDRAWAL OPTIONS
The Rollover IRA is an annuity contract, even though you may elect to receive
your benefits in a non-annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while you are alive.
Four withdrawal options are available: Lump Sum Withdrawals, Substantially
Equal Payment Withdrawals, Systematic Withdrawals and Minimum Distribution
Withdrawals. Withdrawals may result in withdrawal charges. See
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<PAGE>
"Part 7: Deductions and Charges." Special withdrawal rules may apply under
the IRA Assured Payment Option and IRA APO Plus.
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration
Date" in Part 4. Withdrawals may be taxable and subject to tax penalty. See
"Part 9: Tax Aspects of the Certificates."
As a deterrent to early withdrawal (generally prior to age 59 1/2) the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 9: Tax Aspects
of the Certificates."
LUMP SUM WITHDRAWALS
You may take a Lump Sum Withdrawal at any time subject to a minimum
withdrawal amount of $1,000. A request to withdraw more than 90% of the Cash
Value as of the Transaction Date will result in the termination of the
Certificate and will be treated as a surrender of the Certificate for its
Cash Value. See "Surrendering the Certificates to Receive the Cash Value," in
Part 5.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal
will be taken. If we have received the information we require, the requested
withdrawal will become effective on the Transaction Date and proceeds will
usually be mailed within seven calendar days thereafter, but we may delay
payment as described in "When Payments Are Made" in Part 5. If we receive
only partially completed information, our Processing Office will contact you
for specific instructions before your request can be processed.
Lump Sum Withdrawals in excess of the 15% free corridor amount may be subject
to a withdrawal charge. While either the IRA Assured Payment Option or IRA
APO Plus is in effect, Lump Sum Withdrawals that exceed the 10% free corridor
amount may be subject to a withdrawal charge. See "Withdrawal Charge" in Part
7.
SUBSTANTIALLY EQUAL PAYMENT WITHDRAWALS
Substantially Equal Payment Withdrawals provide distributions from the
Annuity Account Value of the amounts necessary so that the 10% penalty tax,
normally applicable to distributions made prior to age 59 1/2, does not
apply. See "Penalty Tax on Early Distributions," in Part 9. Once
distributions begin, they should not be changed or stopped until the later of
age 59 1/2 or five years from the date of the first distribution. If you
change or stop the distributions or take a Lump Sum Withdrawal, you may be
liable for the 10% penalty tax that would have otherwise been due on all
prior distributions made under this option and for any interest thereon.
Substantially Equal Payment Withdrawals may be elected at any time if you are
below age 59 1/2. You can elect this option by submitting the proper form.
You select the day and the month when the first withdrawal will be made, but
it may not be sooner than 28 days after the issue of the Certificate. In no
event may you elect to receive the first payment in the same Contract Year in
which a Lump Sum Withdrawal was taken. We will calculate the amount of the
distribution under a method we select and payments will be made monthly,
quarterly or annually as you select. These payments will continue to be made
until we receive written notice from you to cancel this option. Such notice
must be received at our Processing Office at least seven calendar days prior
to the next scheduled withdrawal date. A Lump Sum Withdrawal taken while
Substantially Equal Payment Withdrawals are in effect will cancel such
withdrawals. You may elect to start receiving Substantially Equal Payment
Withdrawals again, but in no event can the payments start in the same
Contract Year in which a Lump Sum Withdrawal was taken. We will calculate a
new distribution amount.
Unless you specify otherwise, Substantially Equal Payment Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the
Investment Funds. If there is insufficient value or no value in the
Investment Funds, any additional amount of the withdrawal or the total amount
of the withdrawal, as applicable, will be withdrawn from the Guarantee
Periods in order of the earliest Expiration Date(s) first.
Substantially Equal Payment Withdrawals are not subject to a withdrawal
charge.
SYSTEMATIC WITHDRAWALS
This option may be elected if you are age 59 1/2 to 70 1/2. Systematic
Withdrawals provide level percentage or level amount payouts. You may choose
to receive Systematic Withdrawals on a monthly, quarterly or annual
frequency. You select a dollar amount or percentage of the Annuity Account
Value to be withdrawn, subject to a maximum of 1.2% monthly, 3.6% quarterly
and 15.0% annually, but in no event may any payment be less than $250. If at
the time a Systematic Withdrawal is to be made, the withdrawal amount would
be less than $250, no payment will be made and your Systematic Withdrawal
election will terminate.
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<PAGE>
You select the date of the month when the withdrawals will be made, but you
may not choose a date later than the 28th day of the month. If no date is
selected, withdrawals will be made on the same calendar day of the month as
the Contract Date. The commencement of payments under the Systematic
Withdrawal option may not be elected to start sooner than 28 days after issue
of the Certificate.
You may elect Systematic Withdrawals at any time by completing the proper
form and sending it to our Processing Office. You may change the payment
frequency of your Systematic Withdrawals once each Contract Year or cancel
this withdrawal option at any time by sending notice in a form satisfactory
to us. The notice must be received at our Processing Office at least seven
calendar days prior to the next scheduled withdrawal date. You may also
change the amount or percentage of your Systematic Withdrawals once in each
Contract Year. However, you may not change the amount or percentage in any
Contract Year where you have previously taken another withdrawal under the
Lump Sum Withdrawal option described above.
Unless you specify otherwise, Systematic Withdrawals will be withdrawn on a
pro rata basis from your Annuity Account Value in the Investment Funds. If
there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal required or the total amount of the
withdrawal, as applicable, will be withdrawn from the Guarantee Periods in
order of the earliest Expiration Date(s) first.
Systematic Withdrawals are not subject to a withdrawal charge, except to the
extent that, when added to a Lump Sum Withdrawal previously taken in the same
Contract Year, the Systematic Withdrawal exceeds the 15% free corridor
amount. See "Withdrawal Charge" in Part 7.
MINIMUM DISTRIBUTION WITHDRAWALS
Minimum Distribution Withdrawals provide distributions from the Annuity
Account Value of the amounts necessary to meet minimum distribution
requirements set forth in the Code.
This option may be elected in the year in which you attain age 70 1/2. You
can elect Minimum Distribution Withdrawals by submitting the proper election
form. The minimum amount we will pay out is $250.
You may elect Minimum Distribution Withdrawals for each Certificate you own,
subject to our rules then in effect. Currently, Minimum Distribution
Withdrawal payments will be made annually.
Unless you specify otherwise, Minimum Distributions Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the
Investment Funds. If there is insufficient value or no value in the
Investment Funds, any additional amount of the withdrawal required or the
total amount of the withdrawal, as applicable, will be withdrawn from the
Guarantee Periods in order of the earliest Expiration Date(s) first.
Minimum Distribution Withdrawals are not subject to a withdrawal charge,
except to the extent that, when added to a Lump Sum Withdrawal previously
taken in the same Contract Year, the Minimum Distribution Withdrawal exceeds
the 15% free corridor amount. See "Withdrawal Charge" in Part 7.
Example
- -------
The chart below illustrates the pattern of payments, under Minimum
Distribution Withdrawals for a male who purchases the Rollover IRA at age 70
with a single contribution of $100,000, with payments commencing at the end
of the first Contract Year.
PATTERN OF MINIMUM DISTRIBUTION WITHDRAWALS
$100,000 SINGLE CONTRIBUTION FOR A
SINGLE LIFE-MALE AGE 70
[THE FOLLOWING TABLE WAS REPRESENTED
AS AN AREA GRAPH IN THE PROSPECTUS]
ASSUMES 6.0% RATE OF RETURN
Amount
Age Withdrawn
- --- ---------
70 $6,250
75 7,653
80 8,667
85 8,770
90 6,931
95 3,727
100 1,179
[END OF GRAPHICALLY REPRESENTED DATA]
Payments are calculated each year based on the Annuity Account Value at the
end of each year, using the recalculation method of determining payments.
(See "Part 1--Minimum Distribution Withdrawals" in the SAI.) Payments are
made annually, and it is further assumed that no Lump Sum Withdrawals are
taken.
<PAGE>
This example assumes an annual rate of return of 6.0% compounded annually for
both the Investment Funds and the Guaranteed Period Account. This rate of
return is for illustrative purposes only and is not intended to represent an
expected or guaranteed rate of return. Your investment results will vary. In
addition, this example does not reflect any charges that may be applicable
under the Rollover IRA. Such charges would effectively reduce the actual
return.
INCOME ANNUITY OPTIONS
Income annuity options provide periodic payments over a specified period of
time which may be fixed or may be based on your life. Annuity forms of
payment are calculated as of the Annuity Commencement Date, which is on file
with our Processing Office. You
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<PAGE>
can change the Annuity Commencement Date by writing to our Processing Office
any time before the Annuity Commencement Date. However, you may not choose a
date later than the 28th day of any month. Also, no Annuity Commencement Date
will be later than the Processing Date which follows your 90th birthday (may
be different in some states).
Before the Annuity Commencement Date, we will send you a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay you a
fixed annuity benefit on the "normal form" indicated for your Certificate as
of your Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or
(2) the Cash Value for any period certain only annuity form except that if
the period certain is more than five years, the amount applied will be no
less than 95% of the Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an income annuity option
prior to an Expiration Date will result in a market value adjustment. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
ANNUITY FORMS
o Life Annuity: An annuity which guarantees payments for the rest of your
life. Payments end with the last monthly payment before your death.
Because there is no death benefit associated with this annuity form, it
provides the highest monthly payment of any of the life income annuity
options, so long as you are living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of your life. In addition, if you die before a specific
period of time (the "certain period") has ended, payments will continue
to your beneficiary for the balance of the certain period. Certain
periods may be 5, 10, 15 or 20 years. A life annuity with a certain
period of 10 years is the normal form of annuity under the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
This option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The income annuity options outlined above are available in both fixed and
variable form, unless otherwise indicated. Fixed annuity payments are
guaranteed by us and will be based either on the tables of guaranteed annuity
payments in your Certificate or on our then current annuity rates, whichever
is more favorable for you. Variable income annuities may be funded through
the Common Stock Fund through the purchase of annuity units. The amount of
each variable annuity payment may fluctuate, depending upon the performance
of the Common Stock Fund. That is because the annuity unit value rises and
falls depending on whether the actual rate of net investment return (after
deduction of charges) is higher or lower than the assumed base rate. See
"Annuity Unit Values" in the SAI. Variable income annuities may also be
available by separate prospectus through the Common Stock or other Funds of
other separate accounts we offer.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here. Your registered representative
can provide details.
For each income annuity option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
income annuity option, your age (or your and the joint Annuitant's ages) and
in certain instances, the sex of the Annuitant(s). Once an income annuity
option is chosen and payments have commenced, no change can be made.
If, at the time you elect an income annuity option, the amount to be applied
is less than $2,000 or the initial payment under the option elected is less
than $20 monthly, we reserve the right to pay the Annuity Account Value in a
single sum rather than as payments under the annuity form chosen.
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<PAGE>
PART 7: DEDUCTIONS AND CHARGES
CHARGES DEDUCTED FROM THE
ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options
you select, subject to certain restrictions. We then periodically deduct
certain amounts from your Annuity Account Value. The charges described below
and under "Charges Deducted from the Investment Funds" below will not be
increased by us for the life of the Certificates. We may reduce certain
charges under sponsored arrangements. See "Sponsored Arrangements" below.
Charges are deducted proportionately from all the Investment Funds in which
your Annuity Account Value is invested on a pro rata basis, except as noted
below.
Distribution Fee
We deduct a sales load annually in an amount of 0.20% of each contribution
received during the first Contract Year. This sales load is deducted on each
of the first seven Processing Dates (so long as the Certificate is in force).
See "Example" below.
The distribution fee will not be deducted while the IRA Assured Payment
Option or IRA APO Plus is in effect.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that (i) a Lump Sum Withdrawal or cumulative withdrawals during
a Contract Year exceed the free corridor amount, or (ii) if the Certificate
is surrendered to receive its Cash Value. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
If the IRA Assured Payment Option or IRA APO Plus is in effect, the
withdrawal charge will be imposed as a percentage of contributions (less
withdrawals), less the amount applied under the Life Contingent Annuity.
The applicable withdrawal charge percentage is determined by the Contract
Year in which the excess withdrawal is made or the Certificate is
surrendered, beginning with "Contract Year 1" with respect to each
contribution withdrawn or surrendered. For purposes of the table, for each
contribution, the Contract Year in which we receive that contribution is
"Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the
beginning of the Contract Year, minus any amount previously withdrawn
during that Contract Year.
While either the IRA Assured Payment Option or IRA APO Plus is in effect,
the free corridor amount is 10% of the Annuity Account Value at the
beginning of the Contract Year.
There is no withdrawal charge if a Lump Sum Withdrawal is taken to satisfy
minimum distribution requirements under the Certificate. A free corridor
amount is not applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions.
The withdrawal charge is to help cover sales expenses. Because of the way the
distribution fee is calculated the distribution fee and the withdrawal charge
combined will never exceed the 7.0% maximum withdrawal charge.
Example--The example below illustrates how the withdrawal charge and the
distribution fee would be calculated upon a withdrawal under the Rollover
IRA. This example assumes an initial contribution of $12,000 and subsequent
contributions of $12,000 each in the second and third Contract Years for
total contributions under the Certificate of $36,000. It also assumes a
withdrawal from the Investment Funds at the beginning of the fourth Contract
Year of 25% of an Annuity Account Value of $40,000.
The total withdrawal amount would be $10,000 ($40,000 x .25). In this case,
$6,000 ($40,000 x .15) would be the free corridor amount and could be
withdrawn without imposition of a withdrawal charge. The balance of $4,000
($10,000-$6,000) would be considered a withdrawal of a part of the initial
contribution of $12,000. This contribution would be subject to a 4.0%
withdrawal charge of $160 ($4,000 x .04) as indicated in the chart above.
The distribution fee deducted on the Processing Date following the withdrawal
would be based on the remaining initial contribution of $8,000
($12,000-$4,000).
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<PAGE>
Withdrawal Processing Charge
We reserve the right to impose a charge of the lesser of $25 and 2.0% of the
amount withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. This charge, if made, is to cover our administrative expenses in
processing Lump Sum Withdrawals. See "Asset Based Administrative Charge"
below.
Charges for Combined GMDB/GMIB Benefit (Plan A)
We deduct a charge annually on each Processing Date for providing the
Combined GMDB/GMIB Benefit (Plan A). The charge is equal to a percentage of
the GMDB in effect on the Processing Date. The percentage is equal to 0.45%
for the 6% to Age 80 Benefit and 0.30% for the 6% to Age 70 Benefit.
Charges for GMDB Only Benefit (Plan B)
We deduct a charge annually on each Processing Date for providing the GMDB
Only Benefit (Plan B). The charge is equal to a percentage of the GMDB in
effect on the Processing Date. The percentage is equal to 0.20%.
If the amount collected from this charge exceeds the cost of providing the
benefits, it will be to our profit, and may be used to pay distribution
expenses not recovered from sales charges under the Certificates.
Annual Contract Fee
The annual contract fee is incurred at the beginning of the Contract Year and
deducted at the end of each Contract Year on the Processing Date. We deduct
this charge when determining the Cash Value payable if you surrender the
Certificate prior to the end of a Contract Year. The amount deducted is
determined by the amount of your initial contribution. The charge will be $30
per Contract Year if your initial contribution is less than $25,000, and zero
if your initial contribution equals $25,000 or more. This charge is to cover
a portion of our administrative expenses. See "Asset Based Administrative
Charge," below.
Charges for State Premium and Other
Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium
taxes, that might be imposed in your state. Generally we deduct this charge
from the amount applied to provide an income annuity option. In certain
states, however, we may deduct the charge for taxes from contributions. The
current tax charge that might be imposed varies by state and ranges from 0%
to 2.25%.
Allocation of Certain Charges to the
Guaranteed Period Account
No portion of the distribution fee or the annual contract fee will be
deducted from the Guaranteed Period Account unless there is insufficient
value in the Investment Funds. If charges are deducted from the Guaranteed
Period Account, they will be deducted from the Annuity Account Value with
respect to the Guarantee Periods in order of the earliest Expiration Date(s)
first. If charges are deducted from the Guaranteed Period Account, you will
not receive the full Guaranteed Rate if held to the Expiration Date. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
CHARGES DEDUCTED FROM THE
INVESTMENT FUNDS
Mortality and Expense Risk Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for mortality and expense risks. The daily charge is at the
rate of 0.002477%, which is equivalent to an annual rate of 0.90%, on the
assets in each Investment Fund. Approximately 0.60% of this annual charge is
allocated to the mortality risk and 0.30% is allocated to the expense risk.
We will realize a gain from this charge to the extent it is not needed to
provide for benefits and expenses under the Certificate. We will use any gain
for any lawful purpose including payment of distribution expenses not
recovered from sales charges under the Certificate.
The mortality risk assumed is the risk that Annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables,
shown in each Certificate, will differ from actual mortality experience.
Lastly, we assume a mortality risk to the extent that the guaranteed minimum
death benefit charge is insufficient to pay any amount by which such death
benefit exceeds the Cash Value of the Certificate.
The expense risk assumed is the risk that it will cost us more to issue and
administer the Certificates than we expect.
Asset Based Administrative Charge
We will deduct a daily charge from the assets in each Investment Fund, to
compensate us for administrative expenses under the Certificates. The daily
charge is at a rate of 0.000692% (equivalent to an annual rate of 0.25%) on
the assets in each Investment Fund. The withdrawal processing charge, the an-
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<PAGE>
nual contract fee and the asset based administrative charge are not designed
to produce a profit for Equitable Life.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against the Trust's assets, direct
operating expenses of the Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of the Trust
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
maximum investment advisory fees paid annually by the Portfolios cannot be
changed without a vote by shareholders. They are as follows:
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
-------------------------------------
FIRST $350 NEXT $400 OVER $750
MILLION MILLION MILLION
----------- ----------- -----------
<S> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors ... .550% .525% .500%
Growth Investors .......... .550% .525% .500%
EQUITY SERIES:
Common Stock .............. .400% .375% .350%
Global .................... .550% .525% .500%
Aggressive Stock .......... .500% .475% .450%
FIXED INCOME SERIES:
Money Market .............. .400% .375% .350%
Intermediate Govt.
Securities ................ .500% .475% .450%
FIRST $500 NEXT $500 OVER $1
MILLION MILLION BILLION
----------- ----------- -----------
EQUITY SERIES:
Growth & Income ........... .550% .525% .500%
FIRST $500 NEXT $1 OVER $1.5
MILLION BILLION BILLION
----------- ----------- -----------
EQUITY SERIES:
International ............. .900% .850% .800%
</TABLE>
Investment advisory fees are established under the Trust's investment
advisory agreements between the Trust and its investment adviser, Alliance.
All of these fees and expenses are described more fully in the Trust
prospectus.
SPONSORED ARRANGEMENTS
For certain sponsored arrangements, we may reduce the distribution fee, the
annual contract fee and the withdrawal charge or change the minimum initial
contribution requirements. Under the IRA Assured Payment Option and IRA APO
Plus, we may increase Guaranteed Rates and reduce purchase rates under the
Life Contingent Annuity. We may also change the guaranteed minimum death
benefit and the guaranteed minimum income benefit. Sponsored arrangements
include those in which an employer allows us to sell Certificates to its
employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the sponsoring organization among other factors. We
take all these factors into account when reducing charges. To qualify for
reduced charges, a sponsored arrangement must meet certain requirements,
including our requirements for size and number of years in existence.
Sponsored arrangements that have been set up solely to buy Certificates or
that have been in existence less than six months will not qualify for reduced
charges.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the distribution fee, withdrawal charge
or annual contract fee will reflect differences in costs or services and will
not be unfairly discriminatory.
Sponsored arrangements may be governed by the Code, the Employee Retirement
Income Security Act of 1974 (ERISA), or both. We make no representations as
to the impact of those and other applicable laws on such programs. WE
RECOMMEND THAT EMPLOYERS PURCHASING OR MAKING CERTIFICATES AVAILABLE FOR
PURCHASE UNDER A SPONSORED ARRANGEMENT SEEK THE ADVICE OF THEIR OWN LEGAL AND
BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The distribution fee, the withdrawal charge and the annual contract fee may
be reduced or eliminated when sales are made in a manner that results in
savings of sales and administrative expenses, such as sales through persons
who are compensated by clients for recommending investments and receive no
commission or reduced commissions in connection with the sale of the
Certificates. In no event will a reduction or elimination of a fee or charge
be permitted where it would be unfairly discriminatory.
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<PAGE>
PART 8: VOTING RIGHTS
TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of the Trust. Since we own
the assets of the Separate Account, we are the legal owner of the shares and,
as such, have the right to vote on certain matters. Among other things, we
may vote:
o to elect the Trust's Board of Trustees,
o to ratify the selection of independent auditors for the Trust, and
o on any other matters described in the Trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because the Trust is a Massachusetts business trust, annual meetings are not
required. Whenever a shareholder vote is taken, we will give Certificate
Owners the opportunity to instruct us how to vote the number of shares
attributable to their Certificates. If we do not receive instructions in time
from all Certificate Owners, we will vote the shares of a Portfolio for which
no instructions have been received in the same proportion as we vote shares
of that Portfolio for which we have received instructions. We will also vote
any shares that we are entitled to vote directly because of amounts we have
in an Investment Fund in the same proportions that Certificate Owners vote.
Each Trust share is entitled to one vote. Fractional shares will be counted.
Voting generally is on a Portfolio-by-Portfolio basis except that shares will
be voted on an aggregate basis when universal matters, such as election of
Trustees and ratification of independent auditors, are voted upon. However,
if the Trustees determine that shareholders in a Portfolio are not affected
by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
VOTING RIGHTS 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
and 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 the Rollover IRA Certificate
Owners, we currently do not foresee any disadvantages 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
Certificate Owners, we will see to it that appropriate action is taken to
protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner
approval, Certificate Owners will be entitled to one vote for each
Accumulation Unit they have in the Investment Funds. Each Certificate Owner
who has elected a variable annuity payout may cast the number of votes equal
to the dollar amount of reserves we are holding for that annuity in the
Common Stock Fund divided by the Accumulation Unit Value for the Common Stock
Fund. We will cast votes attributable to any amounts we have in the
Investment Funds in the same proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
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<PAGE>
PART 9: TAX ASPECTS OF THE CERTIFICATES
TAX-QUALIFIED INDIVIDUAL RETIREMENT ANNUITIES (IRAS)
Introduction
The Rollover IRA Certificate is designed to qualify as an IRA under Section
408(b) of the Code. Your rights under the Rollover IRA cannot be forfeited.
This prospectus contains the information which the Internal Revenue Service
(IRS) requires to be disclosed to an individual before he or she purchases an
IRA.
This Part covers some of the special tax rules that apply to individual
retirement arrangements. You should be aware that an IRA is subject to
certain restrictions in order to qualify for its special treatment under the
Federal tax law.
This prospectus provides our general understanding of applicable Federal
income tax rules, but does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Rollover IRA Certificates.
Further information on IRA tax matters can be obtained from any IRS district
office. Additional information regarding IRAs, including a discussion of
required distributions, can be found in IRS Publication 590, entitled
"Individual Retirement Arrangements (IRAs)," which is generally updated
annually.
The Rollover IRA Certificate has been approved by the IRS as to form for use
as an IRA. This IRS approval is a determination only as to the form of the
annuity and does not represent a determination of the merits of the annuity
as an investment.
Cancelation
You can cancel a Certificate issued as an IRA by following the directions in
Part 5 under "Free Look Period." Since there may be adverse tax consequences
if a Certificate is canceled (and because we are required to report to the
IRS certain distributions from canceled IRAs), you should consult with a tax
adviser before making any such decision. If you cancel this Certificate, you
may establish a new individual retirement arrangement if at the time you meet
the requirements for establishing an individual retirement arrangement.
Contributions to IRAs
Individuals may make three different types of contributions to purchase an
IRA, or as later additions to an existing IRA: "regular" contributions out of
earnings, tax-free "rollover" contributions from tax-qualified plans, or
direct custodian-to-custodian transfers from other individual retirement
arrangements ("direct transfers").
The initial contribution to the Certificate must be either a rollover or a
direct custodian-to-custodian transfer. See "Tax-Free Transfers and
Rollovers," discussed below. Any subsequent contributions you make may be any
of rollovers, direct transfers or "regular" IRA contributions. See
"Contributions Under the Certificates" in Part 5. The immediately following
discussion relates to "regular" IRA contributions. For the reasons noted in
"Tax-Free Transfers and Rollovers" below, you should consult with your tax
adviser before making any subsequent contributions to an IRA which is
intended to serve as a "conduit" IRA.
Generally, $2,000 is the maximum amount of deductible and nondeductible
contributions which may be made to all IRAs by an individual in any taxable
year. The above limit may be less when the individual's earnings are below
$2,000. This limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into an IRA.
The amount of IRA contributions for a tax year that an individual can deduct
depends on whether the individual (or the individual's spouse, if a joint
return is filed) is covered by an employer-sponsored tax-favored retirement
plan. If the individual's spouse does not work or elects to be treated as
having no compensation, the individual and the individual's spouse may
contribute up to $2,250 to individual retirement arrangements (but no more
than $2,000 to any one individual retirement arrangement). The non-working
spouse owns his or her individual retirement arrangements, even if the
working spouse makes contributions to purchase the spousal individual
retirement arrangements.
If neither the individual nor the individual's spouse is covered during any
part of the taxable year by an employer-sponsored tax-favored retirement plan
(including a qualified plan, a tax sheltered account or annuity under Section
403(b) of the Code (TSA) or a simplified employee pension plan), then
regardless of adjusted gross income (AGI), each working spouse may make
deductible contributions to an IRA for each tax year (MAXIMUM PERMISSIBLE
DOLLAR DEDUCTION) up to the lesser of $2,000 or 100% of compensation. In
certain cases, individuals covered by a tax-favored retirement plan include
persons eligible to participate in the plan although not actually
participating. Whether or not a person is covered by a retirement plan will
be reported on an employee's Form W-2.
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<PAGE>
If the individual is single and covered by a retirement plan during any part
of the taxable year, the deduction for IRA contributions phases out with AGI
between $25,000 and $35,000. If the individual is married and files a joint
return, and either the individual or the spouse is covered by a tax-favored
retirement plan during any part of the taxable year, the deduction for IRA
contributions phases out with AGI between $40,000 and $50,000. If the
individual is married, files a separate return and is covered by a
tax-favored retirement plan during any part of the taxable year, the
deduction for IRA contributions phases out with AGI between $0 and $10,000.
Married individuals filing separate returns must take into account the
retirement plan coverage of the other spouse, unless the couple has lived
apart for the entire taxable year. If AGI is below the phase-out range, an
individual is entitled to the Maximum Permissible Dollar Deduction. In
computing the partial deduction for IRA contributions the individual must
round the amount of the deduction to the nearest $10. The permissible
deduction for IRA contributions is a minimum of $200 if AGI is less than the
amount at which the deduction entirely phases out.
If the individual (or the individual's spouse, unless the couple has lived
apart the entire taxable year and their filing status is married, filing
separately) is covered by a tax-favored retirement plan, the deduction for
IRA contributions must be computed using one of two methods. Under the first
method, the individual determines AGI and subtracts $25,000 if the individual
is a single person, $40,000 if the individual is married and files a joint
return with the spouse, or $0 if the individual is married and files a
separate return. The resulting amount is the individual's Excess AGI. The
individual then determines the limit on the deduction for IRA contributions
using the following formula:
Maximum Adjusted
$10,000-Excess AGI Permissible Dollar
- ------------------ X Dollar = Deduction
$10,000 Deduction Limit
Under the second method, the individual determines his or her Excess AGI and
then refers to the table in Appendix V originally prepared by the IRS to
determine the deduction.
Contributions may be made for a tax year until the deadline for filing a
Federal income tax return for that tax year (without extensions). No
contributions are allowed for the tax year in which an individual attains age
70 1/2 or any tax year after that. A working spouse age 70 1/2 or over,
however, can contribute up to the lesser of $2,000 or 100% of "earned income"
to a spousal individual retirement arrangement for a non-working spouse until
the year in which the non-working spouse reaches age 70 1/2.
An individual not eligible to deduct part or all of the IRA contribution may
still make nondeductible contributions on which earnings will accumulate on a
tax-deferred basis. The deductible and nondeductible contributions may not,
however, together exceed the lesser of the $2,000 limit (or $2,250 spousal
limit) or 100% of compensation for each tax year. See "Excess Contributions"
below. Individuals must keep their own records of deductible and
nondeductible contributions in order to prevent double taxation on the
distribution of previously taxed amounts. See "Distributions from IRA
Certificates" below.
An individual making nondeductible contributions in any taxable year, or
receiving amounts from any IRA to which he or she has made nondeductible
contributions, must file the required information with the IRS. Moreover,
individuals making nondeductible IRA contributions must retain all income tax
returns and records pertaining to such contributions until interest in such
IRAs are fully distributed.
Excess Contributions
Excess contributions to an IRA are subject to a 6% excise tax for the year in
which made and for each year thereafter until withdrawn. In the case of
"regular" IRA contributions any contribution in excess of the lesser of
$2,000 or 100% of compensation or earned income is an "excess contribution,"
(without regard to the deductibility or nondeductibility of IRA contributions
under this limit). Also, any "regular" contributions made after you reach age
70 1/2 are excess contributions. In the case of rollover IRA contributions,
excess contributions are amounts which are not eligible to be rolled over
(for example, after tax contributions to a qualified plan or minimum
distributions required to be made after age 70 1/2). An excess contribution
(rollover or "regular") which is withdrawn, however, before the time for
filing the individual's Federal income tax return for the tax year (including
extensions) is not includable in income and therefore is not subject to the
10% penalty tax on early distributions (discussed below under "Penalty Tax on
Early Distributions"), provided any earnings attributable to the excess
contribution are also withdrawn and no tax deduction is taken for the excess
contribution. The withdrawn earnings on the excess contribution, however,
would be includable in the individual's gross income and would be subject to
the 10% penalty tax. If excess contributions are not withdrawn before the
time for filing the individual's Federal income tax return for
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the year (including extensions), "regular" contributions may still be
withdrawn after that time if the IRA contribution for the tax year did not
exceed $2,250 and no tax deduction was taken for the excess contribution; in
that event, the excess contribution would not be includable in gross income
and would not be subject to the 10% penalty tax. Lastly, excess "regular"
contributions may also be removed by underutilizing the allowable
contribution limits for a later year.
If excess rollover contributions are not withdrawn before the time for filing
the individual's Federal tax return for the year (including extensions) and
the excess contribution occurred as a result of incorrect information
provided by the plan, any such excess amount can be withdrawn if no tax
deduction was taken for the excess contribution. As above, excess rollover
contributions withdrawn under those circumstances would not be includable in
gross income and would not be subject to the 10% penalty tax.
Tax-Free Transfers and Rollovers
Rollover contributions may be made to an IRA from these sources: (i)
qualified plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii)
other individual retirement arrangements.
The rollover amount must be transferred to the Certificate either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within
60 days of the date the proceeds from another individual retirement
arrangement or an eligible rollover distribution from a qualified plan or TSA
were received. Generally the taxable portion of any distribution from a
qualified plan or TSA is an eligible rollover distribution and may be rolled
over tax-free to an IRA unless the distribution is (i) a required minimum
distribution under Section 401(a)(9) of the Code; or (ii) one of a series of
substantially equal periodic payments made (not less frequently than
annually) (a) for the life (or life expectancy) of the plan participant or
the joint lives (or joint life expectancies) of the plan participant and his
or her designated beneficiary, or (b) for a specified period of ten years or
more.
Under some circumstances, amounts from a Certificate may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" IRA treatment, the
source of funds used to establish the IRA must be a rollover contribution
from the qualified plan and the entire amount received from the IRA
(including any earnings on the rollover contribution) must be rolled over
into another qualified plan within 60 days of the date received. Similar
rules apply in the case of a TSA. If you make a contribution to the
Certificate which is from an eligible rollover distribution and you commingle
such contribution with other contributions, you may not be able to roll over
these eligible rollover distribution contributions and earnings to another
qualified plan (or TSA, as the case may be) at a future date, unless the Code
permits.
Under the conditions and limitations of the Code, an individual may elect for
each IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers
and can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Certificate
and rolled over into other individual retirement arrangements unless the
distribution was received under an inherited IRA. Tax-free rollovers are also
available to the surviving spouse beneficiary of a deceased individual, or a
spousal alternate payee of a qualified domestic relations order applicable to
a qualified plan. In some cases, IRAs can be transferred on a tax-free basis
between spouses or former spouses incidental to a judicial decree of divorce
or separation.
Distributions from IRA Certificates
Income or gains on contributions under IRAs are not subject to Federal income
tax until benefits are distributed to the individual. Distributions include
withdrawals from your Certificate, surrender of your Certificate and annuity
payments from your Certificate. Death benefits are also distributions. Except
as discussed below, the amount of any distribution from an IRA is fully
includable as ordinary income by the individual in gross income.
If the individual makes non-deductible IRA contributions, those contributions
are recovered tax-free when distributions are received. The individual must
keep records of all nondeductible contributions. At the end of each tax year
in which the individual has received a distribution, the individual
determines a ratio of the total nondeductible IRA contributions (less any
amounts previously withdrawn tax-free) to the total account balances of all
IRAs held by the individual at the end of the tax year (including rollover
IRAs) plus all IRA distributions made during such tax year. The resulting
ratio is then multiplied by all distributions from the IRA during that tax
year to determine the nontaxable portion of each distribution.
In addition, a distribution (other than a required minimum distribution
received after age 70 1/2) is not
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taxable if (1) the amount received is a return of excess contributions which
are withdrawn, as described under "Excess Contributions" above, (2) the
entire amount received is rolled over to another individual retirement
arrangement (see "Tax-Free Transfers and Rollovers" above) or (3) in certain
limited circumstances, where the IRA acts as a "conduit," the entire amount
is paid into a qualified plan or TSA that permits rollover contributions.
Distributions from an IRA are not entitled to the special favorable five-year
averaging method (or, in certain cases, favorable ten-year averaging and
long-term capital gain treatment) available in certain cases to distributions
from qualified plans.
Required Minimum Distributions
The minimum distribution rules require IRA owners to start taking annual
distributions from their retirement plans by age 70 1/2. The distribution
requirements are designed to provide for distribution of the owner's interest
in the IRA over the owner's life expectancy. Whether the correct amount has
been distributed is calculated on a year by year basis; there are no
provisions in the Code to allow amounts taken in excess of the required
amount to be carried over or carried back and credited to other years.
Generally, an individual must take the first required minimum distribution
with respect to the calendar year in which the individual turns age 70 1/2.
The individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2, or to delay taking it
until the three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date,"
which is the April 1st of the calendar year following the calendar year in
which the individual turns age 70 1/2.) If the individual chooses to delay
taking the first annual minimum distribution, then the individual will have
to take two minimum distributions in that year--the delayed one for the first
year and the one actually for that year. Once minimum distributions begin,
they must be made at some time every year.
There are two approaches to taking minimum distributions--"account based" or
"annuity based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
An account based minimum distribution approach may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. An annuity based approach involves application
of the Annuity Account Value to an annuity for the life of the individual or
the joint lives of the individual and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options
are best for your own personal situation. Individuals who are participants in
more than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Your required minimum distribution for any taxable year is calculated by
taking into account the required minimum distribution from each of your
individual retirement arrangements. The IRS, however, does not require that
you make the required distribution from each individual retirement
arrangement that you maintain. As long as the total amount distributed
annually satisfies your overall minimum distribution requirement, you may
choose to take your annual required distribution from any one or more
individual retirement arrangements that you maintain.
An individual may recompute his or her minimum distribution amount each year
based on the individual's current life expectancy as well as that of the
spouse. No recomputation is permitted, however, for a beneficiary other than
a spouse. If there is an insufficient distribution in any year, a 50% tax may
be imposed on the amount by which the minimum required to be distributed
exceeds the amount actually distributed. The penalty tax may be waived by the
Secretary of the Treasury in certain limited circumstances. Failure to have
distributions made as the Code and Treasury regulations require may result in
disqualification of your IRA. See "Tax Penalty for Insufficient
Distributions" below.
Except as described in the next sentence, if the individual dies after
distribution in the form of an annuity has begun, or after the Required
Beginning Date, payment of the remaining interest must be made at least as
rapidly as under the method used prior to the individual's death. (The IRS
has indicated that an exception to the rule that payment of the remaining
interest must be made at least as rapidly as under the method used prior to
the individual's death applies if the beneficiary of the IRA is the surviving
spouse. In some circumstances, the surviving spouse may elect to "make the
IRA his or her own" and halt distributions until he or she reaches age
70 1/2).
If an individual dies before the Required Beginning Date and before
distributions in the form of an
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annuity begin, distributions of the individual's entire interest under the
Certificate must be completed within five years after death, unless payments
to a designated beneficiary begin within one year of the individual's death
and are made over the beneficiary's life or over a period certain which does
not extend beyond the beneficiary's life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay
the commencement of such payments up until the individual would have attained
70 1/2. In the alternative, a surviving spouse may elect to roll over the
inherited IRA into the surviving spouse's own IRA.
Taxation of Death Benefits
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if distribution had been made to
the individual.
If you elect to have your spouse be the sole primary beneficiary and to be
the successor Annuitant and Certificate Owner, then your surviving spouse
automatically becomes both the successor Certificate Owner and Annuitant, and
no death benefit is payable until the surviving spouse's death.
Guaranteed Minimum Death Benefit
The Code provides that no part of an individual retirement account may be
invested in life insurance contracts. Treasury Regulations provide that an
individual retirement account may be invested in an annuity contract which
provides a death benefit of the greater of premiums paid or the contract's
cash value. Your Certificate provides a minimum death benefit guarantee that
in certain circumstances may be greater than either of contributions made or
the Annuity Account Value. Although there is no ruling regarding the type of
minimum death benefit guarantee provided by the Certificate, Equitable Life
believes that the Certificate's minimum death benefit guarantee should not
adversely affect the qualification of the Certificate as an IRA.
Nevertheless, it is possible that the IRS could disagree, or take the
position that some portion of the charge in the Certificate for the minimum
death benefit guarantee should be treated for Federal income tax purposes as
a taxable partial withdrawal from the Certificate. If this were so, such a
deemed withdrawal would also be subject to tax penalty for Certificate Owners
under age 59 1/2.
Tax Considerations for the IRA Assured Payment Option and IRA APO Plus
Although the Life Contingent Annuity does not have a Cash Value, it will be
assigned a value for tax purposes which will generally change each year. This
value must be taken into account when determining the amount of required
minimum distributions from your IRA even though the Life Contingent Annuity
may not be providing a source of funds to satisfy such required minimum
distribution. Accordingly, before you apply any IRA funds under the IRA
Assured Payment Option or IRA APO Plus or terminate such Options, you should
be aware of the tax considerations discussed below. Consult with your tax
adviser to determine the impact of electing the IRA Assured Payment Option
and IRA APO Plus in view of your own particular situation.
When funds have been allocated to the Life Contingent Annuity, you will
generally be required to determine your required minimum distribution by
annually recalculating your life expectancy. The IRA Assured Payment Option
and IRA APO Plus will not be available if you have previously made a
different election. Recalculation is no longer required once the only
payments you or your spouse receive are under the Life Contingent Annuity.
If prior to the date payments are to start under the Life Contingent Annuity,
you surrender your Certificate, or withdraw any remaining Annuity Account
Value, it may be necessary for you to satisfy your required minimum
distribution by accelerating the start date of payments for your Life
Contingent Annuity, or to the extent available, take distributions from other
IRA funds you may have. Alternatively you may convert your IRA Life
Contingent Annuity under the IRA Rollover to a non-qualifed Life Contingent
Annuity. This would be viewed as a distribution of the value of the Life
Contingent Annuity from the IRA, and therefore, would be a taxable event.
However, since the Life Contingent Annuity would no longer be part of an IRA,
its value would not have to be taken into account in determining future
required minimum distributions.
If you have elected a Joint and Survivor form of the Life Contingent Annuity,
the joint Annuitant must be your spouse. You must determine your required
minimum distribution by annually recalculating both your life expectancy and
your spouse's life expectancy. The IRA Assured Payment Option and IRA APO
Plus will not be available if you have previously made a different election.
Recalculation is no longer required once the only payments you or your spouse
receive are under the Life Contingent Annuity. The value of such an annuity
will change in the event of your death or the death of your spouse. For this
reason, it is important that we be informed if you or your spouse dies before
the Life Contingent Annuity has started payments so that a lower valuation
can
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<PAGE>
be made. Otherwise a higher tax value may result in an overstatement of the
amount that would be necessary to satisfy your required minimum distribution
amount.
Allocations of funds to the Life Contingent Annuity may prevent the
Certificate from later receiving "conduit" IRA treatment. See "Tax-Free
Transfers and Rollovers" above.
Prohibited Transaction
An IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the tax year in which
the event occurred. If this happens, the individual must include in Federal
gross income for that year an amount equal to the fair market value of the
IRA Certificate as of the first day of that tax year, less the amount of any
nondeductible contributions not previously withdrawn. Also, the early
distribution penalty tax of 10% will apply if the individual has not reached
age 59 1/2 before the first day of that tax year. See "Penalty Tax on Early
Distributions" below.
PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of IRA distributions will be subject to a 10% penalty tax
unless the distribution is made (1) on or after your death, (2) because you
have become disabled, (3) on or after the date when you reach age 59 1/2, or
(4) in accordance with the exception outlined below if you are under 59 1/2.
A payout over your life or life expectancy (or joint and survivor lives or
life expectancies), which is part of a series of substantially equal periodic
payments made at least annually, is also not subject to penalty tax. To
permit you to meet this exception, Equitable Life has two options:
Substantially Equal Payment Withdrawals and the IRA Assured Payment Option
with level payments, both of which are described in Part 6. If you are a
Rollover IRA Certificate Owner who will be under age 59 1/2 as of the date
the first payment is expected to be received and you choose either option,
Equitable Life will calculate the substantially equal annual payments under a
method we will select based on guidelines issued by the IRS (currently
contained in IRS Notice 89-25, Question and Answer 12). Although
Substantially Equal Payment Withdrawals and IRA Assured Payment Option level
payments are not subject to the 10% penalty tax, they are taxable as
discussed in "Distributions from IRA Certificates," above. Once Substantially
Equal Payment Withdrawals or IRA Assured Payment Option level payments begin,
the distributions should not be stopped or changed until the later of your
attaining age 59 1/2 or five years after the date of the first distribution,
or the penalty tax, including an interest charge for the prior penalty
avoidance, may apply to all withdrawals. Also, it is possible that the IRS
could view any additional withdrawal or payment you take from your
Certificate as changing your pattern of Substantially Equal Payment
Withdrawals or IRA Assured Payment Option payments for purposes of
determining whether the penalty applies.
Where a taxpayer under age 59 1/2 purchases an individual retirement annuity
contract calling for substantially equal periodic payments during a fixed
period, continuing afterwards under a joint life contingent annuity with a
reduced payment to the survivor (e.g., a joint and 50% to survivor), the
question might be raised whether payments will not be substantially equal for
the joint lives of the taxpayer and survivor, as the payments will be reduced
at some point. In issuing our information returns, we code the substantially
equal periodic payments from such a contract as eligible for an exception
from the early distribution penalty. We believe that any change in payments
to the survivor would come within the statutory provision covering change of
payments on account of death. As there is no direct authority on this point,
however, if you are under age 59 1/2, you should discuss this item with your
own tax adviser when electing a reduced survivorship option.
TAX PENALTY FOR INSUFFICIENT
DISTRIBUTIONS
Failure to make required distributions discussed above in "Required Minimum
Distributions" may cause the disqualification of the IRA. Disqualification
may result in current taxation of your entire benefit. In addition a 50%
penalty tax may be imposed on the difference between the required
distribution amount and the amount actually distributed, if any.
We do not automatically make distributions from a Certificate before the
Annuity Commencement Date unless a request has been made. It is your
responsibility to comply with the minimum distribution rules. We will notify
you when our records show that your age 70 1/2 is approaching. If you do not
select a method, we will assume you are taking your minimum distribution from
another IRA that you maintain. You should consult with your tax adviser
concerning these rules and their proper application to your situation.
TAX PENALTY FOR EXCESS DISTRIBUTIONS OR ACCUMULATION
A 15% excise tax applies to an individual's aggregate excess distributions
from all tax-favored retirement plans (including IRAs). The excise tax is in
addition to the ordinary income tax due but is reduced by the amount (if any)
of the early distribution penalty tax imposed by the Code. The aggregate
distributions in any year will be subject to excise tax if they exceed an
indexed amount ($155,000 in 1996).
In addition, in certain cases the estate tax imposed on a deceased
individual's estate will be increased if
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the accumulated value of the individual's interest in qualified annuities and
tax favored retirement plans is excessive.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax from IRA
distributions, unless the recipient elects not to be subject to income tax
withholding. The rate of withholding will depend on the type of distribution
and, in certain cases, the amount of the distribution. Special withholding
rules apply to foreign recipients and United States citizens residing outside
the United States. If a recipient does not have sufficient income tax
withheld or does not make sufficient estimated income tax payments, however,
the recipient may incur penalties under the estimated income tax rules.
Recipients should consult their tax advisers to determine whether they should
elect out of withholding. Requests not to withhold Federal income tax must be
made in writing prior to receiving benefits under the Certificate. Our
Processing Office will provide forms for this purpose. No election out of
withholding is valid unless the recipient provides us with the correct
taxpayer identification number and a United States residence address.
Certain states have indicated that income tax withholding will apply to
payments made from the Certificate to residents. In some states, a recipient
may elect out of state withholding. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. If
you need more information concerning a particular state or any required
forms, call our Processing Office at the toll-free number and consult your
tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1996, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,075
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemptions.
A withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than the Certificate Owner, a Federal generation skipping
tax may be payable with respect to the benefit at rates similar to the
maximum estate tax rate in effect at the time. The generation skipping tax
provisions generally apply to transfers which would also be subject to the
gift and estate tax rules. Individuals are generally allowed an aggregate
generation skipping tax exemption of $1 million. Because these rules are
complex, you should consult with your tax adviser for specific information,
especially where benefits are passing to younger generations, as opposed to a
spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account
for taxes. Equitable Life can set up reserves for such taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers among the Investment Funds or between the Guaranteed Period Account
and one or more Investment Funds are not taxable.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities and individual retirement arrangements. In addition,
the Treasury Department may amend existing regulations, issue new
regulations, or adopt new interpretations of existing laws. State tax laws
or, if you are not a United States resident, foreign tax laws, may affect the
tax consequences to you or the beneficiary. These laws may change from time
to time without notice and, as a result, the tax consequences may be altered.
There is no way of predicting whether, when or in what form any such change
would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
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PART 10: INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life for the years ended December 31, 1995 and 1994
included in Equitable Life's Annual Report on Form 10-K, incorporated by
reference in the prospectus, have been examined by Price Waterhouse LLP,
independent accountants, whose reports thereon are incorporated herein by
reference. Such consolidated financial statements and consolidated financial
statement schedules have been incorporated herein by reference in reliance
upon the reports of Price Waterhouse LLP given upon their authority as
experts in accounting and auditing.
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APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- -----------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1997 to a Guarantee Period with an Expiration Date
of February 15, 2006 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2001.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2001
----------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2001 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value .................. $144,048 $119,487
(2) Guaranteed Period Amount ............... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ...... 12,968 (11,593)
On February 15, 2001 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000 / (1)] $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)] ........... 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ..... 85,581 76,229
(7) Maturity Value ......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value .................. 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
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APPENDIX II: GUARANTEED MINIMUM DEATH BENEFIT (GMDB) EXAMPLE
- -----------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB (see "GMDB" in Part 5); and
(2) the death benefit provided with respect to the Guaranteed Period
Account (see "Death Benefit Amount" in Part 4).
The following is an example illustrating the calculation of the GMDB.
Assuming $100,000 is allocated to the Investment Funds (with no allocation to
the Fixed Income Series), no subsequent contributions, no transfers and no
withdrawals, the GMDB for an Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
END OF
CONTRACT ANNUITY ACCOUNT NON-NEW YORK
YEAR VALUE GMDB(1) NEW YORK GMDB
- ---------- --------------- -------------- -------------
<S> <C> <C> <C>
1 $105,000 $106,000 $105,000(2)
2 $108,675 $112,360 $108,675(2)
3 $124,976 $119,102 $119,102(3)
4 $135,912 $126,248 $126,248(3)
5 $149,503 $133,823 $133,823(3)
6 $149,503 $141,852 $141,852(3)
7 $161,463 $150,363 $161,463(3)
8 $161,463 $159,385 $161,463(2)
</TABLE>
The Annuity Account Values for Contract Years 1 through 8 are determined
based on hypothetical rates of return of 5.00%, 3.50%, 15.00%, 8.75%, 10.00%,
0.00%, 8.00% and 0.00%, respectively.
NON-NEW YORK
(1) For Contract Years 1 through 8, the GMDB equals the initial contribution
increased by 6%.
NEW YORK
(2) At the end of Contract Years 1 and 2, and again at the end of Contract
Year 8, the GMDB is equal to the Annuity Account Value.
(3) At the end of Contract Years 3 through 6, the GMDB is equal to the
contribution increased by 6% instead of the Annuity Account Value, since
the GMDB cannot be greater than this amount. However, at the end of the
seventh Contract Year the GMDB is equal to the Annuity Account Value of
$161,463 even though it is greater than the contribution increased at 6%
($150,363) because the cap does not apply on the seventh Processing
Date.
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APPENDIX III: GMIB EXAMPLES
- -----------------------------------------------------------------------------
The GMIB is equal to:
(A) the greater of
(i) the Annuity Account Value in the Investment Funds, and
(ii) an amount equal to the GMDB (reduced by any remaining withdrawal
charges);
divided by
(B) the guaranteed maximum annuity purchase rates.
The examples below assume a male age 60 has purchased the Rollover IRA with
an initial contribution of $100,000 that is allocated 100% to the Investment
Funds (excluding the Fixed Income Series). The GMDB in the 10th Contract Year
is $179,085 at 6% interest. Assuming hypothetical rates of return (after
deduction of charges) in the Investment Funds of 0% in Example 1 and 8% in
Example 2 during the 10 Contract Years, the GMIB in the 10th Contract Year
(assuming level payment under the IRA Assured Payment Option) would be as
follows:
<TABLE>
<CAPTION>
EXAMPLE 1 EXAMPLE 2
----------- -----------
<S> <C> <C>
(1) Hypothetical Rate of Return ....... 0% 8%
(2) Annuity Account Value as of the
Contract Date ...................... $100,000 $100,000
(3) The greater of (i) the GMDB and
(ii) the Annuity Account Value as
of the 10th Contract Date
anniversary ........................ $179,085 $215,892
(4) Guaranteed Maximum Annuity Purchase
Rates for level payments under the
IRA Assured Payment
Option ............................. $ 14.73 $ 14.73
(5) GMIB as of 10th Contract Date
anniversary ((3) / (4)) ............ $ 12,160 $ 14,659
</TABLE>
In Example 1, the GMDB which is higher than the Annuity Account Value would
provide a GMIB of $12,160. In Example 2, the Annuity Account Value, which at
this point is higher than the GMDB, would provide a GMIB of $14,659.
The rates of return discussed above are for illustrative purposes only and
are not intended to represent an expected or guaranteed rate of return. Your
investment results will vary. The level of GMIB under the IRA Assured Payment
Option will also depend on the guaranteed maximum annuity purchase rates as
of the Transaction Date and the type of payments selected. The examples
assume no transfers or withdrawals, which would affect the GMDB and, thus,
the GMIB.
55
<PAGE>
APPENDIX IV: EXAMPLE OF PAYMENTS UNDER THE IRA ASSURED PAYMENT
OPTION AND IRA APO PLUS
- -----------------------------------------------------------------------------
The second column in the chart below illustrates the payments for a male age
70 who purchased the IRA Assured Payment Option on October 1, 1996 with a
single contribution of $100,000, with increasing annual payments. The
payments are to commence on February 15, 1997. It assumes that the fixed
period is 15 years and that the Life Contingent Annuity will provide payments
on a Single Life basis. Based on Guaranteed Rates for the Guarantee Periods
and the current purchase rate for the Life Contingent Annuity, on October 1,
1996, the initial payment would be $7,048.32 and would increase in each three
year period to a final payment of $10,319.45. The first payment under the
Life Contingent Annuity would be $11,351.39.
Alternatively as shown in the third and fourth columns, this individual could
purchase IRA APO Plus with the same $100,000 contribution, with the same
fixed period and the Life Contingent Annuity on a Single Life basis. Based on
Guaranteed Rates for the Guarantee Periods and the current purchase rate for
the Life Contingent Annuity, on October 1, 1996, the same initial payment of
$7,048.32 would be purchased under IRA APO Plus. However, unlike the payment
under the IRA Assured Payment Option that will increase every three years,
this initial payment under IRA APO Plus is not guaranteed to increase.
Therefore, only $79,640.09 is needed to purchase the initial payment stream,
and the remaining $20,359.91 is invested in the Investment Funds according to
the Certificate Owner's instructions. Any future increase in payments under
IRA APO Plus will depend on the investment performance in the Investment
Funds.
Assuming hypothetical average annual rates of return of 0% and 8% (after
deduction of charges) for the Investment Funds, the Annuity Account Value in
the Investment Funds would grow to $20,359.91 and $25,647.63 respectively
after three years. A portion of this amount is used to purchase the increase
in the payments at the beginning of the fourth year. The remainder will stay
in the Investment Funds to be drawn upon for the purchase of increases in
payments at the end of each third year thereafter during the fixed period and
at the end of the fixed period under the Life Contingent Annuity. Based on
Guaranteed Rates for the Guarantee Periods and purchase rates for the Life
Contingent Annuity as of October 1, 1996, the third and fourth columns
illustrate the increasing payments that would be purchased under IRA APO Plus
assuming 0% and 8% rates of return respectively.
Under both options, while the Certificate Owner is living payments increase
annually after the 16th year under the Life Contingent Annuity based on the
increase, if any, in the Consumer Price Index, but in no event greater than
3% per year.
ANNUAL PAYMENTS
<TABLE>
<CAPTION>
GUARANTEED INCREASING PAYMENTS ILLUSTRATIVE ILLUSTRATIVE
UNDER THE IRA ASSURED PAYMENT PAYMENTS UNDER IRA PAYMENTS UNDER IRA
YEARS OPTION APO PLUS AT 0% APO PLUS AT 8%
- ------- ------------------------------ ------------------ ------------------
<S> <C> <C> <C>
1-3 $ 7,048.32 $7,048.32 $ 7,048.32
4-6 7,753.15 8,336.74 8,800.85
7-9 8,528.47 8,336.74 8,817.96
10-12 9,381.31 8,529.34 9,791.83
13-15 10,319.45 8,529.34 9,791.83
16 11,351.39 8,723.31 10,919.35
</TABLE>
As described above, a portion of the illustrated contribution is applied to
the Life Contingent Annuity. This amount will generally be larger under the
IRA Assured Payment Option than under IRA APO Plus, and conversely a smaller
portion of the contribution will be allocated to Guarantee Periods under the
former than the latter. In this illustration, $82,069.88 is allocated under
the IRA Assured Payment Option to the Guarantee Periods and under IRA APO
Plus, $89,906.43 is allocated to the Guarantee Periods and the Investment
Funds. The balance of the $100,000 ($17,930.12 and $10,093.57, respectively)
is applied to the Life Contingent Annuity.
The rates of return of 0% and 8% are for illustrative purposes only and are
not intended to represent an expected or guaranteed rate of return. Your
investment results will vary. Payments will also depend on the Guaranteed
Rates and Life Contingent Annuity purchase rates in effect as of the
Transaction Date. It is assumed that no Lump Sum Withdrawals are taken.
56
<PAGE>
APPENDIX V: IRS TAX DEDUCTION TABLE
- -----------------------------------------------------------------------------
If your Maximum Permissible Dollar Deduction is $2,000, use this table to
estimate the amount of your contribution which will be deductible.
<TABLE>
<CAPTION>
EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION
- ------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 $2,000 $2,550 $1,490 $5,050 $990 $ 7,550 $490
50 1,990 2,600 1,480 5,100 980 7,600 480
100 1,980 2,650 1,470 5,150 970 7,650 470
150 1,970 2,700 1,460 5,200 960 7,700 460
200 1,960 2,750 1,450 5,250 950 7,750 450
250 1,950 2,800 1,440 5,300 940 7,800 440
300 1,940 2,850 1,430 5,350 930 7,850 430
350 1,930 2,900 1,420 5,400 920 7,900 420
400 1,920 2,950 1,410 5,450 910 7,950 410
450 1,910 3,000 1,400 5,500 900 8,000 400
500 1,900 3,050 1,390 5,550 890 8,050 390
550 1,890 3,100 1,380 5,600 880 8,100 380
600 1,880 3,150 1,370 5,650 870 8,150 370
650 1,870 3,200 1,360 5,700 860 8,200 360
700 1,860 3,250 1,350 5,750 850 8,250 350
750 1,850 3,300 1,340 5,800 840 8,300 340
800 1,840 3,350 1,330 5,850 830 8,350 330
850 1,830 3,400 1,320 5,900 820 8,400 320
900 1,820 3,450 1,310 5,950 810 8,450 310
950 1,810 3,500 1,300 6,000 800 8,500 300
1,000 1,800 3,550 1,290 6,050 790 8,550 290
1,050 1,790 3,600 1,280 6,100 780 8,600 280
1,100 1,780 3,650 1,270 6,150 770 8,650 270
1,150 1,770 3,700 1,260 6,200 760 8,700 260
1,200 1,760 3,750 1,250 6,250 750 8,750 250
1,250 1,750 3,800 1,240 6,300 740 8,800 240
1,300 1,740 3,850 1,230 6,350 730 8,850 230
1,350 1,730 3,900 1,220 6,400 720 8,900 220
1,400 1,720 3,950 1,210 6,450 710 8,950 210
1,450 1,710 4,000 1,200 6,500 700 9,000 200
1,500 1,700 4,050 1,190 6,550 690 9,050 200
1,550 1,690 4,100 1,180 6,600 680 9,100 200
1,600 1,680 4,150 1,170 6,650 670 9,150 200
1,650 1,670 4,200 1,160 6,700 660 9,200 200
1,700 1,660 4,250 1,150 6,750 650 9,250 200
1,750 1,650 4,300 1,140 6,800 640 9,300 200
1,800 1,640 4,350 1,130 6,850 630 9,350 200
1,850 1,630 4,400 1,120 6,900 620 9,400 200
1,900 1,620 4,450 1,110 6,950 610 9,450 200
1,950 1,610 4,500 1,100 7,000 600 9,500 200
2,000 1,600 4,550 1,090 7,050 590 9,550 200
2,050 1,590 4,600 1,080 7,100 580 9,600 200
2,100 1,580 4,650 1,070 7,150 570 9,650 200
2,150 1,570 4,700 1,060 7,200 560 9,700 200
2,200 1,560 4,750 1,050 7,250 550 9,750 200
2,250 1,550 4,800 1,040 7,300 540 9,800 200
2,300 1,540 4,850 1,030 7,350 530 9,850 200
2,350 1,530 4,900 1,020 7,400 520 9,900 200
2,400 1,520 4,950 1,010 7,450 510 9,950 200
2,450 1,510 5,000 1,000 7,500 500 10,000 0
2,500 1,500
<FN>
- ------------
Excess AGI = Your AGI minus your THRESHOLD LEVEL:
If you are single, your Threshold Level is $25,000.
If you are married, your Threshold Level is $40,000.
If you are married and file a separate tax return, your
Excess AGI = your AGI.
</TABLE>
57
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
Part 1: Minimum Distribution Withdrawals 2
Part 2: Accumulation Unit Values 2
Part 3: Annuity Unit Values 2
Part 4: Custodian and Independent Accountants 3
Part 5: Money Market Fund and Intermediate Government
Securities Fund Yield Information 3
Part 6: Long-Term Market Trends 5
Part 7: Financial Statements 7
</TABLE>
HOW TO OBTAIN A ROLLOVER IRA STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an INCOME MANAGER Rollover IRA SAI:
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
58
<PAGE>
SUPPLEMENT DATED MAY 1, 1997 TO
ACCUMULATOR PROSPECTUS, DATED OCTOBER 17, 1996
-----------------------------------------------------------------------------
This supplement dated May 1, 1997, updates certain information in the
Accumulator prospectus of The Equitable Life Assurance Society of the United
States (EQUITABLE LIFE), dated October 17, 1996. You should read this
supplement in conjunction with the prospectus. You should keep the supplement
and the prospectus for future reference. We have filed with the Securities
and Exchange Commission (SEC) our statement of additional information (SAI)
dated May 1, 1997. If you have previously received, but do not presently
have, a copy of the prospectus, you may obtain an additional copy of the
prospectus, as well as a copy of the SAI, from us, free of charge, if you
write to Equitable Life, Income Management Group, P.O. Box 1547, Secaucus, NJ
07096-1547, call (800) 789-7771 or if you only need a copy of the SAI, you
may mail in the SAI request form located at the end of the supplement. The
SAI has been incorporated by reference into this supplement.
In the supplement, each section of the prospectus in which a change has been
made is identified and the number of each prospectus page on which a change
occurs is also noted. Special terms used in the prospectus have the same
meaning in the supplement unless otherwise noted.
ON THE COVER PAGE OF THE PROSPECTUS, THE THIRD (INCLUDING THE CHART OF
INVESTMENT OPTIONS) AND FOURTH PARAGRAPHS ARE REPLACED BY THE FOLLOWING
PARAGRAPHS:
The Accumulator offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 21
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in
the GUARANTEED PERIOD ACCOUNT.
We invest each Investment Fund in Class IA shares of a corresponding
portfolio (PORTFOLIO) of The Hudson River Trust (HR TRUST) or Class IB
shares of a corresponding Portfolio of EQ Advisors Trust (EQ TRUST), mutual
funds whose shares are purchased by separate accounts of insurance
companies. The prospectuses for HR Trust and EQ Trust, both of which
accompany this supplement, describe the investment objectives, policies and
risks of the Portfolios.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
EQUITY SERIES
- -----------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY INTERNATIONAL EQUITY AGGRESSIVE EQUITY
<S> <C> <C>
Alliance Common Stock Alliance Global Alliance Aggressive Stock
Alliance Growth & Income Alliance International Alliance Small Cap Growth
EQ/Putnam Growth & Income Value Morgan Stanley Emerging Markets Equity MFS Emerging Growth Companies
MFS Research T. Rowe Price International Stock Warburg Pincus Small Company Value
Merrill Lynch Basic Value Equity
T. Rowe Price Equity Income
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES FIXED INCOME SERIES
- ------------------------------------------------------------------------------------------------------------
AGGRESSIVE FIXED INCOME DOMESTIC FIXED INCOME
<S> <C> <C>
Alliance Conservative Investors Alliance High Yield Alliance Intermediate Government Securities
Alliance Growth Investors Alliance Money Market
EQ/Putnam Balanced
Merrill Lynch World Strategy
------------------------------------------------------------------------------------------------------------
</TABLE>
THE FOLLOWING SENTENCE IS ADDED AT THE END OF THE FIFTH PARAGRAPH.
The Guarantee Periods currently available have Expiration Dates of
February 15 in years 1998 through 2007.
THROUGHOUT THE PROSPECTUS ANY REFERENCE TO THE INVESTMENT FUNDS AND GUARANTEE
PERIODS REFER TO THE INVESTMENT FUNDS AND GUARANTEE PERIODS SET FORTH ABOVE.
- -----------------------------------------------------------------------------
Copyright 1997
The Equitable Life Assurance Society of the United States,
New York, New York 10104.
All rights reserved.
<PAGE>
THROUGHOUT THE PROSPECTUS (EXCEPT WHERE OTHERWISE NOTED) THE REFERENCE TO
"TRUST" IS REPLACED BY "HR TRUST AND EQ TRUST."
ON PAGE 2, UNDER THE HEADING "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" REPLACE THE ENTIRE SECTION WITH THE FOLLOWING SECTION:
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (EXCHANGE ACT) after the date hereof and prior to the termination
of the offering of the securities offered hereby shall be deemed to be
incorporated by reference in the prospectus and the supplement and to be a
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of the
prospectus and the supplement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified and superseded, to constitute a part of the
prospectus and the supplement. Equitable Life files its Exchange Act
documents and reports, including its annual and quarterly reports on Form
10-K and Form 10-Q, electronically pursuant to EDGAR under CIK No.
0000727920. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the SEC. The address of the site is
http://www.sec.gov.
Equitable Life will provide without charge to each person to whom a
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
ON PAGE 4, UNDER THE HEADING "GENERAL TERMS"
ADD THE FOLLOWING DEFINITIONS:
EQ TRUST--EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants,
Inc. (EQ Financial) is the manager of EQ Trust and has appointed advisers
for each of the Portfolios.
HR TRUST--The Hudson River Trust, a mutual fund in which the assets of
separate accounts of insurance companies are invested. Alliance Capital
Management L.P. (Alliance) is the adviser to HR Trust.
DELETE THE DEFINITION FOR "TRUST."
2
<PAGE>
ON PAGES 5, 6 AND 7, REPLACE THE "FEE TABLE" SECTION WITH THE FOLLOWING
SECTION:
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them on the same basis with other similar products.
The table reflects both the charges of the Separate Account and the expenses
of HR Trust and EQ Trust. Charges for applicable taxes such as state or local
premium taxes may also apply. For a complete description of the charges under
the Certificate, see "Part 6: Deductions and Charges." For a complete
description of each trust's charges and expenses, see the prospectuses for
the HR Trust and EQ Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. However, if there is insufficient
value in the Investment Funds all or a portion of the distribution fee and
the annual contract fee, if any, will be deducted from your Annuity Account
Value in the Guaranteed Period Account rather than from the Investment Funds.
See "Part 6: Deductions and Charges." A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
<TABLE>
<CAPTION>
<S> <C>
DISTRIBUTION FEE (SALES LOAD) AS A PERCENTAGE OF EACH
CONTRIBUTION RECEIVED DURING THE FIRST CONTRACT YEAR
(deducted annually on each of the first seven
Processing Dates)(1) ............................................ 0.20%
</TABLE>
<TABLE>
<CAPTION>
CONTRACT
YEAR
--------
<S> <C>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS 1 ... 7.00%
(deducted upon surrender or for certain withdrawals. 2 ... 6.00
The applicable withdrawal charge percentage is 3 ... 5.00
determined by the Contract Year in which the withdrawal 4 ... 4.00
is made or the Certificate is surrendered beginning with 5 ... 3.00
"Contract Year 1" with respect to each contribution 6 ... 2.00
withdrawn or surrendered. For each contribution, the 7 ... 1.00
Contract Year in which we receive that contribution 8+ .. 0.00
is "Contract Year 1")(2)
</TABLE>
<TABLE>
<CAPTION>
COMBINED GMDB
GMDB/GMIB ONLY
BENEFIT BENEFIT
(PLAN A) (PLAN B)
----------- ---------
<S> <C> <C>
GMDB/GMIB CHARGES (percentage deducted annually
on each Processing Date as a percentage of the
guaranteed minimum death benefit then in effect)(3) .. 0.45% 0.20%
ANNUAL CONTRACT FEE (DEDUCTED FROM ANNUITY ACCOUNT
VALUE ON EACH PROCESSING DATE)(4)
If the initial contribution is less than $25,000 ..... $ 30
If the initial contribution is $25,000 or more ....... $ 0
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF
ASSETS IN EACH INVESTMENT FUND)
MORTALITY AND EXPENSE RISK CHARGE ..................... 0.90%
ASSET BASED ADMINISTRATIVE CHARGE ..................... 0.25%
-----
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES ............... 1.15%
=====
</TABLE>
3
<PAGE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH
PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
CONSERVATIVE GROWTH GROWTH & COMMON ALLIANCE
INVESTORS INVESTORS INCOME STOCK GLOBAL
--------- --------- ------ ----- ------
<S> <C> <C> <C> <C> <C>
HR TRUST
- --------
Investment Advisory Fee 0.48% 0.53% 0.55% 0.38% 0.65%
Other Expenses 0.07% 0.06% 0.05% 0.03% 0.08%
TOTAL TRUST ANNUAL
EXPENSES(5) 0.55% 0.59% 0.60% 0.41% 0.73%
==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE ALLIANCE ALLIANCE INTERMEDIATE ALLIANCE
ALLIANCE AGGRESSIVE SMALL MONEY GOVT. HIGH
INTERNATIONAL STOCK CAP GROWTH MARKET SECURITIES YIELD
------------- ----- ---------- ------ ---------- -----
<S> <C> <C> <C> <C> <C> <C>
HR TRUST
- --------
Investment Advisory Fee 0.90% 0.55% 0.90% 0.35% 0.50% 0.60%
Other Expenses 0.18% 0.03% 0.10% 0.04% 0.09% 0.06%
TOTAL TRUST ANNUAL
EXPENSES(5) 1.08% 0.58% 1.00% 0.39% 0.59% 0.66%
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
EQ/PUTNAM MFS MERRILL
GROWTH & EMERGING LYNCH
EQ/PUTNAM INCOME GROWTH MFS BASIC VALUE
BALANCED VALUE COMPANIES RESEARCH EQUITY
-------- ----- --------- -------- ------
<S> <C> <C> <C> <C> <C>
EQ TRUST
- --------
Investment Advisory Fee 0.55% 0.55% 0.55% 0.55% 0.55%
12b-1 Fee(6) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.10% 0.05% 0.05% 0.05% 0.05%
---- ---- ---- ---- ----
TOTAL EQ TRUST ANNUAL
EXPENSES(7) 0.90% 0.85% 0.85% 0.85% 0.85%
==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
MORGAN T. ROWE WARBURG
MERRILL STANLEY T. ROWE PRICE PINCUS
LYNCH EMERGING PRICE INTERNA- SMALL
WORLD MARKETS EQUITY TIONAL COMPANY
STRATEGY EQUITY INCOME STOCK VALUE
-------- ------ ------ ----- -----
<S> <C> <C> <C> <C> <C>
EQ TRUST
- --------
Investment Advisory Fee 0.70% 1.15% 0.55% 0.75% 0.65%
12b-1 Fee(6) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.25% 0.35% 0.05% 0.20% 0.10%
---- ---- ---- ---- ----
TOTAL EQ TRUST ANNUAL
EXPENSES(7) 1.20% 1.75% 0.85% 1.20% 1.00%
==== ==== ==== ==== ====
</TABLE>
- ------------
Notes:
(1) The amount deducted is based on contributions that have not been
withdrawn. See "Part 6: Deductions and Charges," "Distribution Fee."
(2) Deducted upon a withdrawal with respect to amounts in excess of the
15% free corridor amount, and upon a surrender. See "Part 6:
Deductions and Charges," "Withdrawal Charge." We reserve the right
to impose an administrative charge of the lesser of $25 and 2.0% of
the amount withdrawn for each Lump Sum Withdrawal after the fifth in
a Contract Year. See "Withdrawal Processing Charge" also in Part 6.
(3) The guaranteed minimum death benefit (GMDB) is described under
"Death Benefit," "GMDB" and the guaranteed minimum income benefit
(GMIB) is described under "GMIB" both of which are in Part 5. See
"Part 6: Deductions and Charges," "Charges for Combined GMDB/GMIB
Benefit (Plan A) and Charges for GMDB Only Benefit (Plan B)."
(4) This charge is incurred at the beginning of the Contract Year and
deducted on the Processing Date. See "Part 6: Deductions and
Charges," "Annual Contract Fee."
(5) The amounts shown for the Portfolios of HR Trust (other than
Alliance Small Cap Growth) have been restated to reflect advisory
fees which went into effect as of May 1, 1997. "Other Expenses" are
based on the average daily net assets in each Portfolio for the year
ended December 31, 1996. The amounts shown for the Alliance Small
Cap Growth Portfolio are estimated for the current fiscal year as
this Portfolio commenced operations on May 1, 1997. The investment
advisory fee for each Portfolio may vary from year to year depending
upon the average daily net assets of the respective Portfolio of HR
Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. See "HR Trust Charges to Portfolios"
in Part 6.
(6) The Class IB shares of EQ Trust are subject to fees imposed under a
distribution plan (herein, the "Rule 12b-1 Plan") adopted by EQ
Trust pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended. The Rule 12b-1 Plan provides that EQ Trust, on
behalf of each Portfolio, may pay annually up to 0.25% of the
average daily net assets of a Portfolio attributable to its Class IB
shares in respect of activities primarily intended to result in the
sale of the Class IB shares. The 12b-1 fee may be increased only by
action of the Board of Trustees of EQ Trust up to a maximum of 0.50%
per annum.
(7) "Other Expenses" shown are based on estimated amounts (after expense
waiver or limitation) for the current fiscal year, as EQ Trust
commenced operations on May 1, 1997. The maximum investment advisory
fees cannot be increased without a vote of that Portfolio's
shareholders. The other direct operating expenses will fluctuate
from year to year depending on actual expenses, but pursuant to
agreement, cannot together with other fees specified exceed the
total annual expenses specified. See "EQ Trust Charges to
Portfolios" in Part 6.
4
<PAGE>
EXAMPLES
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined GMDB/GMIB Benefit (Plan A) and under the GMDB
Only Benefit (Plan B) in the two situations noted below assuming a $1,000
contribution invested in one of the Investment Funds listed, and a 5% annual
return on assets.(1) The annual contract fee was computed based on an initial
contribution of $10,000.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
COMBINED GMDB/GMIB BENEFIT (PLAN A) ELECTION
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD
SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative
Investors $ 90.26 $125.78 $164.15 $290.05
Alliance Growth Investors 90.65 126.98 166.16 294.09
Alliance Growth & Income 90.75 127.28 166.66 295.10
Alliance Common Stock 88.86 121.57 157.10 275.76
Alliance Global 92.05 131.17 173.15 308.12
Alliance International 95.53 141.59 190.48 342.39
Alliance Aggressive Stock 90.55 126.68 165.66 293.08
Alliance Small Cap Growth 94.73 139.22 -- --
Alliance Money Market 88.67 120.98 156.09 273.71
Alliance Intermediate
Government Securities 90.65 126.98 166.16 294.09
Alliance High Yield 91.35 129.08 169.66 301.13
EQ TRUST
EQ/Putnam Balanced $ 93.74 $136.25 -- --
EQ/Putnam Growth & Income
Value 93.24 134.75 -- --
MFS Emerging Growth
Companies 93.24 134.75 -- --
MFS Research 93.24 134.75 -- --
Merrill Lynch Basic Value
Equity 93.24 134.75 -- --
Merrill Lynch World
Strategy 96.72 145.15 -- --
Morgan Stanley Emerging
Markets Equity 102.19 161.34 -- --
T. Rowe Price Equity
Income 93.24 134.75 -- --
T. Rowe Price
International Stock 96.72 145.15 -- --
Warburg Pincus Small
Company Value 94.73 139.22 -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH
PERIOD SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
- -------------------------
Alliance Conservative
Investors $27.03 $ 83.14 $142.17 $298.10
Alliance Growth Investors 27.42 84.33 144.17 302.14
Alliance Growth & Income 27.52 84.63 144.67 303.14
Alliance Common Stock 25.63 78.93 135.12 283.82
Alliance Global 28.82 88.53 151.17 316.17
Alliance International 32.30 98.96 168.51 350.45
Alliance Aggressive Stock 27.32 84.03 143.67 301.14
Alliance Small Cap Growth 31.50 96.57 -- --
Alliance Money Market 25.44 78.34 134.11 281.77
Alliance Intermediate
Government Securities 27.42 84.33 144.17 302.14
Alliance High Yield 28.12 86.43 147.67 309.17
EQ TRUST
EQ/Putnam Balanced $30.51 $ 93.60 -- --
EQ/Putnam Growth & Income
Value 30.01 92.10 -- --
MFS Emerging Growth
Companies 30.01 92.10 -- --
MFS Research 30.01 92.10 -- --
Merrill Lynch Basic Value
Equity 30.01 92.10 -- --
Merrill Lynch World
Strategy 33.49 102.51 -- --
Morgan Stanley Emerging
Markets Equity 38.96 118.70 -- --
T. Rowe Price Equity
Income 30.01 92.10 -- --
T. Rowe Price
International Stock 33.49 102.51 -- --
Warburg Pincus Small
Company Value 31.50 96.57 -- --
</TABLE>
- ------------
* See footnote on next page.
5
<PAGE>
GMDB ONLY BENEFIT (PLAN B) ELECTION
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD
SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
- -------------------------
Alliance Conservative
Investors $ 90.26 $120.46 $153.06 $262.23
Alliance Growth Investors 90.65 121.66 155.07 266.33
Alliance Growth & Income 90.75 121.96 155.58 267.36
Alliance Common Stock 88.86 116.24 145.96 247.74
Alliance Global 92.05 125.87 162.12 280.56
Alliance International 95.53 136.32 179.54 315.32
Alliance Aggressive Stock 90.55 121.35 154.55 265.29
Alliance Small Cap Growth 94.73 133.93 -- --
Alliance Money Market 88.67 115.65 144.95 245.67
Alliance Intermediate
Government Securities 90.65 121.66 155.07 266.33
Alliance High Yield 91.35 123.77 158.60 273.47
EQ TRUST
EQ/Putnam Balanced $ 93.74 $130.95 -- --
EQ/Putnam Growth & Income
Value 93.24 129.45 -- --
MFS Emerging Growth
Companies 93.24 129.45 -- --
MFS Research 93.24 129.45 -- --
Merrill Lynch Basic Value
Equity 93.24 129.45 -- --
Merrill Lynch World
Strategy 96.72 139.88 -- --
Morgan Stanley Emerging
Markets Equity 102.19 156.12 -- --
T. Rowe Price Equity
Income 93.24 129.45 -- --
T. Rowe Price
International Stock 96.72 139.88 -- --
Warburg Pincus Small
Company Value 94.73 133.93 -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH
PERIOD SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
HR TRUST
- -------------------------
Alliance Conservative
Investors $24.38 $ 74.85 $127.74 $265.82
Alliance Growth Investors 24.77 76.04 129.75 269.91
Alliance Growth & Income 24.87 76.34 130.25 270.93
Alliance Common Stock 22.98 70.63 120.64 251.32
Alliance Global 26.17 80.25 136.79 284.15
Alliance International 29.65 90.70 154.21 318.91
Alliance Aggressive Stock 24.67 75.74 129.24 268.88
Alliance Small Cap Growth 28.85 88.31 -- --
Alliance Money Market 22.79 70.02 119.62 249.24
Alliance Intermediate
Government Securities 24.77 76.04 129.75 269.91
Alliance High Yield 25.47 78.15 133.28 277.06
EQ TRUST
EQ/Putnam Balanced $27.86 $ 85.34 -- --
EQ/Putnam Growth & Income
Value 27.36 83.84 -- --
MFS Emerging Growth
Companies 27.36 83.84 -- --
MFS Research 27.36 83.84 -- --
Merrill Lynch Basic Value
Equity 27.36 83.84 -- --
Merrill Lynch World
Strategy 30.84 94.26 -- --
Morgan Stanley Emerging
Markets Equity 36.31 110.50 -- --
T. Rowe Price Equity
Income 27.36 83.84 -- --
T. Rowe Price
International Stock 30.84 94.26 -- --
Warburg Pincus Small
Company Value 28.85 88.31 -- --
</TABLE>
- ------------
Notes:
(1) The amount accumulated from the $1,000 contribution could not be paid
in the form of an annuity at the end of any of the periods shown in the
examples. If the amount applied to purchase an annuity is less than
$2,000, or the initial payment is less than $20 we may pay the amount
to the payee in a single sum instead of as payments under an annuity
form. See "Income Annuity Options" in Part 5. The examples do not
reflect charges for applicable taxes such as state or local premium
taxes that may also be deducted in certain jurisdictions.
6
<PAGE>
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on May 1, 1995.
The following table shows the Accumulation Unit Values, as of May 1, 1995
and the last Business Day for the periods shown. There are no Accumulation
Unit Values for Alliance Small Cap Growth, Alliance High Yield, and the
Investment Funds investing in Class IB shares of EQ Trust Portfolios as
such Investment Funds were not available prior to the date of this
supplement.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
-------------------------------
MAY 1, 1995 DECEMBER 1995 DECEMBER 1996 MARCH 1997
------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
Alliance Conservative
Investors $ 14.647383 $ 16.549050 $ 17.209382 $ 17.209382
Alliance Growth
Investors 20.073331 23.593613 26.260729 26.260729
Alliance Growth &
Income 10.376155 11.989601 14.231408 14.231408
Alliance Common
Stock 102.335691 124.519251 152.955877 152.955877
Alliance Global 19.478146 22.293921 25.253538 25.253538
Alliance International 10.125278 11.033925 11.976127 11.976127
Alliance Aggressive
Stock 44.025496 54.591448 65.938687 65.938687
Alliance Money Market 23.150932 23.830754 24.810781 24.810781
Alliance Intermediate
Govt. Securities 12.498213 13.424767 13.770322 13.770322
Alliance High Yield 19.578616 21.602062 26.238452
</TABLE>
ON PAGE 8, UNDER THE HEADING "TRANSFERS," DELETE THE SECOND SENTENCE.
ON PAGE 11 UNDER THE HEADING "EQUITABLE LIFE."
REPLACE THE THIRD SENTENCE OF THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Our home office is located at 1290 Avenue of the Americas, New York, New
York 10104.
REPLACE THE SECOND AND THIRD PARAGRAPHS WITH THE FOLLOWING PARAGRAPHS:
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996, AXA beneficially owned
63.8% of the outstanding shares of common stock of the Holding Company
(assuming conversion of convertible preferred stock held by AXA). Under its
investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $239.8 billion of assets as of December 31, 1996.
ON PAGES 11 AND 12 REPLACE THE HEADING "THE TRUST" WITH "HR TRUST" AND ADD
THE FOLLOWING SENTENCE AFTER THE FIFTH SENTENCE OF THE FIRST PARAGRAPH:
Investment Funds that invest in Portfolios of HR Trust purchase Class IA
shares of a corresponding Portfolio of HR Trust.
7
<PAGE>
ON PAGE 12 IN THE HEADING "THE TRUST'S INVESTMENT ADVISOR" AND IN THE FIRST
SENTENCE OF THE PARAGRAPH UNDER THE HEADING REPLACE "THE TRUST" WITH "HR
TRUST."
IN THE FIRST PARAGRAPH OF THIS SECTION, REPLACE THE THIRD SENTENCE WITH THE
FOLLOWING SENTENCE:
On December 31, 1996, Alliance was managing approximately $182.8 billion in
assets.
DELETE THE SECOND PARAGRAPH.
ON PAGE 12, INSERT THE FOLLOWING SECTIONS AFTER THE LAST PARAGRAPH:
EQ TRUST
EQ Trust is an open-end management investment company. As a "series type"
of mutual fund, EQ Trust issues different series of stock, each of which
relates to a different Portfolio of EQ Trust. EQ Trust commenced operations
on May 1, 1997. EQ Trust does not impose a sales charge or "load" for
buying and selling it shares. All dividend distributions to EQ Trust are
reinvested in full and fractional shares of the Portfolio to which they
relate. Investment Funds that invest in Portfolios of EQ Trust purchase
Class IB shares of a corresponding Portfolio of EQ Trust. More detailed
information about EQ Trust, its investment objectives, policies and
restrictions, risks, expenses, the Rule 12b-1 Plan relating to the Class IB
shares, and all other aspects of its operations appears in its prospectus
which accompanies this supplement and in its statement of additional
information.
EQ TRUST'S MANAGER AND ADVISERS
EQ Trust is managed by EQ Financial Consultants, Inc. (EQ Financial) which,
subject to supervision and direction of the Trustees of EQ Trust, has
overall responsibility for the general management of EQ Trust. EQ Financial
is an investment adviser registered under the 1940 Act, and a broker-dealer
registered under the Exchange Act. EQ Financial is a Delaware corporation
and an indirect, wholly-owned subsidiary of Equitable Life.
EQ Financial's main office is located at 1290 Avenue of the Americas, New
York, New York 10104.
EQ Financial has entered into investment advisory agreements with Putnam
Investments, Massachusetts Financial Services Company, Merrill Lynch Asset
Management, L.P., Morgan Stanley Asset Management, Inc., T. Rowe Price
Associates, Inc. and Rowe Price-Fleming International Inc., and Warburg,
Pincus Counsellors, Inc., each of which serve as advisers to EQ/Putnam,
MFS, Merrill Lynch, Morgan Stanley, T. Rowe Price, and Warburg Pincus
Portfolios, respectively, of EQ Trust.
ON PAGE 13, UNDER THE HEADING "INVESTMENT POLICIES AND OBJECTIVES OF THE
TRUST'S PORTFOLIOS"
ADD THE FOLLOWING SENTENCES TO THE END OF THE FIRST PARAGRAPH:
Set forth below is a summary of the investment policies and objectives of
each Portfolio. This summary is qualified in its entirely by reference to
the prospectus for HR Trust and EQ Trust both of which accompany this
supplement. Please read the prospectuses for each of the trusts carefully
before investing.
DELETE THE DESCRIPTION OF "AGGRESSIVE STOCK" AND INSERT THE FOLLOWING
DESCRIPTIONS:
<TABLE>
<CAPTION>
<S> <C> <C>
Alliance Aggressive Primarily common stocks and other equity-type securities Long-term growth of
Stock issued by quality small and intermediate sized companies capital
with strong growth prospects and in covered options on
those securities.
Alliance Small Cap Primarily U.S. common stocks and other equity type Long-term growth of
Growth securities issued by smaller companies with favorable capital
growth prospects.
Alliance High Yield Primarily a diversified mix of high yield, fixed-income High return by
securities involving greater volatility of price and maximizing current
risk of principal and income than high quality income and, to the
fixed-income securities. The medium and lower quality extent consistent with
debt securities in which the Portfolio may invest are that objective, capital
known as "junk bonds." appreciation
</TABLE>
8
<PAGE>
INSERT THE FOLLOWING DESCRIPTIONS AFTER THE DESCRIPTION OF "INTERMEDIATE
GOVERNMENT SECURITIES:"
<TABLE>
<CAPTION>
<S> <C> <C>
EQ/Putnam Balanced A well-diversified portfolio of stocks and bonds that Balanced investment
will produce both capital growth and current income.
EQ/Putnam Growth & Primarily common stocks that offer potential for Capital growth and,
Income Value capital growth, consistent with the Portfolios' secondarily, current
investment objective, common stocks that offer income
potential for current income.
MFS Emerging Growth Primarily (i.e., at lest 80% of its assets uder normal Long-term growth of
Companies circumstances) in common stocks of emerging growth capital
companies that the Portfolio adviser believes are early
in their life cycle but which have the potential to
become major enterprises.
MFS Research A substantial portion of assets invested in common Long-term growth of
stock or securities convertible into common stock of capital and future
companies believed by the Portfolio adviser to possess income
better than average prospects for long-term growth.
Merrill Lynch Basic Investment in securities, primarily equities, that the Capital appreciation
Value Equity Portfolio adviser believes are undervalued and and, secondarily, income
therefore represent basic investment value.
Merrill Lynch World Investment primarily in a portfolio of equity and fixed High total investment
Strategy income securities, including convertible securities, of return
U.S. and foreign issuers.
Morgan Stanley Emerging Primarily equity securities of emerging market country Long-term capital
Markets Equity* (i.e. foreign) issuers. appreciation
T. Rowe Price Equity Primarily dividend paying common stocks of established Substantial dividend
Income companies. income and also capital
appreciation
T. Rowe Price Primarily common stocks of established non-United Long-term growth of
International Stock States companies. capital
Warburg Pincus Small Primarily in a portfolio of equity securities of small Long-term capital
Company Value capitalization companies (i.e., companies having market appreciation
capitalizations of $1 billion or less at the time of
initial purchase) that the Portfolio adviser considers
to be relatively undervalued.
</TABLE>
- ------------
* Will be available on or about September 2, 1997.
9
<PAGE>
ON PAGE 14, REPLACE THE FIRST AND SECOND PARAGRAPHS WITH THE FOLLOWING
PARAGRAPHS:
This Part presents performance data for each of the Investment Funds
included in the tables below. The performance data were calculated by two
methods. The first method presented in the tables under "SEC Standardized
Performance Data," reflects all applicable fees and charges, including the
Combined GMDB/GMIB Benefit charge, but not the charges for any applicable
taxes such as premium taxes.
The second method presented in the tables under "Rate of Return Data for
Investment Funds," also reflects all applicable fees and charges, but does
not reflect the distribution fee, the withdrawal charge, the Combined
GMDB/GMIB Benefit charge, the annual contract fee or the charge for tax
such as premium taxes. These additional charges would effectively reduce
the rates of return credited to a particular Certificate.
HR Trust Portfolios
The performance data shown for the Investment Funds investing in Class IA
shares of HR Trust Portfolios (other than the Alliance Small Cap Growth
Portfolio which commenced operations on May 1, 1997) are based on the
actual investment results of the Portfolios, and have been adjusted for the
fees and charges applicable under the Certificates.
The performance data for the Alliance Money Market and Alliance Common
Stock Investment Funds that invest in corresponding HR Trust Portfolios,
for periods prior to March 22, 1985, reflect the investment results of two
open-end management separate accounts (the "predecessor separate accounts")
which were reorganized in unit investment trust form. The "Since inception"
figures for these Investment Funds are based on the date of inception of
the predecessor separate accounts. These performance data have been
adjusted to reflect the maximum investment advisory fee payable for the
corresponding Portfolio of HR Trust, as well as an assumed charge of 0.06%
for direct operating expenses.
EQ Trust Portfolios
The Investment Funds of the Separate Account that invest in Class IB shares
of Portfolios of EQ Trust have only recently been established and no
Certificates funded by those Investment Funds have been issued as of the
date of this Supplement. EQ Trust commenced operations on May 1, 1997.
Therefore, no actual historical performance data for any of these
Portfolios are available. In this connection, see the discussion
immediately following the tables below.
ON PAGE 14, REPLACE THE HEADING "PERFORMANCE DATA FOR A CERTIFICATE" WITH
"STANDARDIZED PERFORMANCE DATA."
IN THE FIRST SENTENCE OF THE THIRD PARAGRAPH UNDER THIS HEADING CHANGE THE
DATE FROM "DECEMBER 31, 1995" TO "DECEMBER 31, 1996."
10
<PAGE>
ON PAGES 14 AND 15, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING
TABLES AND FOOTNOTES:
STANDARDIZED PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ------------------------------ --------- ------- ------- -------- -------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative
Investors (3.31)% 3.16% 4.76% -- 6.20%
Alliance Growth Investors 4.00 7.81 8.23 -- 12.10
Alliance Growth & Income 11.40 10.57 -- -- 7.57
Alliance Common Stock 15.54 13.83 13.23 13.84% 13.38
Alliance Global 5.98 9.32 11.03 -- 8.87
Alliance International 1.24 -- -- -- 6.02
Alliance Aggressive Stock 13.49 12.24 9.26 16.64 18.14
Alliance Money Market (3.19) 1.47 1.70 3.86 5.14
Alliance Intermediate Govt.
Securities (4.73) 0.39 3.02 -- 4.43
Alliance High Yield 14.16 9.26 12.21 -- 9.33
</TABLE>
STANDARDIZED PERFORMACE DATA
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ------------------------------ ------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative
Investors $ 967 $1,098 $1,262 -- $ 1,618
Alliance Growth Investors 1,040 1,253 1,485 -- 2,494
Alliance Growth & Income 1,114 1,352 -- -- 1,339
Alliance Common Stock 1,155 1,475 1,862 $3,657 13,975
Alliance Global 1,060 1,307 1,687 -- 2,340
Alliance International 1,012 -- -- -- 1,124
Alliance Aggressive Stock 1,135 1,414 1,557 4,660 6,257
Alliance Money Market 968 1,045 1,088 1,461 2,230
Alliance Intermediate Govt.
Securities 953 1,012 1,161 -- 1,297
Alliance High Yield 1,142 1,304 1,779 -- 2,441
</TABLE>
- ------------
* The tables reflect charges under a Certificate with the 0.45% GMDB/GMIB
charge.
** The "Since Inception" dates for the Portfolios of HR Trust are as
follows: Alliance Conservative Investors (October 2, 1989); Alliance
Growth Investors (October 2, 1989); Alliance Growth & Income (October 1,
1993); Alliance Common Stock (January 13, 1976); Alliance Global (August
27, 1987); Alliance International (April 3, 1995); Alliance Aggressive
Stock (January 27, 1986); Alliance Small Cap Growth (May 1, 1997);
Alliance Money Market (July 13, 1981); Alliance Intermediate Government
Securities (April 1, 1991); and Alliance High Yield (January 2, 1987).
ON PAGE 15, INSERT THE FOLLOWING PARAGRAPHS BEFORE THE "RATE OF RETURN DATA
FOR INVESTMENT FUNDS" SECTION:
Additional investment performance information appears in the attached HR
Trust and EQ Trust prospectuses.
The Alliance Small Cap Growth Portfolio of HR Trust commenced operations
on May 1, 1997. Therefore, no actual historical performance data are
available. However, historical performance of a composite of six other
advisory accounts managed by Alliance is described in the attached HR
Trust prospectus. According to that prospectus, these accounts have
substantially the same investment objectives and policies, and are
managed in accordance with essentially the same investment strategies and
techniques, as those of the Alliance Small Cap Growth Portfolio. It
should be noted that these accounts are not subject to certain of the
requirements and restrictions to which the Alliance Small Cap Growth
Portfolio is subject and that they are managed for tax exempt clients of
Alliance, who may have different investment goals. The investment
performance information included in the HR Trust prospectus for all
Portfolios other than the Alliance Small Cap Portfolio is based on actual
historical performance.
11
<PAGE>
The investment performance data for HR Trust's Alliance Small Cap
Portfolio and for each of the Portfolios of EQ Trust, contained in the HR
Trust and the EQ Trust prospectuses, are provided by those prospectuses
to illustrate the past performance of each respective Portfolio adviser
in managing a substantially similar investment vehicles as measured
against specified market indices and do not represent the past or future
performance of any Portfolio. None of the performance data contained in
the HR Trust and EQ Trust prospectuses reflects fees and charges imposed
under your Certificate, which fees and charges would reduce such
performance figures. Therefore, the performance data for each of the
Portfolios described in the EQ Trust prospectus and for the Alliance
Small Cap Portfolio in the HR Trust prospectus may be of limited use and
are not intended to be a substitute for actual performance of the
corresponding Portfolios, nor are such results an estimate or guarantee
of future performance for these Portfolios.
ON PAGE 16, INSERT THE FOLLOWING SECTION UNDER THE HEADING "PORTFOLIO
INCEPTION DATES AND COMPARATIVE BENCHMARKS:"
ALLIANCE HIGH YIELD: January 2, 1997; Merrill Lynch High Yield Master
Index.
ON PAGES 16, 17 AND 18, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING
TABLES AND FOOTNOTES:
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 5.47% 6.08% -- -- -- 7.77%
Lipper Income 8.95 8.91 9.55 -- -- -- 9.55
Benchmark 8.78 10.14 9.64 -- -- -- 10.42
ALLIANCE GROWTH
INVESTORS 11.30 10.00 9.48 -- -- -- 14.23
Lipper Flexible Portfolio 12.51 9.26 9.30 -- -- -- 9.99
Benchmark 16.94 15.84 13.02 -- -- -- 12.73
ALLIANCE GROWTH &
INCOME 18.70 12.69 -- -- -- -- 11.47
Lipper Growth & Income 19.96 15.39 -- -- -- -- 14.78
Benchmark 21.28 17.93 -- -- -- -- 17.24
ALLIANCE COMMON STOCK 22.84 15.87 14.39 14.49% 15.17% 14.17% 13.90
Lipper Growth 18.78 14.80 12.39 13.08 14.04 13.60 13.42
Benchmark 22.96 19.66 15.20 15.28 16.79 14.55 14.63
ALLIANCE GLOBAL 13.28 11.44 12.19 -- -- -- 10.43
Lipper Global 17.89 8.49 10.29 -- -- -- 3.65
Benchmark 13.48 12.91 10.82 -- -- -- 7.44
ALLIANCE INTERNATIONAL 8.54 -- -- -- -- -- 10.90
Lipper International 13.36 -- -- -- -- -- 14.33
Benchmark 6.05 -- -- -- -- -- 8.74
ALLIANCE Aggressive Stock 20.79 14.33 10.55 17.24 -- -- 18.79
Lipper Small Company
Growth 16.55 12.70 17.53 16.29 -- -- 16.47
Benchmark 17.85 14.14 14.80 14.29 -- -- 13.98
ALLIANCE MONEY MARKET 4.11 3.82 3.12 4.68 5.85 -- 6.05
Lipper Money Market 3.82 3.60 2.93 4.52 5.72 -- 5.89
Benchmark 5.25 5.07 4.37 5.67 6.72 -- 6.97
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57 2.80 4.38 -- -- -- 5.75
Lipper Gen. U.S.
Government 1.57 3.99 5.21 -- -- -- 6.76
Benchmark 4.06 5.37 6.23 -- -- -- 7.43
ALLIANCE HIGH YIELD 21.46 11.43 13.34 -- -- -- 10.13
Lipper High Yield 12.46 7.93 11.47 -- -- -- 9.13
Benchmark 11.06 9.59 12.76 -- -- -- 11.24
</TABLE>
12
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 17.34% 34.32% -- -- -- 72.02%
Lipper Income 8.95 29.47 58.37 -- -- -- 94.21
Benchmark 8.78 33.60 58.40 -- -- -- 105.23
ALLIANCE GROWTH
INVESTORS 11.30 33.11 57.28 -- -- -- 162.18
Lipper Flexible Portfolio 12.51 30.84 56.65 -- -- -- 100.79
Benchmark 16.94 55.46 84.42 -- -- -- 138.49
ALLIANCE GROWTH &
INCOME 18.70 43.09 -- -- -- -- 42.30
Lipper Growth & Income 19.96 53.82 -- -- -- -- 56.73
Benchmark 21.28 63.99 -- -- -- -- 67.75
ALLIANCE COMMON STOCK 22.84 55.58 95.88 287.01% 731.70% 1,314.86% 1,430.82
Lipper Growth 18.78 51.65 80.51 243.70 627.03 1,185.21 1,298.19
Benchmark 22.96 71.34 102.85 314.34 925.25 1,416.26 1,655.74
ALLIANCE GLOBAL 13.28 38.40 77.77 -- -- -- 152.69
Lipper Global 17.89 28.45 63.87 -- -- -- 39.73
Benchmark 13.48 43.95 67.12 - -- -- 95.62
ALLIANCE INTERNATIONAL 8.54 -- -- -- -- -- 19.76
Lipper International 13.36 -- -- -- -- -- 26.53
Benchmark 6.05 -- -- -- -- -- 15.78
ALLIANCE Aggressive Stock 20.79 49.45 65.10 390.47 -- -- 556.42
Lipper Small Company
Growth 16.55 43.42 142.70 352.31 -- -- 428.32
Benchmark 17.85 46.89 99.38 280.32 -- -- 318.19
ALLIANCE MONEY MARKET 4.11 11.90 16.59 58.03 134.78 -- 148.19
Lipper Money Market 3.82 11.18 15.58 55.73 130.46 -- 141.99
Benchmark 5.25 15.99 23.86 73.61 165.31 -- 184.26
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57 8.63 23.89 -- -- -- 37.89
Lipper Gen. U.S.
Government 1.57 12.45 28.92 -- -- -- 45.71
Benchmark 4.06 16.98 35.30 -- -- -- 51.07
ALLIANCE HIGH YIELD 21.46 38.37 87.00 -- -- -- 162.38
Lipper High Yield 12.46 25.77 72.39 -- -- -- 142.30
Benchmark 11.06 31.63 82.29 -- -- -- 190.43
</TABLE>
- ------------
* See footnotes on next page.
13
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS -- -- -- -- -- 2.79%
ALLIANCE GROWTH
INVESTORS -- -- -- -- -- 3.53
ALLIANCE GROWTH
& INCOME -- -- -- -- -- --
ALLIANCE COMMON
STOCK** (3.09)% 31.91% 16.02% 6.21% 21.03% 24.16
ALLIANCE GLOBAL -- -- -- (13.62) 9.61 25.29
ALLIANCE
INTERNATIONAL -- -- -- -- -- --
ALLIANCE
AGGRESSIVE
STOCK -- -- 33.83 6.06 (0.03) 41.86
ALLIANCE MONEY
MARKET** 9.59 6.91 5.39 5.41 6.09 7.93
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- -- -- --
ALLIANCE HIGH
YIELD -- -- -- 3.49 8.48 3.93
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02% 3.99%
ALLIANCE GROWTH
INVESTORS 9.39 47.19 3.69 13.95 (4.27) 24.92 11.30
ALLIANCE GROWTH
& INCOME -- -- -- (0.55) (1.72) 22.65 18.70
ALLIANCE COMMON
STOCK** (9.17) 36.30 2.03 23.39 (3.26) 30.93 22.84
ALLIANCE GLOBAL (7.15) 29.06 (1.65) 30.60 4.02 17.45 13.28
ALLIANCE
INTERNATIONAL -- -- -- -- -- 10.34 8.54
ALLIANCE
AGGRESSIVE
STOCK 6.92 84.73 (4.28) 15.41 (4.92) 30.13 20.79
ALLIANCE MONEY
MARKET** 6.99 4.97 2.37 1.78 2.82 4.53 4.11
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- 11.30 4.38 9.27 (5.47) 12.03 2.57
ALLIANCE HIGH
YIELD (2.26) 23.03 11.02 21.74 (3.90) 18.54 21.46
</TABLE>
- ------------
* Returns do not reflect the distribution fee, the withdrawal charge, the
Combined GMDB/GMIB Benefit charge, the annual contract fee and any
charge for tax such as premium taxes.
<TABLE>
<CAPTION>
** Prior to 1984 the Year-by-Year Rates of Return were: 1976 1977 1978 1979 1980 1981 1982 1983
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE COMMON STOCK 8.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22% 24.67%
ALLIANCE MONEY MARKET -- -- -- -- -- 5.71 11.72 7.70%
</TABLE>
14
<PAGE>
ON PAGE 25, UNDER THE HEADING "TRANSFERS AMONG INVESTMENT OPTIONS," DELETE
THE FIRST BULLETED PARAGRAPH.
ON PAGE 25, UNDER THE HEADING "DOLLAR COST AVERAGING."
REPLACE THE FIRST SENTENCE IN THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE.
If you have at least $10,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage
of your Annuity Account Value transferred from the Alliance Money Market
Fund to other Investment Funds on a monthly, quarterly, or annual basis.
REPLACE THE SECOND AND THIRD SENTENCES IN THE SECOND PARAGRAPH WITH THE
FOLLOWING SENTENCES.
The minimum amount that may be transferred on each Transaction Date is
$250. The maximum amount which may be transferred is equal to the Annuity
Account Value in the Alliance Money Market Fund at the time the option is
elected, divided by the number of transfers scheduled to made each Contract
Year.
ON PAGE 33, UNDER THE HEADING, "DISTRIBUTION OF THE CERTIFICATES," REPLACE
THE FOURTH AND FIFTH SENTENCES OF THE FIRST PARAGRAPH WITH THE FOLLOWING TWO
SENTENCES.
EDI's principal business address is 1290 Avenue of the Americas, New York,
New York 10104. EDI was paid a fee of $1,204,370 for 1996 and $126,914 for
1995 for its services under its "Distribution Agreement" with Equitable
Life and the Separate Account.
ON PAGE 36, DELETE THE SECTION WITH THE HEADING "TRUST CHARGES TO
PORTFOLIOS," AND REPLACE WITH THE FOLLOWING SECTIONS.
HR TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HR Trust's assets, direct
operating expenses of HR Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of HR Trust
(such as brokerage commissions and other expenses related to the purchase
and sale of securities), are reflected in each Portfolio's daily share
price. The maximum investment advisory fees paid annually by the Portfolios
cannot be changed without a vote by shareholders. They are as follows:
AVERAGE DAILY NET ASSETS
<TABLE>
<CAPTION>
FIRST NEXT NEXT NEXT
$750 MILLION $750 MILLION $1 BILLION $2.5 BILLION THEREAFTER
------------ ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Alliance Conservative Investors ....... 0.475% 0.425% 0.375% 0.350% 0.325%
Alliance Growth Investors.............. 0.550% 0.500% 0.450% 0.425% 0.400%
Alliance Growth & Income............... 0.550% 0.525% 0.500% 0.480% 0.470%
Alliance Common Stock.................. 0.475% 0.425% 0.375% 0.355% 0.345%*
Alliance Global........................ 0.675% 0.600% 0.550% 0.530% 0.520%
Alliance International................. 0.900% 0.825% 0.800% 0.780% 0.770%
Alliance Aggressive Stock.............. 0.625% 0.575% 0.525% 0.500% 0.475%
Alliance Small Cap Growth.............. 0.900% 0.850% 0.825% 0.800% 0.775%
Alliance Money Market.................. 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance Intermediate Govt Securities 0.500% 0.475% 0.450% 0.430% 0.420%
Alliance High Yield.................... 0.600% 0.575% 0.550% 0.530% 0.520%
</TABLE>
- ------------
* On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
Investment advisory fees are established under HR Trust's investment
advisory agreements between HR Trust and its investment adviser, Alliance.
All of these fees and expenses are described more fully in the HR Trust
prospectus.
EQ TRUST CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQ Trust's assets, the
12b-1 fee, other direct operating expenses of EQ Trust (such as trustees'
fees, expenses of independent auditors and legal counsel, administrative
service fees, custodian fees, and liability insurance), and certain
investment-related
15
<PAGE>
expenses of EQ Trust (such as brokerage commissions and other expenses
related to the purchase and sale of securities), are reflected in each
Portfolio's daily share price. The investment management fees paid annually
by the Portfolios cannot be changed without a vote by shareholders. They
are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS
------------------------
<S> <C>
EQ/Putnam Balanced .................... 0.55%
EQ/Putnam Growth & Income Value ...... 0.55%
MFS Emerging Growth Companies ......... 0.55%
MFS Research .......................... 0.55%
Merrill Lynch Basic Value Equity ..... 0.55%
Merrill Lynch World Strategy .......... 0.70%
Morgan Stanley Emerging Markets Equity 1.15%
T. Rowe Price Equity Income ........... 0.55%
T. Rowe Price International Stock .... 0.75%
Warburg Pincus Small Company Value ... 0.75%
</TABLE>
Investment management fees are established under EQ Trust's Investment
Management Agreement between EQ Trust and its investment manager, EQ
Financial. EQ Financial has entered into expense limitation agreements with
EQ Trust, with respect to each Portfolio, pursuant to which EQ Financial
has agreed to waive or limit its fees and total annual operating expenses
(expressed as a percentage of the Portfolios' average daily net assets) to
0.85% each for the EQ/Putnam Growth & Income Value, MFS Research, Merrill
Lynch Basic Value Equity, T. Rowe Price Equity, and MFS Emerging Growth
Companies Portfolios; 0.90% for the EQ/Putnam Balanced Portfolio; 1.00% for
Warburg Pincus Portfolio; 1.20% each for T. Rowe Price International Stock
and Merrill Lynch World Strategy Portfolios; and 1.75% for Morgan Stanley
Emerging Markets Equity Portfolio. See the prospectus for EQ Trust for more
information.
The Rule 12b-1 Plan provides that EQ Trust, on behalf of each Portfolio,
may pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fees,
which may be waived in the discretion of EDI, may be increased only by
action of the Board of Trustees of EQ Trust up to a maximum of 0.50% per
annum. All of these fees and expenses are described more fully in the EQ
Trust prospectus.
ON PAGE 37, UNDER THE HEADING "TRUST VOTING RIGHTS"
REPLACE THE FIRST SENTENCE OF THE SECOND PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Because HR Trust is a Massachusetts business trust and EQ Trust is a
Delaware business trust, annual meetings are not required.
ON PAGE 37, UNDER THE HEADING "VOTING RIGHTS OF OTHERS," REPLACE THE FIRST
TWO SENTENCES OF THE PARAGRAPH WITH THE FOLLOWING SENTENCES:
Currently we control each trust. EQ Trust shares currently are sold only to
our separate accounts. HR Trust shares are held by other separate accounts
of ours and by separate accounts of insurance companies affiliated and
unaffiliated with us.
ON PAGE 39, UNDER THE HEADING "FEDERAL AND STATE INCOME TAX WITHHOLDING,"
REPLACE THE FOURTH SENTENCE OF THE THIRD PARAGRAPH WITH THE FOLLOWING
SENTENCE:
For 1997, a recipient of periodic payments (e.g., monthly or annual
payments) which total less than a $14,400 taxable amount will generally be
exempt from federal income tax withholding, unless the recipient specifies
a different choice of withholding exemption.
16
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
PAGE
--------
Part 1: Accumulation Unit Values 2
Part 2: Annuity Unit Values 2
Part 3: Custodian and Independent Accountants 3
Part 4: Alliance Money Market Fund and Alliance Intermediate 3
Government Securities Fund Yield Information
Part 5: Long-Term Market Trends 4
Part 6: Financial Statements 6
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Accumulator SAI:
(Supplement dated May 1, 1997 to Accumulator Prospectus,
dated October 17, 1996)
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
<PAGE>
INCOME MANAGER(SM)
ACCUMULATOR PROSPECTUS
DATED OCTOBER 17, 1996
----------------------
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
This prospectus describes certificates The Equitable Life Assurance Society
of the United States (EQUITABLE LIFE, WE, OUR and US) offers under a
combination variable and fixed deferred annuity contract (ACCUMULATOR) issued
on a group basis or as individual contracts. Enrollment under a group
contract will be evidenced by issuance of a certificate. Certificates and
individual contracts each will be referred to as "Certificates." Accumulator
Certificates are used for after-tax contributions to a non-qualified annuity.
A minimum initial contribution of $10,000 is required to put the Certificate
into effect.
The Accumulator is designed to provide retirement income at a future date.
Contributions accumulate on a tax-deferred basis and can be later distributed
under a number of different methods which are designed to be responsive to
the owner's (CERTIFICATE OWNER, YOU and YOUR) objectives.
The Accumulator offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 9
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the
GUARANTEED PERIOD ACCOUNT.
<TABLE>
<CAPTION>
INVESTMENT FUNDS
- ------------------------------------------------------------------------------ GUARANTEE PERIODS
ASSET ALLOCATION SERIES: EQUITY SERIES: FIXED INCOME SERIES: EXPIRATION DATES:
- ---------------------------- ---------------------- ------------------------ ------------------
<S> <C> <C> <C>
O CONSERVATIVE INVESTORS O GROWTH & INCOME O MONEY MARKET FEBRUARY 15,
O GROWTH INVESTORS O COMMON STOCK O INTERMEDIATE O 1997 THROUGH 2007
O GLOBAL GOVERNMENT
O INTERNATIONAL SECURITIES
O AGGRESSIVE STOCK
</TABLE>
We invest each Investment Fund in shares of a corresponding portfolio
(PORTFOLIO) of The Hudson River Trust (TRUST), a mutual fund whose shares are
purchased by separate accounts of insurance companies. The prospectus for the
Trust, which accompanies this prospectus, describes the investment
objectives, policies and risks of the Portfolios.
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). Each Guarantee Period has its
own Guaranteed Rates.
You may choose from a variety of payout options, including variable annuities
and fixed annuities.
This prospectus provides information about the Accumulator that prospective
investors should know before investing. You should read it carefully and
retain it for future reference. The prospectus is not valid unless
accompanied by a current prospectus for the Trust, which you should also read
carefully.
Registration statements relating to Separate Account No. 45 (SEPARATE
ACCOUNT) and interests under the Guarantee Periods have been filed with the
Securities and Exchange Commission (SEC). The statement of additional
information (SAI), dated October 17, 1996, which is part of the registration
statement for the Separate Account, is available free of charge upon request
by writing to our Processing Office or calling 1-800-789-7771, our toll-free
number. The SAI has been incorporated by reference into this prospectus. The
Table of Contents for the SAI appears at the back of this prospectus.
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- ------------------------------------------------------------------------------
Copyright 1996
The Equitable Life Assurance Society of the United States, New York, New York
10019.
All rights reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1995 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE
ACT) after the date hereof and prior to the termination of the offering of
the securities offered hereby shall be deemed to be incorporated by reference
in this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this prospectus.
Equitable Life files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically
pursuant to EDGAR under CIK No. 0000727920.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 787
Seventh Avenue, New York, New York 10019. Attention: Corporate Secretary
(telephone: (212) 554-1234).
2
<PAGE>
- ------------------------------------------------------------------------------
PROSPECTUS TABLE OF CONTENTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
FEE TABLE PAGE 5
Condensed Financial Information 7
PART 1: SUMMARY PAGE 8
What is the INCOME MANAGER? 8
Investment Options 8
Contributions 8
Transfers 8
Free Look Period 8
Services We Provide 8
Withdrawal Options 9
Death Benefits 9
Guaranteed Minimum Income
Benefit (GMIB) 9
Surrendering the Certificates 9
Income Annuity Options 9
Taxes 9
Deductions from Annuity
Account Value 9
Deductions from Investment
Funds 10
Trust Charges to Portfolios 10
PART 2: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE INVESTMENT FUNDS PAGE 11
Equitable Life 11
Separate Account No. 45 11
The Trust 11
The Trust's Investment Adviser 12
Investment Policies and Objectives of the
Trust's Portfolios 13
PART 3: INVESTMENT PERFORMANCE PAGE 14
Performance Data for a Certificate 14
Rate of Return Data for Investment
Funds 15
Communicating Performance Data 18
Money Market Fund and Intermediate Government
Securities Fund
Yield Information 19
PART 4: THE GUARANTEED PERIOD ACCOUNT PAGE 20
Guarantee Periods 20
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 21
Death Benefit Amount 22
Investments 22
PART 5: PROVISIONS OF THE CERTIFICATES
AND SERVICES
WE PROVIDE PAGE 23
Availability of the Certificates 23
Contributions Under the Certificates 23
Methods of Payment 23
Allocation of Contributions 23
Free Look Period 24
Annuity Account Value 24
Transfers Among Investment Options 25
Dollar Cost Averaging 25
Withdrawal Options 26
Death Benefit 28
When the Certificate Owner Dies
Before the Annuitant 30
GMIB 30
Cash Value 31
Surrendering the Certificates to
Receive the Cash Value 31
Income Annuity Options 31
Assured Payment Plan 32
When Payments are Made 33
Assignment 33
Distribution of the Certificates 33
PART 6: DEDUCTIONS AND CHARGES PAGE 34
Charges Deducted from the Annuity
Account Value 34
Charges Deducted from the Investment
Funds 35
Trust Charges to Portfolios 36
Group or Sponsored Arrangements 36
Other Distribution Arrangements 36
PART 7: VOTING RIGHTS PAGE 37
Trust Voting Rights 37
Voting Rights of Others 37
Separate Account Voting Rights 37
Changes in Applicable Law 37
PART 8: TAX ASPECTS OF THE CERTIFICATES PAGE 38
Tax Changes 38
Taxation of Non-Qualified Annuities 38
Federal and State Income Tax
Withholding 39
Other Withholding 39
Special Rules for Certificates Issued in
Puerto Rico 40
Impact of Taxes to Equitable Life 40
Transfers Among Investment Options 40
PART 9: KEY FACTORS IN RETIREMENT PLANNING PAGE 41
Introduction 41
Inflation 41
Starting Early 42
Tax-Deferral 42
Investment Options 43
The Benefit of Annuitization 44
PART 10: INDEPENDENT ACCOUNTANTS PAGE 45
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE PAGE 46
APPENDIX II: GUARANTEED MINIMUM
DEATH BENEFIT (GMDB)
EXAMPLE PAGE 47
APPENDIX III: GMIB EXAMPLES PAGE 48
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS PAGE 49
</TABLE>
3
<PAGE>
- ------------------------------------------------------------------------------
GENERAL TERMS
- ------------------------------------------------------------------------------
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE--The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT--The individual who is the measuring life for determining annuity
benefits.
ANNUITY ACCOUNT VALUE--The sum of the amounts in the Investment Options under
the Accumulator Certificate. See "Annuity Account Value" in Part 5.
ANNUITY COMMENCEMENT DATE--The date on which amounts are applied to provide
an annuity benefit.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns an Accumulator Certificate and has the
right to exercise all rights under the Certificate.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The date on which the Annuitant is enrolled under the group
annuity contract, or the effective date of the individual contract. This is
usually the Business Day we receive the initial contribution at our
Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificates.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
INVESTMENT FUNDS--The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS--The choices for investment: the Investment Funds and each
available Guarantee Period.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
PORTFOLIOS--The portfolios of the Trust that correspond to the Investment
Funds of the Separate Account.
PROCESSING DATE--The day when we deduct certain charges from the Annuity
Account Value. If the Processing Date is not a Business Day, it will be on
the next succeeding Business Day. The Processing Date will be once each year
on each anniversary of the Contract Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 1.
SAI--The statement of additional information for the Separate Account under
the Accumulator.
SEPARATE ACCOUNT--Equitable Life's Separate Account No. 45.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
TRUST--The Hudson River Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested.
VALUATION PERIOD--Each Business Day together with any preceding non-business
days.
4
<PAGE>
- -------------------------------------------------------------------------------
FEE TABLE
- -------------------------------------------------------------------------------
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them on the same basis with other similar products.
The table reflects both the charges of the Separate Account and the expenses
of the Trust. Charges for applicable taxes such as state or local premium
taxes may also apply. For a complete description of the charges under the
Certificate, see "Part 6: Deductions and Charges." For a complete description
of the Trust's charges and expenses, see the prospectus for the Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. However, if there is insufficient
value in the Investment Funds all or a portion of the distribution fee and
the annual contract fee, if any, will be deducted from your Annuity Account
Value in the Guaranteed Period Account rather than from the Investment Funds.
See "Part 6: Deductions and Charges." A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
- -------------------------------------------------------------
DISTRIBUTION FEE (SALES LOAD) AS A PERCENTAGE OF EACH CONTRIBUTION RECEIVED
DURING THE FIRST CONTRACT YEAR (deducted annually on each of the first seven
Processing Dates)(1) ................................................ 0.20%
<TABLE>
<CAPTION>
Contract
Year
--------
<S> <C> <C>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted upon surrender 1 ............... 7.00%
or for certain withdrawals. The applicable withdrawal charge percentage is 2 ............... 6.00
determined by the Contract Year in which the withdrawal is made or the 3 ............... 5.00
Certificate is surrendered beginning with "Contract Year 1" with respect 4 ............... 4.00
to each contribution withdrawn or surrendered. For each contribution, the 5 ............... 3.00
Contract Year in which we receive that contribution is "Contract Year 6 ............... 2.00
1")(2) 7 ............... 1.00
8+............... 0.00
</TABLE>
<TABLE>
<CAPTION>
Combined GMDB
GMDB/GMIB Only
Benefit Benefit
(Plan A) (Plan B)
----------- ---------
<S> <C> <C>
GMDB/GMIB CHARGES (percentage deducted annually on each Processing Date
as a percentage of the guaranteed minimum death benefit then in effect)(3) ....... 0.45% 0.20%
ANNUAL CONTRACT FEE (DEDUCTED FROM ANNUITY ACCOUNT VALUE ON EACH PROCESSING
DATE)(4)
- ---------------------------------------------------------------------------
If the initial contribution is less than $25,000 .................................. $30
If the initial contribution is $25,000 or more .................................... $0
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH INVESTMENT
FUND)
- -------------------------------------------------------------------------------
MORTALITY AND EXPENSE RISK CHARGE .................................................. 0.90%
ASSET BASED ADMINISTRATIVE CHARGE .................................................. 0.25%
----------
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES ............................................ 1.15%
==========
</TABLE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS IN EACH PORTFOLIO)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
-----------------------------------------------------------
CONSERVATIVE GROWTH GROWTH & COMMON
INVESTORS INVESTORS INCOME STOCK GLOBAL
-------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.55% 0.52% 0.55% 0.35% 0.53%
Other Expenses 0.04% 0.04% 0.05% 0.03% 0.08%
-------------- ----------- ---------- -------- --------
TOTAL TRUST ANNUAL EXPENSES(5) 0.59% 0.56% 0.60% 0.38% 0.61%
============== =========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
AGGRESSIVE MONEY GOVT.
INTERNATIONAL STOCK MARKET SECURITIES
--------------- ------------ -------- --------------
<S> <C> <C> <C> <C>
Investment Advisory Fee 0.90% 0.46% 0.40% 0.50%
Other Expenses 0.13% 0.03% 0.04% 0.07%
--------------- ------------ -------- --------------
TOTAL TRUST ANNUAL
EXPENSES(5) 1.03% 0.49% 0.44% 0.57%
=============== ============ ======== ==============
</TABLE>
5
<PAGE>
- ------------
Notes:
(1) The amount deducted is based on contributions that have not been
withdrawn. See "Part 6: Deductions and Charges," "Distribution Fee."
(2) Deducted upon a withdrawal with respect to amounts in excess of the 15%
free corridor amount, and upon a surrender. See "Part 6: Deductions and
Charges," "Withdrawal Charge." We reserve the right to impose an
administrative charge of the lesser of $25 and 2.0% of the amount
withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. See "Withdrawal Processing Charge" also in Part 6.
(3) The guaranteed minimum death benefit (GMDB) is described under "Death
Benefit," "GMDB" and the guaranteed minimum income benefit (GMIB) is
described under "GMIB" both of which are in Part 5. See "Part 6:
Deductions and Charges," "Charges for Combined GMDB/GMIB Benefit (Plan
A) and Charges for GMDB Only Benefit (Plan B)."
(4) This charge is incurred at the beginning of the Contract Year and
deducted on the Processing Date. See "Part 6: Deductions and Charges,"
"Annual Contract Fee."
(5) Expenses shown for all Portfolios are for the fiscal year ended December
31, 1995. The amount shown for the International Portfolio, which was
established on April 3, 1995, is annualized. The investment advisory fee
for each Portfolio may vary from year to year depending upon the average
daily net assets of the respective Portfolio of the Trust. The maximum
investment advisory fees, however, cannot be increased without a vote of
that Portfolio's shareholders. The other direct operating expenses will
also fluctuate from year to year depending on actual expenses. See
"Trust Charges to Portfolios" in Part 6.
EXAMPLES
- --------
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined GMDB/GMIB Benefit (Plan A) and under the GMDB
Only Benefit (Plan B) in the two situations noted below assuming a $1,000
contribution invested in one of the Investment Funds listed, and a 5% annual
return on assets.(1) The annual contract fee was computed based on an initial
contribution of $10,000.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
COMBINED GMDB/GMIB BENEFIT (PLAN A) ELECTION
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN,
THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $90.65 $126.98 $166.16 $294.09
Growth Investors 90.36 126.08 164.65 291.07
EQUITY SERIES:
Growth & Income 90.75 127.28 166.66 295.10
Common Stock 88.57 120.68 155.59 272.70
Global 90.85 127.58 167.16 296.11
International 95.03 140.10 188.01 337.54
Aggressive Stock 89.66 123.98 161.13 283.94
FIXED INCOME SERIES:
Money Market 89.16 122.48 158.61 278.85
Intermediate Govt.
Securities 90.46 126.38 165.15 292.07
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE
AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $27.42 $84.33 $144.17 $302.14
Growth Investors 27.13 83.44 142.67 299.12
EQUITY SERIES:
Growth & Income 27.52 84.63 144.67 303.14
Common Stock 25.34 78.03 133.60 280.74
Global 27.62 84.93 145.17 304.15
International 31.80 97.46 166.03 345.61
Aggressive Stock 26.43 81.33 139.14 292.01
FIXED INCOME SERIES:
Money Market 25.93 79.83 136.62 286.89
Intermediate Govt.
Securities 27.23 83.74 143.18 300.13
</TABLE>
6
<PAGE>
GMDB ONLY BENEFIT (PLAN B) ELECTION
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN,
THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $90.65 $121.66 $155.07 $266.33
Growth Investors 90.36 120.76 153.56 263.26
EQUITY SERIES:
Growth & Income 90.75 121.96 155.58 267.36
Common Stock 88.57 115.35 144.45 244.62
Global 90.85 122.27 156.09 268.38
International 95.03 134.82 177.05 310.42
Aggressive Stock 89.66 118.65 150.02 256.04
FIXED INCOME SERIES:
Money Market 89.16 117.15 147.48 250.85
Intermediate Govt.
Securities 90.46 121.06 154.06 264.27
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE
AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $24.77 $76.04 $129.75 $269.91
Growth Investors 24.48 75.15 128.24 266.84
EQUITY SERIES:
Growth & Income 24.87 76.34 130.25 270.93
Common Stock 22.69 69.72 119.11 248.19
Global 24.97 76.64 130.75 271.94
International 29.15 89.21 151.74 314.02
Aggressive Stock 23.78 73.04 124.70 259.62
FIXED INCOME SERIES:
Money Market 23.28 71.53 122.16 254.45
Intermediate Govt.
Securities 24.58 75.45 128.74 267.85
</TABLE>
- ------------
Notes:
(1) The amount accumulated could not be paid in the form of an annuity at
the end of any of the periods shown in the examples. If the amount
applied to purchase an annuity is less than $2,000, or the initial
payment is less than $20 we may pay the amount to the payee in a single
sum instead of as payments under an annuity form. See "Income Annuity
Options" in Part 5. The examples do not reflect charges for applicable
taxes such as state or local premium taxes that may also be deducted in
certain jurisdictions.
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on May 1, 1995. The
following table shows the Accumulation Unit Values, as of May 1, 1995 and the
last Business Day for the periods shown.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
-------------------------------
MAY 1, 1995 DECEMBER 1995 SEPTEMBER 1996
------------- --------------- --------------
<S> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $ 14.647383 $ 16.549050 $ 16.558882
Growth Investors 20.073331 23.593613 25.115630
EQUITY SERIES:
Growth & Income 10.376155 11.989601 13.060119
Common Stock 102.335691 124.519251 141.022624
Global 19.478146 22.293921 24.080727
International 10.125278 11.033925 11.735219
Aggressive Stock 44.025496 54.591448 64.680156
FIXED INCOME SERIES:
Money Market 23.150932 23.830754 24.547344
Intermediate Govt.
Securities 12.498213 13.424767 13.535782
</TABLE>
7
<PAGE>
- -------------------------------------------------------------------------------
PART 1: SUMMARY
- -------------------------------------------------------------------------------
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE INCOME MANAGER?
The INCOME MANAGER is a family of annuities designed to provide for
retirement income. The Accumulator is a non-qualified deferred annuity
designed to provide retirement income at a future date through the investment
of funds on an after-tax basis. Generally, earnings will accumulate without
being subject to annual income tax, until withdrawn. The Accumulator features
a combination of Investment Options, consisting of Investment Funds providing
variable returns and Guarantee Periods providing guaranteed interest. Fixed
and variable income annuities are also available. The Accumulator may not be
available in all states.
INVESTMENT OPTIONS
The Accumulator offers the following Investment Options which permit you to
create your own strategy for retirement savings. All available Investment
Options may be selected under a Certificate.
INVESTMENT FUNDS
o Asset Allocation Series: the Conservative Investors and Growth Investors
Funds
o Equity Series: the Growth & Income, Common Stock, Global, International
and Aggressive Stock Funds
o Fixed Income Series: the Money Market and Intermediate Government
Securities Funds
GUARANTEE PERIODS
o Guarantee Periods (may not be available in all states) maturing in each
of calendar years 1997 through 2007.
CONTRIBUTIONS
o To put a Certificate into effect, you must make an initial contribution
of at least $10,000.
o Subsequent contributions may be made in an amount of at least $1,000.
TRANSFERS
You may make an unlimited number of transfers among the Investment Funds.
However, there are restrictions for transfers to and from the Guarantee
Periods. Transfers from a Guarantee Period may result in a market value
adjustment. Transfers among Investment Options are free of charge. Transfers
among the Investment Options are not taxable.
FREE LOOK PERIOD
You have the right to examine the Accumulator Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You may
cancel it by sending it to our Processing Office. Your refund will equal the
Annuity Account Value, reflecting any investment gain or loss, and any
positive or negative market value adjustment, through the date we receive
your Certificate at our Processing Office.
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the calendar
year;
o Three additional reports of your Certificate values each year;
o Annual and semi-annual statements of the Trust; and
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values and
Guaranteed Rates applicable to the Guarantee Periods. Also call during our
regular business hours to speak to one of our customer service
representatives.
O PROCESSING OFFICE
O FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
8
<PAGE>
O FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
O FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
O FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
WITHDRAWAL OPTIONS
o Lump Sum Withdrawals--Before the Annuity Commencement Date while the
Certificate is in effect, you may take Lump Sum Withdrawals from your
Certificate at any time. The minimum withdrawal amount is $1,000.
o Systematic Withdrawals--You may also withdraw funds under our Systematic
Withdrawal option, where the minimum withdrawal amount is $250.
o Systematic Withdrawals Plus Life Contingent Annuity--This option provides
systematic withdrawals during a deferral period and lifetime guaranteed
annuity payments thereafter. Payments increase each year, subject to
availability of Annuity Account Value. The minimum withdrawal amount in
the first year must be at least $250.
Withdrawals may be subject to a withdrawal charge and withdrawals from
Guarantee Periods prior to their Expiration Dates will result in a market
value adjustment. Withdrawals may be subject to income tax and tax penalty.
DEATH BENEFITS
If the Annuitant and successor Annuitant, if any, die before the Annuity
Commencement Date, the Accumulator provides a death benefit. The beneficiary
will be paid the greater of the Annuity Account Value in the Investment Funds
and the guaranteed minimum death benefit (GMDB), plus any death benefit
provided with respect to the Guaranteed Period Account.
There are two plans available under the Certificates for providing guaranteed
benefits, Plan A and Plan B. Plan A provides both a GMDB and a guaranteed
minimum income benefit (described below). Plan B provides a GMDB only.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
The GMIB, available under the Combined GMDB/ GMIB Benefit (Plan A), may not
currently be available in all states.
The GMIB provides a minimum guaranteed lifetime income from application of
the Annuity Account Value in the Investment Funds to purchase the Assured
Payment Plan (Life Annuity with a Period Certain). Any amounts in the
Guaranteed Period Account will be applied to increase the payments provided
under the GMIB. A market value adjustment may apply.
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time before
the Annuity Commencement Date while the Annuitant is living. Withdrawal
charges and a market value adjustment may apply. A surrender may also be
subject to income tax and tax penalty.
INCOME ANNUITY OPTIONS
The Certificates provide income annuity options to which amounts may be
applied at the Annuity Commencement Date. The income annuity options are
offered on a fixed and variable basis.
TAXES
Generally, earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject
to tax penalty.
DEDUCTIONS FROM ANNUITY
ACCOUNT VALUE
Distribution Fee
We deduct a sales load annually in an amount of 0.20% of each contribution
received during the first Contract Year. This sales load is deducted on each
of the first seven Processing Dates. The amount deducted is based on
contributions that have not been withdrawn.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of the initial and each
subsequent contribution if
9
<PAGE>
a withdrawal exceeds the 15% free corridor amount or if the Certificate is
surrendered. We determine the withdrawal charge separately for each
contribution in accordance with the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For each contribution the Contract Year in which we receive
that contribution is "Contract Year 1."
Withdrawal Processing Charge
We reserve the right to impose an administrative charge of the lesser of $25
and 2.0% of the amount withdrawn for each Lump Sum Withdrawal after the fifth
in a Contract Year.
Charges for Combined GMDB/GMIB Benefit (Plan A)
We deduct a charge annually on each Processing Date for providing the
Combined GMDB/GMIB Benefit (Plan A). The charge is equal to a percentage of
the GMDB in effect on the Processing Date. The percentage is equal to 0.45%.
Charges for GMDB Only Benefit (Plan B)
We deduct a charge annually on each Processing Date for providing the GMDB
Only Benefit (Plan B). The charge is equal to a percentage of the GMDB in
effect on the Processing Date. The percentage is equal to 0.20%.
Annual Contract Fee
The charge will be $30 per Contract Year if your initial contribution is less
than $25,000, and zero if your initial contribution is $25,000 or more.
Charges for State Premium and Other Applicable Taxes
Generally, we deduct a charge for premium or other applicable taxes from the
Annuity Account Value on the Annuity Commencement Date. The current tax
charge that might be imposed varies by state and ranges from 0 to 3.5% (the
rate is 1% in Puerto Rico and 5% in the Virgin Islands).
DEDUCTIONS FROM INVESTMENT FUNDS
Mortality and Expense Risk Charge
We charge each Investment Fund a daily asset based charge for mortality and
expense risks equivalent to an annual rate of 0.90%.
Asset Based Administrative Charge
We charge each Investment Fund a daily asset based charge to cover a portion
of the administrative expenses under the Certificate equivalent to an annual
rate of 0.25%.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees and other expenses of the Trust are charged daily
against the Trust's assets. These are reflected in the Portfolio's daily
share price and in the daily Accumulation Unit Value for the Investment
Funds.
10
<PAGE>
- -------------------------------------------------------------------------------
PART 2: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
- -------------------------------------------------------------------------------
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our home office is located
at 787 Seventh Avenue, New York, New York 10019. We are authorized to sell
life insurance and annuities in all fifty states, the District of Columbia,
Puerto Rico and the Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding shares of
common stock of the Holding Company plus convertible preferred stock. Under
its investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $217.6 billion of assets as of June 30, 1996.
SEPARATE ACCOUNT NO. 45
Separate Account No. 45 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment
Company Act of 1940 (1940 Act). This registration does not involve any
supervision by the SEC of the management or investment policies of the
Separate Account. The Separate Account has several Investment Funds, each of
which invests in shares of a corresponding Portfolio of the Trust. Because
amounts allocated to the Investment Funds are invested in a mutual fund,
investment return and principal will fluctuate and the Certificate Owner's
Accumulation Units may be worth more or less than the original cost when
redeemed.
Under the New York Insurance Law, the portion of the Separate Account's
assets equal to the reserves and other liabilities relating to the
Certificates are not chargeable with liabilities arising out of any other
business we may conduct. Income, gains or losses, whether or not realized,
from assets of the Separate Account are credited to or charged against the
Separate Account without regard to our other income gains or losses. We are
the issuer of the Certificates, and the obligations set forth in the
Certificates (other than those of Annuitants or Certificate Owners) are our
obligations.
In addition to contributions made under the Accumulator Certificates, we may
allocate to the Separate Account monies received under other contracts,
certificates, or agreements. Owners of all such contracts, certificates or
agreements will participate in the Separate Account in proportion to the
amounts they have in the Investment Funds that relate to their contracts,
certificates or agreements. We may retain in the Separate Account assets that
are in excess of the reserves and other liabilities relating to the
Accumulator Certificates or to other contracts, certificates or agreements,
or we may transfer the excess to our General Account.
We reserve the right, subject to compliance with applicable law; (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove
Investment Funds (or sub-funds) from, the Separate Account, or to add other
separate accounts; (2) to combine any two or more Investment Funds or
sub-funds thereof; (3) to transfer the assets we determine to be the share of
the class of contracts to which the Certificate belongs from any Investment
Fund to another Investment Fund; (4) to operate the Separate Account or any
Investment Fund as a management investment company under the 1940 Act, in
which case charges and expenses that otherwise would be assessed against an
underlying mutual fund would be assessed against the Separate Account; (5) to
deregister the Separate Account under the 1940 Act, provided that such action
conforms with the requirements of applicable law; (6) to restrict or
eliminate any voting rights as to the Separate Account; and (7) to cause one
or more Investment Funds to invest some or all of their assets in one or more
other trusts or investment companies. If any changes are made that result in
a material change in the underlying investment policy of an Investment Fund,
you will be notified as required by law.
THE TRUST
The Trust is an open-end diversified management investment company, more
commonly called a mu-
11
<PAGE>
tual fund. As a "series" type of mutual fund, it issues several different
series of stock, each of which relates to a different Portfolio of the Trust.
The Trust commenced operations in January 1976 with a predecessor of its
Common Stock Portfolio. The Trust does not impose a sales charge or "load"
for buying and selling its shares. All dividend distributions to the Trust
are reinvested in full and fractional shares of the Portfolio to which they
relate. More detailed information about the Trust, its investment
objec-tives, policies, restrictions, risks, expenses and all other aspects of
its operations appears in its prospectus which accompanies this prospectus or
in its statement of additional information.
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Alliance Capital Management L.P. (Alliance), which is
registered with the SEC as an investment adviser under the Investment
Advisers Act of 1940. Alliance, a publicly-traded limited partnership, is
indirectly majority-owned by Equitable Life. On June 30, 1996, Alliance was
managing over $168 billion in assets. Alliance acts as an investment adviser
to various separate accounts and general accounts of Equitable Life and other
affiliated insurance companies. Alliance also provides management and
consulting services to mutual funds, endowment funds, insurance companies,
foreign entities, qualified and non-tax qualified corporate funds, public and
private pension and profit-sharing plans, foundations and tax-exempt
organizations.
Alliance's record as an investment manager is based, in part, on its ability
to provide a diversity of investment services to domestic, international and
global markets. Alliance prides itself on its ability to attract and retain a
quality, professional work force. Alliance employs more than 188 investment
professionals, including 74 research analysts. Portfolio managers have an
average investment experience of more than 14 years.
Alliance's main office is located at 1345 Avenue of the Americas, New York,
New York 10105.
12
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF THE TRUST'S PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of
each Portfolio will affect its return and its risks. There is no guarantee
that these objectives will be achieved.
The policies and objectives of the Trust's Portfolios are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Portfolio Investment Policy Objective
- --------------------------- ---------------------------------------------------- -----------------------------
ASSET ALLOCATION SERIES:
Conservative Investors Diversified mix of publicly-traded, fixed-income and High total return without, in
equity securities; asset mix and security selection the adviser's opinion, undue
are primarily based upon factors expected to reduce risk to principal
risk. The Portfolio is generally expected to hold
approximately 70% of its assets in fixed income
securities and 30% in equity securities.
Growth Investors Diversified mix of publicly-traded, fixed-income and High total return consistent
equity securities; asset mix and security selection with the adviser's
based upon factors expected to increase possibility determination of reasonable
of high long-term return. The Portfolio is generally risk
expected to hold approximately 70% of its assets in
equity securities and 30% in fixed income
securities.
EQUITY SERIES:
Growth & Income Primarily income producing common stocks and High total return through a
securities convertible into common stocks. combination of current income
and capital appreciation
Common Stock Primarily common stock and other equity-type Long-term growth of capital
instruments. and increasing income
Global Primarily equity securities of non-United States as Long-term growth of capital
well as United States companies.
International Primarily equity securities selected principally to Long-term growth of capital
permit participation in non-United States companies
with prospects for growth.
Aggressive Stock Primarily common stocks and other equity-type Long-term growth of capital
securities issued by medium and other smaller sized
companies with strong growth potential.
FIXED INCOME SERIES:
Money Market Primarily high quality short-term money market High level of current income
instruments. while preserving assets and
maintaining liquidity
Intermediate Government Primarily debt securities issued or guaranteed by High current income
Securities the U.S. government, its agencies and consistent with relative
instrumentalities. Each investment will have a final stability of principal
maturity of not more than 10 years or a duration not
exceeding that of a 10-year Treasury note.
13
<PAGE>
- -------------------------------------------------------------------------------
PART 3: INVESTMENT PERFORMANCE
- -------------------------------------------------------------------------------
This Part presents performance data for each of the Investment Funds
calculated by two methods. The first method, used in calculating values for
the two tables in "Performance Data for a Certificate," reflects all
applicable fees and charges other than the charge for tax such as premium
taxes. The second method, used in preparing rates of return for the three
tables in "Rate of Return Data for Investment Funds," reflects all fees and
charges other than the distribution fee, the withdrawal charge, the GMDB/
GMIB charge, the annual contract fee and the charge for tax such as premium
taxes. These additional charges would effectively reduce the rates of return
credited to a particular Certificate.
The Separate Account commenced operations in May 1995 and no Certificates
were issued prior to that date. The calculations of investment performance
shown below are based on the actual investment results of the Portfolios of
the Trust, from which certain fees and charges applicable under the
Accumulator have been deducted. The results shown are not an estimate or
guarantee of future investment performance, and do not reflect the actual
experience of amounts invested under a particular Certificate.
See "Part 4: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
PERFORMANCE DATA FOR A CERTIFICATE
The standardized performance data in the following tables illustrate the
average annual total return of the Investment Funds over the periods shown,
assuming a single initial contribution of $1,000 and the surrender of the
Certificate at the end of each period. These tables (which reflect the first
calcu lation method described above) are prepared in a manner prescribed by
the SEC for use when we advertise the performance of the Separate Account. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
Each calculation assumes that the $1,000 contribution was allocated to only
one Investment Fund, no transfers or subsequent contributions were made and
no amounts were allocated to any other Investment Option under the
Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of
a Certificate which is surrendered on December 31, 1995 by the $1,000
contribution made at the beginning of each period illustrated. The annual
contract fee is computed based on an initial contribution of $10,000. The
result of that calculation is the total growth rate for the period. Then we
annualize that growth rate to obtain the average annual percentage increase
(decrease) during the period shown. When we "annualize," we assume that a
single rate of return applied each year during the period will produce the
ending value, taking into account the effect of compounding.
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995*
</TABLE>
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION**
- ---------------------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $1,117 $1,160 $1,448 -- $ 1,558
Growth Investors 1,176 1,285 1,994 -- 2,243
EQUITY SERIES:
Growth & Income 1,154 -- -- -- 1,122
Common Stock 1,236 1,484 2,082 $3,458 11,394
Global 1,102 1,519 1,936 -- 2,076
International -- -- -- -- 1,030
Aggressive Stock 1,228 1,350 2,438 -- 5,198
</TABLE>
14
<PAGE>
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995*
(CONTINUED)
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
----------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ----------------------------- ------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
FIXED INCOME SERIES:
Money Market $ 972 $1,020 $1,098 $1,479 $2,156
Intermediate Govt. Securities 1,047 1,083 -- -- 1,265
</TABLE>
- ------------
* See footnotes below.
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1995*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
---------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION**
- ----------------------------- -------- ------- ------- -------- -------------
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors 11.72% 5.07% 7.69% -- 6.53%
Growth Investors 17.62 8.73 14.80 -- 12.23
EQUITY SERIES:
Growth & Income 15.35 -- -- -- 3.90
Common Stock 23.63 14.07 15.80 13.21% 12.94
Global 10.15 14.95 14.12 -- 8.45
International -- -- -- -- 3.04
Aggressive Stock 22.83 10.51 19.51 -- 17.92
FIXED INCOME SERIES:
Money Market (2.77) 0.66 1.89 3.99 5.25
Intermediate Govt. Securities 4.73 2.68 -- -- 4.81
</TABLE>
- ------------
* The tables reflect charges under a Certificate with the 0.45% GMDB/GMIB
charge.
** The "Since Inception" dates are as follows: Conservative Investors
(October 2, 1989); Growth Investors (October 2, 1989); Growth & Income
(October 1, 1993); Common Stock (January 13, 1976); Global (August 27,
1987); International (April 3, 1995); Aggressive Stock (January 27,
1986); Money Market (July 13, 1981); and Intermediate Government
Securities (April 1, 1991). The "Since Inception" numbers for the
International Fund are unannualized.
RATE OF RETURN DATA FOR INVESTMENT FUNDS
The following tables (which reflect the second calculation method described
above) provide you with information on rates of return on an annualized,
cumulative and year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of
return reflect performance over a stated period of time. Annualized rates of
return represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
Performance data of the Money Market and Common Stock Funds for the periods
prior to March 22, 1985, reflect the investment results of two open-end
management separate accounts (the "predecessor separate accounts") which were
reorganized in unit investment trust form. The "Since Inception" figures for
these Funds are based on the date of inception of the predecessor separate
accounts. This performance data has been adjusted to reflect the maximum
investment advisory fee payable for the corresponding Portfolio of the Trust
as well as an assumed charge of 0.06% for direct operating expenses.
Performance data for the remaining Investment Funds reflect (i) the
investment results of the corresponding Portfolios of the Trust from the date
of inception of those Portfolios and (ii) the actual investment advisory fee
and direct operating expenses of the relevant Portfolio.
15
<PAGE>
The performance data for all periods has also been adjusted to reflect the
Separate Account mortality and expense risk charge, and the asset based
administrative charge equal to a total of 1.15% relating to the Certificates,
as well as the Trust's expenses.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality
and expense risk charge and the asset based administrative charge under the
Certificates. Comparisons with these benchmarks, therefore, are of limited
use. We include them because they are widely known and may help you to
understand the universe of securities from which each Portfolio is likely to
select its holdings. Benchmark data reflect the reinvestment of dividend
income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
Asset Allocation Series:
CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond Composite
Index and 30% Standard & Poor's 500 Index.
GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond Index
and 70% Standard & Poor's 500 Index.
Equity Series:
GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index and 25%
Value Line Convertible Index.
COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
GLOBAL: August 27, 1987; Morgan Stanley Capital International World Index.
INTERNATIONAL: April 3, 1995; Morgan Stanley Capital International Europe,
Australia, Far East Index.
AGGRESSIVE STOCK: January 27, 1986; 50% Standard & Poor's Mid-Cap Total
Return Index and 50% Russell 2000 Small Stock Index.
Fixed Income Series:
MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill Index.
INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman Intermediate
Government Bond Index.
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity products,
including managed separate accounts of insurance companies. According to
Lipper Analytical Services, Inc., the data are presented net of investment
management fees, direct operating expenses and asset-based charges applicable
under annuity contracts. Lipper data provide a more accurate picture than
market benchmarks of the Accumulator performance relative to other variable
annuity products.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE INVESTORS 19.02% 7.32% 8.89% -- -- 8.39%
Lipper Income 21.25 9.65 11.99 -- -- 9.79
Benchmark 24.11 10.41 11.73 -- -- 10.55
GROWTH INVESTORS 24.92 10.87 15.77 -- -- 14.70
Lipper Flexible Portfolio 21.58 9.32 11.43 -- -- 9.44
Benchmark 32.05 13.35 14.70 -- -- 11.97
EQUITY SERIES:
GROWTH & INCOME 22.65 -- -- -- -- 8.40
Lipper Growth & Income 31.18 -- -- -- -- 12.76
Benchmark 34.93 -- -- -- -- 15.45
COMMON STOCK 30.93 16.05 16.80 13.84% 13.06% 13.47
Lipper Growth 31.08 12.09 15.53 12.05 12.26 12.25
Benchmark 37.54 15.30 16.57 14.87 14.79 14.24
</TABLE>
16
<PAGE>
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:* (CONTINUED)
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
GLOBAL 17.45% 16.86% 15.16% -- -- 10.09%
Lipper Global 13.87 13.45 9.10 -- -- 2.52
Benchmark 20.72 15.83 11.74 -- -- 6.75
INTERNATIONAL -- -- -- -- -- 10.34**
Lipper International -- -- -- -- -- 12.21**
Benchmark -- -- -- -- -- 9.17**
AGGRESSIVE STOCK 30.13 12.61 20.35 -- -- 18.59
Lipper Small Company Growth 28.19 15.26 25.72 -- -- 16.06
Benchmark 29.69 13.67 20.16 -- -- 13.58
FIXED INCOME SERIES:
MONEY MARKET 4.53 3.04 3.29 4.81% -- 6.19
Lipper Money Market 4.35 2.88 3.10 4.71 -- 6.27
Benchmark 5.74 4.34 4.47 5.77 -- 7.09
INTERMEDIATE GOVERNMENT
SECURITIES 12.03 4.99 -- -- -- 6.43
Lipper Gen. U.S. Government 15.47 6.27 -- -- -- 7.87
Benchmark 14.41 6.74 -- -- -- 8.17
</TABLE>
- ------------
* See footnotes on next page.
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE INVESTORS 19.02% 23.60% 53.06% -- -- 65.42%
Lipper Income 21.25 31.95 76.42 -- -- 79.42
Benchmark 24.11 34.58 74.09 -- -- 87.24
GROWTH INVESTORS 24.92 36.28 108.00 -- -- 135.55
Lipper Flexible Portfolio 21.58 30.92 72.73 -- -- 76.92
Benchmark 32.05 45.64 98.56 -- -- 102.72
EQUITY SERIES:
GROWTH & INCOME 22.65 -- -- -- -- 19.89
Lipper Growth & Income 31.18 -- -- -- -- 31.42
Benchmark 34.93 -- -- -- -- 38.14
COMMON STOCK 30.93 56.29 117.35 265.55% 530.07% 1,146.22
Lipper Growth 31.08 41.29 107.30 215.49 483.45 920.87
Benchmark 37.54 53.30 115.25 300.11 692.18 1,327.94
GLOBAL 17.45 59.57 102.53 -- -- 123.08
Lipper Global 13.87 46.36 55.44 -- -- 23.09
Benchmark 20.72 55.39 74.20 -- -- 72.38
INTERNATIONAL -- -- -- -- -- 10.34**
Lipper International -- -- -- -- -- 12.21**
Benchmark -- -- -- -- -- 9.17**
AGGRESSIVE STOCK 30.13 42.79 152.49 -- -- 443.46
Lipper Small Company Growth 28.19 55.24 268.67 -- -- 337.96
Benchmark 29.69 46.89 150.49 -- -- 254.09
FIXED INCOME SERIES:
MONEY MARKET 4.53 9.40 17.55 59.97 -- 138.38
Lipper Money Market 4.35 8.87 16.48 58.55 -- 140.42
Benchmark 5.74 13.58 24.45 75.23 -- 170.07
</TABLE>
17
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:* (CONTINUED)
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INTERMEDIATE GOVERNMENT
SECURITIES 12.03% 15.72% -- -- -- 34.43 %
Lipper Gen. U.S. Government 15.47 20.05 -- -- -- 43.43
Benchmark 14.41 21.60 -- -- -- 45.17
</TABLE>
- ------------
* See footnotes below.
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988
-------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION
SERIES:
CONSERVATIVE
INVESTORS -- -- -- -- -- --
GROWTH INVESTORS -- -- -- -- -- --
EQUITY SERIES:
GROWTH & INCOME -- -- -- -- -- --
COMMON STOCK*** 24.67% (3.09)% 31.91% 16.02% 6.21% 21.03%
GLOBAL -- -- -- -- (13.62) 9.61
INTERNATIONAL -- -- -- -- -- --
AGGRESSIVE STOCK -- -- -- 33.83 6.06 (0.03)
FIXED INCOME SERIES:
MONEY MARKET*** 7.70 9.59 6.91 5.39 5.41 6.09
INTERMEDIATE
GOVERNMENT --
SECURITIES -- -- -- -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995
------- -------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION
SERIES:
CONSERVATIVE
INVESTORS 2.79% 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02%
GROWTH INVESTORS 3.53 9.39 47.19 3.69 13.95 (4.27) 24.92
EQUITY SERIES:
GROWTH & INCOME -- -- -- -- (0.55) (1.72) 22.65
COMMON STOCK*** 24.16 (9.17) 36.30 2.03 23.39 (3.26) 30.93
GLOBAL 25.29 (7.15) 29.06 (1.65) 30.60 4.02 17.45
INTERNATIONAL -- -- -- -- -- -- 10.34
AGGRESSIVE STOCK 41.86 6.92 84.73 (4.28) 15.41 (4.92) 30.13
FIXED INCOME SERIES:
MONEY MARKET*** 7.93 6.99 4.97 2.37 1.78 2.82 4.53
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- 11.30 4.38 9.27 (5.47) 12.03
</TABLE>
- ------------
* Returns do not reflect the distribution fee, the withdrawal charge, the
GMDB/GMIB charge, the annual contract fee and any charge for tax such
as premium taxes.
** Unannualized.
<TABLE>
<CAPTION>
** Prior to 1983 the Year-by-Year Rates of Return were: 1976 1977 1978 1979 1980 1981 1982
----- ----- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCK 8.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22%
MONEY MARKET -- -- -- -- -- 5.71 11.72
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may
describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance of the Investment Funds
with (1) that of other insurance company separate accounts or mutual funds
included in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS 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 which are shown under "Benchmarks" and "Fund Inception Dates and
Comparative Benchmarks" in this Part 3, or (3) data developed by us derived
from such indices or averages. The Morningstar Variable Annuity/Life Report
consists of nearly 700 variable life and annuity funds, all of which report
their data net of investment management fees, direct operating expenses and
separate account charges. VARDS is a monthly reporting service that monitors
approximately 760 variable life and variable annuity funds on performance and
account information. Advertisements or other communications furnished to
present or prospective Certificate Owners may also include evaluations of an
Investment Fund or Portfolio by financial publications that are nationally
recognized such as Barron's, Morningstar's Variable Annuity Sourcebook,
Business Week, Chicago Tribune, Forbes, Fortune, Institutional Investor,
Investment Adviser, Investment Dealer's Digest, Investment Management Weekly,
Los Angeles Times, Money, Money Management Letter,
18
<PAGE>
Kiplinger's Personal Finance, Financial Planning, National Underwriter,
Pension & Investments, USA Today, Investor's Daily, The New York Times, and
The Wall Street Journal.
MONEY MARKET FUND AND INTERMEDIATE GOVERNMENT SECURITIES FUND YIELD
INFORMATION
The current yield and effective yield of the Money Market Fund and
Intermediate Government Securities Fund may appear in reports and promotional
material to current or prospective Certificate Owners.
Money Market Fund
Current yield for the Money Market Fund will be based on net changes in a
hypothetical investment over a given seven-day period, exclusive of capital
changes, and then "annualized" (assuming that the same seven-day result would
occur each week for 52 weeks). "Effective yield" is calculated in a manner
similar to that used to calculate current yield, but when annualized, any
income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings
are compounded weekly. Money Market Fund yields and effective yields assume
the deduction of all Certificate charges and expenses other than the
distribution fee, withdrawal charge, GMDB/GMIB charge and any charge for tax
such as premium tax. See "Part 4: Money Market Fund and Intermediate
Government Securities Fund Yield Information" in the SAI.
Intermediate Government Securities Fund
Current yield for the Intermediate Government Securities Fund will be based
on net changes in a hypothetical investment over a given 30-day period,
exclusive of capital changes, and then "annualized" (assuming that the same
30-day result would occur each month for 12 months). "Effective yield" is
calculated in a manner similar to that used to calculate current yield, but
when annualized, any income earned by the investment is assumed to be
reinvested. The "effective yield" will be slightly higher than the "current
yield" because any earnings are compounded monthly.
Intermediate Government Securities Fund yields and effective yields assume
the deduction of all Certificate charges and expenses other than the
distribution fee, withdrawal charge, GMDB/GMIB charge and any charge for tax
such as premium tax. See "Part 4: Money Market Fund and Intermediate
Government Securities Fund Yield Information" in the SAI.
19
<PAGE>
PART 4: THE GUARANTEED PERIOD ACCOUNT
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. The Guaranteed
Rate for each allocation is the annual interest rate applicable to new
allocations to that Guarantee Period, which was in effect on the Transaction
Date for the allocation. We may establish different Guaranteed Rates under
different classes of Certificates. We use the term GUARANTEED PERIOD AMOUNT
to refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
on any Business Day, therefore, will be the sum of the present value of the
Maturity Value in each Guarantee Period, using the Guaranteed Rate in effect
for new allocations to each such Guarantee Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1997 through 2007.
Not all Guarantee Periods will be available for Annuitants ages 76 and above.
See "Allocation of Contributions" in Part 5. Also, the Guarantee Periods may
not be available for investment in all states. As Guarantee Periods expire we
expect to add maturity years so that generally 10 are available at any time.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no transfers or withdrawals are made and no charges
are allocated to the Guarantee Period). The required amount is the present
value of that Maturity Value at the Guaranteed Rate on the Transaction Date
for the contribution, which may also be expressed as the price per $100 of
Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of October 1, 1996 and the related
price per $100 of Maturity Value for each currently available Guarantee
Period were as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH GUARANTEED
EXPIRATION DATE RATE AS OF PRICE PER $100
FEBRUARY 15TH OF OCTOBER 1, OF MATURITY
MATURITY YEAR 1996 VALUE
- ---------------- ------------ --------------
<S> <C> <C>
1997 4.21% $98.46
1998 4.80 93.76
1999 5.10 88.86
2000 5.29 84.03
2001 5.41 79.40
2002 5.52 74.90
2003 5.65 70.43
2004 5.66 66.62
2005 5.80 62.34
2006 5.92 58.30
2007 6.03 54.45
</TABLE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of
years 1997 through 2001, then according to the above table the lump sum
contribution you would have to make as of
20
<PAGE>
October 1, 1996 would be $444.51 (i.e., the sum of the price per $100 of
Maturity Value for each maturity year from 1997 through 2001).
The above table is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted or withdrawals or transfers from Guarantee Periods. Actual
calculations will also be based on Guaranteed Rates on each actual
Transaction Date, which may differ.
Options at Expiration Date
We will notify you on or before December 31st prior to the Expiration Date of
each Guarantee Period in which you have any Guaranteed Period Amount. You may
elect one of the following options to be effective at the Expiration Date,
subject to the restrictions set forth on the prior page and under "Allocation
of Contributions" in Part 5:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges
which may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR
TRANSFERS, WITHDRAWALS OR SURRENDER
PRIOR TO THE EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a
Guarantee Period prior to its Expiration Date will cause any remaining
Guaranteed Period Amount for that Guarantee Period to be increased or
decreased by a market value adjustment. The amount of the adjustment will
depend on two factors: (a) the difference between the Guaranteed Rate
applicable to the amount being withdrawn and the Guaranteed Rate on the
Transaction Date for new allocations to a Guarantee Period with the same
Expiration Date, and (b) the length of time remaining until the Expiration
Date. In general, if interest rates have risen between the time when an
amount was originally allocated to a Guarantee Period and the time it is
withdrawn, the market value adjustment will be negative, and vice versa; and
the longer the period of time remaining until the Expiration Date, the
greater the impact of the interest rate difference. Therefore, it is possible
that a significant rise in interest rates could result in a substantial
reduction in your Annuity Account Value in the Guaranteed Period Account
related to longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Guarantee Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal of a portion of the amount in a Guarantee Period will be a
percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds from a Guarantee Period. This percentage is
determined by (i) dividing the amount of the withdrawal or transfer from the
Guarantee Period by (ii) the Annuity Account Value in such Guarantee Period
prior to the withdrawal or transfer. See Appendix I for an example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new
21
<PAGE>
Guarantee Periods, the "current Guaranteed Rate" will be determined in
accordance with our procedures then in effect. For purposes of calculating
the market value adjustment only, we reserve the right to add up to 0.25% to
the current rate in (1)(c) above.
DEATH BENEFIT AMOUNT
The death benefit provided with respect to the Guaranteed Period Account is
equal to the Annuity Account Value in the Guaranteed Period Account or, if
greater, the sum of the Guaranteed Period Amounts in each Guarantee Period.
See "Annuity Account Value" in Part 5.
INVESTMENTS
Amounts allocated to Guarantee Periods will be held in a "nonunitized"
separate account established by Equitable Life under the laws of New York.
This separate account provides an additional measure of assurance that full
payment of amounts due under the Guarantee Periods will be made. Under the
New York Insurance Law, the portion of the separate account's assets equal to
the reserves and other contract liabilities relating to the Certificates are
not chargeable with liabilities arising out of any other business we may
conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations. Amounts applied under the Life Contingent Annuity become
part of the general account. See "Systematic Withdrawals Plus Life Contingent
Annuity" in Part 5.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933 (1933 Act),
nor is the general account an investment company under the 1940 Act.
Accordingly, neither the general account nor the Life Contingent Annuity is
subject to regulation under the 1933 Act or the 1940 Act. However, the market
value adjustment interests under the Certificates are registered under the
1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in this prospectus for your information that
relates to the general account (other than market value adjustment interests)
and the Life Contingent Annuity. The disclosure, however, may be subject to
certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
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PART 5: PROVISIONS OF THE CERTIFICATES AND SERVICES WE PROVIDE
- -------------------------------------------------------------------------------
The provisions of your Certificate may be restricted by applicable laws or
regulations.
AVAILABILITY OF THE CERTIFICATES
The Certificates are available for Annuitant issue ages 20 through 83. These
Certificates may not be available in all states.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your initial contribution must be at least $10,000.
Subsequent contributions may be made in an amount of at least $1,000 at any
time up until the Annuitant attains age 84. We may refuse to accept any
contributions if the sum of all contributions under all accumulation
Certificates with the same Annuitant would then total more than $1,000,000.
We reserve the right to limit aggregate contributions made after the first
Contract Year to 150% of first year contributions. We may also refuse to
accept any contribution if the sum of all contributions under all Equitable
Life annuity accumulation certificates/contracts that you own would then
total more than $2,500,000.
Contributions are credited as of the Transaction Date.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check. All
contributions made by check must be drawn on a bank or credit union in the
U.S., in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. All contributions should be sent to Equitable
Life at our Processing Office address designated for contributions.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will be invested at the value next
determined following receipt for contributions allocated to the Investment
Funds. Contributions allocated to the Guaranteed Period Account will receive
the Guaranteed Rate(s) in effect for the applicable Guarantee Period(s) on
the date contributions are received. Wire orders not accompanied by complete
information, may be retained for a period not exceeding five Business Days
while an attempt is made to obtain the required information. If the required
information cannot be obtained within those five Business Days, the
Processing Office will inform the broker-dealer, on behalf of the applicant,
of the reasons for the delay and return the contribution immediately to the
applicant, unless the applicant specifically consents to our retaining the
contribution until the required information is received by the Processing
Office.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate will not be issued until the receipt and
acceptance of a properly completed application. During the time from receipt
of the initial contribution until a signed application is received from the
Certificate Owner, no other financial transactions may be requested.
If an application is not received within ten days of receipt of the initial
contribution via wire order, or if an incomplete application is received and
cannot be completed within ten days of receipt of the initial contribution,
the amount of the initial contribution will be returned to the applicant.
After your Certificate has been issued, subsequent contributions may be
transmitted by wire.
ALLOCATION OF CONTRIBUTIONS
You have two options from which to choose for allocation of your
contributions: Self-Directed Allocation and Principal Assurance.
Self-Directed Allocation
You design your own investment program by allocating your contributions among
the Investment Options in any way you choose. Your contributions may be
allocated to one or up to all of the available Investment Options at any
time. We allocate contributions among the Investment Options according to
your allocation percentages. Allocations must be in whole percentages.
Allocation percentages can be changed at any time by writing to our
Processing Office, or by telephone. The change will be effective on the
Transaction Date and will remain in effect for future contributions unless
another change is requested. Allocation of the initial contribution is
subject to the provisions for the free look period. See "Free Look Period"
below. Allocation of any contribution to the Guaranteed Period Account is
subject to the following restrictions.
o No more than 60% of any contribution may be allocated to the
Guaranteed Period Account.
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o For Annuitants ages 76 and above, allocations may be made only to
Guarantee Periods with maturities of five years or less; however, in
no event may allocations be made to Guarantee Periods with maturities
beyond the February 15th immediately following the Annuity
Commencement Date.
Principal Assurance
This option (available for Annuitant issue ages 20 through 75) is designed to
assure that your Maturity Value in a specified Guarantee Period equals your
initial contribution, while at the same time allowing you to invest in the
Investment Funds. The maturity year you select for such specified Guaranteed
Period generally may not be later than 10 years nor earlier than seven years.
In order to accomplish this strategy, we will allocate a portion (equal to
the present value) of your initial contribution to a Guarantee Period based
on the year you select. See "Guaranteed Rates and Price Per $100 of Maturity
Value" in Part 4. You may allocate the balance of your contribution to the
Investment Funds in any way you choose. Such allocations to the Investment
Funds must be in whole percentages. Allocation of the portion of your initial
contribution to the Investment Funds is subject to the provisions for the
free look period. See "Free Look Period" below.
Principal Assurance may only be elected at issue of your Certificate and
assumes no withdrawals or transfers of the amount allocated to the specified
Guarantee Period.
Subsequent contributions must be allocated under "Self-Directed Allocation"
described above.
Allocations to the Investment Funds
A contribution allocated to an Investment Fund purchases Accumulation Units
in that Investment Fund based on the Accumulation Unit Value for that
Investment Fund computed on the Transaction Date.
Allocations to the Guaranteed Period Account
Contributions allocated to the Guaranteed Period Account will have the
Guaranteed Rate for the specified Guarantee Period offered on the Transaction
Date.
FREE LOOK PERIOD
You have the right to examine the Accumulator Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You cancel it
by sending it to our Processing Office. The free look is extended if your
state requires a refund period of longer than 10 days. This right applies
only to the initial owner of a Certificate.
Your refund will equal the Annuity Account Value reflecting any investment
gain or loss, and any positive or negative market value adjustment, through
the date we receive your Certificate at our Processing Office. Some states
may require that we calculate the refund differently. In those states that
require that we calculate the refund differently, we may require that any
portion of your initial contribution that you request to have allocated to
the Investment Funds, be allocated to the Money Market Fund until the end of
the free look period.
If Systematic Withdrawals Plus Life Contingent Annuity is elected in the
application for the Certificate, your refund will include any amount applied
under the Life Contingent Annuity (discussed below).
We follow these same procedures if you change your mind before a Certificate
has been issued, but after a contribution has been made. See "Part 8: Tax
Aspects of the Certificates" for possible consequences of canceling your
Certificate during the free look period.
If you cancel your Certificate during the free look period, we may require
that you wait six months before you may apply for a Certificate with us
again.
ANNUITY ACCOUNT VALUE
The Annuity Account Value is the sum of the Annuity Account Values in the
Investment Funds and the Guaranteed Period Account.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal
to the number of Accumulation Units in that Investment Fund times the
Accumulation Unit Value for the Investment Fund for that date. The number of
Accumulation Units in an Investment Fund at any time is equal to the sum of
Accumulation Units purchased by contributions and transfers less the sum of
Accumulation Units redeemed for withdrawals, transfers or deductions for
charges.
The number of Accumulation Units purchased or sold in any Investment Fund
equals the dollar amount of the transaction divided by the Accumulation Unit
Value for that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the corresponding Portfolios of the Trust, which in
turn reflects the investment income and realized and unrealized capital gains
and losses of the Portfolios, as well as the
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Trust fees and expenses. The Accumulation Unit Value is also stated after
deduction of the Separate Account asset charges relating to the Certificates.
A description of the computation of the Accumulation Unit Value is found in
the SAI.
Annuity Account Value in Guaranteed Period
Account
The Annuity Account Value in the Guaranteed Period Account on any Business
Day will be the sum of the present value of the Maturity Value in each
Guarantee Period, using the Guaranteed Rate in effect for new allocations to
such Guarantee Period on such date. (This is equivalent to the Guaranteed
Period Amount increased or decreased by the full market value adjustment.)
The Annuity Account Value, therefore, may be higher or lower than the
contributions (less withdrawals) accumulated at the Guaranteed Rate. At the
Expiration Date the Annuity Account Value in the Guaranteed Period Account
will equal the Maturity Value. See "Part 4: The Guaranteed Period Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject
to the following restrictions.
o Transfers are permitted to or from a Guarantee Period once per quarter
during each Contract Year. Such transfers may be made at any time during
each quarter.
o Transfers out of a Guarantee Period other than at the Expiration Date will
result in a market value adjustment. See "Part 4: The Guaranteed Period
Account."
o Transfers to Guarantee Periods are subject to the restrictions set forth
under "Guarantee Periods and Expiration Dates" in Part 4 and are limited
based on the age of the Annuitant. See "Allocation of Contributions" above.
Transfer requests must be made directly to our Processing Office. Your
request for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which
the amounts are to be transferred. Your transfer request may be in writing or
by telephone.
For telephone transfer requests, procedures have been established by
Equitable Life that are considered to be reasonable and are designed to
confirm that instructions communicated by telephone are genuine. Such
procedures include requiring certain personal identification information
prior to acting on telephone instructions and providing written confirmation.
In light of the procedures established, Equitable Life will not be liable for
following telephone instructions that it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must
be on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer
to or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in
writing.
DOLLAR COST AVERAGING
If you have at least $10,000 of Annuity Account Value in the Money Market
Fund, you may choose to have a specified dollar amount transferred from the
Money Market Fund to other Investment Funds on a monthly basis. The main
objective of dollar cost averaging is to attempt to shield your investment
from short term price fluctuations. Since the same dollar amount is
transferred to other Investment Funds each month, more Accumulation Units are
purchased in an Investment Fund if the value per Accumulation Unit is low and
fewer Accumulation Units are purchased if the value per Accumulation Unit is
high. Therefore, a lower average value per Accumulation Unit may be achieved
over the long term. This plan of investing allows you to take advantage of
market fluctuations but does not assure a profit or protect against a loss in
declining markets.
The dollar cost averaging option may be elected at the time you apply for the
Certificate or at a later date. The minimum amount that may be transferred
each month is $250. The maximum amount which may be transferred is equal to
the Annuity Account Value in the Money Market Fund at the time the option is
elected, divided by 12.
The transfer date will be the same calendar day each month as the Contract
Date. If, on any transfer date, the Annuity Account Value in the Money Market
Fund is equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred and the dollar cost
averaging option will end. You may change the transfer amount once each
Contract Year, or cancel this option by sending us satisfactory notice to our
Processing Office at least seven calendar days before the next transfer date.
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WITHDRAWAL OPTIONS
The Accumulator is an annuity contract, even though you may elect to receive
your benefits in a non-annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while the Annuitant is
alive. Three withdrawal options are available: Lump Sum Withdrawals,
Systematic Withdrawals and Systematic Withdrawals Plus Life Contingent
Annuity. Withdrawals may result in withdrawal charges. See "Part 6:
Deductions and Charges." Withdrawals may also be taxable and subject to tax
penalty. See "Part 8: Tax Aspects of the Certificates."
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration
Date" in Part 4.
As a deterrent to early withdrawal (generally prior to age 59 1/2) the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 8: Tax Aspects
of the Certificates."
o LUMP SUM WITHDRAWALS--You may take Lump Sum Withdrawals any time subject
to a minimum withdrawal amount of $1,000. A request to withdraw more
than 90% of the Cash Value as of the date of the withdrawal will result
in the termination of the Certificate and will be treated as a surrender
of the Certificate for its Cash Value. See "Surrendering the
Certificates to Receive the Cash Value," below.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal
will be taken. If we have received the information we require, the
requested withdrawal will become effective on the Transaction Date and
proceeds will usually be mailed within seven calendar days thereafter, but
we may delay payment as described in "When Payments Are Made" below. If we
receive only partially completed information, our Processing Office will
contact you for specific instructions before your request can be processed.
o SYSTEMATIC WITHDRAWALS--Systematic Withdrawals provide level percentage
or level amount payouts. You may choose to receive Systematic
Withdrawals on a monthly, quarterly or annual frequency. You select a
dollar amount or percentage of the Annuity Account Value to be
withdrawn, subject to a maximum of 1.2% monthly, 3.6% quarterly and
15.0% annually, but in no event may any payment be less than $250. If at
the time a Systematic Withdrawal is to be made, the withdrawal amount
would be less than $250, no payment will be made and your Systematic
Withdrawal election will terminate.
You select the date of the month when the withdrawals will be made, but you
may not choose a date later than the 28th day of the month. If no date is
selected, withdrawals will be made on the same calendar day of the month as
the Contract Date. The commencement of payments under the Systematic
Withdrawal option may not be elected to start sooner than 28 days after
issue of the Certificate.
You may elect Systematic Withdrawals at any time by completing the proper
form and sending it to our Processing Office. You may change the payment
frequency of your Systematic Withdrawals once each Contract Year or cancel
this withdrawal option at any time by sending notice in a form satisfactory
to us. The notice must be received at our Processing Office at least seven
calendar days prior to the next scheduled withdrawal date. You may also
change the amount or percentage of your Systematic Withdrawals once in each
Contract Year. However, you may not change the amount or percentage in any
Contract Year where you have previously taken another withdrawal under the
Lump Sum Withdrawals option described above.
o SYSTEMATIC WITHDRAWALS PLUS LIFE CONTINGENT ANNUITY--This option is
available for election under Certificates with the GMDB Only Benefit
(Plan B) at ages 60 through 75 if you are the Owner and Annuitant under
the Certificate. This option provides systematic withdrawals during a
deferral period and guaranteed annuity payments thereafter for your
lifetime (SINGLE LIFE) or the lifetime of you and a joint Annuitant
(JOINT & SURVIVOR) you designate. Withdrawals you receive during the
deferral period are made from the Annuity Account Value under your
Certificate, and are followed by Life Contingent Annuity payments
(described below). Deferral period withdrawals in the first year are
designed to equal 6% of the initial contribution (or Annuity Account
Value at time of election), with withdrawals increasing by 3% each year
thereafter. The first payment under the Life Contingent Annuity will be
3% greater than the final withdrawal scheduled to be made at the end of
the deferral period and will increase annually on each anniversary of
the payment start date based on the annual increase, if any, in the
Consumer Price Index, but in no event greater than 3% per year.
You may elect this option at any time by completing the proper form. You
select the length of the deferral period subject to a minimum of seven
years and a maximum of 15 years. You may
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choose to receive withdrawals on a monthly, quarterly or annual mode,
subject to a minimum of $250 in the first year. All withdrawals will be
made on the 15th of the month. Withdrawals will begin one payment mode
after the Contract Date or effective date of the option. You may cancel
your Systematic Withdrawals at any time by sending notice in a form
satisfactory to us. The notice must be received at our Processing Office at
least seven calendar days prior to the next scheduled withdrawal date. If
you cancel the Systematic Withdrawals, the Life Contingent Annuity will
still be in effect and payments will begin on the scheduled initial payment
date. The Life Contingent Annuity may only be canceled during its Free Look
Period, discussed below.
Withdrawals during the Deferral Period
Withdrawals are not guaranteed since the Annuity Account Value available
for withdrawal will depend on the performance of the Investment Funds and
any market value adjustment for amounts in the Guarantee Periods. It is
possible that poor investment performance in the Investment Funds and
negative market value adjustments in the Guarantee Periods, may result in
the Annuity Account Value being exhausted prior to the end of the deferral
period. This may result in no withdrawals being made for a period of time
until the Life Contingent Annuity payments are scheduled to begin. However,
you may elect to accelerate the date the Life Contingent Annuity payments
will begin in order to receive continuous payments. Such payments will be
made in reduced amounts.
Good investment performance and positive market value adjustments may
result in significant Annuity Account Value at the end of the deferral
period. In such a case, any remaining Annuity Account Value will be applied
to increase the annuity payments under the Life Contingent Annuity. Excess
Annuity Account Value at the end of the deferral period may also result
from payment of subsequent contributions as discussed below.
Withdrawals under this option are not subject to withdrawal charges
provided no other withdrawals are made. Once you take a Lump Sum
Withdrawal, all subsequent withdrawals under this option will be subject to
a withdrawal charge to the extent that in any Contract Year they exceed the
15% free corridor.
Allocation of Contributions
If elected at issue of the Certificate, based on the amount of your initial
contribution, your age and sex (and the age and sex of the joint Annuitant,
if applicable), the mode of payment, the form of payments and the deferral
period you select, a portion of your initial contribution is applied by us
to the Life Contingent Annuity. The balance of the initial contribution is
allocated to the Investment Options according to your instructions. If
elected after issue, a portion of your Annuity Account Value is applied to
the Life Contingent Annuity and the balance is allocated according to your
instructions. A market value adjustment may apply with respect to amounts
transferred from the Guaranteed Period Account.
If you elect this option in the application and your initial contribution
will come from multiple sources, your application must also indicate that
contributions are to be initially allocated to the Money Market Fund.
Election of this option must include your instructions to apply a portion
of your Annuity Account Value to the Life Contingent Annuity and the
balance according to your instructions, on the date the last such
contribution is received.
Any subsequent contributions will be allocated according to you
instructions. However, if withdrawal payments have begun, subsequent
contributions will not increase the amount of withdrawal payments you will
receive.
You may transfer your Annuity Account Value among the Investment Options
subject to the rules indicated under "Transfers Among Investment Options"
above.
Life Contingent Annuity Payments
The Life Contingent Annuity provides lifetime payments starting after the
end of the deferral period. The portion of your contributions or Annuity
Account Value applied under the Life Contingent Annuity does not have a
Cash Value or an Annuity Account Value and, therefore, does not provide for
transfers or withdrawals. Once the deferral period has ended and payments
have begun under the Life Contingent Annuity, subsequent amounts may no
longer be applied under the Life Contingent Annuity.
THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND
ANNUITY INCOME IS PAID ONLY IF YOU (OR A JOINT ANNUITANT) ARE LIVING AT THE
DATE ANNUITY BENEFITS BEGIN. BENEFITS ARE ONLY PAID DURING YOUR LIFETIME
AND, IF APPLICABLE, THE LIFETIME OF A JOINT ANNUITANT. CONSEQUENTLY, YOU
SHOULD CONSIDER THE POSSIBILITY THAT NO AMOUNTS WILL BE PAID UNDER THE LIFE
CONTINGENT ANNUITY IF YOU (OR A JOINT ANNUITANT) DO NOT SURVIVE TO THE DATE
PAYMENTS ARE TO START UNDER SUCH ANNUITY.
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You may elect to have the Life Contingent Annuity provide increasing
payments on a Single Life or a Joint and 100% to Survivor basis. The Life
Contingent Annuity may also provide payments on a Joint and one-half to
Survivor or a Joint and two-thirds to Survivor basis. If you elect Joint &
Survivor, the joint Annuitant must be your spouse, who must also be
designated as successor Annuitant/Certificate Owner and sole primary
beneficiary under the Certificate.
Payments under the Life Contingent Annuity will be made to you during your
lifetime (and the lifetime of the joint Annuitant, if applicable) on the
same payment mode and date as the payments that were made during the
deferral period.
A portion of each annuity payment under the Life Contingent Annuity will be
excluded from taxable income. See "Part 8: Tax Aspects of the
Certificates."
Free Look Period
If the Systematic Withdrawals Plus Life Contingent Annuity option is
elected after issue of the Certificate, after the first application of an
amount under the Life Contingent Annuity, you have the right to examine the
Life Contingent Annuity for a period of 10 days. During this period you may
request that we cancel the Life Contingent Annuity and the amount applied
will be allocated to the Investment Options under the Accumulator
Certificate according to your allocation percentages, as described under
"Allocation of Contributions" above. If you cancel the Life Contingent
Annuity, we may require that you wait one year from the date of cancelation
before amounts may be applied again.
Distribution Fee and Withdrawal Charge
Once amounts are applied under the Life Contingent Annuity, the
distribution fee and the withdrawal charge (discussed in Part 6) under the
Certificate will be imposed as a percentage of contributions that have not
been withdrawn, less the amount applied under the Life Contingent Annuity.
Income Annuity Option and Surrendering
the Certificates
If you elect to cancel your systematic withdrawals, and elect an annuity
benefit as described under "Income Annuity Options" below, or surrender the
Certificate for its Cash Value as described under "Surrendering the
Certificates to Receive the Cash Value" below, once we receive your
returned Certificate, your Certificate will be returned to you with a
notation that the Life Contingent Annuity is still in effect. Thereafter,
no subsequent contributions will be accepted under the Certificate and no
amounts may be applied under the Life Contingent Annuity.
Assignment
Once amounts are applied to the Life Contingent Annuity, the Life
Contingent Annuity may not be assigned.
1035 Exchanges
Under the Certificate, a transfer of the Cash Value under your Certificate
to another issuer may not qualify under Section 1035 of the Code as a tax
free exchange, once amounts have been applied under the Life Contingent
Annuity.
Allocation of Systematic Withdrawals
Unless you specify otherwise, Systematic Withdrawals under both options
above, will be withdrawn on a pro rata basis from your Annuity Account Value
in the Investment Funds. If there is insufficient value or no value in the
Investment Funds, any additional amount of the withdrawal required or the
total amount of the withdrawal, as applicable, will be withdrawn from the
Guarantee Periods in order of the earliest Expiration Date(s) first.
Withdrawal Charges
Withdrawals in excess of the 15% free corridor amount may be subject to a
withdrawal charge. See "Withdrawal Charge" in Part 6.
DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of proof satisfactory to us of the Annuitant's death,
prior to the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the
time you apply for the Certificate. While the Certificate is in effect, you
may change your beneficiary by writing to our Processing Office. The change
will be effective on the date the written submission was signed. The death
benefit payable will be determined as of the date we receive such proof of
death and any required instructions as to the method of payment.
The death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB defined below; and
(2) the death benefit provided with respect to the Guaranteed Period
Account. See "Part 4: The Guaranteed Period Account."
There are two plans available under the Certificates for providing guaranteed
benefits, Plan A and Plan B. Plan A (available for Annuitant issue ages 20
through
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75) provides a Combined GMDB/GMIB Benefit. Plan B provides a GMDB Only
Benefit, and has a lower charge.
For Annuitant issue ages 20 through 75, you must elect the Combined GMDB/GMIB
Benefit (Plan A) or the GMDB Only Benefit (Plan B) in the application. To
elect the Combined GMDB/GMIB Benefit (Plan A), you must be both the Owner and
the Annuitant under the Certificate. Once elected, the plan may not be
changed. For Annuitant issue ages 76 through 83, for Certificates issued in
New York and in states where the GMIB is not currently available, the GMDB
Only Benefit (Plan B) will apply.
For the specific charges, see "Part 6: Deductions and Charges."
GMDB
Applicable to Certificates issued in all states except
- -----------------------------------------------------------------------------
New York
- ---------
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to (a) the GMDB determined on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. In addition, interest (see below) is credited to and becomes part of
the GMDB on each Processing Date.
o 6% to Age 80 Benefit--interest will be credited at the effective annual
GMDB interest rate of 6% (3% for amounts in the Fixed Income Series)
through age 80, and 0% thereafter. Contributions, transfers and
withdrawals during the Contract Year will be taken into account.
Applicable to Certificates issued in New York for
- -----------------------------------------------------------------------------
Annuitant issue ages 20 through 79
- -----------------------------------
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to (a) the GMDB calculated on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. Additionally, on each Processing Date the GMDB is reset at the greater
of the current GMDB and the current Annuity Account Value in the Investment
Funds, not to exceed a cap as described below. The cap does not apply on the
seventh Processing Date. The cap is equal to (a) the portion of the initial
contribution allocated to the Investment Funds, plus (b) any subsequent
contributions and transfers into the Investment Funds, less (c) any transfers
and withdrawals from such Funds, plus (d) interest (see below) that is
credited on each Processing Date plus (e) any amount by which the GMDB is
increased because the cap did not apply on the seventh Processing Date.
o 6% to Age 80 Cap--interest will be credited at the effective annual GMDB
interest rate of 6% (3% for amounts in the Fixed Income Series) through
age 80, and 0% thereafter.
Applicable to Certificates issued in New York for
- --------------------------------------------------
Annuitant issue ages 80 through 83
- -----------------------------------
The GMBD is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to such portion of the initial contribution
plus (a) any subsequent contributions and transfers into the Investment
Funds, less (b) any transfers and withdrawals from such Funds.
See Appendix II for an example of the calculation of the GMDB.
How Withdrawals and Transfers Affect the GMDB
Withdrawals and transfers out of the Investment Funds will generally cause a
reduction in the GMDB on a dollar-for-dollar basis. However, if on any
Transaction Date, (i) the GMDB exceeds the Annuity Account Value and (ii) the
sum of withdrawals and transfers out of the Investment Funds is greater than
6% of the beginning of year GMDB, the GMDB will be reduced on a pro rata
basis on the Transaction Date. The amount of the reduction will be determined
by dividing the amount of the withdrawal by the Annuity Account Value on the
Transaction Date and multiplying this percentage by the current GMDB.
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your GMDB.
For example, assuming a beginning of year GMDB of $100,000 and a withdrawal
of $5,000 which represents 5% of the beginning of year GMDB ($5,000/
$100,000), such withdrawal would cause the current GMDB to be reduced by
$5,000. If a withdrawal in the amount of $10,000, which represents 10% of the
beginning of year GMDB ($10,000/$100,000) were to be made, assuming a current
Annuity Account Value of $50,000 the current GMDB would be reduced by 20%
($10,000/$50,000), or $20,000 ($100,000 x .20).
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the income
annuity option you have chosen under your Certificate. If no income annuity
option has been chosen at the time of the Annuitant's death, the beneficiary
will receive the death
29
<PAGE>
benefit in a lump sum. However, subject to certain exceptions in the
Certificate, Equitable Life's rules then in effect and any other applicable
requirements under the Code, the beneficiary may elect to apply the death
benefit to one or more income annuity options offered by Equitable Life. See
"Income Annuity Options" below. Note that if you are both the Certificate
Owner and the Annuitant, only a life annuity or an annuity that does not
extend beyond the life expectancy of the beneficiary may be elected.
Successor Annuitant
If you are both the Certificate Owner and the Annuitant and you elect your
spouse to be both the sole primary beneficiary and the successor Annuitant/
Certificate Owner, then no death benefit is payable until your surviving
spouse's death.
On the Processing Date following your death, if the successor
Annuitant/Certificate Owner election was elected at issue of the Certificate
and is in effect at your death, the GMDB will be reset at the greater of the
current GMDB and the current Annuity Account Value in the Investment Funds.
The GMDB interest rate will subsequently be credited based on the current age
(as of the Processing Date) of the successor Annuitant/Certificate Owner. For
such Certificates, if the Combined GMDB/GMIB Benefit (Plan A) was elected,
the GMIB (discussed below) will continue to be available on Contract Date
anniversaries seven and later based on the Contract Date of the Accumulator
Certificate, provided the GMIB is exercised as specified under GMIB below,
based on the age of the successor Annuitant/Certificate Owner.
WHEN THE CERTIFICATE OWNER DIES
BEFORE THE ANNUITANT
When you are not the Annuitant and you die before the Annuity Commencement
Date, the beneficiary named to receive the death benefit upon the Annuitant's
death will automatically succeed as Certificate Owner (unless you name a
different person as a successor Owner in a written form acceptable to us and
send it to our Processing Office). The Certificate provides that the original
Certificate Owner's entire interest in the Certificate be completely
distributed to the named beneficiary by the fifth anniversary of such Owner's
death (unless an income annuity option is elected and payments begin within
one year after the Certificate Owner's death and are made over the
beneficiary's life or over a period not to exceed the beneficiary's life
expectancy). If an income annuity option has not been elected, as described
above, on the fifth anniversary of your death, we will pay any Annuity
Account Value remaining on such date, less any applicable withdrawal charge.
If the successor Certificate Owner is your surviving spouse, no distributions
are required as long as both the surviving spouse and the Annuitant are
living.
GMIB
The GMIB, available under the Combined GMDB/ GMIB Benefit (Plan A), may not
currently be available in your state. When it becomes available it will be
added to your Certificate if you then elect the Combined GMDB/GMIB Benefit
(Plan A). State availability information may be obtained from your registered
representative.
The GMIB provides a minimum guaranteed lifetime income upon the application
of the Annuity Account Value in the Investment Funds to purchase the Assured
Payment Plan (Life Annuity with a Period Certain). The Assured Payment Plan
provides payments during a period certain with payments continuing for life
thereafter. On the Transaction Date the amount of the periodic lifetime
income to be purchased under the Assured Payment Plan will be based on the
greater of (i) the Annuity Account Value in the Investment Funds and (ii) an
amount equal to the GMDB described above, reduced by any remaining withdrawal
charges; each divided by "guaranteed maximum annuity purchase rates" under
the Certificate. The guaranteed maximum annuity purchase rates are based on
(i) interest at 2.5% if the GMIB is exercised within 30 days following a
Contract Date anniversary in years 7 through 9 and at 3% if exercised within
30 days following the 10th or later Contract Date anniversary, and (ii)
mortality based on the 1983 Individual Annuity Mortality Table "a" projected
with modified Scale G. The mortality table used in determining such annuity
purchase rates assumes that mortality will improve in the future and is more
conservative than the basis underlying current annuity purchase rates. Your
Annuity Account Value in the Investment Funds will depend on the performance
of such Funds. The amount equal to the GMDB (as discussed above) does not
have an Annuity Account Value or a Cash Value and is used solely for purposes
of calculating the GMIB.
If you have any Annuity Account Value in the Guaranteed Period Account under
your Accumulator Certificate as of the Transaction Date that you exercise the
GMIB, such Annuity Account Value will also be applied (at current annuity
purchase rates) toward the purchase of payments under the Assured Payment
Plan. Such Annuity Account Value will increase the payments provided by the
GMIB. A market value adjustment may apply.
When you exercise the GMIB, we automatically determine whether the
application of your Annuity Account Value in the Investment Funds at current
purchase rates under the Assured Payment Plan (with a period certain as
specified below) would produce higher lifetime income, and if so, the higher
income will be provided.
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<PAGE>
In addition, you can elect any of our income annuity options discussed below.
The GMIB applies only if your election of the Assured Payment Plan meets the
following conditions:
o You are the Owner and Annuitant of the Accumulator Certificate.
o The Assured Payment Plan is purchased within 30 days following the
7th or later Contract Date anniversary under your Accumulator
Certificate; provided it is not purchased earlier than your age 60,
nor later than age 83.
o The period certain you select is as indicated below, based on your
issue age for the Assured Payment Plan Certificate and the type of
payments selected:
<TABLE>
<CAPTION>
LEVEL PAYMENTS
- --------------------------------------------------
ISSUE AGE PERIOD CERTAIN
- ---------------------- --------------------------
<S> <C>
60 through 80 10 years
81 through 83 90 less your issue age
INCREASING PAYMENTS
- --------------------------------------------------
ISSUE AGE PERIOD CERTAIN
- ---------------------- --------------------------
60 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
</TABLE>
o Payments start one payment mode from the Contract Date of the Assured
Payment Plan Certificate.
Each year on your Contract Date anniversary, if you are eligible to exercise
the GMIB, we will send you a notice of how much income could be provided
under such option on the Contract Date anniversary. You may then notify us
within 30 days following the Contract Date anniversary if you want to
exercise the GMIB by submitting the proper form and returning your
Accumulator Certificate. The income to be provided under the Assured Payment
Plan Certificate will be determined on the Transaction Date that we receive
your request and the Certificate and, therefore, may differ from the notice.
It will be based on the GMIB as of such Transaction Date.
The Assured Payment Plan (Life Annuity with a Period Certain) is offered
through our Prospectus for the Assured Payment Plan dated May 1, 1996, which
may be obtained from your registered representative. You should read it
carefully before you decide to purchase such Plan.
See Appendix III for examples on the GMIB.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward
or downward market value adjustment. See "Part 4: The Guaranteed Period
Account." We do not guarantee any minimum Cash Value except for amounts in a
Guarantee Period held to the Expiration Date. On any date before the Annuity
Commencement Date while the Certificate is in effect, the Cash Value is equal
to: (1) the Annuity Account Value; (2) less any withdrawal charge; and (3)
less any annual contract fee incurred but not yet deducted. The free corridor
amount will not apply when calculating the withdrawal charge applicable upon
a surrender. See "Part 6: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
the Annuitant is living and before the Annuity Commencement Date.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate will be terminated
as of that date. You may receive the Cash Value in a single sum payment or
apply it under one or more of the income annuity options described below. We
will usually pay the Cash Value within seven calendar days, but we may delay
payment as described in "When Payments are Made" below.
In some cases, surrenders may have adverse tax consequences. See "Part 8: Tax
Aspects of the Certificates."
INCOME ANNUITY OPTIONS
Income annuity options provide periodic payments over a specified period of
time which may be fixed or may be based on the Annuitant's life. Annuity
forms of payment are calculated as of the Annuity Commencement Date, which is
on file with our Processing Office. You can change the Annuity Commencement
Date by writing to our Processing Office any time before the Annuity
Commencement Date. However, you may not choose a date later than the 28th day
of any month. Also, based on the issue age of the Annuitant, the Annuity
Commencement Date may not be later than the Processing Date which follows the
Annuitant's 90th birthday (may be different in some states).
Before the Annuity Commencement Date, we will send a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay fixed
annuity benefits on the "normal form" indicated for your Certificate as of
the Annuity Com-
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<PAGE>
mencement Date. The amount applied to provide the annuity benefit will be (1)
the Annuity Account Value for any life annuity form or (2) the Cash Value for
any period certain only annuity form except that if the period certain is
more than five years, the amount applied will be no less than 95% of the
Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an income annuity option
prior to an Expiration Date will result in a market value adjustment. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
ANNUITY FORMS
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with
this annuity form, it provides the highest monthly payment of any of the
life income annuity options, so long as the Annuitant is living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before a specified period of time (the "certain period") has ended,
payments will continue to the beneficiary for the balance of the certain
period. Certain periods may be 5, 10, 15 or 20 years. A life annuity
with a certain period of 10 years is the normal form of annuity under
the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
This option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The income annuity options outlined above are available in both fixed and
variable form, unless otherwise indicated. Fixed annuity payments are
guaranteed by us and will be based either on the tables of guaranteed annuity
payments in your Certificate or on our then current annuity rates, whichever
is more favorable for the Annuitant. Variable income annuities may be funded
through the Common Stock Fund through the purchase of annuity units. The
amount of each variable annuity payment may fluctuate, depending upon the
performance of the Common Stock Fund. That is because the annuity unit value
rises and falls depending on whether the actual rate of net investment return
(after deduction of charges) is higher or lower than the assumed base rate.
See "Annuity Unit Values" in the SAI. Variable income annuities may also be
available by separate prospectus through the Common Stock or other Funds of
other separate accounts we offer.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here. Your registered representative
can provide details.
For each income annuity option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
income annuity option, the Annuitant's age (or the Annuitant's and joint
Annuitant's ages) and in certain instances, the sex of the Annuitant(s). Once
an income annuity option is chosen and payments have commenced, no change can
be made.
If, at the time you elect an income annuity option, the amount to be applied
is less than $2,000 or the initial payment under the option elected is less
than $20 monthly, we reserve the right to pay the Annuity Account Value in a
single sum rather than as payments under the annuity form chosen.
ASSURED PAYMENT PLAN
If you are the Owner and the Annuitant, you may apply your Annuity Account
Value, in whole or in part, and subject to any withdrawal charges to the
extent described below, to purchase the Assured Payment Plan (Life Annuity
with a Period Certain), provided you meet the issue age and payment
restrictions for the Assured Payment Plan. If you apply a part of the Annuity
Account Value, it will be considered a withdrawal and may be subject to
withdrawal charges. See "Withdrawal Options" above. The Assured Payment Plan,
is designed to provide guaranteed level or increasing annual payments for
your life or for your life and the life of a joint Annuitant. If 100% of the
Annuity Account Value is applied from an Accumulator Certificate to purchase
the Assured Payment Plan at a time when the dollar amount of the withdrawal
charge is greater
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<PAGE>
than 2% of remaining contributions (after withdrawals), such withdrawal
charge will not be deducted. However, a new withdrawal charge schedule will
apply under the Assured Payment Plan. For purposes of the Assured Payment
Plan withdrawal charge schedule, the year in which your Annuity Account Value
is applied under the Assured Payment Plan will be "Contract Year 1." If 100%
of the Annuity Account Value is applied from the Accumulator when the dollar
amount of the withdrawal charge is 2% or less, such withdrawal charge will
not be deducted and there will be no withdrawal charge schedule under the
Assured Payment Plan. You should consider the timing of your purchase as it
relates to the potential for withdrawal charges under the Assured Payment
Plan. No subsequent contributions will be permitted under the Assured Payment
Plan Certificate.
You may also apply your Annuity Account Value to purchase the Assured Payment
Plan (Period Certain) once withdrawal charges are no longer in effect. This
version of the Assured Payment Plan provides for annual payments for a
specified period. No withdrawal charges will apply under the Assured Payment
Plan Certificate.
The Assured Payment Plan (Life Annuity with a Period Certain) and Assured
Payment Plan (Period Certain) are described in our prospectus for the Assured
Payment Plan, dated May 1, 1996. Copies are available from your registered
representative.
To purchase this annuity form we also require the return of your Certificate.
An Assured Payment Plan Certificate will be issued putting this annuity form
into effect.
Depending upon your circumstances, this may be accomplished on a tax-free
basis. Consult your tax adviser.
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds,
payment of any portion of the Annuity Account Value (less any applicable
withdrawal charge) from the Investment Funds, and, upon surrender, payment of
the Cash Value from the Investment Funds will be made within seven calendar
days after the Transaction Date. Payments or application of proceeds from the
Investment Funds can be deferred for any period during which (1) the New York
Stock Exchange is closed or trading on it is restricted, (2) sales of
securities or determination of the fair value of an Investment Fund's assets
is not reasonably practicable because of an emergency, or (3) the SEC, by
order, permits us to defer payment in order to protect persons with interest
in the Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account (other than for death benefits) for up to six
months while you are living. We may also defer payments for any amount
attributable to a contribution made in the form of a check for a reasonable
amount of time (not to exceed 15 days) to permit the check to clear.
ASSIGNMENT
The Certificates may be assigned at any time before the Annuity Commencement
Date and for any purpose other than as collateral or security for a loan.
Equitable Life will not be bound by an assignment unless it is in writing and
we have received it at our Processing Office. In some cases, an assignment
may have adverse tax consequences. See "Part 8: Tax Aspects of the
Certificates."
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI),
an indirect wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI is
registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's
principal business address is 787 Seventh Avenue, New York, New York 10019.
For 1995, EDI was paid a fee of $126,914 for its services under its
"Distribution Agreement" with Equitable Life and the Separate Account.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents. Broker-dealer sales
compensation for EDI and its affiliates will generally not exceed six percent
of total contributions made under a Certificate. EDI may also receive
compensation and reimbursement for its marketing services under the terms of
its distribution agreement with Equitable Life. Broker-dealers receiving
sales compensation will generally pay a portion thereof to their registered
representatives as commission related to sales of the Certificates. The
offering of the Certificates is intended to be continuous.
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<PAGE>
- -------------------------------------------------------------------------------
PART 6: DEDUCTIONS AND CHARGES
- -------------------------------------------------------------------------------
CHARGES DEDUCTED FROM THE
ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options
you select, subject to certain restrictions. We then periodically deduct
certain amounts from your Annuity Account Value. The charges described below
and under "Charges Deducted from the Investment Funds" below will not be
increased by us for the life of the Certificates. We may reduce certain
charges under group or sponsored arrangements. See "Group or Sponsored
Arrangements" below. Charges are deducted proportionately from all the
Investment Funds in which your Annuity Account Value is invested on a pro
rata basis, except as noted below.
Distribution Fee
We deduct a sales load annually in an amount of 0.20% of each contribution
received during the first Contract Year. This sales load is deducted on each
of the first seven Processing Dates (so long as the Certificate is in force).
See "Example" below.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that a withdrawal exceeds the free corridor amount, or if the
Certificate is surrendered to receive its Cash Value. We determine the
withdrawal charge separately for each contribution in accordance with the
table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For each contribution, the Contract Year in which we receive
that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the
beginning of the Contract Year minus any amount previously withdrawn
during that Contract Year.
Any withdrawal requested that exceeds the free corridor amount will be
subject to the withdrawal charge. The 15% free corridor amount is not
applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge, the Federal income tax law
treats earnings as withdrawn first. See "Part 8: Tax Aspects of the
Certificates."
The withdrawal charge is to help cover sales expenses. Because of the way the
distribution fee is calculated the distribution fee and the withdrawal charge
combined will never exceed the 7.0% maximum withdrawal charge.
Example--The example below illustrates how the withdrawal charge and the
distribution fee would be calculated upon a withdrawal. This example assumes
an initial contribution of $12,000 and subsequent contributions of $12,000
each in the second and third Contract Years for total contributions under the
Certificate of $36,000. It also assumes a withdrawal from the Investment
Funds at the beginning of the fourth Contract Year of 25% of an Annuity
Account Value of $40,000.
The total withdrawal amount would be $10,000 ($40,000 x .25). In this case,
$6,000 ($40,000 x .15) would be the free corridor amount and could be
withdrawn without imposition of a withdrawal charge. The balance of $4,000
($10,000 -$6,000) would be considered a withdrawal of a part of the initial
contribution of $12,000. This contribution would be subject to a 4.0%
withdrawal charge of $160 ($4,000 x .04) as indicated in the chart above.
The distribution fee deducted on the Processing Date following the withdrawal
would be based on the remaining initial contribution of $8,000
($12,000-$4,000).
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<PAGE>
Withdrawal Processing Charge
We reserve the right to impose a charge of the lesser of $25 and 2.0% of the
amount withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. This charge, if made, is to cover our administrative expenses in
processing Lump Sum Withdrawals. See "Asset Based Administrative Charge"
below.
Charges for Combined GMDB/GMIB Benefit (Plan A)
We deduct a charge annually on each Processing Date for providing the
Combined GMDB/GMIB Benefit (Plan A). The charge is equal to a percentage of
the GMDB in effect on the Processing Date. The percentage is equal to 0.45%.
Charges for GMDB Only Benefit (Plan B)
We deduct a charge annually on each Processing Date for providing the GMDB
Only Benefit (Plan B). The charge is equal to a percentage of the GMDB in
effect on the Processing Date. The percentage is equal to 0.20%.
If the amount collected from this charge exceeds the cost of providing the
benefits, it will be to our profit, and may be used to pay distribution
expenses not recovered from sales charges under the Certificates.
Annual Contract Fee
The annual contract fee is incurred at the beginning of the Contract Year and
deducted at the end of each Contract Year on the Processing Date. We deduct
this charge when determining the Cash Value payable if you surrender the
Certificate prior to the end of a Contract Year. The amount deducted is
determined by the amount of your initial contribution. The charge will be $30
per Contract Year if your initial contribution is less than $25,000, and zero
if your initial contribution equals $25,000 or more. This charge is to cover
a portion of our administrative expenses. See "Asset Based Administrative
Charge," below.
Charges for State Premium and Other Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium
taxes, that might be imposed in your state. Generally we deduct this charge
from the amount applied to provide an income annuity option. In certain
states, however, we may deduct the charge for taxes from contributions. The
current tax charge that might be imposed varies by state and ranges from 0%
to 3.5% (the rate is 1% in Puerto Rico and 5% in the Virgin Islands).
Allocation of Certain Charges to the
Guaranteed Period Account
No portion of the distribution fee or the annual contract fee will be
deducted from the Guaranteed Period Account, unless there is insufficient
value in the Investment Funds. If charges are deducted from the Guaranteed
Period Account, they will be deducted from the Annuity Account Value with
respect to the Guarantee Periods in order of the earliest Expiration Date(s)
first. If charges are deducted from the Guaranteed Period Account, you will
not receive the full Guaranteed Rate if held to the Expiration Date. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
CHARGES DEDUCTED FROM THE
INVESTMENT FUNDS
Mortality and Expense Risk Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for mortality and expense risks. The daily charge is at the
rate of 0.002477%, which is equivalent to an annual rate of 0.90%, on the
assets in each Investment Fund. Approximately 0.60% of this annual charge is
allocated to the mortality risk and 0.30% is allocated to the expense risk.
We will realize a gain from this charge to the extent it is not needed to
provide for benefits and expenses under the Certificate. We will use any gain
for any lawful purpose including payment of distribution expenses not
recovered from sales charges under the Certificate.
The mortality risk assumed is the risk that Annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables,
shown in each Certificate, will differ from actual mortality experience.
Lastly, we assume a mortality risk to the extent that the guaranteed minimum
death benefit charge is insufficient to pay any amount by which such death
benefit exceeds the Cash Value of the Certificate.
The expense risk assumed is the risk that it will cost us more to issue and
administer the Certificates than we expect.
Asset Based Administrative Charge
We will deduct a daily charge from the assets in each Investment Fund, to
compensate us for a portion of the administrative expenses under the
Certificates. The daily charge is at a rate of 0.000692% (equivalent to an
annual rate of 0.25%) on the assets in each Investment Fund. The withdrawal
processing charge, the annual contract fee and the asset based administrative
charge are not designed to produce a profit for Equitable Life.
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<PAGE>
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against the Trust's assets, direct
operating expenses of the Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of the Trust
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
maximum investment advisory fees paid annually by the Portfolios cannot be
changed without a vote by shareholders. They are as follows:
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
-------------------------------------
FIRST $350 NEXT $400 OVER $750
MILLION MILLION MILLION
----------- ----------- -----------
<S> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors ... .550% .525% .500%
Growth Investors .......... .550% .525% .500%
EQUITY SERIES:
Common Stock .............. .400% .375% .350%
Global .................... .550% .525% .500%
Aggressive Stock .......... .500% .475% .450%
FIXED INCOME SERIES:
Money Market .............. .400% .375% .350%
Intermediate Govt.
Securities ................ .500% .475% .450%
FIRST $500 NEXT $500 OVER $1
MILLION MILLION BILLION
----------- ----------- -----------
EQUITY SERIES:
Growth & Income ........... .550% .525% .500%
FIRST $500 NEXT $1 OVER $1.5
MILLION BILLION BILLION
----------- ----------- -----------
EQUITY SERIES:
International ............. .900% .850% .800%
</TABLE>
Investment advisory fees are established under the Trust's investment
advisory agreements between the Trust and its investment adviser, Alliance.
All of these fees and expenses are described more fully in the Trust
prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the distribution
fee, the withdrawal charge and the annual contract fee or change the minimum
initial contribution requirements. We may also change the guaranteed minimum
death benefit and the guaranteed minimum income benefit. Group arrangements
include those in which a trustee or an employer, for example, purchases
contracts covering a group of individuals on a group basis. Sponsored
arrangements include those in which an employer allows us to sell
Certificates to its employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these
factors into account when reducing charges. To qualify for reduced charges, a
group or sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy Certificates or that have
been in existence less than six months will not qualify for reduced charges.
We may also establish different Guaranteed Rates for the Guarantee Periods
under different classes of Certificates for group or sponsored arrangements.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the distribution fee, withdrawal charge
or annual contract fee will reflect differences in costs or services and will
not be unfairly discriminatory.
Group and sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR
MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE
ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The distribution fee, the withdrawal charge and the annual contract fee may
be reduced or eliminated when sales are made in a manner that results in
savings of sales and administrative expenses, such as sales through persons
who are compensated by clients for recommending investments and receive no
commission or reduced commissions in connection with the sale of the
Certificates. In no event will a reduction or elimination of a fee or charge
be permitted where it would be unfairly discriminatory.
36
<PAGE>
- -------------------------------------------------------------------------------
PART 7: VOTING RIGHTS
- -------------------------------------------------------------------------------
TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of the Trust. Since we own
the assets of the Separate Account, we are the legal owner of the shares and,
as such, have the right to vote on certain matters. Among other things, we
may vote:
o to elect the Trust's Board of Trustees,
o to ratify the selection of independent auditors for the Trust, and
o on any other matters described in the Trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because the Trust is a Massachusetts business trust, annual meetings are not
required. Whenever a shareholder vote is taken, we will give Certificate
Owners the opportunity to instruct us how to vote the number of shares
attributable to their Certificates. If we do not receive instructions in time
from all Certificate Owners, we will vote the shares of a Portfolio for which
no instructions have been received in the same proportion as we vote shares
of that Portfolio for which we have received instructions. We will also vote
any shares that we are entitled to vote directly because of amounts we have
in an Investment Fund in the same proportions that Certificate Owners vote.
Each Trust share is entitled to one vote. Fractional shares will be counted.
Voting generally is on a Portfolio-by-Portfolio basis except that shares will
be voted on an aggregate basis when universal matters, such as election of
Trustees and ratification of independent auditors, are voted upon. However,
if the Trustees determine that shareholders in a Portfolio are not affected
by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
VOTING RIGHTS 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
and 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 the Accumulator Certificate
Owners, we currently do not foresee any disadvantages 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
Certificate Owners, we will see to it that appropriate action is taken to
protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner
approval, Certificate Owners will be entitled to one vote for each
Accumulation Unit they have in the Investment Funds. Each Certificate Owner
who has elected a variable annuity payout may cast the number of votes equal
to the dollar amount of reserves we are holding for that annuity in the
Common Stock Fund divided by the Accumulation Unit Value for the Common Stock
Fund. We will cast votes attributable to any amounts we have in the
Investment Funds in the same proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
37
<PAGE>
- -------------------------------------------------------------------------------
PART 8: TAX ASPECTS OF THE CERTIFICATES
- -------------------------------------------------------------------------------
This prospectus generally covers our understanding of the current Federal
income tax rules that apply to an annuity purchased with after-tax dollars
(non-qualified annuity).
This prospectus does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Accumulator Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities. In addition, the Treasury Department may amend
existing regulations, issue new regulations, or adopt new interpretations of
existing laws. State tax laws or, if you are not a United States resident,
foreign tax laws, may affect the tax consequences to you or the beneficiary.
These laws may change from time to time without notice and, as a result, the
tax consequences may be altered. There is no way of predicting whether, when
or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
TAXATION OF NON-QUALIFIED ANNUITIES
Equitable Life has designed the Accumulator Certificate to qualify as an
"annuity" for purposes of Federal income tax law. Gains in the Annuity
Account Value of the Certificate generally will not be taxable to an
individual until a distribution occurs, either by a withdrawal of part or all
of its value or as a series of periodic payments. However, there are some
exceptions to this rule: (1) if a Certificate fails the investment
diversification requirements; (2) if an individual transfers a Certificate as
a gift to someone other than a spouse (or divorced spouse), any gain in its
Annuity Account Value will be taxed at the time of transfer; (3) the
assignment or pledge of any portion of the value of a Certificate will be
treated as a distribution of that portion of the Certificate; and (4) when an
insurance company (or its affiliate) issues more than one non-qualified
deferred annuity certificate or contract during any calendar year to the same
taxpayer, the certificates or contracts are required to be aggregated in
computing the taxable amount of any distribution.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Certificate
unless an exception under the Code applies.
Prior to the Annuity Commencement Date, any withdrawals which do not
terminate your total interest in the Certificate are taxable to you as
ordinary income to the extent there has been a gain in the Annuity Account
Value. The balance of the distribution is treated as a return of the
"investment" or "basis" in the Certificate and is not taxable. Generally, the
investment or basis in the Certificate equals the contributions made, less
any amounts previously withdrawn which were not taxable. Special rules may
apply if contributions made to another annuity certificate or contract prior
to August 14, 1982 are transferred to a Certificate in a tax-free exchange.
To take advantage of these rules, you should notify us prior to such an
exchange.
If you surrender or cancel the Certificate, the distribution is taxable to
the extent it exceeds the investment in the Certificate.
Once annuity payments begin, a portion of each payment is considered to be a
tax-free recovery of investment based on the ratio of the investment to the
expected return under the Certificate. The remainder of each payment will be
taxable. In the case of a variable annuity, special rules apply if the
payments received in a year are less than the amount permitted to be
recovered tax-free. In the case of a life annuity, after the total investment
has been recovered, future payments are fully taxable. If payments cease as a
result of death, a deduction for any unrecovered investment will be allowed.
The taxable portion of a distribution is treated as ordinary income and is
subject to income tax withholding. See "Federal and State Income Tax
Withholding" below. In addition, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date the taxpayer attains age 59 1/2, (2) made on or after your death, (3)
attributable to the disability of the taxpayer, (4) part of a series of
substantially equal installments as an annuity for the life (or life
expectancy) of the taxpayer or the joint lives (or joint life expectancies)
of the taxpayer and a beneficiary, or (5) with respect to income allocable to
amounts contributed to an annuity certificate or contract prior to August 14,
1982 which are transferred to the Certificate in a tax-free exchange.
38
<PAGE>
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 5, the beneficiary is generally
subject to the same tax treatment as would apply to you, had you surrendered
the Certificate (discussed above).
If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a lump sum death benefit first becomes payable and
before any benefit is actually paid. The tax computation will reflect your
investment in the Certificate.
The Certificate provides a minimum guaranteed death benefit that in certain
circumstances may be greater than either the contributions made or the
Annuity Account Value. This provision provides investment protection against
an untimely termination of a Certificate on the death of an Annuitant at a
time when the Certificate's Annuity Account Value might otherwise have
provided a lower benefit. Although we do not believe that the provision of
this benefit should have any adverse tax effect, it is possible that the IRS
could take a contrary position and could assert that some portion of the
charges for the minimum guaranteed death benefit should be treated for
Federal income tax purposes as a partial withdrawal from the Certificate. If
this were so, such a deemed withdrawal could be taxable, and for Certificate
Owners under age 59 1/2, also subject to tax penalty.
You should discuss with your tax adviser the effect of any surrender or
withdrawal under the Accumulator Certificate after amounts have been applied
to the Life Contingent Annuity.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax on the taxable
portion of annuity payments, unless the recipient elects not to be subject to
income tax withholding. The rate of withholding will depend on the type of
distribution and, in certain cases, the amount of the distribution. Special
withholding rules apply to foreign recipients and United States citizens
residing outside the United States. If a recipient does not have sufficient
income tax withheld or does not make sufficient estimated income tax
payments, however, the recipient may incur penalties under the estimated
income tax rules. Recipients should consult their tax advisers to determine
whether they should elect out of withholding. Requests not to withhold
Federal income tax must be made in writing prior to receiving benefits under
the Certificate. Our Processing Office will provide forms for this purpose.
No election out of withholding is valid unless the recipient provides us with
the correct taxpayer identification number and a United States residence
address.
Certain states have indicated that income tax withholding will apply to
payments made from the Certificate to residents. In some states, a recipient
may elect out of state withholding. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. If
you need more information concerning a particular state or any required
forms, call our Processing Office at the toll-free number and consult your
tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1996, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,075
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemption. A
withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than you, a Federal generation skipping tax may be
payable with respect to the benefit at rates similar to the maximum estate
tax rate in effect at the time. The generation skipping tax provisions
generally apply to transfers which would also be subject to the gift and
estate tax rules. Individuals are generally allowed an aggregate generation
skipping tax exemp-
39
<PAGE>
tion of $1 million. Because these rules are complex, you should consult with
your tax adviser for specific information, especially where benefits are
passing to younger generations, as opposed to a spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
SPECIAL RULES FOR CERTIFICATES ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from Accumulator Certificates
as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents
is excludable from U.S. taxation. Income from Accumulator Certificates is
also subject to Puerto Rico tax. The computation of the taxable portion of
amounts distributed from a Certificate may differ in the two jurisdictions.
Therefore, an individual might have to file both U.S. and Puerto Rico tax
returns, showing different amounts of income for each. Puerto Rico generally
provides a credit against Puerto Rico tax for U.S. tax paid. Depending on an
individual's personal situation and the timing of the different tax
liabilities, an individual may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account
for taxes. Equitable Life can set up reserves for such taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers among the Investment Funds or between the Guaranteed Period Account
and one or more Investment Funds are not taxable.
40
<PAGE>
- -------------------------------------------------------------------------------
PART 9: KEY FACTORS IN RETIREMENT PLANNING
- -------------------------------------------------------------------------------
INTRODUCTION
The Accumulator is available to help meet the retirement income and
investment needs of individuals. In assessing these retirement needs, some
key factors need to be addressed: (1) the impact of inflation on fixed
retirement incomes; (2) the importance of planning early for retirement; (3)
the benefits of tax-deferral; (4) the selection of an appropriate investment
strategy; and (5) the benefit of annuitization. Each of these factors is
addressed below.
Unless otherwise noted, all of the following presentations use an assumed
annual rate of return of 7.5% compounded annually. This rate of return is for
illustrative purposes only and is not intended to represent an expected or
guaranteed rate of return for any investment vehicle, including the
Accumulator. In addition, unless otherwise noted, none of the illustrations
reflect any charges that may be applied under a particular investment
vehicle, including the Accumulator. Such charges would effectively reduce the
actual return under any investment vehicle.
All earnings in these presentations are assumed to accumulate tax-deferred
unless otherwise noted. Most programs designed for retirement savings offer
tax-deferral. Monies are taxed upon withdrawal and a 10% penalty tax may
apply to premature withdrawals. Certain retirement programs prohibit early
withdrawals. See "Part 8: Tax Aspects of the Certificates." Where taxes are
taken into consideration in these presentations, a 28% tax rate is assumed.
The source of the data used by us to compile the charts which appear in this
Part 9 (other than charts 1, 2, 3, 4 and 7) is Ibbotson Associates, Inc.
Chicago. Stocks, Bonds, Bills and Inflation 1996 Yearbook (TM). All rights
reserved.
In reports or other communications or in advertising material we may make use
of these or other graphic or numerical illustrations that we prepare showing
the impact of inflation, planning early for retirement, tax-deferral,
diversification and other concepts important to retirement planning.
INFLATION
Inflation erodes purchasing power. This means that, in an inflationary
period, the dollar is worth less as time passes. Because many people live on
a fixed income during retirement, inflation is of particular concern to them.
The charts that follow illustrate the detrimental impact of inflation over an
extended period of time. Between 1965 and 1995, the average annual inflation
rate was 5.39%. As demonstrated in Chart 1, this 5.39% annual rate of
inflation would cause the purchasing power of $35,000 to decrease to only
$7,246 after 30 years.
In Chart 2, the impact of inflation is examined from another perspective.
Specifically, the chart illustrates the additional income needed to maintain
the purchasing power of $35,000 over a thirty year period. Again, the
1965-1995 historical inflation rate of 5.39% is used. In this case, an
additional $134,064 would be required to maintain the purchasing power of
$35,000 after 30 years.
CHART 1
[THE FOLLOWING TABLE WAS REPRESENTED AS A
3-D BAR GRAPH IN THE PROSPECTUS]
Today -- $35,000
10 years -- $20,705
20 years -- $12,248
30 years -- $ 7,246
[END OF GRAPHICALLY REPRESENTED DATA]
CHART 2
ANNUAL INCOME NEEDED
[THE FOLLOWING TABLE WAS REPRESENTED AS A
3-D BAR GRAPH IN THE PROSPECTUS]
Today -- $ 35,000
10 years -- $ 59,165
20 years -- $100,013
30 years -- $169,064
Increase Needed: $24,165 $65,013 $134,064
[END OF GRAPHICALLY REPRESENTED DATA]
41
<PAGE>
STARTING EARLY
The impact of inflation accentuates the need to begin a retirement program
early. The value of starting early is illustrated in the following charts.
As shown in Chart 3, if an individual makes annual contributions of $2,500 to
his or her retirement program beginning at age 30, he or she would accumulate
$414,551 by age 65 under the assumptions described earlier. If that
individual waited until age 50, he or she would only accumulate $70,193 by
age 65 under the same assumptions.
CHART 3
[THE FOLLOWING TABLE WAS REPRESENTED AS
A STACKED AREA GRAPH IN THE PROSPECTUS:]
30 ................. $414,551
40 ................. $182,691
50 ................. $ 70,193
BLACK - Age 30 GRAY - Age 40 DOTTED - Age 50
[END OF GRAPHICALLY REPRESENTED DATA]
In Table 1, the impact of starting early is demonstrated in another format.
For example, if an individual invests $300 monthly, he or she would
accumulate $387,193 in thirty years under our assumptions. In contrast, if
that individual invested the same $300 per month for 15 years, he or she
would accumulate only $97,804 under our assumptions.
TABLE 1
<TABLE>
<CAPTION>
MONTHLY
CONTRIBUTION YEAR 10 YEAR 15 YEAR 20 YEAR 25 YEAR 30
- -------------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 20 $ 3,532 $ 6,520 $ 10,811 $ 16,970 $ 25,813
50 8,829 16,301 27,027 42,425 64,532
100 17,659 32,601 54,053 84,851 129,064
200 35,317 65,202 108,107 169,701 258,129
300 52,969 97,804 162,160 254,552 387,193
</TABLE>
Chart 4 presents an additional way to demonstrate the significant impact of
starting to make contributions to a retirement program earlier rather than
later. It assumes that an individual had a goal to accumulate $250,000
(pre-tax) by age 65. If he or she starts at age 30, under our assumptions he
or she could reach the goal by making a monthly pre-tax contribution of $130
(equivalent to $93 after taxes). The total net cost for the 30 year old in
this hypothetical example would be $39,265. If the individual in this
hypothetical example waited until age 50, he or she would have to make a
monthly pre-tax contribution of $767 (equivalent to $552 after taxes) to
attain the goal, illustrating the importance of starting early.
CHART 4
GOAL: $250,000 BY AGE 65
[THE FOLLOWING TABLE WAS REPRESENTED
AS A BAR GRAPH IN THE PROSPECTUS:]
$ 93 a Month ............. 30 $39,265 $210,735
$212 a Month ............. 40 $63,641 $186,359
$552 a Month ............. 50 $99,383 $150,617
BLACK - Net Cost
WHITE - Tax Savings and Tax-Deferred Earnings at 7.5%
[END OF GRAPHICALLY REPRESENTED DATA]
TAX-DEFERRAL
Contributing to a retirement plan early is part of an effective strategy for
addressing the impact of inflation. Another part of such a strategy is to
carefully select the types of retirement programs in which to invest. In
deciding where to invest retirement contributions, there are three basic
types of programs.
The first type offers the most tax benefits, and therefore is potentially the
most beneficial for accumulating funds for retirement. Contributions are made
with pre-tax dollars or are tax-deductible and earnings grow income
tax-deferred. An example of this type of program is the deductible Individual
Retirement Annuity (IRA).
The second type of program also provides for tax deferred earnings growth;
however, contributions are made with after-tax dollars. Examples of this type
of program are non-deductible IRAs and non-qualified annuities.
The third approach to retirement savings is fully taxable. Contributions are
made with after-tax dol-
42
<PAGE>
lars and earnings are taxed each year. Examples of this type of program
include certificates of deposit, savings accounts, and taxable stock, bond or
mutual fund investments.
Consider an example. For the type of retirement program that offers both
pre-tax contributions and tax-deferral, assume that a $2,000 annual pre-tax
contribution is made for thirty years. In this example, the retirement funds
would be $176,363 after thirty years (assuming a 7.5% rate of return, no
withdrawals and assuming the deduction of the 1.15% Separate Account daily
asset charge and the $30 annual contract fee--but no withdrawal charge or
other charges under the Certificate, or Trust charges to Portfolios), and
such funds would be $222,309 without the effect of any charges. Assuming a
lump sum withdrawal was made in year thirty and a 28% tax bracket, these
amounts would be $126,981 and $160,062, respectively.
For the type of program that offers only tax-deferral, assume an after-tax
annual contribution of $1,440 for thirty years and the same rate of return.
The after-tax contribution is derived by taxing the $2,000 pre-tax
contribution again assuming a 28% tax bracket. In this example, the
retirement funds would be $126,275 after thirty years assuming the deduction
of charges and no withdrawals, and $160,062 without the effect of charges.
Assuming a lump sum withdrawal in year thirty, the total after-tax amount
would be $103,014 with charges deducted and $127,341 without charges as
described above.
For the fully taxable investment, assume an after-tax contribution of $1,440
for thirty years. Earnings are taxed annually. After thirty years, the amount
of this fully taxable investment is $108,046.
Keep in mind that taxable investments have fees and charges too (investment
advisory fees, administrative charges, 12b-1 fees, sales loads, brokerage
commissions, etc.). We have not attempted to apply these fees and charges to
the fully taxable amounts since this is intended merely as an example of tax
deferral.
Again, it must be emphasized that the assumed rate of return of 7.5%
compounded annually used in these examples is for illustrative purposes only
and is not intended to represent a guaranteed or expected rate of return on
any investment vehicle. Moreover, early withdrawals of tax-deferred
investments are generally subject to a 10% penalty tax.
INVESTMENT OPTIONS
Selecting an appropriate retirement program is clearly an important part of
an effective retirement planning strategy. Carefully choosing among
Investment Options is another essential component.
During the 1965-1995 period, common stock average annual returns outperformed
the average annual returns of fixed investments such as long-term government
bonds and Treasury Bills (T-Bills). See "Notes" below. Common stocks earned
an average annual return of 10.68% over this period, in contrast to 6.72% and
7.92% for the other two investment categories. Significantly, common stock
returns also outpaced inflation which grew at 5.39% over this period.
Although common stock returns have historically outpaced returns of fixed
investments, people often allocate a significant percentage of their
retirement funds to fixed return investments. Their primary concern is the
preservation of principal. Given this concern, Chart 5 illustrates the impact
of exposing only the interest generated by a fixed investment to the stock
market. In this illustration, the fixed investment is represented by a
Treasury Bill return and the stock investment is represented by the Standard
& Poor's 500 ("S&P 500").
The chart assumes that a $20,000 fixed investment was made on January 1,
1980. If the interest on that investment were to accumulate based upon the
return of the S&P 500, the total investment would have been worth $131,033 in
1995. Had the interest been reinvested in the fixed investment, the fixed
investment would have grown to $62,379. As illustrated in Chart 5,
significant opportunities for growth exist while preserving principal. See
"Notes" below.
CHART 5
$131,033 with Interest Exposed to Stock Market (S&P 500)
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PROSPECTUS]
Market Value Market Value
Month of S&P 500 If 100% in
Ending & Fixed Acct 3 Mo. T-Bill
1980 J 20,160 20,160
F 20,338 20,339
M 20,547 20,586
A 20,823 20,845
M 21,031 21,014
J 21,183 21,142
J 21,369 21,254
A 21,515 21,390
S 21,708 21,550
O 21,930 21,755
N 22,333 21,964
D 22,522 22,252
1981 J 22,619 22,483
F 22,888 22,724
M 23,239 22,999
A 23,386 23,247
M 23,637 23,514
J 23,878 23,832
J 24,129 24,127
A 24,156 24,436
S 24,196 24,739
O 24,659 25,039
N 25,079 25,306
D 25,118 25,527
1982 J 25,195 25,731
F 25,113 25,968
M 25,278 26,222
A 25,722 26,518
M 25,770 26,799
J 25,861 27,057
J 25,945 27,341
A 26,850 27,549
S 27,028 27,689
O 27,937 27,852
N 28,411 28,028
D 28,690 28,216
1983 J 29,131 28,410
F 29,492 28,587
M 29,965 28,767
A 30,862 28,971
M 30,943 29,171
J 31,495 29,366
J 31,284 29,584
A 31,627 29,808
S 31,938 30,035
O 31,930 30,263
N 32,348 30,475
D 32,418 30,698
1984 J 32,490 30,931
F 32,222 31,150
M 32,577 31,378
A 32,826 31,632
M 32,297 31,879
J 32,719 32,118
J 32,701 32,381
A 34,295 32,650
S 34,470 32,931
O 34,708 33,260
N 34,705 33,503
D 35,205 33,717
1985 J 36,503 33,936
F 36,845 34,133
M 37,000 34,345
A 37,089 34,592
M 38,272 34,820
J 38,673 35,012
J 38,748 35,229
A 38,744 35,423
S 38,262 35,635
O 39,208 35,867
N 40,706 36,086
D 41,803 36,320
1986 J 42,011 36,524
F 43,792 36,717
M 45,230 36,938
A 45,021 37,130
M 46,493 37,312
J 47,036 37,506
J 45,602 37,701
A 47,609 37,874
S 45,430 38,045
O 46,935 38,220
N 47,703 38,369
D 47,070 38,557
1987 J 50,789 38,719
F 52,147 38,885
M 53,115 39,068
A 52,912 39,240
M 53,327 39,389
J 55,086 39,578
J 56,925 39,760
A 58,441 39,947
S 57,685 40,127
O 49,695 40,367
N 47,333 40,509
D 49,428 40,667
1988 J 50,743 40,785
F 52,280 40,972
M 51,393 41,152
A 51,824 41,342
M 52,174 41,553
J 53,765 41,756
J 53,732 41,969
A 52,733 42,217
S 54,245 42,478
O 55,302 42,738
N 54,915 42,981
D 55,673 43,252
1989 J 58,362 43,490
F 57,529 43,755
M 58,548 44,048
A 60,672 44,343
M 62,465 44,694
J 62,377 45,011
J 66,323 45,326
A 67,365 45,662
S 67,310 45,958
O 66,344 46,271
N 67,446 46,590
D 68,687 46,874
1990 J 65,533 47,142
F 66,234 47,410
M 67,578 47,714
A 66,541 48,043
M 71,214 48,370
J 70,982 48,674
J 70,955 49,005
A 66,481 49,329
S 64,314 49,625
O 64,286 49,962
N 67,252 50,247
D 68,667 50,548
1991 J 70,922 50,811
F 74,664 51,055
M 76,053 51,280
A 76,316 51,552
M 78,820 51,794
J 76,216 52,011
J 78,945 52,266
A 80,422 52,507
S 79,523 52,748
O 80,405 52,970
N 78,042 53,176
D 84,752 53,378
1992 J 83,616 53,560
F 84,486 53,710
M 83,290 53,892
A 85,196 54,065
M 85,604 54,216
J 84,717 54,390
J 87,387 54,558
A 86,078 54,700
S 86,890 54,842
O 87,176 54,969
N 89,486 55,095
D 90,453 55,249
1993 J 91,013 55,376
F 92,016 55,498
M 93,614 55,637
A 91,858 55,770
M 93,843 55,893
J 94,136 56,033
J 93,836 56,167
A 96,699 56,308
S 96,183 56,454
O 97,774 56,578
N 97,093 56,720
D 98,087 56,850
1994 J 100,753 56,992
F 98,615 57,112
M 95,249 57,266
A 96,281 57,421
M 97,589 57,605
J 95,734 57,783
J 98,297 57,945
A 101,558 58,159
S 99,666 58,375
O 101,566 58,596
N 98,647 58,813
D 99,883 59,072
1995 J 102,044 59,320
F 105,307 59,557
M 107,925 59,831
A 110,571 60,095
M 114,257 60,419
J 116,566 60,703
J 119,871 60,976
A 120,235 61,263
S 124,521 61,526
O 124,249 61,816
N 128,920 62,075
D 131,033 63,379
$62,379 Without Interest Exposed to Stock Market
(S&P 500)
[END OF GRAPHICALLY REPRESENTED DATA]
Another variation of the example in Chart 5 is to gradually transfer
principal from a fixed investment into the stock market. Chart 6 assumes that
a $20,000 fixed investment was made on January 1, 1980. For the next two
years, $540 is transferred monthly into the stock market (represented by the
S&P 500). The total investment, given this strategy,
43
<PAGE>
would have grown to $139,695 in 1995. In contrast, had the principal not been
transferred, the fixed investment would have grown to $62,379. See "Notes"
below.
CHART 6
$139,695 with Principal Transfer
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PROSPECTUS]
Market Value Market Value
Month of S&P 500 If 100% in
Ending & Fixed Acct 3 Mo. T-Bil
1980 J 20540 20160
F 20702 20339
M 20770 20586
A 21068 20845
M 21425 21014
J 21659 21142
J 22000 21254
A 22149 21390
S 22394 21550
O 22623 21755
N 23446 21964
D 23372 22252
1981 J 23246 22483
F 23569 22724
M 24053 22999
A 24031 23247
M 24246 23514
J 24324 23832
J 24514 24127
A 24051 24436
S 23651 24739
O 24397 25039
N 25087 25306
D 24857 25527
1982 J 24193 25731
F 23594 25968
M 23618 26222
A 24248 26518
M 23995 26799
J 23892 27057
J 23731 27341
A 25407 27549
S 25647 27689
O 27281 27852
N 28031 28028
D 28386 28216
1983 J 29041 28410
F 29568 28587
M 30282 28767
A 31737 28971
M 31721 29171
J 32549 29366
J 32000 29584
A 32424 29808
S 32790 30035
O 32616 30263
N 33176 30475
D 33142 30698
1984 J 33104 30931
F 32544 31150
M 32969 31378
A 33202 31632
M 32246 31879
J 32767 32118
J 32593 32381
A 34841 32650
S 34959 32931
O 35133 33260
N 35058 33503
D 35692 33717
1985 J 37434 33936
F 37844 34133
M 37970 34345
A 37984 34592
M 39531 34820
J 40023 35012
J 40038 35229
A 39976 35423
S 39254 35635
O 40428 35867
N 42341 36086
D 43701 36320
1986 J 43926 36524
F 46184 36717
M 47968 36938
A 47659 37130
M 49498 37312
J 50136 37506
J 48265 37701
A 50769 37874
S 47982 38045
O 49830 38220
N 50767 38369
D 49918 38557
1987 J 54519 38719
F 56165 38885
M 57317 39068
A 57035 39240
M 57525 39389
J 59630 39578
J 61849 39760
A 63662 39947
S 62711 40127
O 52932 40367
N 50090 40509
D 52585 40667
1988 J 54165 40785
F 55951 40972
M 54862 41152
A 55344 41342
M 55720 41553
J 57582 41756
J 57509 41969
A 56280 42217
S 58018 42478
O 59225 42738
N 58749 42981
D 59588 43252
1989 J 62695 43490
F 61691 43755
M 62824 44048
A 65234 44343
M 67232 44694
J 67118 45011
J 71581 45326
A 72728 45662
S 72661 45958
O 71544 46271
N 72760 46590
D 74150 46874
1990 J 70617 47142
F 71385 47410
M 72851 47714
A 71676 48043
M 76833 48370
J 76576 48674
J 76526 49005
A 71611 49329
S 69246 49625
O 69192 49962
N 72438 50247
D 73964 50548
1991 J 76420 50811
F 80470 51055
M 81977 51280
A 82241 51552
M 84947 51794
J 82165 52011
J 85076 52266
A 86666 52507
S 85709 52748
O 86662 52970
N 84157 53176
D 91300 53378
1992 J 90106 53560
F 91047 53710
M 89770 53892
A 91798 54065
M 92244 54216
J 91302 54390
J 94130 54558
A 92765 54700
S 93626 54842
O 93940 54969
N 96377 55095
D 97388 55249
1993 J 97994 55376
F 99055 55498
M 100732 55637
A 98899 55770
M 100989 55893
J 101297 56033
J 100991 56167
A 103992 56308
S 103458 56454
O 105136 56578
N 104425 56720
D 105474 56850
1994 J 108259 56992
F 106046 57112
M 102533 57266
A 103617 57421
M 104976 57605
J 103062 57783
J 105741 57945
A 109118 58159
S 107170 58375
O 109151 58596
N 106146 58813
D 107426 59072
1995 J 109681 59320
F 113071 59557
M 115775 59831
A 118526 60095
M 122319 60419
J 124733 60703
J 128155 60976
A 128547 61263
S 132973 61526
O 132710 61816
N 137525 62075
D 139695 62379
$62,379 Without Principal Transfer
[END OF GRAPHICALLY REPRESENTED DATA]
NOTES
1. Common Stocks: Standard & Poor's (S&P) Composite Index is an unmanaged
weighted index of the stock performance of 500 industrial,
transportation, utility and financial companies. Results shown assume
reinvestment of dividends. Both market value and return on common stock
will vary.
2. U.S. Government Securities: Long-term Government Bonds are measured
using a one-bond portfolio constructed each year containing a bond with
approximately a 20-year maturity and a reasonably current coupon. U.S.
Treasury Bills are 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. U.S. Government
securities are guaranteed as to principal and interest, and if held to
maturity, offer a fixed rate of return. However, market value and
return on such securities will fluctuate prior to maturity.
The Accumulator can be an effective program for diversifying ongoing
investments between various asset categories. In addition, the Accumulator
offers special features which help address the risk associated with timing
the equity markets, such as dollar cost averaging. By transferring the same
dollar amount each month from the Money Market Fund to other Investment
Funds, dollar cost averaging attempts to shield your investment from short
term price fluctuations. This, however, does not assure a profit or protect
against a loss in declining markets.
THE BENEFIT OF ANNUITIZATION
An individual may shift the risk of outliving his or her principal by
electing a lifetime income annuity. See "Income Annuity Options," in Part 5.
Chart 7 below shows the monthly income that can be generated under various
forms of life annuities, as compared to receiving level payments of interest
only or principal and interest from the investment. Calculations in the Chart
are based on the following assumption: a $100,000 contribution was made at
one of the ages shown, annuity payments begin immediately, and a 5%
annuitization interest rate is used. For purposes of this example, principal
and interest are paid out on a level basis over 15 years. In the case of the
interest only scenario, the principal is always available and may be left to
other individuals at death. Under the principal and interest scenario, a
portion of the principal will be left at death, assuming the individual dies
within the 15 year period. In contrast, under the life annuity scenarios,
there is no residual amount left.
CHART 7
MONTHLY INCOME
($100,000 CONTRIBUTION)
<TABLE>
<CAPTION>
JOINT AND SURVIVOR*
-----------------------------------
INTEREST PRINCIPAL AND
ONLY FOR INTEREST FOR SINGLE 50% TO 66.67% TO 100% TO
ANNUITANT LIFE 15 YEARS LIFE SURVIVOR SURVIVOR SURVIVOR
- ----------- ---------- -------------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Male 65 $401 $785 $ 617 $560 $544 $513
Male 70 401 785 685 609 588 549
Male 75 401 785 771 674 646 598
Male 80 401 785 888 760 726 665
Male 85 401 785 1,045 878 834 757
</TABLE>
- ------------
The numbers are based on 5% interest compounded annually and the 1983
Individual Annuity Mortality Table "a" projected with modified Scale G.
Annuity purchase rates available at annuitization may vary, depending
primarily on the annuitization interest rate, which may not be less than an
annual rate of 2.5%.
* The Joint and Survivor Annuity Forms are based on male and female
Annuitants of the same age.
44
<PAGE>
PART 10: INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life for the years ended December 31, 1995 and 1994
included in Equitable Life's Annual Report on Form 10-K, incorporated by
reference in the prospectus, have been examined by Price Waterhouse LLP,
independent accountants, whose reports thereon are incorporated herein by
reference. Such consolidated financial statements and consolidated financial
statement schedules have been incorporated herein by reference in reliance
upon the reports of Price Waterhouse LLP given upon their authority as
experts in accounting and auditing.
45
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- -----------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1997 to a Guarantee Period with an Expiration Date
of February 15, 2006 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2001.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2001
----------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2001 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value .................. $144,048 $119,487
(2) Guaranteed Period Amount ............... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ...... 12,968 (11,593)
February 15, 2001 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000 / (1)] $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)] ........... 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ..... 85,581 76,229
(7) Maturity Value ......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value .................. 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
46
<PAGE>
APPENDIX II: GUARANTEED MINIMUM DEATH BENEFIT (GMDB) EXAMPLE
- -----------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB (see "GMDB" in Part 5); and
(2) the death benefit provided with respect to the Guaranteed Period
Account (see "Death Benefit Amount" in Part 4).
The following is an example illustrating the calculation of the GMDB.
Assuming $100,000 is allocated to the Investment Funds (with no allocation to
the Fixed Income Series), no subsequent contributions, no transfers and no
withdrawals, the GMDB for an Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
END OF
CONTRACT ANNUITY ACCOUNT NON-NEW YORK
YEAR VALUE GMDB(1) NEW YORK GMDB
- ---------- --------------- -------------- -------------
<S> <C> <C> <C>
1 $105,000 $106,000 $105,000(2)
2 $108,675 $112,360 $108,675(2)
3 $124,976 $119,102 $119,102(3)
4 $135,912 $126,248 $126,248(3)
5 $149,503 $133,823 $133,823(3)
6 $149,503 $141,852 $141,852(3)
7 $161,463 $150,363 $161,463(3)
8 $161,463 $159,385 $161,463(2)
</TABLE>
The Annuity Account Values for Contract Years 1 through 8 are determined
based on hypothetical rates of return of 5.00%, 3.50%, 15.00%, 8.75%, 10.00%,
0.00%, 8.00% and 0.00%, respectively.
NON-NEW YORK
(1)For Contract Years 1 through 8, the GMDB equals the initial contribution
increased by 6%.
NEW YORK
(2)At the end of Contract Years 1 and 2, and again at the end of Contract
Year 8, the GMDB is equal to the Annuity Account Value.
(3)At the end of Contract Years 3 through 6, the GMDB is equal to the
contribution increased by 6% instead of the Annuity Account Value, since
the GMDB cannot be greater than this amount. However, at the end of the
seventh Contract Year the GMDB is equal to the Annuity Account Value of
$161,463 even though it is greater than the contribution increased at 6%
($150,363) because the cap does not apply on the seventh Processing
Date.
47
<PAGE>
APPENDIX III: GMIB EXAMPLES
- -----------------------------------------------------------------------------
The GMIB is equal to:
(A) the greater of
(i) the Annuity Account Value in the Investment Funds, and
(ii) an amount equal to the GMDB (reduced by any remaining withdrawal
charges);
divided by
(B) the guaranteed maximum annuity purchase rates.
The examples below assume a male age 60 has purchased an Accumulator
Certificate with an initial contribution of $100,000 that is allocated 100%
to the Investment Funds (excluding the Fixed Income Series). The GMDB in the
10th Contract Year is $179,085 at 6% interest. Assuming hypothetical rates of
return (after deduction of charges) in the Investment Funds of 0% in Example
1 and 8% in Example 2 during the 10 Contract Years, the GMIB in the 10th
Contract Year (assuming level payments under the Assured Payment Plan) would
be as follows:
<TABLE>
<CAPTION>
EXAMPLE 1 EXAMPLE 2
----------- -----------
<S> <C> <C>
(1) Hypothetical Rate of Return .... 0% 8%
(2) Annuity Account Value as of the
Contract Date ................... $100,000 $100,000
(3) The greater of (i) the GMDB and (ii)
the Annuity Account Value as of the
10th Contract Date anniversary . $179,085 $215,892
(4) Guaranteed Maximum Annuity
Purchase Rates for level payments
under the Assured Payment Plan . $14.73 $14.73
(5) GMIB as of 10th Contract Date
anniversary ((3) / (4)) ......... $12,160 $14,659
</TABLE>
In Example 1, the GMDB which is higher than the Annuity Account Value would
provide a GMIB of $12,160. In Example 2, the Annuity Account Value, which at
this point is higher than the GMDB, would provide a GMIB of $14,659.
The rates of return shown above are for illustrative purposes only and are
not intended to represent an expected or guaranteed rate of return. Your
investment results will vary. The level of GMIB under the Assured Payment
Plan will also depend on the guaranteed maximum annuity purchase rates as of
the Transaction Date and the type of payments selected. The examples assume
no transfers or withdrawals, which would affect the GMDB and, thus, the GMIB.
48
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
--------
Part 1: Accumulation Unit Values 2
Part 2: Annuity Unit Values 2
Part 3: Custodian and Independent Accountants 3
Part 4: Money Market Fund and Intermediate Government 3
Securities Fund Yield Information
Part 5: Long-Term Market Trends 4
Part 6: Financial Statements 6
</TABLE>
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Accumulator SAI:
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
49
<PAGE>
SUPPLEMENT DATED MAY 1, 1997 TO ROLLOVER IRA AND
CHOICE INCOME PLAN PROSPECTUS, DATED MAY 1, 1996
- -----------------------------------------------------------------------------
This supplement dated May 1, 1997, updates certain information in the
Rollover IRA and Choice Income Plan prospectus of The Equitable Life
Assurance Society of the United States (EQUITABLE LIFE), dated May 1, 1996.
You should read this supplement in conjunction with the prospectus. You
should keep the supplement and the prospectus for future reference. We have
filed with the Securities and Exchange Commission (SEC) our statement of
additional information (SAI) dated May 1, 1997. If you have previously
received, but do not presently have, a copy of the prospectus, you may obtain
an additional copy of the prospectus, as well as a copy of the SAI, from us,
free of charge, if you write to Equitable Life, Income Management Group, P.O.
Box 1547, Secaucus, NJ 07096-1547, call (800) 789-7771 or if you only need a
copy of the SAI, you may mail in the SAI request form located at the end of
the supplement. The SAI has been incorporated by reference into this
supplement.
In the supplement, each section of the prospectus in which a change has been
made is identified and the number of each prospectus page on which a change
occurs is also noted. Special terms used in the prospectus have the same
meaning in the supplement unless otherwise noted.
ON THE COVER PAGE OF THE PROSPECTUS THE THIRD (INCLUDING THE CHART OF
INVESTMENT OPTIONS) AND FOURTH PARAGRAPHS ARE REPLACED BY THE FOLLOWING
PARAGRAPHS:
The Rollover IRA offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 21
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in
the GUARANTEED PERIOD ACCOUNT.
We invest each Investment Fund in Class IA shares of a corresponding
portfolio (PORTFOLIO) of The Hudson River Trust (HR TRUST) or Class IB
shares of a corresponding Portfolio of EQ Advisors Trust (EQ TRUST), mutual
funds whose shares are purchased by separate accounts of insurance
companies. The prospectuses for HR Trust and EQ Trust, both of which
accompany this supplement, describe the investment objectives, policies and
risks of the Portfolios.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
EQUITY SERIES
- -----------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY INTERNATIONAL EQUITY AGGRESSIVE EQUITY
<S> <C> <C>
Alliance Common Stock Alliance Global Alliance Aggressive Stock
Alliance Growth & Income Alliance International Alliance Small Cap Growth
EQ/Putnam Growth & Income Value Morgan Stanley Emerging Markets MFS Emerging Growth Companies
MFS Research Equity Warburg Pincus Small Company Value
Merrill Lynch Basic Value Equity T. Rowe Price International Stock
T. Rowe Price Equity Income
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES FIXED INCOME SERIES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Conservative Investors AGGRESSIVE FIXED INCOME DOMESTIC FIXED INCOME
Alliance Growth Investors Alliance High Yield Alliance Intermediate Government Securities
EQ/Putnam Balanced Alliance Money Market
Merrill Lynch World Strategy
------------------------------------------------------------------------------------------------------------------
</TABLE>
THE FOLLOWING SENTENCE IS ADDED AT THE END OF THE FIFTH PARAGRAPH:
The Guarantee Periods currently available have Expiration Dates of
February 15 in years 1998 through 2007 under the Rollover IRA and 1998
through 2012 under the Choice Income Plan.
THROUGHOUT THE PROSPECTUS ANY REFERENCE TO THE INVESTMENT FUNDS AND GUARANTEE
PERIODS REFER TO THE INVESTMENT FUNDS AND GUARANTEE PERIODS SET FORTH ABOVE.
- -----------------------------------------------------------------------------
Copyright 1997
The Equitable Life Assurance Society of the United States, New York,
New York 10104.
All rights reserved.
<PAGE>
THROUGHOUT THE PROSPECTUS (EXCEPT WHERE OTHERWISE NOTED) THE REFERENCE TO
"TRUST" IS REPLACED BY "HR TRUST AND EQ TRUST."
ON PAGE 2, UNDER THE HEADING "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" REPLACE THE ENTIRE SECTION WITH THE FOLLOWING SECTION:
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December 31,
1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (EXCHANGE ACT) after the date hereof and prior to the termination
of the offering of the securities offered hereby shall be deemed to be
incorporated by reference in the prospectus and the supplement and to be a
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of the
prospectus and the supplement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified and superseded, to constitute a part of the
prospectus and the supplement. Equitable Life files its Exchange Act
documents and reports, including its annual and quarterly reports on Form
10-K and Form 10-Q, electronically pursuant to EDGAR under CIK No.
0000727920. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the SEC. The address of the site is
http://www.sec.gov.
Equitable Life will provide without charge to each person to whom a
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
ON PAGE 4, UNDER THE HEADING "GENERAL TERMS"
ADD THE FOLLOWING DEFINITIONS:
EQ TRUST--EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants,
Inc. (EQ Financial) is the manager of EQ Trust and has appointed advisers
for each of the Portfolios.
HR TRUST--The Hudson River Trust, a mutual fund in which the assets of
separate accounts of insurance companies are invested. Alliance Capital
Management L.P. (Alliance) is the adviser to HR Trust.
DELETE THE DEFINITION FOR "TRUST."
2
<PAGE>
ON PAGES 6, 7 AND 8, REPLACE THE "FEE TABLE" SECTION WITH THE FOLLOWING
SECTION:
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them with other similar products. The table reflects
both the charges of the Separate Account and the expenses of HR Trust and EQ
Trust. Charges for applicable taxes such as state or local premium taxes may
also apply. For a complete description of the charges under the Certificate,
see "Part 7: Deductions and Charges." For a complete description of each
trust's charges and expenses, see the prospectuses for the HR Trust and EQ
Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. However, if there is insufficient
value in the Investment Funds, all or a portion of the distribution fee and
the annual contract fee, if any, may be deducted from your Annuity Account
Value in the Guaranteed Period Account rather than from the Investment Funds.
See "Part 7: Deductions and Charges." A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
<TABLE>
<CAPTION>
<S> <C>
DISTRIBUTION FEE (SALES LOAD) AS A PERCENTAGE OF EACH CONTRIBUTION RECEIVED DURING THE
FIRST CONTRACT YEAR (deducted annually on each of the first seven Processing Dates)(1) ... 0.20%
</TABLE>
<TABLE>
<CAPTION>
CONTRACT
YEAR
---------
<S> <C> <C>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (percentage deducted 1................ 7.00%
upon surrender or for certain withdrawals. The applicable withdrawal 2................ 6.00
charge percentage is determined by the Contract Year in which the 3................ 5.00
withdrawal is made or the Certificate is surrendered beginning with 4................ 4.00
"Contract Year 1" with respect to each contribution withdrawn or 5................ 3.00
surrendered. For each contribution, the Contract Year in which we 6................ 2.00
receive that contribution is "Contract Year 1")(2) 7................ 1.00
8+............... 0.00
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
TRANSFER CHARGE(3)...................................................................... $ 0.00
GUARANTEED MINIMUM DEATH BENEFIT CHARGE (percentage deducted annually on each Processing
Date as a percentage of the guaranteed minimum death benefit then in effect)(4) ....... 0.20%
ANNUAL CONTRACT FEE (DEDUCTED FROM ANNUITY ACCOUNT VALUE ON EACH PROCESSING DATE)(5)
If the initial contribution is less than $25,000 ...................................... $30
If the initial contribution is $25,000 or more ........................................ $ 0
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH INVESTMENT FUND)
MORTALITY AND EXPENSE RISK CHARGE ...................................................... 0.90%
ASSET BASED ADMINISTRATIVE CHARGE ...................................................... 0.25%
-------
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES ................................................ 1.15%
=======
</TABLE>
3
<PAGE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH
PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
-----------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
CONSERVATIVE GROWTH GROWTH & COMMON ALLIANCE
HR TRUST INVESTORS INVESTORS INCOME STOCK GLOBAL
- -------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.48% 0.53% 0.55% 0.38% 0.65%
Other Expenses 0.07% 0.06% 0.05% 0.03% 0.08%
-------------- ----------- ---------- ---------- ----------
TOTAL TRUST ANNUAL
EXPENSES(6) 0.55% 0.59% 0.60% 0.41% 0.73%
============== =========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE ALLIANCE ALLIANCE INTERMEDIATE ALLIANCE
ALLIANCE AGGRESSIVE SMALL CAP MONEY GOVT. HIGH
HR TRUST INTERNATIONAL STOCK GROWTH MARKET SECURITIES YIELD
- -------- --------------- ------------ ----------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.90% 0.55% 0.90% 0.35% 0.50% 0.60%
Other Expenses 0.18% 0.03% 0.10% 0.04% 0.09% 0.06%
--------------- ------------ ----------- ---------- -------------- ----------
TOTAL TRUST ANNUAL
EXPENSES(6) 1.08% 0.58% 1.00% 0.39% 0.59% 0.66%
=============== ============ =========== ========== ============== ==========
</TABLE>
<TABLE>
<CAPTION>
EQ/PUTNAM MFS MERRILL
GROWTH & EMERGING LYNCH
EQ/PUTNAM INCOME GROWTH MFS BASIC VALUE
EQ TRUST BALANCED VALUE COMPANIES RESEARCH EQUITY
- -------- ----------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.55% 0.55% 0.55% 0.55% 0.55%
12b-1 Fee(7) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.10% 0.05% 0.05% 0.05% 0.05%
----------- ----------- ----------- ---------- -------------
TOTAL EQ TRUST ANNUAL
EXPENSES(8) 0.90% 0.85% 0.85% 0.85% 0.85%
=========== =========== =========== ========== =============
</TABLE>
<TABLE>
<CAPTION>
MORGAN T. ROWE WARBURG
MERRILL STANLEY T. ROWE PRICE PINCUS
LYNCH EMERGING PRICE INTERNA- SMALL
WORLD MARKETS EQUITY TIONAL COMPANY
EQ TRUST STRATEGY EQUITY INCOME STOCK VALUE
- -------- ---------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.70% 1.15% 0.55% 0.75% 0.65%
12b-1 Fee(7) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.25% 0.35% 0.05% 0.20% 0.10%
---------- ---------- --------- ---------- ---------
TOTAL EQ TRUST ANNUAL
EXPENSES(8) 1.20% 1.75% 0.85% 1.20% 1.00%
========== ========== ========= ========== =========
</TABLE>
- ------------
Notes:
(1) The amount deducted is based on contributions that have not been
withdrawn. The distribution fee will not apply while the IRA Assured
Payment Option or IRA APO Plus is in effect. See "Part 7: Deductions
and Charges," "Distribution Fee." Under Certificates issued prior to
May 1, 1996, the distribution fee is 0%.
(2) Deducted upon a withdrawal with respect to amounts in excess of the
15% (10% under the IRA Assured Payment Option and IRA APO Plus) free
corridor amount, and upon a surrender. See "Part 7: Deductions and
Charges," "Withdrawal Charge."
(3) We reserve the right to impose a charge in the future at a maximum
of $25 for each transfer among the Investment Options in excess of
five per Contract Year.
(4) See "Part 7: Deductions and Charges," "Guaranteed Minimum Death
Benefit Charge."
(5) This charge is incurred at the beginning of the Contract Year and
deducted on the Processing Date. See "Part 7: Deductions and
Charges," "Annual Contract Fee."
(6) The amounts shown for the Portfolios of HR Trust (other than
Alliance Small Cap Growth) have been restated to reflect advisory
fees which went into effect as of May 1, 1997. "Other Expenses" are
based on the average daily net assets in each Portfolio for the year
ended December 31, 1996. The amounts shown for the Alliance Small
Cap Growth Portfolio are estimated for the current fiscal year as
this Portfolio commenced operations on May 1, 1997. The investment
advisory fee for each Portfolio may vary from year to year depending
upon the average daily net assets of the respective Portfolio of HR
Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. See "HR Trust Charges to Portfolios"
in Part 7.
(7) The Class IB shares of EQ Trust are subject to fees imposed under a
distribution plan (herein, the "Rule 12b-1 Plan") adopted by EQ
Trust pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended. The Rule 12b-1 Plan provides that EQ Trust, on
behalf of each Portfolio, may pay annually up to 0.25% of the
average daily net assets of a Portfolio attributable to its Class IB
shares in respect of activities primarily intended to result in the
sale of the Class IB shares. The 12b-1 fee may be increased only by
action of the Board of Trustees of EQ Trust up to a maximum of 0.50%
per annum.
(8) "Other Expenses" shown are based on estimated amounts (after expense
waiver or limitation) for the current fiscal year, as EQ Trust
commenced operations on May 1, 1997. The maximum investment advisory
fees cannot be increased without a vote of that Portfolio's
shareholders. The other direct operating expenses will fluctuate
from year to year depending on actual expenses, but pursuant to
agreement, cannot together with other fees specified exceed the
total annual expenses specified. See "EQ Trust Charges to
Portfolios" in Part 7.
4
<PAGE>
EXAMPLES
- --------
The examples below show the expenses that a hypothetical Certificate Owner
would pay in the two situations noted below assuming a $1,000 contribution
invested in one of the Investment Funds listed, and a 5% annual return on
assets.(1) The annual contract fee was computed based on an initial
contribution of $10,000.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE EXPENSES
WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
--------
Alliance Conservative Investors $ 90.26 $120.46 $153.06 $262.23
Alliance Growth Investors 90.65 121.66 155.07 266.33
Alliance Growth Income 90.75 121.96 155.58 267.36
Alliance Common Stock 88.86 116.24 145.96 247.74
Alliance Global 92.05 125.87 162.12 280.56
Alliance International 95.53 136.32 179.54 315.32
Alliance Aggressive Stock 90.55 121.35 154.55 265.29
Alliance Small Cap Growth 94.73 133.93 -- --
Alliance Money Market 88.67 115.65 144.95 245.67
Alliance Intermediate Government Securities 90.65 121.66 155.07 266.33
Alliance High Yield 91.35 123.77 158.60 273.47
EQ TRUST
--------
EQ/Putnam Balanced $ 93.74 $130.95 -- --
EQ/Putnam Growth & Income Value 93.24 129.45 -- --
MFS Emerging Growth Companies 93.24 129.45 -- --
MFS Research 93.24 129.45 -- --
Merrill Lynch Basic Value Equity 93.24 129.45 -- --
Merrill Lynch World Strategy 96.72 139.88 -- --
Morgan Stanley Emerging Markets Equity 102.19 156.12 -- --
T. Rowe Price Equity Income 93.24 129.45 -- --
T. Rowe Price International Stock 96.72 139.88 -- --
Warburg Pincus Small Company Value 94.73 133.93 -- --
</TABLE>
----------
* See footnote on next page.
5
<PAGE>
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN,
THE EXPENSES WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative Investors $24.38 $ 74.85 $127.74 $265.82
Alliance Growth
Investors 24.77 76.04 129.75 269.91
Alliance Growth &
Income 24.87 76.34 130.25 270.93
Alliance Common Stock 22.98 70.63 120.64 251.32
Alliance Global 26.17 80.25 136.79 284.15
Alliance International 29.65 90.70 154.21 318.91
Alliance Aggressive Stock 24.67 75.74 129.24 268.88
Alliance Small Cap Growth 28.85 88.31 -- --
Alliance Money Market 22.79 70.02 119.62 249.24
Alliance Intermediate Government
Securities 24.77 76.04 129.75 269.91
Alliance High Yield 25.47 78.15 133.28 277.06
EQ TRUST
- --------
EQ/Putnam Balanced $27.86 $ 85.34 -- --
EQ/Putnam Growth & Income Value 27.36 83.84 -- --
MFS Emerging Growth Companies 27.36 83.84 -- --
MFS Research 27.36 83.84 -- --
Merrill Lynch Basic
Value Equity 27.36 83.84 -- --
Merrill Lynch World Strategy 30.84 94.26 -- --
Morgan Stanley
Emerging Markets Equity 36.31 110.50 -- --
T. Rowe Price Equity Income 27.36 83.84 -- --
T. Rowe Price International Stock 30.84 94.26 -- --
Warburg Pincus Small Company Value 28.85 88.31 -- --
</TABLE>
- ------------
Notes:
(1) The amount accumulated from the $1,000 contribution could not be paid
in the form of an annuity at the end of any of the periods shown in the
examples. If the amount applied to purchase an annuity is less than
$2,000, or the initial payment is less than $20 we may pay the amount
to the payee in a single sum instead of as payments under an annuity
form. See "Income Annuity Options" in Part 6. The examples do not
reflect charges for applciable taxes such as state or local premium
taxes that may also be deducted in certain jurisdictions.
6
<PAGE>
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on May 1, 1995.
The following table shows the Accumulation Unit Values, as of May 1, 1995
and the last Business Day for the periods shown. There are no Accumulation
Unit Values for Alliance Small Cap Growth, Alliance High Yield and the
Investment Funds investing in Class IB shares of EQ Trust Portfolios as
such Investment Funds were not available prior to the date of this
supplement.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
-------------------------------
MAY 1, 1995 DECEMBER 1995 DECEMBER 1996 MARCH 1997
------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
Alliance Conservative
Investors $ 14.647383 $ 16.549050 $ 17.209382 17.009080
Alliance Growth
Investors 20.073331 23.593613 26.260729 25.712963
Alliance Growth &
Income 10.376155 11.989601 14.231408 14.317214
Alliance Common
Stock 102.335691 124.519251 152.955877 147.037726
Alliance Global 19.478146 22.293921 25.253538 24.366634
Alliance International 10.125278 11.033925 11.976127 11.827319
Alliance Aggressive
Stock 44.025496 54.591448 65.938687 64.279288
Alliance Money Market 23.150932 23.830754 24.810781 25.046934
Alliance Intermediate
Govt. Securities 12.498213 13.424767 11.976127 13.741339
Alliance High Yield 19.578616 21.602062 26.238452 26.305394
</TABLE>
ON PAGE 9, UNDER THE HEADING "TRANSFERS," DELETE THE SECOND SENTENCE.
ON PAGE 10, UNDER THE HEADING "IRA ASSURED PAYMENT OPTION," DELETE THE THIRD
PARAGRAPH.
ON PAGE 12, UNDER THE HEADING "EQUITABLE LIFE,"
REPLACE THE THIRD SENTENCE OF THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Our home office is located at 1290 Avenue of the Americas, New York, New
York 10104.
REPLACE THE SECOND AND THIRD PARAGRAPHS WITH THE FOLLOWING PARAGRAPHS:
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996, AXA beneficially owned
63.8% of the outstanding shares of common stock of the Holding Company
(assuming conversion of convertible preferred stock held by AXA). Under its
investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $239.8 billion of assets as of December 31, 1996.
ON PAGES 12 AND 13, REPLACE THE HEADING "THE TRUST" WITH "HR TRUST" AND ADD
THE FOLLOWING SENTENCE AFTER THE FIFTH SENTENCE OF THE FIRST PARAGRAPH:
Investment Funds that invest in Portfolios of HR Trust purchase Class IA
shares of a corresponding Portfolio of HR Trust.
7
<PAGE>
ON PAGE 13, UNDER THE HEADING "THE TRUST'S INVESTMENT ADVISER" AND IN THE
FIRST SENTENCE OF THE PARAGRAPH UNDER THE HEADING REPLACE "THE TRUST" WITH
"HR TRUST."
IN THE FIRST PARAGRAPH OF THIS SECTION REPLACE THE THIRD SENTENCE WITH THE
FOLLOWING SENTENCE:
On December 31, 1996, Alliance was managing approximately $182.8 billion in
assets.
DELETE THE SECOND PARAGRAPH.
ON PAGE 13, INSERT THE FOLLOWING SECTIONS AFTER THE LAST PARAGRAPH:
EQ TRUST
EQ Trust is an open-end management investment company. As a "series type"
of mutual fund, EQ Trust issues different series of stock, each of which
relates to a different Portfolio of EQ Trust. EQ Trust commenced operations
on May 1, 1997. EQ Trust does not impose a sales charge or "load" for
buying and selling it shares. All dividend distributions to EQ Trust are
reinvested in full and fractional shares of the Portfolio to which they
relate. Investment Funds that invest in Portfolios of EQ Trust purchase
Class IB shares of a corresponding Portfolio of EQ Trust. More detailed
information about EQ Trust, its investment objectives, policies and
restrictions, risks, expenses, the Rule 12b-1 Plan relating to the Class IB
shares, and all other aspects of its operations appears in its prospectus
which accompanies this supplement and in its statement of additional
information.
EQ TRUST'S MANAGER AND ADVISERS
EQ Trust is managed by EQ Financial Consultants, Inc. (EQ Financial) which,
subject to supervision and direction of the Trustees of EQ Trust, has
overall responsibility for the general management of EQ Trust. EQ Financial
is an investment adviser registered under the 1940 Act, and a broker-dealer
registered under the Exchange Act. EQ Financial is a Delaware corporation
and an indirect, wholly-owned subsidiary of Equitable Life.
EQ Financial's main office is located at 1290 Avenue of the Americas, New
York, NY 10104.
EQ Financial has entered into investment advisory agreements with Putnam
Investments, Massachusetts Financial Services Company, Merrill Lynch Asset
Management, L.P., Morgan Stanley Asset Management, Inc., T. Rowe Price
Associates, Inc. and Rowe Price-Fleming International, Inc. and Warburg,
Pincus Counsellors, Inc., each of which serve as advisers to EQ/Putnam,
MFS, Merrill Lynch, Morgan Stanley, T. Rowe Price, and Warburg Pincus
Portfolios, respectively, of EQ Trust.
ON PAGE 14, UNDER THE HEADING "INVESTMENT POLICIES AND OBJECTIVES OF THE
TRUST'S PORTFOLIOS"
ADD THE FOLLOWING SENTENCES TO THE END OF THE FIRST PARAGRAPH:
Set forth below is a summary of the investment policies and objectives of
each Portfolio. This summary is qualified in its entirely by reference to
the prospectus for HR Trust and EQ Trust both of which accompany this
supplement. Please read the prospectuses for each of the trusts carefully
before investing.
DELETE THE DESCRIPTION OF "AGGRESSIVE STOCK" AND INSERT THE FOLLOWING
DESCRIPTIONS:
<TABLE>
<CAPTION>
<S> <C> <C>
Alliance Aggressive Primarily common stocks and other equity-type securities Long-term growth of
Stock issued by quality small and intermediate sized companies capital
with strong growth prospects and in covered options on
those securities.
Alliance Small Cap Primarily U.S. common stocks and other equity type Long-term growth of
Growth securities issued by smaller companies with favorable capital
growth prospects.
Alliance High Yield Primarily a diversified mix of high yield, fixed-income High return by
securities involving greater volatility of price and maximizing current
risk of principal and income than high quality income and, to the
fixed-income securities. The medium and lower quality extent consistent with
debt securities in which the Portfolio may invest are that objective, capital
known as "junk bonds." appreciation
</TABLE>
8
<PAGE>
INSERT THE FOLLOWING DESCRIPTIONS AFTER THE DESCRIPTION OF "INTERMEDIATE
GOVERNMENT SECURITIES:"
<TABLE>
<CAPTION>
<S> <C> <C>
EQ/Putnam Balanced A well-diversified portfolio of stocks and bonds that Balanced investment
will produce both capital growth and current income.
EQ/Putnam Growth & Primarily common stocks that offer potential for Capital growth and,
Income Value capital growth, consistent with the Portfolios' secondarily, current
investment objective, common stocks that offer income
potential for current income.
MFS Emerging Growth Primarily (i.e., at lest 80% of its assets uder normal Long-term growth of
Companies circumstances) in common stocks of emerging growth capital
companies that the Portfolio adviser believes are early
in their life cycle but which have the potential to
become major enterprises.
MFS Research A substantial portion of assets invested in common Long-term growth of
stock or securities convertible into common stock of capital and future
companies believed by the Portfolio adviser to possess income
better than average prospects for long-term growth.
Merrill Lynch Basic Investment in securities, primarily equities, that the Capital appreciation
Value Equity Portfolio adviser believes are undervalued and and, secondarily, income
therefore represent basic investment value.
Merrill Lynch World Investment primarily in a portfolio of equity and fixed High total investment
Strategy income securities, including convertible securities of return
U.S. and foreign issuers.
Morgan Stanley Emerging Primarily equity securities of emerging market country Long-term capital
Markets Equity* (i.e. foreign) issuers. appreciation
T. Rowe Price Equity Primarily dividend paying common stocks of established Substantial dividend
Income companies. income and also capital
appreciation
T. Rowe Price Primarily common stocks of established non-United Long-term growth of
International Stock States companies. capital
Warburg Pincus Small Primarily in a portfolio of equity securities of small Long-term capital
Company Value capitalization companies (i.e., companies having market appreciation
capitalizations of $1 billion or less at the time of
initial purchase) that the Portfolio adviser considers
to be relatively undervalued.
</TABLE>
- ------------
* Will be available on or about September 2, 1997.
9
<PAGE>
ON PAGE 15, REPLACE THE FIRST AND SECOND PARAGRAPHS WITH THE FOLLOWING
PARAGRAPHS:
This Part presents performance data for each of the Investment Funds
included in the tables below. The performance data were calculated by two
methods. The first method presented in the tables under "SEC Standardized
Performance Data," reflects all applicable fees and charges, including the
guaranteed minimum death benefit charge, but not the charges for any
applicable taxes such as premium taxes.
The second method presented in the tables under "Rate of Return Data for
Investment Funds," also reflects all applicable fees and charges, but does
not reflect the distribution fee, the withdrawal charge, the guaranteed
minimum death benefit charge, the annual contract fee or the charge for tax
such as premium taxes. These additional charges would effectively reduce
the rates of return credited to a particular Certificate.
HR Trust Portfolios
The performance data shown for the Investment Funds investing in Class IA
shares of HR Trust Portfolios (other than the Alliance Small Cap Growth
Portfolio which commenced operations on May 1, 1997), are based on the
actual investment results of the Portfolios and have been adjusted for the
fees and charges applicable under the Certificates.
The performance data for the Alliance Money Market and Alliance Common
Stock Investment Funds that invest in corresponding HR Trust Portfolios,
for periods prior to March 22, 1985, reflect the investment results of two
open-end management separate accounts (the "predecessor separate accounts")
which were reorganized in unit investment trust form. The "Since inception"
figures for these Investment Funds are based on the date of inception of
the predecessor separate accounts. These performance data have been
adjusted to reflect the maximum investment advisory fee payable for the
corresponding Portfolio of HR Trust, as well as an assumed charge of 0.06%
for direct operating expenses.
EQ Trust Portfolios
The Investment Funds of the Separate Account that invest in Class IB shares
of Portfolios of EQ Trust have only recently been established and no
Certificates funded by those Investment Funds have been issued as of the
date of this supplement. EQ Trust commenced operations on May 1, 1997.
Therefore, no actual historical performance data for any of these
Portfolios are available. In this connection, see the discussion
immediately following the tables below.
REPLACE THE HEADING "PERFORMANCE DATA FOR A CERTIFICATE" WITH "STANDARDIZED
PERFORMANCE DATA."
IN THE FIRST SENTENCE OF THE THIRD PARAGRAPH UNDER THIS HEADING CHANGE THE
DATE FROM "DECEMBER 31, 1995" TO "DECEMBER 31, 1996."
10
<PAGE>
ON PAGES 15 AND 16, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING
TABLES AND FOOTNOTES:
STANDARDIZED PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION*
---------- --------- ------- ------- -------- ------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative
Investors (3.31)% 3.35% 4.99% -- 6.44%
Alliance Growth Investors 4.00 8.01 8.46 -- 12.30
Alliance Growth & Income 11.40 10.76 -- -- 7.80
Alliance Common Stock 15.54 14.03 13.45 14.02% 13.53
Alliance Global 5.98 9.51 11.24 -- 9.12
Alliance International 1.24 -- -- -- 6.16
Alliance Aggressive Stock 13.49 12.44 9.50 16.78 18.25
Alliance Money Market (3.19) 1.66 1.94 4.12 5.38
Alliance Intermediate Govt.
Securities (4.73) 0.58 3.25 -- 4.66
Alliance High Yield 14.16 9.46 12.42 -- 9.57
</TABLE>
STANDARDIZED PERFORMANCE DATA
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1996
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION*
---------- ------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative
Investors $ 967 $1,104 $1,275 -- $ 1,647
Alliance Growth Investors 1,040 1,260 1,501 -- 2,529
Alliance Growth & Income 1,114 1,359 -- -- 1,350
Alliance Common Stock 1,155 1,483 1,880 $3,713 14,359
Alliance Global 1,060 1,313 1,703 -- 2,394
Alliance International 1,012 -- -- -- 1,127
Alliance Aggressive Stock 1,135 1,422 1,574 4,718 6,319
Alliance Money Market 968 1,051 1,101 1,497 2,314
Alliance Intermediate Govt.
Securities 953 1,018 1,173 -- 1,314
Alliance High Yield 1,142 1,312 1,795 -- 2,494
</TABLE>
- ------------
* The "Since Inception" dates for the Portfolios of HR Trust are as follows:
Alliance Conservative Investors (October 2, 1989); Alliance Growth
Investors (October 2, 1989); Alliance Growth & Income (October 1, 1993);
Alliance Common Stock (January 13, 1976); Alliance Global (August 27,
1987); Alliance International (April 3, 1995); Alliance Aggressive Stock
(January 27, 1986); Alliance Small Cap Growth (May 1, 1997); Alliance
Money Market (July 13, 1981); Alliance Intermediate Government Securities
(April 1, 1991); an Alliance High Yield (January 2, 1987).
ON PAGE 16, INSERT THE FOLLOWING PARAGRAPHS BEFORE THE "RATE OF RETURN DATA
FOR INVESTMENT FUNDS" SECTION:
Additional investment performance information appears in the attached HR
Trust and EQ Trust prospectuses.
The Alliance Small Cap Growth Portfolio of HR Trust commenced operations
on May 1, 1997. Therefore, no actual historical performance data are
available. However, historical performance of a composite of six other
advisory accounts managed by Alliance is described in the attached HR
Trust prospectus. According to that prospectus, these accounts have
substantially the same investment objectives and policies, and are managed
in accordance with essentially the same investment strategies and
techniques, as those of the Alliance Small Cap Growth Portfolio. It should
be noted that these accounts are not subject to certain of the
requirements and restrictions to which the Alliance Small Cap
11
<PAGE>
Growth Portfolio is subject and that they are managed for tax exempt
clients of Alliance, who may have different investment goals. The
investment performance information included in the HR Trust prospectus for
all Portfolios other than the Alliance Small Cap Portfolio is based on
actual historical performance.
The investment performance data for HR Trust's Alliance Small Cap
Portfolio and for each of the Portfolios of EQ Trust, contained in the HR
Trust and the EQ Trust prospectuses, are provided by those prospectuses to
illustrate the past performance of each respective Portfolio adviser in
managing a substantially similar investment vehicles as measured against
specified market indices and do not represent the past or future
performance of any Portfolio. None of the performance data contained in
the HR Trust and EQ Trust prospectuses reflects fees and charges imposed
under your Certificate, which fees and charges would reduce such
performance figures. Therefore, the performance data for each of the
Portfolios described in the EQ Trust prospectus and for the Alliance Small
Cap Portfolio in the HR Trust prospectus may be of limited use and are not
intended to be a substitute for actual performance of the corresponding
Portfolios, nor are such results an estimate or guarantee of future
performance for these Portfolios.
ON PAGE 17, INSERT THE FOLLOWING SECTION UNDER THE HEADING "PORTFOLIO
INCEPTION DATES AND COMPARATIVE BENCHMARKS:"
ALLIANCE HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master
Index.
ON PAGES 17, 18 AND 19, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING
TABLES AND FOOTNOTES:
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 5.47% 6.08% -- -- -- 7.77%
Lipper Income 8.95 8.91 9.55 -- -- -- 9.55
Benchmark 8.78 10.14 9.64 -- -- -- 10.42
ALLIANCE GROWTH
INVESTORS 11.30 10.00 9.48 -- -- -- 14.23
Lipper Flexible Portfolio 12.51 9.26 9.30 -- -- -- 9.99
Benchmark 16.94 15.84 13.02 -- -- -- 12.73
ALLIANCE GROWTH &
INCOME 18.70 12.69 -- -- -- -- 11.47
Lipper Growth & Income 19.96 15.39 -- -- -- -- 14.78
Benchmark 21.28 17.93 -- -- -- -- 17.24
ALLIANCE COMMON STOCK 22.84 15.87 14.39 14.49% 15.17% 14.17% 13.90
Lipper Growth 18.78 14.80 12.39 13.08 14.04 13.60 13.42
Benchmark 22.96 19.66 15.20 15.28 16.79 14.55 14.63
ALLIANCE GLOBAL 13.28 11.44 12.19 -- -- -- 10.43
Lipper Global 17.89 8.49 10.29 -- -- -- 3.65
Benchmark 13.48 12.91 10.82 -- -- -- 7.44
ALLIANCE INTERNATIONAL 8.54 -- -- -- -- -- 10.90
Lipper International 13.36 -- -- -- -- -- 14.33
Benchmark 6.05 -- -- -- -- -- 8.74
ALLIANCE Aggressive Stock 20.79 14.33 10.55 17.24 -- -- 18.79
Lipper Small Company
Growth 16.55 12.70 17.53 16.29 -- -- 16.47
Benchmark 17.85 14.14 14.80 14.29 -- -- 13.98
ALLIANCE MONEY MARKET 4.11 3.82 3.12 4.68 5.85 -- 6.05
Lipper Money Market 3.82 3.60 2.93 4.52 5.72 -- 5.89
Benchmark 5.25 5.07 4.37 5.67 6.72 -- 6.97
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57 2.80 4.38 -- -- -- 5.75
Lipper Gen. U.S.
Government 1.57 3.99 5.21 -- -- -- 6.76
Benchmark 4.06 5.37 6.23 -- -- -- 7.43
ALLIANCE HIGH YIELD 21.46 11.43 13.34 -- -- -- 10.13
Lipper High Yield 12.46 7.93 11.47 -- -- -- 9.13
Benchmark 11.06 9.59 12.76 -- -- -- 11.24
</TABLE>
12
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 17.34% 34.32% -- -- -- 72.02%
Lipper Income 8.95 29.47 58.37 -- -- -- 94.21
Benchmark 8.78 33.60 58.40 -- -- -- 105.23
ALLIANCE GROWTH
INVESTORS 11.30 33.11 57.28 -- -- -- 162.18
Lipper Flexible Portfolio 12.51 30.84 56.65 -- -- -- 100.79
Benchmark 16.94 55.46 84.42 -- -- -- 138.49
ALLIANCE GROWTH &
INCOME 18.70 43.09 -- -- -- -- 42.30
Lipper Growth & Income 19.96 53.82 -- -- -- -- 56.73
Benchmark 21.28 63.99 -- -- -- -- 67.75
ALLIANCE COMMON STOCK 22.84 55.58 95.88 287.01% 731.70% 1,314.86% 1,430.82
Lipper Growth 18.78 51.65 80.51 243.70 627.03 1,185.21 1,298.19
Benchmark 22.96 71.34 102.85 314.34 925.25 1,416.26 1,655.74
ALLIANCE GLOBAL 13.28 38.40 77.77 -- -- -- 152.69
Lipper Global 17.89 28.45 63.87 -- -- -- 39.73
Benchmark 13.48 43.95 67.12 -- -- -- 95.62
ALLIANCE INTERNATIONAL 8.54 -- -- -- -- -- 19.76
Lipper International 13.36 -- -- -- -- -- 26.53
Benchmark 6.05 -- -- -- -- -- 15.78
ALLIANCE Aggressive Stock 20.79 49.45 65.10 390.47 -- -- 556.42
Lipper Small Company
Growth 16.55 43.42 142.70 352.31 -- -- 428.32
Benchmark 17.85 46.89 99.38 280.32 -- -- 318.19
ALLIANCE MONEY MARKET 4.11 11.90 16.59 58.03 134.78 -- 148.19
Lipper Money Market 3.82 11.18 15.58 55.73 130.46 -- 141.99
Benchmark 5.25 15.99 23.86 73.61 165.31 -- 184.26
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57 8.63 23.89 -- -- -- 37.89
Lipper Gen. U.S.
Government 1.57 12.45 28.92 -- -- -- 45.71
Benchmark 4.06 16.98 35.30 -- -- -- 51.07
ALLIANCE HIGH YIELD 21.46 38.37 87.00 -- -- -- 162.38
Lipper High Yield 12.46 25.77 72.39 -- -- -- 142.30
Benchmark 11.06 31.63 82.29 -- -- -- 190.43
</TABLE>
* See footnotes on next page.
13
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
--------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS -- -- -- -- -- 2.79%
ALLIANCE GROWTH
INVESTORS -- -- -- -- -- 3.53
ALLIANCE GROWTH
& INCOME -- -- -- -- -- --
ALLIANCE COMMON
STOCK** (3.09)% 31.91% 16.02% 6.21% 21.03% 24.16
ALLIANCE GLOBAL -- -- -- (13.62) 9.61 25.29
ALLIANCE
INTERNATIONAL -- -- -- -- -- --
ALLIANCE
AGGRESSIVE
STOCK -- -- 33.83 6.06 (0.03) 41.86
ALLIANCE MONEY
MARKET** 9.59 6.91 5.39 5.41 6.09 7.93
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- -- -- --
ALLIANCE
HIGH YIELD -- -- -- 3.49 8.48 3.93
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02% 3.99%
ALLIANCE GROWTH
INVESTORS 9.39 47.19 3.69 13.95 (4.27) 24.92 11.30
ALLIANCE GROWTH
& INCOME -- -- -- (0.55) (1.72) 22.65 18.70
ALLIANCE COMMON
STOCK** (9.17) 36.30 2.03 23.39 (3.26) 30.93 22.84
ALLIANCE GLOBAL (7.15) 29.06 (1.65) 30.60 4.02 17.45 13.28
ALLIANCE
INTERNATIONAL -- -- -- -- -- 10.34 8.54
ALLIANCE
AGGRESSIVE
STOCK 6.92 84.73 (4.28) 15.41 (4.92) 30.13 20.79
ALLIANCE MONEY
MARKET** 6.99 4.97 2.37 1.78 2.82 4.53 4.11
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- 11.30 4.38 9.27 (5.47) 12.03 2.57
ALLIANCE
HIGH YIELD (2.26) 23.03 11.02 21.74 (3.90) 18.54 21.46
</TABLE>
- ------------
* Returns do not reflect the distribution fee, the withdrawal charge, the
guaranteed minimum death benefit charge, the annual contract fee and
any charge for tax such as premium taxes.
** Prior to 1984 the Year-by-Year Rates of Return were:
<TABLE>
<CAPTION>
1976 1977 1978 1979 1980 1981 1982 1983
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE COMMON STOCK 8.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22% 24.67%
ALLIANCE MONEY MARKET -- -- -- -- -- 5.71 11.72 7.70%
</TABLE>
14
<PAGE>
ON PAGE 27, UNDER THE HEADING "TRANSFERS AMONG INVESTMENT OPTIONS," DELETE
THE FIRST BULLETED PARAGRAPH.
ON PAGE 28, UNDER THE HEADING "DOLLAR COST AVERAGING."
REPLACE THE FIRST SENTENCE IN THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE.
If you have at least $10,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage
of your Annuity Account Value transferred from the Alliance Money Market
Fund to other Investment Funds on a monthly, quarterly, or annual basis.
REPLACE THE SECOND AND THIRD SENTENCES IN THE SECOND PARAGRAPH WITH THE
FOLLOWING SENTENCES.
The minimum amount that may be transferred on each Transaction Date is
$250. The maximum amount which may be transferred is equal to the Annuity
Account Value in the Alliance Money Market Fund at the time the option is
elected, divided by the number of transfers scheduled to made each Contract
Year.
ON PAGE 29, INSERT THE FOLLOWING SECTION BEFORE THE "CASH VALUE" SECTION:
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
When you elect the IRA Assured Payment Option discussed in Part 6 of the
prospectus, the GMIB provides a minimum amount of guaranteed lifetime
income under such option. On the Transaction Date, the amount of the
periodic lifetime income to be provided will be based on the greater of (i)
the Annuity Account Value in the Investment Funds and (ii) an amount equal
to the GMDB (without regard to the seventh Contract Year reset) described
above, reduced by any remaining withdrawal charges; each divided by
"guaranteed maximum annuity purchase rates" under the Certificate. The
guaranteed maximum annuity purchase rates are based on (i) interest at 2.5%
if the GMIB is exercised within 30 days following a Contract Date
anniversary in years 7 through 9 and at 3% if exercised within 30 days
following the 10th or later Contract Date anniversary, and (ii) mortality
based on the 1983 Individual Annuity Mortality Table "a" projected with
modified Scale G. The mortality table used in determining such annuity
purchase rates assumes that mortality will improve in the future and is
more conservative than the basis underlying current annuity purchase rates.
Your Annuity Account Value in the Investment Funds will depend on the
performance of such Funds. The amount equal to the GMDB (as discussed
above) does not have an Annuity Account Value or a Cash Value and is used
solely for purposes of calculating the GMIB.
If you have any Annuity Account Value in the Guaranteed Period Account as
of the Transaction Date that you exercise the GMIB, such Annuity Account
Value will also be applied (at current annuity purchase rates) toward
providing payments under the IRA Assured Payment Option. Such Annuity
Account Value will increase the payments provided by the GMIB. A market
value adjustment may apply.
When you exercise the GMIB, we automatically determine whether the
application of your Annuity Account Value in the Investment Funds at
current purchase rates under the IRA Assured Payment Option (with a fixed
period as specified below) would produce higher lifetime income, and if so,
the higher income will be provided.
In addition, you can elect any of our income annuity options at any time.
See "Income Annuity Options" in Part 6 of the prospectus.
The GMIB applies only if your election of the IRA Assured Payment Option
meets the following conditions:
o The IRA Assured Payment Option is elected within 30 days following the
7th or later Contract Date anniversary; provided it is not elected
earlier than your age 60, nor later than age 83.
15
<PAGE>
o The fixed period you select is as indicated below, based on your age
at the time of election and the type of payments selected:
<TABLE>
<CAPTION>
LEVEL PAYMENTS
--------------
AGE FIXED PERIOD
----- --------------
<S> <C>
60 through 75 10 years
76 through 78 85 less your age
79 through 83 7 years
INCREASING PAYMENTS
-------------------
AGE FIXED PERIOD
----- --------------
60 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
</TABLE>
o Payments start one payment mode after the IRA Assured Payment Option
goes into effect.
Each year on your Contract Date anniversary, if you are eligible to
exercise the GMIB, we will send you a notice of how much income could be
provided under such option on the Contract Date anniversary. You may then
notify us within 30 days following the Contract Date anniversary if you
want to exercise the GMIB by submitting the proper form. The income to be
provided under the IRA Assured Payment Option will be determined on the
Transaction Date that we receive your request and, therefore, may differ
from the notice. It will be based on the GMIB as of such Transaction Date.
The GMDB, which relates to the Investment Funds, will no longer be in
effect if you elect the IRA Assured Payment Option. If you subsequently
terminate the IRA Assured Payment Option and have your Certificate operate
under the Rollover IRA rules, then the GMDB will go back into effect based
on your Annuity Account Value in the Investment Funds as of the Transaction
Date that the Rollover IRA goes into effect.
GMIB Charge
If you elect to have GMIB added to your Certificate, an additional 0.10%
charge will be applied against the GMDB for providing the GMIB. The charge
will be added as of the Processing Date following election of this benefit.
The combined GMDB/GMIB charge will be 0.30% of the GMDB in effect on each
Processing Date.
ON PAGE 30, UNDER THE HEADING, "DISTRIBUTION OF THE CERTIFICATES," REPLACE
THE FOURTH AND FIFTH SENTENCES OF THE FIRST PARAGRAPH WITH THE FOLLOWING TWO
SENTENCES.
EDI's principal business address is 1290 Avenue of the Americas, New York,
New York 10104. EDI was paid a fee of $1,204,370 for 1996 and $126,914 for
1995 for its services under its "Distribution Agreement" with Equitable
Life and the Separate Account.
ON PAGE 32, UNDER THE SUB-HEADING "PAYMENTS," DELETE THE SECOND PARAGRAPH.
ON PAGE 41, DELETE THE SECTION WITH THE HEADING "TRUST CHARGES TO
PORTFOLIOS," AND REPLACE WITH THE FOLLOWING SECTION.
HR TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HR Trust's assets, direct
operating expenses of HR Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of HR Trust
(such as brokerage commissions and other expenses related to the purchase
and sale of securities), are reflected in each Portfolio's daily share
price. The maximum investment advisory fees paid annually by the Portfolios
cannot be changed without a vote by shareholders. They are as follows:
16
<PAGE>
AVERAGE DAILY NET ASSETS
<TABLE>
<CAPTION>
FIRST NEXT NEXT NEXT
$750 MILLION $750 MILLION $1 BILLION $2.5 BILLION THEREAFTER
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative Investors ....... 0.475% 0.425% 0.375% 0.350% 0.325%
Alliance Growth Investors.............. 0.550% 0.500% 0.450% 0.425% 0.400%
Alliance Growth & Income............... 0.550% 0.525% 0.500% 0.480% 0.470%
Alliance Common Stock.................. 0.475% 0.425% 0.375% 0.355% 0.345%*
Alliance Global........................ 0.675% 0.600% 0.550% 0.530% 0.520%
Alliance International................. 0.900% 0.825% 0.800% 0.780% 0.770%
Alliance Aggressive Stock.............. 0.625% 0.575% 0.525% 0.500% 0.475%
Alliance Small Cap Growth.............. 0.900% 0.850% 0.825% 0.800% 0.775%
Alliance Money Market.................. 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance Intermediate Govt Securities 0.500% 0.475% 0.450% 0.430% 0.420%
Alliance High Yield.................... 0.600% 0.575% 0.550% 0.530% 0.520%
</TABLE>
- ------------
* On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
Investment advisory fees are established under HR Trust's investment advisory
agreements between HR Trust and its investment adviser, Alliance. All of
these fees and expenses are described more fully in the HR Trust prospectus.
EQ TRUST CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQ Trust's assets, the 12b-1
fee, other direct operating expenses of EQ Trust (such as trustees' fees,
expenses of independent auditors and legal counsel, administrative service
fees, custodian fees, and liability insurance), and certain
investment-related expenses of EQ Trust (such as brokerage commissions and
other expenses related to the purchase and sale of securities), are reflected
in each Portfolio's daily share price. The investment management fees paid
annually by the Portfolios cannot be changed without a vote by shareholders.
They are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS
------------------------
<S> <C>
EQ/Putnam Balanced..................... 0.55%
EQ/Putnam Growth and Income Value ..... 0.55%
MFS Emerging Growth Companies.......... 0.55%
MFS Research........................... 0.55%
Merrill Lynch Basic Value Equity ...... 0.55%
Merrill Lynch World Strategy........... 0.70%
Morgan Stanley Emerging Markets
Equity................................ 1.15%
T. Rowe Price Equity Income............ 0.55%
T. Rowe Price International Stock ..... 0.75%
Warburg Pincus Small Company Value .... 0.75%
</TABLE>
Investment management fees are established under EQ Trust's Investment
Management Agreement between EQ Trust and its investment manager, EQ
Financial. EQ Financial has entered into expense limitation agreements with
EQ Trust, with respect to each Portfolio, pursuant to which EQ Financial has
agreed to waive or limit its fees and total annual operating expenses
(expressed as a percentage of the Portfolios' average daily net assets) to
0.85% each for the EQ/Putnam Growth & Income Value, MFS Research, Merrill
Lynch Basic Value Equity, T. Rowe Price Equity, and MFS Emerging Growth
Companies Portfolios; 0.90% for the EQ/Putnam Balanced Portfolio; 1.00% for
Warburg Pincus Small Company Value Portfolio; 1.20% each for T. Rowe Price
International Stock and Merrill Lynch World Strategy Portfolios; and 1.75%
for Morgan Stanley Emerging Markets Equity Portfolio. See the prospectus for
EQ Trust for more information.
The Rule 12b-1 Plan provides that EQ Trust, on behalf of each Portfolio, may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fees, which
may be waived in the discretion of EDI, may be increased only by action of
the Board of Trustees of EQ Trust up to a maximum of 0.50% per annum. All of
these fees and expenses are described more fully in the EQ Trust prospectus.
ON PAGE 43, UNDER THE HEADING "TRUST VOTING RIGHTS"
REPLACE THE FIRST SENTENCE OF THE SECOND PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Because HR Trust is a Massachusetts business trust and EQ Trust is a
Delaware business trust, annual meetings are not required.
17
<PAGE>
ON PAGE 43, UNDER THE HEADING "VOTING RIGHTS OF OTHERS," REPLACE THE FIRST
TWO SENTENCES OF THE PARAGRAPH WITH THE FOLLOWING SENTENCES:
Currently we control each trust. EQ Trust shares currently are sold only to
our separate accounts. HR Trust shares are hold by other separate accounts
of insurance companies affiliated and unaffiliated with us.
ON PAGE 44, UNDER THE SUB-HEADING "CONTRIBUTIONS TO IRAS," REPLACE THE SECOND
SENTENCE OF THE FOURTH PARAGRAPH WITH THE FOLLOWING SENTENCE:
If the individual's spouse does not work or elects to be treated as having
no compensation, the individual and the individual's spouse may contribute
up to $2,000 to individual retirement arrangements (but no more than $2,000
to any one individual retirement arrangement).
ON PAGE 45, REPLACE THE SECOND SENTENCE OF THE FIFTH PARAGRAPH WITH THE
FOLLOWING SENTENCE:
The deductible and nondeductible contributions to the individual's IRA (or
the nonworking spouse's IRA) may not, however, together exceed the maximum
$2,000 per person limit.
ON PAGE 45, UNDER THE SUB-HEADING "EXCESS CONTRIBUTIONS," REPLACE THE LAST
SENTENCE ON THIS PAGE WITH THE FOLLOWING SENTENCE:
If excess contributions are not withdrawn before the time for filing the
individual's Federal income tax return for the year (including extensions),
"regular" contributions may still be withdrawn after that time if the IRA
contribution for the tax year did not exceed $2,000 and no tax deduction
was taken for the excess contribution; in that event, the excess
contribution would not be includable in gross income and would not be
subject to the 10% penalty tax.
ON PAGE 49, UNDER THE HEADING "PENALTY TAX ON EARLY DISTRIBUTIONS," ADD THE
FOLLOWING SENTENCE AT THE END OF THE FIRST PARAGRAPH:
Also not subject to penalty tax are IRA distributions used to pay certain
extraordinary medical expenses or medical insurance premiums for defined
unemployed individuals.
ON PAGE 49, UNDER THE HEADING "TAX PENALTY FOR EXCESS DISTRIBUTIONS OR
ACCUMULATION," REPLACE THE TWO PARAGRAPHS WITH THE FOLLOWING PARAGRAPH:
A 15% excise tax is imposed on an individual's aggregate excess
distributions from all tax-favored retirement plans, including IRAs. The
excise tax is in addition to the ordinary income tax due, but is reduced by
the amount (if any) of the early distribution penalty tax imposed by the
Code. This tax is temporarily suspended for distributions to the individual
for the years 1997, 1998 and 1999. However, the excise tax continues to
apply for estate tax purposes. In certain cases the estate tax imposed on a
deceased individual's estate will be increased if the accumulated value of
the individual's interest in tax-favored retirement plans is excessive. The
aggregate accumulations will be subject to excise tax in 1997 if they
exceed the present value of a hypothetical life annuity paying $160,000 a
year.
ON PAGE 49, UNDER THE HEADING "FEDERAL AND STATE INCOME TAX WITHHOLDING,"
REPLACE THE FOURTH SENTENCE OF THE THIRD PARAGRAPH WITH THE FOLLOWING
SENTENCE:
For 1997, a recipient of periodic payments (e.g., monthly or annual
payments) which total less than a $14,400 taxable amount will generally be
exempt from Federal income tax withholding, unless the recipient specifies
a different choice of withholding exemptions.
INSERT THE FOLLOWING APPENDIX AFTER PAGE 56 "APPENDIX V:"
APPENDIX VI: GMIB EXAMPLES
The GMIB is equal to:
(A) the greater of
(i) the Annuity Account Value in the Investment Funds, and
(ii) an amount equal to the GMDB (without regard to the seventh
Contract Year reset), reduced by any remaining withdrawal
charges;
divided by
(B) the guaranteed maximum annuity purchase rates.
18
<PAGE>
The examples below assume a male age 60 has purchased the Rollover IRA
with an initial contribution of $100,000 that is allocated 100% to the
Investment Funds (excluding the Fixed Income Series). The GMDB (without
regard to the seventh Contract Year reset) in the 10th Contract Year is
$179,085 at 6% interest. Assuming hypothetical rates of return (after
deduction of charges) in the Investment Funds of 0% in Example 1 and 8%
in Example 2 during the 10 Contract Years, the GMIB in the 10th Contract
Year (assuming level payments under the IRA Assured Payment Option) would
be as follows:
<TABLE>
<CAPTION>
EXAMPLE 1 EXAMPLE 2
----------- -----------
<S> <C> <C>
(1) Hypothetical Rate of Return .................. 0% 8%
(2) Annuity Account Value as of the Contract Date $100,000 $100,000
(3) The greater of (i) the GMDB (without regard
to the seventh Contract Year reset) and (ii)
the Annuity Account Value as of the 10th
Contract Date anniversary .................... $179,085 $215,892
(4) Guaranteed Maximum Annuity
Purchase Rates for level payments under
the IRA Assured Payment Option ............... $14.73 $14.73
(5) GMIB as of 10th Contract Date
anniversary ((3) / (4)) ...................... $12,160 $14,659
</TABLE>
In Example 1, the GMDB (without regard to the seventh Contract Year
reset) which is higher than the Annuity Account Value would provide a
GMIB of $12,160. In Example 2, the Annuity Account Value, which at this
point is higher than the GMDB (without regard to the seventh Contract
Year reset), would provide a GMIB of $14,659.
The rates of return discussed above are for illustrative purposes only
and are not intended to represent an expected or guaranteed rate of
return. Your investment results will vary. The level of GMIB under the
IRA Assured Payment Option will also depend on the guaranteed maximum
annuity purchase rates as of the Transaction Date and the type of
payments selected. The examples assume no transfers or withdrawals, which
would affect the GMDB and, thus, the GMIB.
19
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
----
Part 1: Minimum Distribution Withdrawals
Part 2: Accumulation Unit Values 2
Part 3: Annuity Unit Values 2
Part 4: Custodian and Independent Accountants 3
Part 5: Alliance Money Market Fund and Alliance Intermediate 3
Government Securities Fund Yield Information
Part 6: Long-Term Market Trends 4
Part 7: Financial Statements 6
</TABLE>
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me a Rollover IRA SAI:
(Supplement dated May 1, 1997 to Rollover IRA and Choice
Income Plan Prospectus dated May 1, 1996)
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
<PAGE>
INCOME MANAGER(SM)
SUPPLEMENT TO THE PROSPECTUS FOR ROLLOVER IRA
AND CHOICE INCOME PLAN
DATED May 1, 1996
Combination Variable and Fixed Deferred Annuity Certificates
Issued By:
The Equitable Life Assurance Society of the United States
- ------------------------------------------------------------------------------
From the date of the prospectus until July 8, 1996, we will waive the
distribution fee described in the prospectus, for all Certificates issued
based on applications received at our Processing Office by July 8, 1996. We
reserve the right to extend this date.
- ------------------------------------------------------------------------------
Supplement Dated May 17, 1996
IRASUP-DFW
<PAGE>
INCOME MANAGER(SM)
PROSPECTUS FOR ROLLOVER IRA
AND CHOICE INCOME PLAN
DATED MAY 1, 1996
-----------------
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- -----------------------------------------------------------------------------
This prospectus describes individual retirement annuity (IRA) certificates
The Equitable Life Assurance Society of the United States (EQUITABLE LIFE,
WE, OUR and US) offers under a combination variable and fixed deferred
annuity contract (ROLLOVER IRA) issued on a group basis or as individual
contracts. Enrollment under a group contract will be evidenced by issuance of
a certificate. Certificates and individual contracts each will be referred to
as "Certificates." Under the Rollover IRA we will accept only initial
contributions that are rollover contributions or that are direct transfers
from other individual retirement arrangements, as described in this
prospectus. A minimum initial contribution of $10,000 is required to put a
Certificate into effect.
The Rollover IRA is designed to provide retirement income. Contributions
accumulate on a tax-deferred basis and can be distributed under a number of
different methods which are designed to be responsive to the owner's
(CERTIFICATE OWNER, YOU and YOUR) objectives. The distribution methods
include the Choice Income Plan featuring the IRA ASSURED PAYMENT OPTION, IRA
Assured Payment Option Plus (IRA APO PLUS), and a variety of payout options,
including variable annuities and fixed annuities. The IRA Assured Payment
Option and IRA APO Plus are also available for election in the application if
you are interested in receiving distributions rather than accumulating funds.
The Rollover IRA offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 9
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the
GUARANTEED PERIOD ACCOUNT.
<TABLE>
<CAPTION>
Investment Funds
- ------------------------------------------------------------------------------ Guarantee Periods
Asset Allocation Series: Equity Series: Fixed Income Series: Expiration Dates:
- ---------------------------- ---------------------- ------------------------ -----------------
<S> <C> <C> <C>
o Conservative Investors o Growth & Income o Money Market February 15,
o Growth Investors o Common Stock o Intermediate o 1997 through 2006
o Global Government o 1997 through 2011
o International Securities
o Aggressive Stock
</TABLE>
We invest each Investment Fund in shares of a corresponding portfolio
(PORTFOLIO) of The Hudson River Trust (TRUST), a mutual fund whose shares are
purchased by separate accounts of insurance companies. The prospectus for the
Trust, which accompanies this prospectus, describes the investment
objectives, policies and risks of the Portfolios.
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). Each Guarantee Period has its
own Guaranteed Rates.
This prospectus provides information about the Rollover IRA that prospective
investors should know before investing. You should read it carefully and
retain it for future reference. The prospectus is not valid unless
accompanied by a current prospectus for the Trust, which you should also read
carefully.
Registration statements relating to Separate Account No. 45 (SEPARATE
ACCOUNT) and interests under the Guarantee Periods have been filed with the
Securities and Exchange Commission (SEC). The statement of additional
information (SAI), dated May 1, 1996, which is part of the registration
statement for the Separate Account, is available free of charge upon request
by writing to our Processing Office or calling 1-800-789-7771, our toll-free
number. The SAI has been incorporated by reference into this prospectus. The
Table of Contents for the SAI appears at the back of this prospectus.
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- -----------------------------------------------------------------------------
Copyright 1996
The Equitable Life Assurance Society of the United States, New York, New York
10019.
All rights reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1995 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE
ACT) after the date hereof and prior to the termination of the offering of
the securities offered hereby shall be deemed to be incorporated by reference
in this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this prospectus.
Equitable Life files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically
pursuant to EDGAR under CIK No. 0000727920.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 787
Seventh Avenue, New York, New York 10019. Attention: Corporate Secretary
(telephone: (212) 554-1234).
2
<PAGE>
PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
FEE TABLE PAGE 6
Condensed Financial Information 8
PART 1: SUMMARY PAGE 9
What is the Rollover IRA? 9
Investment Options 9
Contributions 9
Transfers 9
Free Look Period 9
Services We Provide 9
Death Benefits 10
Surrendering the Certificates 10
Distribution Methods 10
Taxes 11
Deductions from Annuity
Account Value 11
Deductions from Investment Funds 11
Trust Charges to Portfolios 11
PART 2: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE INVESTMENT FUNDS PAGE 12
Equitable Life 12
Separate Account No. 45 12
The Trust 12
The Trust's Investment Adviser 13
Investment Policies and Objectives of
the Trust's Portfolios 14
PART 3: INVESTMENT PERFORMANCE PAGE 15
Performance Data for a Certificate 15
Rate of Return Data for Investment
Funds 16
Communicating Performance Data 19
Money Market Fund and Intermediate
Government Securities Fund Yield
Information 20
PART 4: THE GUARANTEED PERIOD ACCOUNT PAGE 21
Guarantee Periods 21
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 22
Modal Payment Portion 23
Death Benefit Amount 23
Investments 23
PART 5: PROVISIONS OF THE CERTIFICATES
AND SERVICES WE PROVIDE PAGE 25
Availability of the Certificates 25
Contributions Under the Certificates 25
Methods of Payment 25
Allocation of Contributions 26
Free Look Period 26
Annuity Account Value 27
Transfers Among Investment Options 27
Dollar Cost Averaging 28
Death Benefit 28
Cash Value 29
Surrendering the Certificates to
Receive the Cash Value 29
When Payments are Made 30
Assignment 30
Distribution of the Certificates 30
PART 6: DISTRIBUTION METHODS UNDER
THE CERTIFICATES PAGE 31
IRA Assured Payment Option 31
IRA APO Plus 35
Withdrawals 36
Income Annuity Options 39
PART 7: DEDUCTIONS AND CHARGES PAGE 40
Charges Deducted from the Annuity
Account Value 40
Charges Deducted from the Investment
Funds 41
Trust Charges to Portfolios 41
Sponsored Arrangements 42
Other Distribution Arrangements 42
PART 8: VOTING RIGHTS PAGE 43
Trust Voting Rights 43
Voting Rights of Others 43
Separate Account Voting Rights 43
Changes in Applicable Law 43
PART 9: TAX ASPECTS OF THE CERTIFICATES PAGE 44
Tax-Qualified Individual Retirement
Annuities (IRAs) 44
Penalty Tax on Early Distributions 49
Tax Penalty for Insufficient
Distributions 49
Tax Penalty for Excess Distributions or
Accumulation 49
Federal and State Income Tax
Withholding 49
Other Withholding 50
Impact of Taxes to Equitable Life 50
Transfers Among Investment Options 50
Tax Changes 50
PART 10: INDEPENDENT ACCOUNTANTS PAGE 51
APPENDIX I: MARKET VALUE ADJUSTMENT
EXAMPLE PAGE 52
APPENDIX II: GUARANTEED MINIMUM
DEATH BENEFIT (GMDB) EXAMPLE PAGE 53
APPENDIX III: GMDB SPECIAL ADJUSTMENT PAGE 54
APPENDIX IV: EXAMPLE OF PAYMENTS
UNDER THE IRA ASSURED PAYMENT
OPTION AND IRA APO PLUS PAGE 55
APPENDIX V: IRS TAX DEDUCTION TABLE PAGE 56
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS PAGE 57
</TABLE>
3
<PAGE>
GENERAL TERMS
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE--The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT--The individual who is the measuring life for determining annuity
benefits.
ANNUITY ACCOUNT VALUE--The sum of the amounts in the Investment Options under
the Certificate. See "Annuity Account Value" in Part 5.
ANNUITY COMMENCEMENT DATE--The date on which amounts will be applied under an
income annuity option.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns a Rollover IRA Certificate and has the
right to exercise all rights under the Certificate. The Certificate Owner
must also be the Annuitant.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The date on which you are enrolled under the group annuity
contract, or the effective date of the individual contract. This is usually
the Business Day we receive the initial contribution at our Processing
Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificates.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods
and the Modal Payment Portion of such Account.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
INVESTMENT FUNDS--The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS--The choices for investment: the Investment Funds and each
available Guarantee Period.
IRA--An individual retirement annuity, as defined in Section 408(b) of the
Code.
IRA ASSURED PAYMENT OPTION--A distribution option which provides guaranteed
lifetime income. The IRA Assured Payment Option may be elected in the
application or elected as a distribution option at a later date. Under this
option amounts are allocated to the Guaranteed Period Account and the Life
Contingent Annuity. No amounts may be allocated to the Investment Funds.
IRA APO PLUS--A distribution option which provides guaranteed lifetime
income. IRA APO Plus may be elected in the application or as a distribution
option at a later date. Under this option amounts are allocated to the
Guaranteed Period Account, the Life Contingent Annuity and to the Investment
Funds. The amount in the Investment Funds is then systematically converted to
increase the guaranteed lifetime income.
LIFE CONTINGENT ANNUITY--Provides guaranteed lifetime income beginning at a
future date. Amounts may only be applied under the Life Contingent Annuity
through election of the IRA Assured Payment Option and IRA APO Plus.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
MODAL PAYMENT PORTION--Under the IRA Assured Payment Option and IRA APO Plus,
the portion of the Guaranteed Period Account from which payments, other than
payments due on an Expiration Date, are made.
PORTFOLIOS--The portfolios of the Trust that correspond to the Investment
Funds of the Separate Account.
PROCESSING DATE--The day when we deduct certain charges from the Annuity
Account Value. If the
4
<PAGE>
Processing Date is not a Business Day, it will be on the next succeeding
Business Day. The Processing Date will be once each year on each anniversary
of the Contract Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 1.
SAI--The statement of additional information for the Separate Account under
the Rollover IRA.
SEPARATE ACCOUNT--Equitable Life's Separate Account No. 45.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
TRUST--The Hudson River Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested.
VALUATION PERIOD--Each Business Day together with any preceding non-business
days.
5
<PAGE>
- -----------------------------------------------------------------------------
FEE TABLE
- -----------------------------------------------------------------------------
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them with other similar products. The table reflects
both the charges of the Separate Account and the expenses of the Trust.
Charges for applicable taxes such as state or local premium taxes may also
apply. For a complete description of the charges under the Certificate, see
"Part 7: Deductions and Charges." For a complete description of the Trust's
charges and expenses, see the prospectus for the Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. However, if there is insufficient
value in the Investment Funds, all or a portion of the distribution fee and
the annual contract fee, if any, may be deducted from your Annuity Account
Value in the Guaranteed Period Account rather than from the Investment Funds.
See "Part 7: Deductions and Charges." A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
<TABLE>
<CAPTION>
<S> <C>
DISTRIBUTION FEE (SALES LOAD) AS A PERCENTAGE OF EACH CONTRIBUTION RECEIVED DURING THE FIRST
CONTRACT Year (deducted annually on each of the first seven Processing Dates)(1) .................... 0.20%
</TABLE>
<TABLE>
<CAPTION>
Contract
Year
--------
<S> <C>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (percentage deducted upon 1 ...... 7.00%
surrender or for certain withdrawals. The applicable withdrawal charge 2 ...... 6.00
percentage is determined by the Contract Year in which the withdrawal is 3 ...... 5.00
made or the Certificate is surrendered beginning with "Contract Year 1" with 4 ...... 4.00
respect to each contribution withdrawn or surrendered. For each contribution, 5 ...... 3.00
the Contract Year in which we receive that contribution is "Contract Year 1")(2) 6 ...... 2.00
7 ...... 1.00
8+ ..... 0.00
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Transfer Charge (3) ............................................................................ $0.00
Guaranteed Minimum Death Benefit Charge (percentage deducted annually on each Processing Date
as a percentage of the guaranteed minimum death benefit then in effect)(4) .................... 0.20%
ANNUAL CONTRACT FEE (DEDUCTED FROM ANNUITY ACCOUNT VALUE ON EACH PROCESSING DATE)(5)
- -----------------------------------------------------------------------------------------------
If the initial contribution is less than $25,000 .............................................. $30
If the initial contribution is $25,000 or more ................................................ $0
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH INVESTMENT FUND)
- -----------------------------------------------------------------------------------------------
Mortality and Expense Risk Charge .............................................................. 0.90%
Asset Based Administrative Charge .............................................................. 0.25%
-------
Total Separate Account Annual Expenses ........................................................ 1.15%
=======
</TABLE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS IN EACH
PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
-----------------------------------------------------------
CONSERVATIVE GROWTH GROWTH & COMMON
INVESTORS INVESTORS INCOME STOCK GLOBAL
-------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.55% 0.52% 0.55% 0.35% 0.53%
Other Expenses 0.04% 0.04% 0.05% 0.03% 0.08%
-------------- ----------- ---------- -------- --------
TOTAL TRUST ANNUAL EXPENSES(6) 0.59% 0.56% 0.60% 0.38% 0.61%
============== =========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
AGGRESSIVE MONEY GOVT.
INTERNATIONAL STOCK MARKET SECURITIES
--------------- ------------ -------- --------------
<S> <C> <C> <C> <C>
Investment Advisory Fee 0.90% 0.46% 0.40% 0.50%
Other Expenses 0.13% 0.03% 0.04% 0.07%
--------------- ------------ -------- --------------
TOTAL TRUST ANNUAL EXPENSES(6) 1.03% 0.49% 0.44% 0.57%
=============== ============ ======== ==============
</TABLE>
6
<PAGE>
- ------------
Notes:
(1)The amount deducted is based on contributions that have not been
withdrawn. The distribution fee will not apply while the IRA Assured
Payment Option or IRA APO Plus is in effect. See "Part 7: Deductions and
Charges," "Distribution Fee." Under Certificates issued prior to May 1,
1996, the distribution fee is 0%.
(2)Deducted upon a withdrawal with respect to amounts in excess of the 15%
(10% under the IRA Assured Payment Option and IRA APO Plus) free
corridor amount, and upon a surrender. See "Part 7: Deductions and
Charges," "Withdrawal Charge."
(3)We reserve the right to impose a charge in the future at a maximum of
$25 for each transfer among the Investment Options in excess of five per
Contract Year.
(4)See "Part 7: Deductions and Charges," "Guaranteed Minimum Death Benefit
Charge."
(5)This charge is incurred at the beginning of the Contract Year and
deducted on the Processing Date. See "Part 7: Deductions and Charges,"
"Annual Contract Fee."
(6)Expenses shown for all Portfolios are for the fiscal year ended December
31, 1995. The amount shown for the International Portfolio, which was
established on April 3, 1995, is annualized. The investment advisory fee
for each Portfolio may vary from year to year depending upon the average
daily net assets of the respective Portfolio of the Trust. The maximum
investment advisory fees, however, cannot be increased without a vote of
that Portfolio's shareholders. The other direct operating expenses will
also fluctuate from year to year depending on actual expenses. See
"Trust Charges to Portfolios" in Part 7.
EXAMPLES
The examples below show the expenses that a hypothetical Certificate Owner
would pay in the two situations noted below assuming a $1,000 contribution
invested in one of the Investment Funds listed, and a 5% annual return on
assets.(1) The annual contract fee was computed based on an initial
contribution of $10,000.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $90.65 $121.66 $155.07 $266.33
Growth Investors 90.36 120.76 153.56 263.26
EQUITY SERIES:
Growth & Income 90.75 121.96 155.58 267.36
Common Stock 88.57 115.35 144.45 244.62
Global 90.85 122.27 156.09 268.38
International 95.03 134.82 177.05 310.42
Aggressive Stock 89.66 118.65 150.02 256.04
FIXED INCOME SERIES:
Money Market 89.16 117.15 147.48 250.85
Intermediate Government
Securities 90.46 121.06 154.06 264.27
</TABLE>
7
<PAGE>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $24.77 $76.04 $129.75 $269.91
Growth Investors 24.48 75.15 128.24 266.84
EQUITY SERIES:
Growth & Income 24.87 76.34 130.25 270.93
Common Stock 22.69 69.72 119.11 248.19
Global 24.97 76.64 130.75 271.94
International 29.15 89.21 151.74 314.02
Aggressive Stock 23.78 73.04 124.70 259.62
FIXED INCOME SERIES:
Money Market 23.28 71.53 122.16 254.45
Intermediate Government
Securities 24.58 75.45 128.74 267.85
<FN>
- ------------
Notes:
(1)The amount accumulated could not be paid in the form of an annuity at
the end of any of the periods shown in the examples. If the amount
applied to purchase an annuity is less than $2,000, or the initial
payment is less than $20 we may pay the amount to the payee in a single
sum instead of as payments under an annuity form. See "Income Annuity
Options" in Part 6. The examples do not reflect charges for applicable
taxes such as state or local premium taxes that may also be deducted in
certain jurisdictions.
</TABLE>
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on May 1, 1995. The
following table shows the Accumulation Unit Values, as of May 1, 1995 and the
last Business Day for the periods shown.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
-----------------------------
MAY 1, 1995 DECEMBER 1995 MARCH 1996
------------- --------------- ------------
<S> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $ 14.647383 $ 16.549050 $ 16.173096
Growth Investors 20.073331 23.593613 23.915983
EQUITY SERIES:
Growth & Income 10.376155 11.989601 12.223906
Common Stock 102.335691 124.519251 129.576942
Global 19.478146 22.293921 23.053487
International 10.125278 11.033925 11.330624
Aggressive Stock 44.025496 54.591448 60.791588
FIXED INCOME SERIES:
Money Market 23.150932 23.830754 24.060696
Intermediate Govt.
Securities 12.498213 13.424767 13.280243
</TABLE>
8
<PAGE>
- -----------------------------------------------------------------------------
PART 1: SUMMARY
- -----------------------------------------------------------------------------
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE ROLLOVER IRA?
The Rollover Individual Retirement Annuity (IRA) is designed to provide for
retirement income through the investment of rollover contributions, direct
transfers from other individual retirement arrangements and additional IRA
contributions. The Rollover IRA features a combination of Investment Options,
consisting of Investment Funds providing variable returns and Guarantee
Periods providing guaranteed interest. The Rollover IRA also makes available
distribution methods under the Choice Income Plan which includes the IRA
Assured Payment Option and IRA APO Plus (which can be applied for in the
application or at a later date). Withdrawal options and fixed and variable
income annuity options are also available.
The Rollover IRA and/or the IRA Assured Payment Option and IRA APO Plus may
not be available in all states. These Certificates are not available in
Puerto Rico.
INVESTMENT OPTIONS
The Rollover IRA offers the following Investment Options which permit you to
create your own strategy for retirement savings. All available Investment
Options may be selected under a Certificate.
INVESTMENT FUNDS
o Asset Allocation Series: the Conservative Investors and Growth Investors
Funds
o Equity Series: the Growth & Income, Common Stock, Global, International
and Aggressive Stock Funds
o Fixed Income Series: the Money Market and Intermediate Government
Securities Funds
GUARANTEE PERIODS
o Guarantee Periods maturing in each of calendar years 1997 through 2006.
o Guarantee Periods maturing in 1997 through 2011 under the IRA Assured
Payment Option and IRA APO Plus.
CONTRIBUTIONS
o To put a Certificate into effect, you must contribute at least $10,000
in the form of either a rollovercontribution or a direct custodian-to-
custodian transfer from one or more other individual retirement
arrangements.
o Subsequent contributions may be made in an amount of at least $1,000.
Subsequent contributions must not exceed $2,000 for any taxable year,
except for additional rollover contributions or direct transfers, both
of which are unlimited.
TRANSFERS
Under the Rollover IRA, you may make an unlimited number of transfers among
the Investment Funds. However, there are restrictions for transfers to and
from the Guaranteed Period Account and among the Guarantee Periods. Transfers
from a Guarantee Period may result in a market value adjustment. Transfers
among Investment Options are currently free of charge. Transfers among the
Investment Options are not taxable.
FREE LOOK PERIOD
You have the right to examine the Rollover IRA Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You may
cancel it by sending it to our Processing Office. Your refund will equal the
Annuity Account Value, reflecting any investment gain or loss, and any
positive or negative market value adjustment, through the date we receive
your Certificate at our Processing Office.
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the
calendar year;
o Three additional reports of your Certificate values each year;
o Annual and semi-annual statements of the Trust; and
o Written confirmation of financial transactions.
9
<PAGE>
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values
and Guaranteed Rates applicable to the Guarantee Periods. Also call
during our regular business hours to speak to one of our customer
service representatives.
O PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
DEATH BENEFITS
If you die before the Annuity Commencement Date, the Rollover IRA provides a
death benefit. The beneficiary will be paid the greater of the Annuity
Account Value in the Investment Funds and the guaranteed minimum death
benefit, plus any death benefit provided with respect to the Guaranteed
Period Account.
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time before
the Annuity Commencement Date while the Annuitant is living. Withdrawal
charges and a market value adjustment may apply. A surrender may also be
subject to income tax and tax penalty.
DISTRIBUTION METHODS
IRA ASSURED PAYMENT OPTION
The IRA Assured Payment Option provides guaranteed lifetime income. You may
elect to receive payments on a monthly, quarterly or annual basis during a
fixed period. Payments during the fixed period represent distributions of the
Maturity Values of serially maturing Guarantee Periods on their Expiration
Dates or, distributions from amounts in the Modal Payment Portion of the
Guaranteed Period Account. During the fixed period you can take withdrawals
from your Annuity Account Value. After the fixed period ends, payments are
made out of the Life Contingent Annuity.
The Life Contingent Annuity does not have a Cash Value or an Annuity Account
Value. There is no death benefit under the Life Contingent Annuity and income
is paid only if you (or a joint Annuitant) are living at the date annuity
benefits begin.
A $2.50 charge will be deducted from each payment made on a monthly or
quarterly basis.
IRA APO PLUS
IRA APO Plus is a variation of the IRA Assured Payment Option. IRA APO Plus
enables you to keep a portion of your Annuity Account Value in the Investment
Funds while periodically converting such Annuity Account Value to increase
the guaranteed lifetime income under the IRA Assured Payment Option. When you
elect IRA APO Plus, a portion of your initial contribution or Annuity Account
Value, as applicable, is allocated to the IRA Assured Payment Option to
provide a minimum guaranteed lifetime income, and the remaining contribution
or Annuity Account Value is allocated to the Investment Funds. Every three
years during the fixed period, a portion of the remaining Annuity Account
Value in the Investment Funds is applied to increase the guaranteed payments
under the IRA Assured Payment Option.
WITHDRAWALS
o Lump Sum Withdrawals--After the first Contract Year and before the
Annuity Commencement Date while the Certificate is in effect, you may
take a Lump Sum Withdrawal from your Certificate once per Contract Year
at any time during such Contract Year. The minimum withdrawal amount is
$1,000.
o Substantially Equal Payment Withdrawals--If you are below age 59 1/2 ,
this withdrawal option is designed to allow you to withdraw funds
annually and not have a 10% penalty tax apply. This is accomplished by
distribution of substantially equal periodic payments over your life
expectancy or over the joint life expectancies of you and your spouse.
If you change or stop such distributions before the later of age 59 1/2
or five years from the date of the first distribution, the 10% penalty
tax may apply on all prior distributions.
10
<PAGE>
o Periodic Withdrawals--You may also withdraw funds under our Periodic
Withdrawal option, where the minimum withdrawal amount is $250. These
withdrawals are available if you are age 59 1/2 to 70 1/2 .
o Minimum Distribution Withdrawals--You may also withdraw funds annually
under our Minimum Distribution Withdrawals option, which is designed to
meet the minimum distribution requirements set forth in the Code. The
minimum withdrawal amount is $250.
Withdrawals may be subject to a withdrawal charge and withdrawals from
Guarantee Periods prior to their Expiration Date will result in a market
value adjustment. Withdrawals may be subject to income tax and tax penalty.
INCOME ANNUITY OPTIONS
The Certificates also provide income annuity options to which amounts may be
applied at the Annuity Commencement Date. The income annuity options are
offered on a fixed and variable basis.
TAXES
Generally, any earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject
to tax penalty.
DEDUCTIONS FROM ANNUITY
ACCOUNT VALUE
Distribution Fee
We deduct a sales load annually in an amount of 0.20% of each contribution
received during the first Contract Year. This sales load is deducted on each
of the first seven Processing Dates. The amount deducted is based on
contributions that have not been withdrawn. The distribution fee will not be
deducted while the IRA Assured Payment Option or IRA APO Plus is in effect.
UNDER CERTIFICATES ISSUED PRIOR TO MAY 1, 1996, THERE IS NO DISTRIBUTION FEE.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of the initial and each
subsequent contribution if (i) a Lump Sum Withdrawal or cumulative
withdrawals during a Contract Year exceed the free corridor amount, or (ii)
the Certificate is surrendered. The free corridor amount is 15% under the
Rollover IRA and 10% under the IRA Assured Payment Option and IRA APO Plus.
We determine the withdrawal charge separately for each contribution in
accordance with the table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For purposes of the table, for each contribution the Contract
Year in which we receive that contribution is "Contract Year 1."
Guaranteed Minimum Death Benefit Charge
We deduct annually on each Processing Date an amount equal to 0.20% of the
guaranteed minimum death benefit in effect on such Processing Date.
Annual Contract Fee
The charge will be $30 per Contract Year if your initial contribution is less
than $25,000, and zero if your initial contribution is $25,000 or more.
Charges for State Premium and Other
Applicable Taxes
Generally, we deduct a charge for premium and other applicable taxes from the
Annuity Account Value on the Annuity Commencement Date. The current tax
charge that might be imposed varies by state and ranges from 0 to 2.25%.
DEDUCTIONS FROM INVESTMENT FUNDS
Mortality and Expense Risk Charge
We charge each Investment Fund a daily asset based charge for mortality and
expense risks equivalent to an annual rate of 0.90%.
Asset Based Administrative Charge
We charge each Investment Fund a daily asset based charge to cover a portion
of the administrative expenses under the Certificate equivalent to an annual
rate of 0.25%.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees and other expenses of the Trust are charged daily
against the Trust's assets. These are reflected in the Portfolio's daily
share price and in the daily Accumulation Unit Value for the Investment
Funds.
11
<PAGE>
- -----------------------------------------------------------------------------
PART 2: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
- -----------------------------------------------------------------------------
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our home office is located
at 787 Seventh Avenue, New York, New York 10019. We are authorized to sell
life insurance and annuities in all fifty states, the District of Columbia,
Puerto Rico and the Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding common
stock of the Holding Company plus convertible preferred stock. Under its
investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $195.3 billion of assets as of December 31, 1995.
SEPARATE ACCOUNT NO. 45
Separate Account No. 45 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment
Company Act of 1940 (1940 Act). This registration does not involve any
supervision by the SEC of the management or investment policies of the
Separate Account. The Separate Account has several Investment Funds, each of
which invests in shares of a corresponding Portfolio of the Trust. Because
amounts allocated to the Investment Funds are invested in a mutual fund,
investment return and principal will fluctuate and the Certificate Owner's
Accumulation Units may be worth more or less than the original cost when
redeemed.
Under the New York Insurance Law, the portion of the Separate Account's
assets equal to the reserves and other liabilities relating to the
Certificates are not chargeable with liabilities arising out of any other
business we may conduct. Income, gains or losses, whether or not realized,
from assets of the Separate Account are credited to or charged against the
Separate Account without regard to our other income gains or losses. We are
the issuer of the Certificates, and the obligations set forth in the
Certificates (other than those of Annuitants or Certificate Owners) are our
obligations.
In addition to contributions made under the Rollover IRA Certificates, we may
allocate to the Separate Account monies received under other contracts,
certificates, or agreements. Owners of all such contracts, certificates or
agreements will participate in the Separate Account in proportion to the
amounts they have in the Investment Funds that relate to their contracts,
certificates or agreements. We may retain in the Separate Account assets that
are in excess of the reserves and other liabilities relating to the Rollover
IRA Certificates or to other contracts, certificates or agreements, or we may
transfer the excess to our General Account.
We reserve the right, subject to compliance with applicable law; (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove
Investment Funds (or sub-funds) from, the Separate Account, or to add other
separate accounts; (2) to combine any two or more Investment Funds or
sub-funds thereof; (3) to transfer the assets we determine to be the share of
the class of contracts to which the Certificate belongs from any Investment
Fund to another Investment Fund; (4) to operate the Separate Account or any
Investment Fund as a management investment company under the 1940 Act, in
which case charges and expenses that otherwise would be assessed against an
underlying mutual fund would be assessed against the Separate Account; (5) to
deregister the Separate Account under the 1940 Act, provided that such action
conforms with the requirements of applicable law; (6) to restrict or
eliminate any voting rights as to the Separate Account; and (7) to cause one
or more Investment Funds to invest some or all of their assets in one or more
other trusts or investment companies. If any changes are made that result in
a material change in the underlying investment policy of an Investment Fund,
you will be notified as required by law.
THE TRUST
The Trust is an open-end diversified management investment company, more
commonly called a mu-
12
<PAGE>
tual fund. As a "series" type of mutual fund, it issues several different
series of stock, each of which relates to a different Portfolio of the Trust.
The Trust commenced operations in January 1976 with a predecessor of its
Common Stock Portfolio. The Trust does not impose a sales charge or "load"
for buying and selling its shares. All dividend distributions to the Trust
are reinvested in full and fractional shares of the Portfolio to which they
relate. More detailed information about the Trust, its investment objectives,
policies, restrictions, risks, expenses and all other aspects of its
operations appears in its prospectus which accompanies this prospectus or in
its statement of additional information.
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Alliance Capital Management L.P. (Alliance), which is
registered with the SEC as an investment adviser under the Investment
Advisers Act of 1940. Alliance, a publicly-traded limited partnership, is
indirectly majority-owned by Equitable Life. On December 31, 1995, Alliance
was managing over $146.5 billion in assets. Alliance acts as an investment
adviser to various separate accounts and general accounts of Equitable Life
and other affiliated insurance companies. Alliance also provides management
and consulting services to mutual funds, endowment funds, insurance
companies, foreign entities, qualified and non-tax qualified corporate funds,
public and private pension and profit-sharing plans, foundations and
tax-exempt organizations.
Alliance's record as an investment manager is based, in part, on its ability
to provide a diversity of investment services to domestic, international and
global markets. Alliance prides itself on its ability to attract and retain a
quality, professional work force. Alliance employs more than 160 investment
professionals, including 68 research analysts. Portfolio managers have an
average investment experience of more than 16 years.
Alliance's main office is located at 1345 Avenue of the Americas, New York,
New York 10105.
13
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF THE TRUST'S PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of
each Portfolio will affect its return and its risks. There is no guarantee
that these objectives will be achieved.
The policies and objectives of the Trust's Portfolios are as follows:
<TABLE>
<CAPTION>
Portfolio Investment Policy Objective
- --------------------------- ---------------------------------------------------- -----------------------------
<S> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors Diversified mix of publicly-traded, fixed-income and High total return without, in
equity securities; asset mix and security selection the adviser's opinion, undue
are primarily based upon factors expected to reduce risk to principal
risk. The Portfolio is generally expected to hold
approximately 70% of its assets in fixed income
securities and 30% in equity securities.
Growth Investors Diversified mix of publicly-traded, fixed-income and High total return consistent
equity securities; asset mix and security selection with the adviser's
based upon factors expected to increase possibility determination of reasonable
of high long-term return. The Portfolio is generally risk
expected to hold approximately 70% of its assets in
equity securities and 30% in fixed income
securities.
EQUITY SERIES:
Growth & Income Primarily income producing common stocks and High total return through a
securities convertible into common stocks. combination of current income
and capital appreciation
Common Stock Primarily common stock and other equity-type Long-term growth of capital
instruments. and increasing income
Global Primarily equity securities of non-United States as Long-term growth of capital
well as United States companies.
International Primarily equity securities selected principally to Long-term growth of capital
permit participation in non-United States companies
with prospects for growth.
Aggressive Stock Primarily common stocks and other equity-type Long-term growth of capital
securities issued by medium and other smaller sized
companies with strong growth potential.
FIXED INCOME SERIES:
Money Market Primarily high quality short-term money market High level of current income
instruments. while preserving assets and
maintaining liquidity
Intermediate Government Primarily debt securities issued or guaranteed by High current income
Securities the U.S. government, its agencies and consistent with relative
instrumentalities. Each investment will have a final stability of principal
maturity of not more than 10 years or a duration not
exceeding that of a 10-year Treasury note.
</TABLE>
14
<PAGE>
PART 3: INVESTMENT PERFORMANCE
This Part presents performance data for each of the Investment Funds
calculated by two methods. The first method, used in calculating values for
the two tables in "Performance Data for a Certificate," reflects all
applicable fees and charges other than the charge for tax such as premium
taxes. The second method, used in preparing rates of return for the three
tables in "Rate of Return Data for Investment Funds," reflects all fees and
charges other than the distribution fee, the withdrawal charge, the
guaranteed minimum death benefit charge, the annual contract fee and the
charge for tax such as premium taxes. These additional charges would
effectively reduce the rates of return credited to a particular Certificate.
The Separate Account commenced operations in May 1995 and no Certificates
were issued prior to that date. The calculations of investment performance
shown below are based on the actual investment results of the Portfolios of
the Trust, from which certain fees and charges applicable under the Rollover
IRA have been deducted. The results shown are not an estimate or guarantee of
future investment performance, and do not reflect the actual experience of
amounts invested under a particular Certificate.
See "Part 4: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
PERFORMANCE DATA FOR A CERTIFICATE
The standardized performance data in the following tables illustrate the
average annual total return of the Investment Funds over the periods shown,
assuming a single initial contribution of $1,000 and the surrender of the
Certificate at the end of each period. These tables (which reflect the first
calculation method described above) are prepared in a manner prescribed by
the SEC for use when we advertise the performance of the Separate Account. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
Each calculation assumes that the $1,000 contribution was allocated to only
one Investment Fund, no transfers or subsequent contributions were made and
no amounts were allocated to any other Investment Option under the
Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of
a Certificate which is surrendered on December 31, 1995 by the $1,000
contribution made at the beginning of each period illustrated. The annual
contract fee is computed based on an initial contribution of $10,000. The
result of that calculation is the total growth rate for the period. Then we
annualize that growth rate to obtain the average annual percentage increase
(decrease) during the period shown. When we "annualize," we assume that a
single rate of return applied each year during the period will produce the
ending value, taking into account the effect of compounding.
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
----------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION*
- ---------------------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $1,117 $1,166 $1,462 -- $ 1,582
Growth Investors 1,176 1,292 2,009 -- 2,271
EQUITY SERIES:
Growth & Income 1,154 -- -- -- 1,128
Common Stock 1,236 1,491 2,099 $3,511 11,701
Global 1,102 1,525 1,952 -- 2,120
International -- -- -- -- 1,030
Aggressive Stock 1,228 1,357 2,453 -- 5,250
</TABLE>
15
<PAGE>
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995
(CONTINUED)
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
---------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION*
- ----------------------------- ------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
FIXED INCOME SERIES:
Money Market $ 972 $1,026 $1,111 $1,516 $2,231
Intermediate Govt. Securities 1,047 1,089 -- -- 1,278
<FN>
- ------------
* See footnote below.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1995
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
--------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION*
- ----------------------------- -------- ------- ------- -------- ------------
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors 11.72% 5.26% 7.89% -- 6.77%
Growth Investors 17.62 8.92 14.97 -- 12.43
EQUITY SERIES:
Growth & Income 15.35 -- -- -- 4.11
Common Stock 23.63 14.25 15.98 13.38% 13.09
Global 10.15 15.11 14.31 -- 8.71
International -- -- -- -- 3.04
Aggressive Stock 22.83 10.70 19.66 -- 18.04
FIXED INCOME SERIES:
Money Market (2.77) 0.85 2.12 4.25 5.49
Intermediate Govt. Securities 4.73 2.87 -- -- 5.03
<FN>
- ------------
* The "Since Inception" dates are as follows: Conservative Investors
(October 2, 1989); Growth Investors (October 2, 1989); Growth & Income
(October 1, 1993); Common Stock (January 13, 1976); Global (August 27, 1987);
International (April 3, 1995); Aggressive Stock (January 27, 1986); Money
Market (July 13, 1981); and Intermediate Govt. Securities (April 1, 1991).
The "Since Inception" numbers for the International Fund are unannualized.
</TABLE>
RATE OF RETURN DATA FOR INVESTMENT FUNDS
The following tables (which reflect the second calculation method described
above) provide you with information on rates of return on an annualized,
cumulative and year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of
return reflect performance over a stated period of time. Annualized rates of
return represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
Performance data of the Money Market and Common Stock Funds for the periods
prior to March 22, 1985, reflect the investment results of two open-end
management separate accounts (the "predecessor separate accounts") which were
reorganized in unit investment trust form. The "Since Inception" figures for
these Funds are based on the date of inception of the predecessor separate
accounts. This performance data has been adjusted to reflect the maximum
investment advisory fee payable for the corresponding Portfolio of the Trust
as well as an assumed charge of 0.06% for direct operating expenses.
Performance data for the remaining Investment Funds reflect (i) the
investment results of the corre-
16
<PAGE>
sponding Portfolios of the Trust from the date of inception of those
Portfolios and (ii) the actual investment advisory fee and direct operating
expenses of the relevant Portfolio.
The performance data for all periods has also been adjusted to reflect the
Separate Account mortality and expense risk charge, and the asset based
administrative charge equal to a total of 1.15% relating to the Certificates,
as well as the Trust's expenses.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality
and expense risk charge and the asset based administrative charge under the
Certificates. Comparisons with these benchmarks, therefore, are of limited
use. We include them because they are widely known and may help you to
understand the universe of securities from which each Portfolio is likely to
select its holdings. Benchmark data reflect the reinvestment of dividend
income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
Asset Allocation Series:
CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond Composite
Index and 30% Standard & Poor's 500 Index.
GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond Index
and 70% Standard & Poor's 500 Index.
Equity Series:
GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index and 25%
Value Line Convertible Index.
COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
GLOBAL: August 27, 1987; Morgan Stanley Capital International World Index.
INTERNATIONAL: April 1, 1995; Morgan Stanley Capital International Europe,
Australia, Far East Index.
AGGRESSIVE STOCK: January 27, 1986; 50% Standard & Poor's Mid-Cap Total
Return Index and 50% Russell 2000 Small Stock Index.
Fixed Income Series:
MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill Index.
INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman Intermediate
Government Bond Index.
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity products,
including managed separate accounts of insurance companies. According to
Lipper Analytical Services, Inc., the data are presented net of investment
management fees, direct operating expenses and asset-based charges applicable
under insurance policies or annuity contracts. Lipper data provide a more
accurate picture than market benchmarks of the Rollover IRA performance
relative to other variable annuity products.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE INVESTORS 19.02% 7.32% 8.89% -- -- 8.39%
Lipper Income 21.25 9.65 11.99 -- -- 9.79
Benchmark 24.11 10.41 11.73 -- -- 10.55
GROWTH INVESTORS 24.92 10.87 15.77 -- -- 14.70
Lipper Flexible Portfolio 21.58 9.32 11.43 -- -- 9.44
Benchmark 32.05 13.35 14.70 -- -- 11.97
EQUITY SERIES:
GROWTH & INCOME 22.65 -- -- -- -- 8.40
Lipper Growth & Income 31.18 -- -- -- -- 12.76
Benchmark 34.93 -- -- -- -- 15.45
</TABLE>
17
<PAGE>
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:* (CONTINUED)
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK 30.93% 16.05% 16.80% 13.84% 13.06% 13.47%
Lipper Growth 31.08 12.09 15.53 12.05 12.26 12.25
Benchmark 37.54 15.30 16.57 14.87 14.79 14.24
GLOBAL 17.45 16.86 15.16 -- -- 10.09
Lipper Global 13.87 13.45 9.10 -- -- 2.52
Benchmark 20.72 15.83 11.74 -- -- 6.75
INTERNATIONAL -- -- -- -- -- 10.34**
Lipper International -- -- -- -- -- 12.21**
Benchmark -- -- -- -- -- 9.17**
AGGRESSIVE STOCK 30.13 12.61 20.35 -- -- 18.59
Lipper Small Company Growth 28.19 15.26 25.72 -- -- 16.06
Benchmark 29.69 13.67 20.16 -- -- 13.58
FIXED INCOME SERIES:
MONEY MARKET 4.53 3.04 3.29 4.81 -- 6.19
Lipper Money Market 4.35 2.88 3.10 4.71 -- 6.27
Benchmark 5.74 4.34 4.47 5.77 -- 7.09
INTERMEDIATE GOVERNMENT
SECURITIES 12.03 4.99 -- -- -- 6.43
Lipper Gen. U.S. Government 15.47 6.27 -- -- -- 7.87
Benchmark 14.41 6.74 -- -- -- 8.17
</TABLE>
- ------------
* See footnotes on next page.
** Unannualized.
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE INVESTORS 19.02% 23.60% 53.06% -- -- 65.42%
Lipper Income 21.25 31.95 76.42 -- -- 79.42
Benchmark 24.11 34.58 74.09 -- -- 87.24
GROWTH INVESTORS 24.92 36.28 108.00 -- -- 135.55
Lipper Flexible Portfolio 21.58 30.92 72.73 -- -- 76.92
Benchmark 32.05 45.64 98.56 -- -- 102.72
EQUITY SERIES:
GROWTH & INCOME 22.65 -- -- -- -- 19.89
Lipper Growth & Income 31.18 -- -- -- -- 31.42
Benchmark 34.93 -- -- -- -- 38.14
COMMON STOCK 30.93 56.29 117.35 265.55% 530.07% 1,146.22
Lipper Growth 31.08 41.29 107.30 215.49 483.45 920.87
Benchmark 37.54 53.30 115.25 300.11 692.18 1,327.94
GLOBAL 17.45 59.57 102.53 -- -- 123.08
Lipper Global 13.87 46.36 55.44 -- -- 23.09
Benchmark 20.72 55.39 74.20 -- -- 72.38
INTERNATIONAL -- -- -- -- -- 10.34**
Lipper International -- -- -- -- -- 12.21**
Benchmark -- -- -- -- -- 9.17**
AGGRESSIVE STOCK 30.13 42.79 152.49 -- -- 443.46
Lipper Small Company
Growth 28.19 55.24 268.67 -- -- 337.96
Benchmark 29.69 46.89 150.49 -- -- 254.09
</TABLE>
- ------------
* See footnotes on next page.
** Unannualized.
18
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:* (CONTINUED)
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
FIXED INCOME SERIES:
MONEY MARKET 4.53% 9.40% 17.55% 59.97% -- 138.38%
Lipper Money Market 4.35 8.87 16.48 58.55 -- 140.42
Benchmark 5.74 13.58 24.45 75.23 -- 170.07
INTERMEDIATE GOVERNMENT
SECURITIES 12.03 15.72 -- -- -- 34.43
Lipper Gen. U.S.
Government 15.47 20.05 -- -- -- 43.43
Benchmark 14.41 21.60 -- -- -- 45.17
</TABLE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION
SERIES:
CONSERVATIVE
INVESTORS -- -- -- -- -- --
GROWTH INVESTORS -- -- -- -- -- --
EQUITY SERIES:
GROWTH & INCOME -- -- -- -- -- --
COMMON STOCK*** 24.67% (3.09)% 31.91% 16.02% 6.21% 21.03%
GLOBAL -- -- -- -- (13.62) 9.61
INTERNATIONAL -- -- -- -- -- --
AGGRESSIVE STOCK -- -- -- 33.83 6.06 (0.03)
FIXED INCOME SERIES:
MONEY MARKET*** 7.70 9.59 6.91 5.39 5.41 6.09
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- -- -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION
SERIES:
CONSERVATIVE
INVESTORS 2.79% 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02%
GROWTH INVESTORS 3.53 9.39 47.19 3.69 13.95 (4.27) 24.92
EQUITY SERIES:
GROWTH & INCOME -- -- -- -- (0.55) (1.72) 22.65
COMMON STOCK*** 24.16 (9.17) 36.30 2.03 23.39 (3.26) 30.93
GLOBAL 25.29 (7.15) 29.06 (1.65) 30.60 4.02 17.45
INTERNATIONAL -- -- -- -- -- -- 10.34
AGGRESSIVE STOCK 41.86 6.92 84.73 (4.28) 15.41 (4.92) 30.13
FIXED INCOME SERIES:
MONEY MARKET*** 7.93 6.99 4.97 2.37 1.78 2.82 4.53
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- 11.30 4.38 9.27 (5.47) 12.03
</TABLE>
- ------------
* Returns do not reflect the distribution fee, the withdrawal charge, the
guaranteed minimum death benefit charge, and the annual contract fee.
The Year-by-Year Rates of Return are different from those previously
published, because the previous rates were calculated based on
historical end of month values and are now calculated using daily
historical values.
** Unannualized.
<TABLE>
<CAPTION>
***Prior to 1982 the Year-by-Year Rates of Return were: 1976 1977 1978 1979 1980 1981 1982
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCK 8.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22%
MONEY MARKET -- -- -- -- -- 5.71 11.72
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may
describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance of the Investment Funds
with (1) that of other insurance company separate accounts or mutual funds
included in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS 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 which are shown under "Benchmarks" and "Fund Inception Dates and
Comparative Benchmarks" in this Part 3, or (3) data developed by us derived
from such indices or averages. The Morningstar Variable Annuity/Life Report
consists of nearly 700 variable life and annuity funds, all of which report
their data net of investment management fees, direct operating expenses and
separate account charges. VARDS is a monthly reporting service that monitors
approximately 760 variable life and variable annuity funds on performance and
account information. Advertisements or other communications furnished to
present or prospective Certificate Owners may also include evaluations of an
Investment Fund or Portfolio by financial publications that are nationally
recognized such as Barron's, Morningstar's Variable Annuity Sourcebook,
Business Week, Chicago Tribune, Forbes, Fortune, Institu-
19
<PAGE>
tional Investor, Investment Adviser, Investment Dealer's Digest, Investment
Management Weekly, Los Angeles Times, Money, Money Management Letter,
Kiplinger's Personal Finance, Financial Planning, National Underwriter,
Pension & Investments, USA Today, Investor's Daily, The New York Times, and
The Wall Street Journal.
MONEY MARKET FUND AND INTERMEDIATE GOVERNMENT SECURITIES FUND YIELD
INFORMATION
The current yield and effective yield of the Money Market Fund and
Intermediate Government Securities Fund may appear in reports and promotional
material to current or prospective Certificate Owners.
Money Market Fund
Current yield for the Money Market Fund will be based on net changes in a
hypothetical investment over a given seven-day period, exclusive of capital
changes, and then "annualized" (assuming that the same seven-day result would
occur each week for 52 weeks). "Effective yield" is calculated in a manner
similar to that used to calculate current yield, but when annualized, any
income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings
are compounded weekly. Money Market Fund yields and effective yields assume
the deduction of all Certificate charges and expenses other than the
distribution fee, withdrawal charge, guaranteed minimum death benefit charge
and any charge for tax such as premium tax. See "Part 5: Money Market Fund
and Intermediate Government Securities Fund Yield Information" in the SAI.
Intermediate Government Securities Fund
Current yield for the Intermediate Government Securities Fund will be based
on net changes in a hypothetical investment over a given 30-day period,
exclusive of capital changes, and then "annualized" (assuming that the 30-day
result would occur each month for 12 months). "Effective yield" is calculated
in a manner similar to that used to calculate current yield, but when
annualized, any income earned by the investment is assumed to be reinvested.
The "effective yield" will be higher than the "current yield" because any
earnings are compounded monthly.
Intermediate Government Securities Fund yields and effective yields assume
the deduction of all Certificate charges and expenses other than the
distribution fee, withdrawal charge, guaranteed minimum death benefit charge
and any charge for tax such as premium tax. See "Part 5: Money Market Fund
and Intermediate Government Securities Fund Yield Information" in the SAI.
20
<PAGE>
- -----------------------------------------------------------------------------
PART 4: THE GUARANTEED PERIOD ACCOUNT
- -----------------------------------------------------------------------------
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. The Guaranteed
Rate for each allocation is the annual interest rate applicable to new
allocations to that Guarantee Period, which was in effect on the Transaction
Date for the allocation. We may establish different Guaranteed Rates under
different classes of Certificates. We use the term GUARANTEED PERIOD AMOUNT
to refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
with respect to the Guarantee Periods on any Business Day, therefore, will be
the sum of the present value of the Maturity Value in each Guarantee Period,
using the Guaranteed Rate in effect for new allocations to such Guarantee
Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1997 through 2006. Not all of these Guarantee Periods will be
available to Annuitants ages 71 and above. See "Allocation of Contributions"
in Part 5. As Guarantee Periods expire we expect to add maturity years so
that generally 10 are available in all states at any time under the Rollover
IRA.
Under the IRA Assured Payment Option and IRA APO Plus, in addition to the
Guarantee Periods above, Guarantee Periods ending on February 15th for each
of the maturity years 2007 through 2011 are also available.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no transfers or withdrawals are made and no charges
are allocated to the Guarantee Period). The required amount is the present
value of that Maturity Value at the Guaranteed Rate on the Transaction Date
for the contribution, which may also be expressed as the price per $100 of
Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of May 1, 1996 and the related price
per $100 of Maturity Value for each currently available Guarantee Period were
as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH
EXPIRATION DATE GUARANTEED PRICE PER $100
FEBRUARY 15TH OF RATE AS OF OF MATURITY
MATURITY YEAR MAY 1, 1996 VALUE
- ---------------- ------------ --------------
<S> <C> <C>
1997 4.54% $96.53
1998 5.16 91.37
1999 5.37 86.40
2000 5.51 81.59
2001 5.62 76.93
2002 5.75 72.32
2003 5.88 67.82
2004 5.85 64.19
2005 5.98 59.98
2006 6.08 56.08
</TABLE>
Available under the IRA Assured Payment Option and IRA APO Plus
<TABLE>
<CAPTION>
<S> <C> <C>
2007 6.03% $53.13
2008 6.03 50.11
2009 6.03 47.25
2010 6.03 44.57
2011 6.03 42.03
</TABLE>
21
<PAGE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of
years 1997 through 2001, then according to the above table the lump sum
contribution you would have to make as of May 1, 1996 would be $432.82 (i.e.,
the sum of the price per $100 of Maturity Value for each maturity year from
1997 through 2001).
The above table is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted or withdrawals or transfers from Guarantee Periods. Actual
calculations will also be based on Guaranteed Rates on each actual
Transaction Date, which may differ.
Options at Expiration Date
Under the Rollover IRA, we will notify you on or before December 31st prior
to the Expiration Date of each Guarantee Period in which you have any
Guaranteed Period Amount. You may elect one of the following options to be
effective at the Expiration Date, subject to the restrictions set forth on
the prior page and under "Allocation of Contributions" in Part 5:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges
which may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR TRANSFERS, WITHDRAWALS OR SURRENDER PRIOR TO THE
EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a
Guarantee Period prior to its Expiration Date will cause any remaining
Guaranteed Period Amount for that Guarantee Period to be increased or
decreased by a market value adjustment. The amount of the adjustment will
depend on two factors: (a) the difference between the Guaranteed Rate
applicable to the amount being withdrawn and the Guaranteed Rate on the
Transaction Date for new allocations to a Guarantee Period with the same
Expiration Date, and (b) the length of time remaining until the Expiration
Date. In general, if interest rates have risen between the time when an
amount was originally allocated to a Guarantee Period and the time it is
withdrawn, the market value adjustment will be negative, and vice versa; and
the longer the period of time remaining until the Expiration Date, the
greater the impact of the interest rate difference. Therefore, it is possible
that a significant rise in interest rates could result in a substantial
reduction in your Annuity Account Value in the Guaranteed Period Account
related to longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal of a portion of the amount in a Guarantee Period will be a
percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds from a Guarantee Period. This percentage is
determined by (i) dividing the amount of the withdrawal or transfer from the
Guarantee Period by (ii) the Annuity Account Value in such Guarantee Period
prior to the withdrawal or transfer. See Appendix I for an example.
22
<PAGE>
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate
in (1)(c) above.
MODAL PAYMENT PORTION
Under the IRA Assured Payment Option and IRA APO Plus, a portion of your
contributions or Annuity Account Value is allocated to the Modal Payment
Portion of the Guaranteed Period Account for payments to be made prior to the
Expiration Date of the earliest Guarantee Period we then offer. Such amount
will accumulate interest beginning on the Transaction Date at an interest
rate we set. Interest will be credited daily. Such rate will not be less than
3%.
Upon the expiration of a Guarantee Period, the Guaranteed Period Amount will
be held in the Modal Payment Portion of the Guaranteed Period Account.
Amounts from an expired Guarantee Period held in the Modal Payment Portion of
the Guaranteed Period Account will be credited with interest at a rate equal
to the Guaranteed Rate applicable to the expired Guarantee Period, beginning
on the Expiration Date of such Guarantee Period.
There is no market value adjustment with respect to amounts held in the Modal
Payment Portion of the Guaranteed Period Account.
DEATH BENEFIT AMOUNT
The death benefit provided with respect to the Guaranteed Period Account is
equal to the Annuity Account Value in the Guaranteed Period Account or, if
greater, the sum of the Guaranteed Period Amounts in each Guarantee Period,
plus any amounts in the Modal Payment Portion of the Guaranteed Period
Account. See "Annuity Account Value" in Part 5.
INVESTMENTS
Amounts allocated to Guarantee Periods or the Modal Payment Portion of the
Guaranteed Period Account will be held in a "nonunitized" separate account
established by Equitable Life under the laws of New York. This separate
account provides an additional measure of assurance that full payment of
amounts due under the Guarantee Periods and the Modal Payment Portion of the
Guaranteed Period Account will be made. Under the New York Insurance Law, the
portion of the separate account's assets equal to the reserves and other
contract liabilities relating to the Certificates are not chargeable with
liabilities arising out of any other business we may conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations. Amounts applied under the Life Contingent Annuity become
part of the general account. See "IRA Assured Payment Option," "Life
Contingent Annuity," in Part 6.
23
<PAGE>
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933 (1933 Act),
nor is the general account an investment company under the 1940 Act.
Accordingly, neither the general account nor the Life Contingent Annuity is
subject to regulation under the 1933 Act or the 1940 Act. However, the market
value adjustment interests under the Certificates are registered under the
1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in the prospectus for your information that
relates to the general account (other than market value adjustment interests)
and the Life Contingent Annuity. The disclosure, however, may be subject to
certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
24
<PAGE>
- -----------------------------------------------------------------------------
PART 5: PROVISIONS OF THE CERTIFICATES AND SERVICES
WE PROVIDE
- -----------------------------------------------------------------------------
The provisions discussed in this Part 5 apply when your Certificate is
operating primarily to accumulate Annuity Account Value. Different rules may
apply when you elect the IRA Assured Payment Option or IRA APO Plus in the
application or as later elected as a distribution option under your Rollover
IRA as discussed in Part 6. The provisions of your Certificate may be
restricted by applicable laws or regulations.
AVAILABILITY OF THE CERTIFICATES
The Rollover IRA Certificates are available for issue ages 20 through 78.
These Certificates may not be available in all states. These Certificates are
not available in Puerto Rico.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your initial contribution must be at least $10,000. We will only accept
initial contributions which are either rollover contributions under Sections
402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code, or direct
custodian-to-custodian transfers from other individual retirement
arrangements. See "Part 9: Tax Aspects of the Certificates."
You may make subsequent contributions in an amount of at least $1,000.
Subsequent contributions may be "regular" IRA contributions (limited to a
maximum of $2,000 a year), rollover contributions as described above, or
direct transfers as described above. Rollover contributions and direct
transfers are not subject to the $2,000 annual limit.
We may refuse to accept any contribution if the sum of all contributions
under a Certificate would then total more than $1,500,000. We may also refuse
to accept any contribution if the sum of all contributions under all
Equitable annuity accumulation certificates/contracts you own would then
total more than $2,500,000.
"Regular" IRA contributions may no longer be made for the taxable year in
which you attain age 70 1/2 and thereafter. Rollover and direct transfer
contributions may be made until you attain age 78. However, any amount
contributed after you attain age 70 1/2 must be net of your required minimum
distribution for the year in which the rollover or direct transfer
contribution is made. See "Part 9: Tax Aspects of the Certificates." For the
consequences of making a "regular" IRA contribution to your Certificate, also
see Part 9.
Contributions are credited as of the Transaction Date.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check. All
contributions made by check must be drawn on a bank or credit union in the
U.S., in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. All contributions should be sent to Equitable
Life at our Processing Office address designated for contributions.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will be invested at the value next
determined following receipt for contributions allocated to the Investment
Funds. Contributions allocated to the Guaranteed Period Account will receive
the Guaranteed Rate(s) in effect for the applicable Guarantee Period(s) on
the date contributions are received. Wire orders not accompanied by complete
information, may be retained for a period not exceeding five Business Days
while an attempt is made to obtain the required information. If the required
information cannot be obtained within those five Business Days, the
Processing Office will inform the broker-dealer, on behalf of the applicant,
of the reasons for the delay and return the contribution immediately to the
applicant, unless the applicant specifically consents to our retaining the
contribution until the required information is received by the Processing
Office.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate will not be issued until the receipt and
acceptance of a properly completed application. During the time from receipt
of the initial contribution until a signed application is received from the
Certificate Owner, no other financial transactions may be requested.
25
<PAGE>
If an application is not received within ten days of receipt of the initial
contribution via wire order, or if an incomplete application is received and
cannot be completed within ten days of receipt of the initial contribution,
the amount of the initial contribution will be returned to the applicant with
immediate notification to the broker-dealer. In no event will less than the
full amount of the initial contribution be returned to the applicant.
After your Certificate has been issued, subsequent contributions may be
transmitted by wire.
ALLOCATION OF CONTRIBUTIONS
You have two options from which to choose for allocation of your
contributions: Self-Directed Allocation and Principal Assurance.
Self-Directed Allocation
You design your own investment program by allocating your contributions among
the Investment Options in any way you choose. Your contributions may be
allocated to one or up to all of the available Investment Options at any
time. We allocate contributions among the Investment Options according to
your allocation percentages. Allocations must be in whole percentages.
Allocation percentages can be changed at any time by writing to our
Processing Office, or by telephone. The change will be effective on the
Transaction Date and will remain in effect for future contributions unless
another change is requested. Allocation of the initial contribution is
subject to the provisions for the free look period. See "Free Look Period"
below. Allocation of any contribution to the Guaranteed Period Account is
subject to the following restrictions:
o No more than 60% of any contribution may be allocated to the
Guaranteed Period Account. UNDER CERTIFICATES ISSUED PRIOR TO MAY 1,
1996, THE 60% LIMITATION DOES NOT APPLY.
o If you are between ages 71 through 74 (inclusive), allocations may
not be made to a Guarantee Period with a maturity year that would
exceed the year in which you will attain age 80. At ages 75 and
above, allocations may be made only to Guarantee Periods with
maturities of five years or less; however, in no event may
allocations be made to Guarantee Periods with maturities beyond the
February 15th immediately following the Annuity Commencement Date.
Principal Assurance
This option is designed to assure that your Maturity Value in a specified
Guarantee Period equals your initial contribution while at the same time
allowing you to invest in the Investment Funds. The maturity year you select
for such specified Guarantee Period may not be later than 10 years nor
earlier than seven years. However, in no event may you elect a year beyond
the year in which you will attain age 70 1/2 . In order to accomplish this
strategy, we will allocate a portion (equal to the present value) of your
initial contribution to a Guarantee Period based on the year you select. See
"Guaranteed Rates and Price Per $100 of Maturity Value" in Part 4. You may
allocate the balance of your contribution to the Investment Funds in any way
you choose. Such allocations to the Investment Funds must be in whole
percentages. Allocation of the portion of your initial contribution to the
Investment Funds is subject to the provisions for the free look period. See
"Free Look Period" below.
Principal Assurance may only be elected at issue of your Certificate and
assumes no withdrawals or transfers of the amount allocated to the specified
Guarantee Period.
Subsequent contributions must be allocated under "Self-Directed Allocation"
described above.
Allocations to the Investment Funds
A contribution allocated to an Investment Fund purchases Accumulation Units
in that Investment Fund based on the Accumulation Unit Value for that
Investment Fund computed on the Transaction Date.
Allocations to the Guaranteed Period Account
Contributions allocated to the Guaranteed Period Account will have the
Guaranteed Rate for the specified Guarantee Period offered on the Transaction
Date.
FREE LOOK PERIOD
You have the right to examine the Rollover IRA Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You cancel it
by sending it to our Processing Office. The free look is extended if your
state requires a refund period of longer than 10 days.
Your refund will equal the Annuity Account Value reflecting any investment
gain or loss, and any positive or negative market value adjustment, through
the date we receive your Certificate at our Processing Office. Some states or
Federal income tax regulations may require that we calculate the refund
differently. In those states that require that we calculate the refund
differently, we may require that any portion of your initial contribution
that you request to have allocated to the Investment Funds, be allocated to
the Money Market Fund until the end of the free look period.
26
<PAGE>
If the IRA Assured Payment Option or IRA APO Plus is elected in the
application for the Certificate, your refund will include any amount applied
under the Life Contingent Annuity. See "IRA Assured Payment Option," "Life
Contingent Annuity" in Part 6.
We follow these same procedures if you change your mind before a Certificate
has been issued, but after a contribution has been made. See "Part 9: Tax
Aspects of the Certificates" for possible consequences of canceling your
Certificate during the free look period.
If you cancel your Certificate during the free look period, we may require
that you wait six months before you may apply for a Certificate with us
again.
ANNUITY ACCOUNT VALUE
The Annuity Account Value is the sum of the Annuity Account Values in the
Investment Funds and the Guaranteed Period Account.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal
to the number of Accumulation Units in that Investment Fund times the
Accumulation Unit Value for the Investment Fund for that date. The number of
Accumulation Units in an Investment Fund at any time is equal to the sum of
Accumulation Units purchased by contributions and transfers less the sum of
Accumulation Units redeemed for withdrawals, transfers or deductions for
charges.
The number of Accumulation Units purchased or sold in any Investment Fund
equals the dollar amount of the transaction divided by the Accumulation Unit
Value for that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the correspond- ing Portfolios of the Trust, which
in turn reflects the investment income and realized and unrealized capital
gains and losses of the Portfolios, as well as the Trust fees and expenses.
The Accumulation Unit Value is also stated after deduction of the Separate
Account asset charges relating to the Certificates. A description of the
computation of the Accumulation Unit Value is found in the SAI.
Annuity Account Value in Guaranteed Period
Account
The Annuity Account Value in the Guaranteed Period Account on any Business
Day will be the sum of the present value of the Maturity Value in each
Guarantee Period, using the Guaranteed Rate in effect for new allocations to
such Guarantee Period on such date. (This is equivalent to the Guaranteed
Period Amount increased or decreased by the full market value adjustment.)
The Annuity Account Value, therefore, may be higher or lower than the
contributions (less withdrawals) accumulated at the Guaranteed Rate. At the
Expiration Date the Annuity Account Value in the Guaranteed Period Account
will equal the Maturity Value. While the IRA Assured Payment Option or IRA
APO Plus is in effect, the Annuity Account Value will include any amount in
the Modal Payment Portion of the Guaranteed Period Account. However, amounts
held in the Modal Payment Portion of the Guaranteed Period Account are not
subject to a market value adjustment. See "Part 4: The Guaranteed Period
Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject
to the following restrictions.
o Transfers are permitted to or from a Guarantee Period once per
quarter during each Contract Year. Such transfers may be made at any
time during each quarter.
o Transfers out of a Guarantee Period other than at the Expiration Date
will result in a market value adjustment. See "Part 4: The Guaranteed
Period Account."
o Transfers to Guarantee Periods are subject to the restrictions set
forth under "Guarantee Periods and Expiration Dates" in Part 4 and
are limited based on your attained age. See "Allocation of
Contributions" above.
Transfer requests must be made directly to our Processing Office. Your
request for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which
the amounts are to be transferred. Your transfer request may be in writing or
by telephone.
For telephone transfer requests, procedures have been established by
Equitable Life that are considered to be reasonable and are designed to
confirm that instructions communicated by telephone are genuine. Such
procedures include requiring certain personal identification information
prior to acting on telephone instructions and providing written confirmation.
In light of the procedures established, Equitable Life will not be liable for
following telephone instructions that it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate
27
<PAGE>
Owner to effect transfers. Any agreements to use market timing services to
effect transfers are subject to our rules then in effect and must be on a
form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer
to or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in
writing.
DOLLAR COST AVERAGING
If you have at least $10,000 of Annuity Account Value in the Money Market
Fund, you may choose to have a specified dollar amount transferred from the
Money Market Fund to other Investment Funds on a monthly basis. The main
objective of dollar cost averaging is to attempt to shield your investment
from short term price fluctuations. Since the same dollar amount is
transferred to other Investment Funds each month, more Accumulation Units are
purchased in an Investment Fund if the value per Accumulation Unit is low and
fewer Accumulation Units are purchased if the value per Accumulation Unit is
high. Therefore, a lower average value per Accumulation Unit may be achieved
over the long term. This plan of investing allows you to take advantage of
market fluctuations but does not assure a profit or protect against a loss in
declining markets.
The dollar cost averaging option may be elected at the time you apply for the
Certificate or at a later date. The minimum amount that may be transferred
each month is $250. The maximum amount which may be transferred is equal to
the Annuity Account Value in the Money Market Fund at the time the option is
elected, divided by 12.
The transfer date will be the same calendar day each month as the Contract
Date. If, on any transfer date, the Annuity Account Value in the Money Market
Fund is equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred and the dollar cost
averaging option will end. You may change the transfer amount once each
Contract Year, or cancel this option by sending us satisfactory notice to our
Processing Office at least seven calendar days before the next transfer date.
DEATH BENEFIT
Generally, upon receipt of proof satisfactory to us of your death prior to
the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the
time you apply for the Certificate. While the Certificate is in effect, you
may change your beneficiary by writing to our Processing Office. The change
will be effective on the date the written submission was signed. The death
benefit payable will be determined as of the date we receive such proof of
death and any required instructions as to the method of payment.
The death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the guaranteed minimum death benefit defined below; and
(2) the death benefit provided with respect to the Guaranteed Period
Account. See "Part 4: The Guaranteed Period Account."
Guaranteed Minimum Death Benefit (GMDB)
Applicable to Certificates issued in all states except New York
- ---------------------------------------------------------------
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter (except as adjusted at the end of the seventh Contract Year, see
(1) below), the GMDB is equal to (a) the GMDB determined on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. In addition, interest (see (2) below) is credited to and becomes part
of the GMDB on each Processing Date.
(1) At the end of the seventh Contract Year, the GMDB calculated on such date
will be set at the then GMDB determined above or, if greater, the current
Annuity Account Value in the Investment Funds.
(2) Interest will be calculated at the applicable effective annual GMDB
interest rate for your "attained age" (your age at issue of the
Certificate plus the number of Contract Years that have elapsed since the
Contract Date, see table below) taking into account contributions,
transfers and withdrawals during the Contract Year, except with respect to
amounts in the Money Market Fund and the Intermediate Government
Securities Fund where the interest credit will be based on the lesser of
the actual rate of return for the Money Market Fund during the Contract
Year such amounts are invested and the GMDB interest rate shown in the
table below.
<TABLE>
<CAPTION>
GMDB INTEREST RATE TABLE
ATTAINED AGE RATE
- ----------------- --------
<S> <C>
up to and
including 70 6%
71 through 85 0%
- ----------------- --------
</TABLE>
28
<PAGE>
UNDER CERTIFICATES ISSUED PRIOR TO JULY 17, 1995, AMOUNTS IN THE INTERMEDIATE
GOVERNMENT SECURITIES FUND ARE CREDITED WITH THE APPLICABLE GMDB INTEREST
RATE SHOWN IN THE TABLE, RATHER THAN THE MONEY MARKET FUND RATE.
Applicable to Certificates issued in New York
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter (except as adjusted at the end of the seventh Contract Year, in
accordance with (1) above) the GMDB is equal to (a) the GMDB calculated on
the immediately preceding Business Day, plus (b) any subsequent contributions
and transfers into the Investment Funds, less (c) any transfers and
withdrawals from such Funds. Additionally, on each Processing Date the GMDB
is reset at the greater of the current GMDB and the current Annuity Account
Value in the Investment Funds. On no date (except possibly at the end of the
seventh Contract Year), however, will the GMDB be greater than (a) the
portion of the initial contribution allocated to the Investment Funds, plus
(b) any subsequent contributions and transfers into the Investment Funds,
less (c) any transfers and withdrawals from such Funds, plus (d) interest (in
accordance with (2) above) that is credited on each Processing Date, plus (e)
any amount by which the GMDB is increased due to the seventh Contract Year
reset in (1) above.
See Appendix II for an example of the calculation of the GMDB.
How Withdrawals and Transfers Affect the GMDB
Whenever a withdrawal or transfer from the Investment Funds is made, the GMDB
is immediately reduced by the amount of the withdrawal or transfer. In
addition, a "special adjustment" will be made to the GMDB on the next
Processing Date to realign the GMDB with the Annuity Account Value. The
special adjustment will be made to the GMDB if on the next Processing Date
following a withdrawal or transfer from the Investment Funds, both (i) the
Annuity Account Value is less than the GMDB, and (ii) the sum of the
withdrawals and transfers from the Investment Funds during the Contract Year
prior to such Processing Date is greater than the difference between the GMDB
(before reduction for withdrawals and transfers from the Investment Funds
during the Contract Year) and "GMDB contributions." GMDB contributions are
equal to the sum of all contributions made plus all transfers into the
Investment Funds, plus at the time of any seventh Contract Year reset, the
amount by which the GMDB is increased to match the then current Annuity
Account Value. Such GMDB contributions are not reduced by withdrawals or
transfers from the Investment Funds. See Appendix III for a further
discussion and an example of the special adjustment.
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the income
annuity option you have chosen under your Certificate. If no income annuity
option has been chosen at the time of your death, the beneficiary will
receive the death benefit in a lump sum. However, subject to Equitable Life's
rules then in effect and any other applicable requirements under the Code,
the beneficiary may elect to apply the death benefit amount to one or more
income annuity options offered by Equitable Life. See "Income Annuity
Options" in Part 6.
If you elect to have your spouse be both the sole primary beneficiary and the
successor Annuitant/ Certificate Owner, then no death benefit is payable
until your surviving spouse's death.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward
or downward market value adjustment. See "Part 4: The Guaranteed Period
Account." We do not guarantee any minimum Cash Value except for amounts in a
Guarantee Period held to the Expiration Date. On any date before the Annuity
Commencement Date while the Certificate is in effect, the Cash Value is equal
to: (1) the Annuity Account Value; (2) less any withdrawal charge; and (3)
less any annual contract fee incurred but not yet deducted. The free corridor
amount will not apply when calculating the withdrawal charge applicable upon
a surrender. See "Part 7: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
you are living and before the Annuity Commencement Date.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate will be terminated
as of that date.
You may receive the Cash Value in a single sum payment or apply it under one
or more of the income annuity options. See "Income Annuity Options" in Part
6. We will usually pay the Cash Value within seven calendar days, but we may
delay payment as described in "When Payments are Made" below.
29
<PAGE>
For the tax consequences of surrenders, see "Part 9: Tax Aspects of the
Certificates."
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds,
payment of any portion of the Annuity Account Value (less any applicable
withdrawal charge) from the Investment Funds, and, upon surrender, payment of
the Cash Value from the Investment Funds will be made within seven calendar
days after the Transaction Date. Payments or application of proceeds from the
Investment Funds can be deferred for any period during which (1) the New York
Stock Exchange is closed or trading on it is restricted, (2) sales of
securities or determination of the fair value of an Investment Fund's assets
is not reasonably practicable because of an emergency, or (3) the SEC, by
order, permits us to defer payment in order to protect persons with interest
in the Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account for up to six months while you are living. We may
also defer payments for any amount attributable to a contribution made in the
form of a check for a reasonable amount of time (not to exceed 15 days) to
permit the check to clear.
ASSIGNMENT
The Certificates are not assignable or transferrable except through surrender
to us. They may not be borrowed against or used as collateral for a loan or
other obligation.
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI),
an indirect wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI is
registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's
principal business address is 787 Seventh Avenue, New York, New York 10019.
For 1995, EDI was paid a fee of $126,914 for its services under its
"Distribution Agreement" with Equitable Life and the Separate Account.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents, as well as by
unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation (including for EDI and its
affiliates) will not exceed six percent of total contributions made under a
Certificate. EDI may also receive compensation and reimbursement for its
marketing services under the terms of its distribution agreement with
Equitable Life. Broker-dealers receiving sales compensation will generally
pay a portion thereof to their registered representatives as commissions
related to sales of the Certificates. The offering of the Certificates is
intended to be continuous.
30
<PAGE>
- -----------------------------------------------------------------------------
PART 6: DISTRIBUTION METHODS UNDER THE CERTIFICATES
- -----------------------------------------------------------------------------
The provisions discussed in this Part 6 apply when you elect the IRA Assured
Payment Option or IRA APO Plus in the application or as a distribution option
at a later date, as well as to other distribution methods under your
Certificate.
The Rollover IRA Certificates offer several distribution methods specifically
designed to provide retirement income. The Choice Income Plan which includes
the IRA Assured Payment Option and IRA APO Plus, may be elected in the
application or as a distribution option at a later date. In addition, the
Certificates provide for Lump Sum Withdrawals, Substantially Equal Payment
Withdrawals, Periodic Withdrawals and Minimum Distribution Withdrawals. Fixed
and variable income annuity options are also available for amounts to be
applied at the Annuity Commencement Date. The IRA Assured Payment Option and
IRA APO Plus may not be available in all states.
The Certificates are subject to the Code's minimum distribution requirements.
Generally, distributions from these Certificates must commence by April 1 of
the calendar year following the calendar year in which you attain age 70 1/2
. Subsequent distributions must be made by December 31st of each calendar
year. If you do not commence minimum distributions in the calendar year in
which you attain age 70 1/2 , and wait until the three month period (January
1 to April 1) in the next calendar year to commence minimum distributions,
then you must take two required minimum distributions in that calendar year.
If the required minimum distribution is not made, a penalty tax in an amount
equal to 50% of the difference between the amount required to be withdrawn
and the amount actually withdrawn may apply. See "Part 9: Tax Aspects of the
Certificates" for a discussion of various special rules concerning the
minimum distribution requirements.
For IRA retirement benefits subject to minimum distribution requirements, we
will send a form outlining the distribution options available before you
reach age 70 1/2 (if you have not annuitized before that time).
IRA ASSURED PAYMENT OPTION
The IRA Assured Payment Option is designed to provide you with guaranteed
payments for your life (SINGLE LIFE) or for the lifetime of you and a joint
Annuitant you designate (JOINT AND SURVIVOR) through a series of
distributions from the Annuity Account Value that are followed by Life
Contingent Annuity payments. Payments you receive during the fixed period are
designed to pay out the entire Annuity Account Value by the end of the fixed
period and to meet or exceed minimum distribution requirements, if
applicable. See "Minimum Distribution Withdrawals" below. The fixed period
ends with the distribution of the Maturity Value of the last Guarantee
Period, or distribution of the final amount in the Modal Payment Portion of
the Guaranteed Period Account. The fixed period may also be referred to as
the "liquidity period" as during this period, you have access to the Cash
Value through Lump Sum Withdrawals or surrender of the Certificate, with
lifetime income continuing in reduced amounts.
After the fixed period, the payments are made under the Life Contingent
Annuity described below.
You may elect the IRA Assured Payment Option at any time if your initial
contribution or Annuity Account Value is at least $25,000 at the time of
election, by submitting a written request satisfactory to us. The IRA Assured
Payment Option may be elected at ages 59 1/2 through 83. If you are over age
70 1/2 , the availability of this option may be restricted under certain
limited circumstances. See "Tax Considerations for the IRA Assured Payment
Option and IRA APO Plus" in Part 9. The IRA Assured Payment Option with level
payments (described below) may be elected at ages as young as 45, subject to
restrictions described below under "Election Restrictions under Joint and
Survivor." Also, there are tax considerations that should be taken into
account before electing level payments under the IRA Assured Payment Option
if you are under age 59 1/2 . See "Penalty Tax on Early Distributions" in
Part 9. The IRA Assured Payment Option with increasing payments (described
below) may be elected at ages as young 53 1/2 provided payments do not start
before you attain age 59 1/2 .
Once the IRA Assured Payment Option is elected, all amounts currently held
under your Rollover IRA must be allocated to the Guarantee Periods, the Modal
Payment Portion of the Guaranteed Period Account, if applicable, and the Life
Contingent Annuity. See "Allocation of Contributions or Annuity Account
Value" below. Subsequent contributions may be made according to the rules set
forth below and in "Tax-Free Transfers and Rollovers" in Part 9.
Subsequent Contributions under the IRA Assured
Payment Option
Subsequent "regular" IRA contributions may no longer be made for the taxable
year in which you attain age 70 1/2 and thereafter. Subsequent rollover and
direct transfer contributions may be made at any time until within seven
years of the end of the fixed period while the IRA Assured Payment Option
31
<PAGE>
is in effect. However, any amount contributed after you attain age 70 1/2
must be net of your required minimum distribution for the year in which the
rollover or direct transfer contribution is made.
Payments
You may elect to receive monthly, quarterly or annual payments. However, all
payments are made on the 15th of the month. Payments to be made on an
Expiration Date during the fixed period represent distributions of the
Maturity Values of serially maturing Guarantee Periods on their Expiration
Dates. Payments to be made monthly, quarterly or annually on dates other than
an Expiration Date represent distributions from amounts in the Modal Payment
Portion of the Guaranteed Period Account. See "Part 4: The Guaranteed Period
Account."
A $2.50 charge will be deducted from each payment made on a monthly or
quarterly basis under the IRA Assured Payment Option.
You have a choice of receiving level payments during the fixed period and
then under the Life Contingent Annuity. Or, you may elect to receive payments
that increase. During the fixed period, payments are designed to increase by
10% every three years on each third anniversary of the payment start date.
After the end of the fixed period, your first payment under the Life
Contingent Annuity will be 10% greater than the final payment made under the
fixed period. Thereafter, payments will increase annually on each anniversary
of the payment start date under the Life Contingent Annuity based on the
annual increase in the Consumer Price Index, but in no event greater than 3%
in any year.
Payments will generally start one payment mode from the date the IRA Assured
Payment Option goes into effect. Or you may choose to defer the date payments
will start generally for a period of up to 60 months. Deferral of the payment
start date permits you to lock in rates at a time when you may consider
current rates to be high, while permitting you to delay receiving payments if
you have no immediate need to receive income under your Certificate. In
making this decision, you should consider that the amount of income you
purchase is based on the rates applicable on the Transaction Date, so if
rates rise during the interim, your payments may be less than they would have
been if you had elected the IRA Assured Payment Option at a later date.
Deferral of the payment start date is not available above age 80. Before you
elect to defer the date your payments will start, you should consider the
consequences of this decision on the requirement under the Code that you take
minimum distributions each calendar year with respect to the value of your
IRA. See "Required Minimum Distributions" in Part 9. The ability to defer the
payment start date may not be available in all states.
Required minimum distributions will be calculated based on the Annuity
Account Value in each Guarantee Period and the deemed value of the Life
Contingent Annuity for tax purposes. If at any time your payment under the
IRA Assured Payment Option would be less than the minimum amount required to
be distributed under minimum distribution rules, we will notify you of the
difference. You will have the option to have an additional amount withdrawn
under your Certificate and such withdrawal will be treated as a Lump Sum
Withdrawal; however, no withdrawal charge will apply. An adjustment will be
made to future scheduled payments. Or, you may take the amount from other IRA
funds you may have. See "Lump Sum Withdrawals" below and "Required Minimum
Distributions" in Part 9.
See Appendix IV for an example of payments purchased under an IRA Assured
Payment Option.
Fixed Period
If you elect level payments, you may select a fixed period of not less than
seven years nor more than 15 years. The maximum fixed period available based
on your age at issue of the Certificate (or attained age if the IRA Assured
Payment Option is elected after issue) is as follows:
<TABLE>
<CAPTION>
AGE* MAXIMUM FIXED PERIOD
- ----------------- -----------------------------------
<S> <C>
45 through 70 15 years
71 through 78 85 less your issue/attained age
79 through 83 7 years
</TABLE>
The minimum and maximum fixed period will be reduced by each year you defer
the date payments will start.
If you elect increasing payments, you do not have a choice as to the fixed
period. Based on your age at issue of the Certificate (or your attained age
if the IRA Assured Payment Option is elected after issue), your fixed period
will be as follows:
<TABLE>
<CAPTION>
AGE* FIXED PERIOD
- ----------------- ----------------
<S> <C>
59 1/2 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
</TABLE>
If you elect increasing payments and defer the date payments will start, your
fixed period will be as follows:
<TABLE>
<CAPTION>
FIXED PERIOD BASED ON
DEFERRAL PERIOD
---------------------------
AGE* 1-36 MONTHS 37-60 MONTHS
- ----------------- ------------- ------------
<S> <C> <C>
53 1/2 through 70 12 years 9 years
71 through 75 9 years 9 years
76 through 80 6 years 6 years
81 through 83 N/A N/A
</TABLE>
* For joint and survivor, the fixed period is based on the age of the younger
Annuitant.
32
<PAGE>
IF YOUR CERTIFICATE WAS ISSUED PRIOR TO MAY 1, 1996, YOUR FIXED PERIOD IS
BASED ON THE FIXED PERIOD RULES IN EFFECT AT THAT TIME.
Allocation of Contributions or Annuity Account Value
If the IRA Assured Payment Option is elected in the application, then based
on the amount of your initial contribution, your age and sex (and the age and
sex of the joint Annuitant, if applicable), the mode of payment, the form of
payments and the fixed period you select, your entire contribution will be
allocated by us. A portion of the initial contribution will be allocated
among the Guarantee Periods and the Modal Payment Portion of the Guaranteed
Period Account, if applicable, to provide fixed period payments and a portion
will be applied under the Life Contingent Annuity in order to provide the
payments for life. If the IRA Assured Payment Option is elected any time
after issue of the Rollover IRA Certificate or if you cancel IRA APO Plus
(discussed below) and elect the IRA Assured Payment Option, then based on
your Annuity Account Value and the information you provide as described
above, your entire Annuity Account Value, including any amounts currently
invested in the Investment Funds, will be allocated by us among the Guarantee
Periods, the Modal Payment Portion of the Guaranteed Period Account, if
applicable, and applied under the Life Contingent Annuity. While the IRA
Assured Payment Option is in effect, no amounts may be allocated to the
Investment Funds. If amounts in the Guarantee Periods are transferred, a
market value adjustment may apply.
If you elect the IRA Assured Payment Option in the application and your
initial contribution will come from multiple sources, your application must
also indicate that contributions are to be allocated to the Money Market Fund
under the Rollover IRA described in Part 5. Election of the IRA Assured
Payment Option must include your instructions to apply your Annuity Account
Value, on the date the last such contribution is received, under the IRA
Assured Payment Option as described above.
Any subsequent contributions made while the IRA Assured Payment Option is in
effect must be allocated to the Guarantee Periods and applied to the Life
Contingent Annuity. We will determine the allocation of such contributions,
such that your payments will be increased and the fixed period and date that
payments are to start under the Life Contingent Annuity will remain the same.
Life Contingent Annuity
The Life Contingent Annuity provides lifetime payments starting after the end
of the fixed period. The portion of your contributions or Annuity Account
Value applied under the Life Contingent Annuity does not have a Cash Value or
an Annuity Account Value and, therefore, does not provide for transfers or
withdrawals. Once the fixed period has ended and payments have begun under
the Life Contingent Annuity, subsequent amounts may no longer be applied
under the Life Contingent Annuity.
THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND
ANNUITY INCOME IS PAID ONLY IF YOU (OR A JOINT ANNUITANT) ARE LIVING AT THE
DATE ANNUITY BENEFITS BEGIN. BENEFITS ARE ONLY PAID DURING YOUR LIFETIME AND,
IF APPLICABLE, THE LIFETIME OF A JOINT ANNUITANT. CONSEQUENTLY, YOU SHOULD
CONSIDER THE POSSIBILITY THAT NO AMOUNTS WILL BE PAID UNDER THE LIFE
CONTINGENT ANNUITY IF YOU (OR A JOINT ANNUITANT) DO NOT SURVIVE TO THE DATE
PAYMENTS ARE TO START UNDER SUCH ANNUITY.
You may elect to have the Life Contingent Annuity provide level or increasing
payments on a Single Life or a Joint and 100% to Survivor basis. If you elect
increasing payments, the payments will increase annually based on the
increase in the Consumer Price Index, but in no event greater than 3% per
year. The Life Contingent Annuity may also provide payments on a Joint and
one-half to Survivor or a Joint and two-thirds to Survivor basis.
Payments under the Life Contingent Annuity will be made to you during your
lifetime (and the lifetime of the joint Annuitant, if applicable) on the same
payment mode and date as the payments that were made during the fixed period.
Election Restrictions under Joint and
Survivor
Election of the IRA Assured Payment Option with a Joint and Survivor form of
the Life Contingent Annuity is subject to the following restrictions: (i) the
joint Annuitant must be your spouse; (ii) neither you nor the joint Annuitant
can be over age 83; (iii) under level payments if you elect the Joint and
100% to Survivor form, only the longest fixed period is permitted; (iv) if
you or the joint Annuitant is under age 59 1/2 , only the Joint and 100% to
Survivor form is permitted; and (v) the fixed period may be limited by the
minimum distribution rules. See "Required Minimum Distributions" in Part 9.
33
<PAGE>
Withdrawals under the IRA Assured
Payment Option
While the IRA Assured Payment Option is in effect, if you take a Lump Sum
Withdrawal as described under "Lump Sum Withdrawals" below (or if a Lump Sum
Withdrawal is made to satisfy minimum distribution requirements under the
Certificate), such withdrawals will be taken from all remaining Guarantee
Periods to which your Annuity Account Value is allocated and the Modal
Payment Portion of the Guaranteed Period Account, if applicable, such that
the amount of the payments and the length of the fixed period will be
reduced, and the date payments are to start under the Life Contingent Annuity
will be accelerated. Additional amounts above the amount of the requested
withdrawal will be withdrawn from the Guaranteed Period Account and applied
to the Life Contingent Annuity to the extent necessary to achieve this
result. As a result, the same pattern of payments will continue in reduced
amounts for your life, and if applicable, the life of your joint Annuitant.
If you have elected increasing payments, the first reduction in your payments
will take place no later than the date of the next planned increase.
Substantially Equal Payment Withdrawals, Periodic Withdrawals and Minimum
Distribution Withdrawals may not be elected while the IRA Assured Payment
Option is in effect. See "Substantially Equal Payment Withdrawals," "Periodic
Withdrawals" and "Minimum Distribution Withdrawals," below.
Death Benefit
Once you have elected the IRA Assured Payment Option, if a death benefit
becomes payable during the fixed period we will pay the death benefit amount,
as described under "Death Benefit" in Part 5, to the designated beneficiary.
Unless you have elected a Joint and Survivor form under the Life Contingent
Annuity, no payment will be made under the Life Contingent Annuity. The death
benefit payable relates only to the Guarantee Periods under the Certificate;
a death benefit is never payable under the Life Contingent Annuity.
If you have elected a Joint and Survivor form of annuity under the Life
Contingent Annuity, payments will be made to you or the joint Annuitant, if
living on the date payments are to start. The designated beneficiary and the
joint Annuitant must be your spouse.
Termination of the IRA Assured
Payment Option
The IRA Assured Payment Option will be terminated if: (i) you cancel such
option at any time by sending a written request satisfactory to us; (ii) you
submit a subsequent contribution and you do not want it applied under the IRA
Assured Payment Option; (iii) you request a transfer of your Annuity Account
Value as described under "Transfers Among Investment Options" in Part 5,
while the IRA Assured Payment Option is in effect; or (iv) you request a
change in the date the payments are to start under the Life Contingent
Annuity. Once the IRA Assured Payment Option is terminated, in order to
receive distributions from your Annuity Account Value you must utilize the
withdrawal options described under "Withdrawals" below. Although the Life
Contingent Annuity will continue in effect and payments will be made if you
or your joint Annuitant, if applicable, are living on the date payments are
to start, additional Life Contingent Annuity payments may not be purchased.
You may elect to start the IRA Assured Payment Option again by submitting a
written request satisfactory to us, but no sooner than three years after the
Option was terminated. If you elected the IRA Assured Payment Option at age
70 1/2 or older and subsequently terminate this Option, required minimum
distributions must continue to be made with respect to your Certificate. If
you elected the IRA Assured Payment Option at age 79 (may apply beginning at
older ages in some states) or above and subsequently terminate this Option,
annuity payments must commence no later than the calendar year in which you
attain age 90 (may be limited to age 85 in some states).
Before terminating the IRA Assured Payment Option, you should consider the
implications this may have under the minimum distribution requirements. See
"Tax Considerations for the IRA Assured Payment Option and IRA APO Plus" in
Part 9.
Income Annuity Options and Surrendering
the Certificates
If you elect an annuity benefit as described under "Income Annuity Options"
below, or surrender the Certificate for its Cash Value as described under
"Surrendering the Certificates to Receive the Cash Value" in Part 5, once we
receive your returned Certificate, your Certificate will be returned to you
with a notation that the Life Contingent Annuity is still in effect.
Thereafter, no subsequent contributions will be accepted under the
Certificate and no amounts may be applied under the Life Contingent Annuity.
Withdrawal Charge
While the IRA Assured Payment Option is in effect, withdrawal charges will
not apply to the level or increasing payments made during the fixed period.
Except as necessary to meet minimum distribution requirements under the
Certificate, Lump Sum Withdrawals will be subject to a withdrawal charge and
will have a 10% free corridor available. Upon termination of the IRA Assured
Payment Option, the free corridor will apply as described under "Withdrawal
Charge" in Part 7.
34
<PAGE>
IRA APO PLUS
IRA APO Plus is a variation of the IRA Assured Payment Option. IRA APO Plus
is available at ages 59 1/2 through 83. It may also be elected at ages as
young as 53 1/2 provided payments under IRA APO Plus do not start before you
attain age 59 1/2 . Except as indicated below, all provisions of the IRA
Assured Payment Option apply to IRA APO Plus. IRA APO Plus enables you to
keep a portion of your Annuity Account Value in the Investment Funds while
periodically converting such Annuity Account Value to increase the guaranteed
lifetime income under the IRA Assured Payment Option. When you elect IRA APO
Plus, a portion of your initial contribution or Annuity Account Value as
applicable is allocated by us to the IRA Assured Payment Option to provide a
minimum guaranteed lifetime income through allocation of amounts to the
Guarantee Periods and the Modal Payment Portion of the Guaranteed Period
Account, if applicable, and application of amounts to the Life Contingent
Annuity. The remaining Annuity Account Value remains in the Investment Funds.
Periodically during the fixed period (as described below), a portion of the
remaining Annuity Account Value in the Investment Funds is applied to
increase the guaranteed level payments under the IRA Assured Payment Option.
IRA APO Plus allows you to remain invested in the Investment Funds for longer
than would be possible if you applied your entire Annuity Account Value all
at once to the IRA Assured Payment Option or to an income annuity option,
while utilizing an "exit strategy" to provide retirement income.
If IRA APO Plus is elected in the application, we may require that the
portion of the initial contribution to be allocated to the Investment Funds,
be allocated to the Money Market Fund until the end of the free look period.
See "Free Look Period" in Part 5.
The fixed period under IRA APO Plus will be based on your age (or the age of
the younger Annuitant if Joint and Survivor is elected) at issue of the
Certificate (or attained age if IRA APO Plus is elected after issue) and will
be the same as the periods indicated for increasing payments under "IRA
Assured Payment Option" above.
You may elect to defer the payment start date as described in "Payments"
under "IRA Assured Payment Option," above. The fixed period will also be as
indicated for deferral of the payment start date for increasing payments
under the IRA Assured Payment Option.
You elect IRA APO Plus in the application or at a later date by submitting
the proper form. IRA APO Plus may not be elected if the IRA Assured Payment
Option is already in effect.
The amount applied under IRA APO Plus is either the initial contribution if
IRA APO Plus is elected at issue of the Certificate, or the Annuity Account
Value if IRA APO Plus is elected after issue of the Certificate. Out of a
portion of the amount applied, level payments are provided under the IRA
Assured Payment Option equal to the initial payment that would have been
provided on the Transaction Date by the allocation of the entire amount to
increasing payments as described in "Payments" under "IRA Assured Payment
Option," above. The difference between the amount required for level payments
and the amount required for increasing payments is allocated to the
Investment Funds in accordance with your instructions. If you have Annuity
Account Value in the Guaranteed Period Account at the time this option is
elected, a market value adjustment may apply as a result of such amounts
being transferred to effect the IRA Assured Payment Option.
On the third February 15th following the date the first payment is made (if
payments are to be made on February 15th, the date of the first payment will
be counted as the first February 15th) during the fixed period while you are
living, a portion of the Annuity Account Value in the Investment Funds is
taken pro rata from the Annuity Account Value in each Investment Fund and is
applied to increase the level payments under the IRA Assured Payment Option.
If a deferral period of three years or more is elected, a portion of the
Annuity Account Value in the Investment Funds will be applied on the February
15th prior to the date the first payment is made, to increase the initial
level payments. If payments are to be made on February 15th, the date of the
first payment will be counted as the first February 15th.
The amount applied is the amount which provides for level payments equal to
the initial payment that would have been provided by the allocation of the
entire Annuity Account Value to increasing payments, as described in the
preceding paragraph. This process is repeated each third year during the
fixed period. The first increased payment will be reflected in the payment
made following three full years of payments and then every three years
thereafter. On the Transaction Date immediately following the last payment
during the fixed period, the remaining Annuity Account Value in the
Investment Funds is first applied to the Life Contingent Annuity to change
the level payments previously purchased to increasing payments. If there is
any Annuity Account Value remaining after the increasing payments are
purchased, this balance is applied to the Life Contingent Annuity to further
increase such increasing payments. If the Annuity Account Value in the
Investment Funds is insufficient to purchase the increasing payments, then
the level payments previously purchased will be increased to the extent
possible.
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While IRA APO Plus provides a minimum guaranteed lifetime payment under the
IRA Assured Payment Option, the total amount of income that can be provided
over time will depend on the investment performance of the Investment Funds
in which you have Annuity Account Value, as well as the current Guaranteed
Rates and the cost of the Life Contingent Annuity, which may vary.
Consequently, the aggregate amount of guaranteed lifetime income under IRA
APO Plus may be more or less than the amount that could have been purchased
by application at the outset of the entire initial contribution or Annuity
Account Value to the IRA Assured Payment Option.
See Appendix IV for an example of the payments purchased under IRA Assured
Payment Option and IRA APO Plus.
In calculating your required minimum distributions your Annuity Account Value
in the Investment Funds, the Annuity Account Value in each Guarantee Period,
any amount in the Model Payment Portion of the Guaranteed Period Account, and
the deemed value of the Life Contingent Annuity for tax purposes will be
taken into account as described in "Payments" under "IRA Assured Payment
Option," above. Also see "Required Minimum Distributions" in Part 9.
Allocation of Subsequent Contributions under IRA APO Plus
Any subsequent contributions you make may only be allocated to the Investment
Funds, where it is later applied by us under the IRA Assured Payment Option.
Subsequent contributions will be allocated among the Investment Funds
according to your allocation percentages. Allocation percentages can be
changed at any time by writing to our Processing Office. Subsequent
Contributions may no longer be made after the end of the fixed period.
Transfers Among Investment Options under IRA APO Plus
While IRA APO Plus is in effect, you may transfer all or a portion of your
Annuity Account Value in the Investment Funds, among the Investment Funds in
any way you choose. However, you may not transfer Annuity Account Value from
the Investment Funds to the Guaranteed Period Account.
Withdrawals under IRA APO Plus
While IRA APO Plus is in effect, if you take a Lump Sum Withdrawal as
described under "Lump Sum Withdrawals" below (or if a Lump Sum Withdrawal is
made to satisfy minimum distribution requirements under the Certificate),
such withdrawals will be taken on a pro rata basis from your Annuity Account
Value in the Investment Funds unless you specify otherwise. If there is
insufficient value in the Investment Funds the excess will be taken from the
Guarantee Periods and the Modal Payment Portion of the Guaranteed Period
Account, if applicable, as described under "Withdrawals under the IRA Assured
Payment Option" above.
A Lump Sum Withdrawal taken to satisfy minimum distribution requirements
under the Certificate will not be subject to a withdrawal charge.
Death Benefit
Once you have elected IRA APO Plus, if a death benefit becomes payable during
the fixed period we will pay the death benefit amount as described under
"Death Benefit" in Part 5, to the designated beneficiary. Unless you have
elected Joint and Survivor under the Life Contingent Annuity, no payment will
be made under the Life Contingent Annuity. The death benefit relates only to
the Investment Funds and the Guarantee Periods under the Certificate; a death
benefit is never payable under the Life Contingent Annuity.
Termination of IRA APO Plus
You may terminate IRA APO Plus at any time by submitting a request
satisfactory to us. In connection with the termination, you may either (i)
elect to terminate IRA APO Plus at any time and have your Certificate operate
under the Rollover IRA rules (see "Part 5: Provisions of the Certificates and
Services We Provide") or (ii) elect the IRA Assured Payment Option with level
or increasing payments. In the latter case your remaining Annuity Account
Value in the Investment Funds will be allocated to the Guaranteed Period
Account and applied under the Life Contingent Annuity. A market value
adjustment may apply for any amounts allocated from a Guarantee Period. At
least 45 days prior to the end of each three year period, we will send you a
quote indicating how much future income could be provided under the IRA
Assured Payment Option. The quote would be based on your current Annuity
Account Value, current Guaranteed Rates for the Guarantee Periods and current
purchase rates under the Life Contingent Annuity as of the date of the quote.
The actual amount of future income would depend on the rates in effect on the
Transaction Date.
WITHDRAWALS
The Rollover IRA is an annuity contract, even though you may elect to receive
your benefits in a non- annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while you are alive.
Four withdrawal options are available: Lump Sum Withdrawals, Substantially
Equal Payment Withdrawals, Periodic Withdrawals and Minimum Distribution
Withdrawals. Withdrawals may result in withdrawal charges. See
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"Part 7: Deductions and Charges." Special withdrawal rules may apply under
the IRA Assured Payment Option and IRA APO Plus.
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Withdrawals, Transfers or Surrender Prior to the Expiration
Date" in Part 4. Withdrawals may be taxable and subject to tax penalty. See
"Part 9: Tax Aspects of the Certificates."
As a deterrent to early withdrawal (generally prior to age 59 1/2 ) the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 9: Tax Aspects
of the Certificates."
LUMP SUM WITHDRAWALS
After the first Contract Year, you may take a Lump Sum Withdrawal once per
Contract Year at any time during such Contract Year. The minimum amount of
such withdrawal is $1,000. A request to withdraw more than 90% of the Cash
Value as of the Transaction Date will result in the termination of the
Certificate and will be treated as a surrender of the Certificate for its
Cash Value. See "Surrendering the Certificates to Receive the Cash Value," in
Part 5. Unless you are also utilizing Minimum Distribution Withdrawals
described below, the limitation on your ability to take more than one Lump
Sum Withdrawal per Contract Year should be discussed with your tax adviser.
This limitation may affect your ability to meet minimum distribution
requirements in the initial year in which you are required by the Code to
begin taking minimum distributions.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal
will be taken. If we have received the information we require, the requested
withdrawal will become effective on the Transaction Date and proceeds will
usually be mailed within seven calendar days thereafter, but we may delay
payment as described in "When Payments Are Made" in Part 5. If we receive
only partially completed information, our Processing Office will contact you
for specific instructions before your request can be processed.
Lump Sum Withdrawals in excess of the 15% free corridor amount may be subject
to a withdrawal charge. While either the IRA Assured Payment Option or IRA
APO Plus is in effect, Lump Sum Withdrawals that exceed the 10% free corridor
amount may be subject to a withdrawal charge. See "Withdrawal Charge" in
Part 7.
SUBSTANTIALLY EQUAL PAYMENT WITHDRAWALS
Substantially Equal Payment Withdrawals provide distributions from the
Annuity Account Value of the amounts necessary so that the 10% penalty tax,
normally applicable to distributions made prior to age 59 1/2 , does not
apply. See "Penalty Tax on Early Distributions," in Part 9. Once
distributions begin, they should not be changed or stopped until the later of
age 59 1/2 or five years from the date of the first distribution. If you
change or stop the distributions or take a Lump Sum Withdrawal, you may be
liable for the 10% penalty tax that would have otherwise been due on all
prior distributions made under this option and for any interest thereon.
Substantially Equal Payment Withdrawals may be elected at any time if you are
below age 59 1/2 . You can elect this option by submitting the proper form.
You select the day and the month when the first withdrawal will be made, but
it may not be sooner than 28 days after the issue of the Certificate. In no
event may you elect to receive the first payment in the same Contract Year in
which a Lump Sum Withdrawal was taken. We will calculate the amount of the
distribution under a method we select and payments will be made quarterly or
annually as you select. These payments will continue to be made until we
receive written notice from you to cancel this option. Such notice must be
received at our Processing Office at least seven calendar days prior to the
next scheduled withdrawal date. A Lump Sum Withdrawal taken while
Substantially Equal Payment Withdrawals are in effect will cancel such
withdrawals. You may elect to start receiving Substantially Equal Payment
Withdrawals again, but in no event can the payments start in the same
Contract Year in which a Lump Sum Withdrawal was taken. We will calculate a
new distribution amount.
Unless you specify otherwise, Substantially Equal Payment Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the
Investment Funds. If there is insufficient value or no value in the
Investment Funds, any additional amount of the withdrawal or the total amount
of the withdrawal, as applicable, will be withdrawn from the Guarantee
Periods in order of the earliest Expiration Date(s) first.
Substantially Equal Payment Withdrawals are not subject to a withdrawal
charge.
PERIODIC WITHDRAWALS
This option may be elected if you are age 59 1/2 to 70 1/2 . Periodic
Withrawals provide level percentage or level amount payouts. You may choose
to receive Periodic Withdrawals on a quarterly or annual frequency. You
select a dollar amount or percentage of the Annuity Account Value to be
withdrawn, subject
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to a maximum of 2.5% quarterly and 10.0% annually, but in no event may any
payment be less than $250. If at the time a Periodic Withdrawal is to be
made, the withdrawal amount would be less than $250, no payment will be made
and your Periodic Withdrawal election will terminate.
You select the date of the month when the withdrawals will be made, but you
may not choose a date later than the 28th day of the month. If no date is
selected, withdrawals will be made on the same calendar day of the month as
the Contract Date. The commencement of payments under the Periodic Withdrawal
option may not be elected to start sooner than 28 days after issue of the
Certificate.
You may elect Periodic Withdrawals at any time by completing the proper form
and sending it to our Processing Office. You may change the payment frequency
of your Periodic Withdrawals once each Contract Year or cancel this
withdrawal option at any time by sending notice in a form satisfactory to us.
The notice must be received at our Processing Office at least seven calendar
days prior to the next scheduled withdrawal date. You may also change the
amount or percentage of your Periodic Withdrawals once in each Contract Year.
However, you may not change the amount or percentage in any Contract Year
where you have previously taken another withdrawal under the Lump Sum
Withdrawal option described above.
Unless you specify otherwise, Periodic Withdrawals will be withdrawn on a pro
rata basis from your Annuity Account Value in the Investment Funds. If there
is insufficient value or no value in the Investment Funds, any additional
amount of the withdrawal required or the total amount of the withdrawal, as
applicable, will be withdrawn from the Guarantee Periods in order of the
earliest Expiration Date(s) first.
Periodic Withdrawals are not subject to a withdrawal charge, except to the
extent that, when added to a Lump Sum Withdrawal previously taken in the same
Contract Year, the Periodic Withdrawal exceeds the 15% free corridor amount.
See "Withdrawal Charge" in Part 7.
MINIMUM DISTRIBUTION WITHDRAWALS
Minimum Distribution Withdrawals provide distributions from the Annuity
Account Value of the amounts necessary to meet minimum distribution
requirements set forth in the Code.
This option may be elected in the year in which you attain age 70 1/2 . You
can elect Minimum Distribution Withdrawals by submitting the proper election
form. The minimum amount we will pay out is $250.
You may elect Minimum Distribution Withdrawals for each Certificate you own,
subject to our rules then in effect. Currently, Minimum Distribution
Withdrawal payments will be made annually.
Unless you specify otherwise, Minimum Distributions Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the
Investment Funds. If there is insufficient value or no value in the
Investment Funds, any additional amount of the withdrawal required or the
total amount of the withdrawal, as applicable, will be withdrawn from the
Guarantee Periods in order of the earliest Expiration Date(s) first.
Minimum Distribution Withdrawals are not subject to a withdrawal charge,
except to the extent that, when added to a Lump Sum Withdrawal previously
taken in the same Contract Year, the Minimum Distribution Withdrawal exceeds
the 15% free corridor amount. See "Withdrawal Charge" in Part 7.
Example
- -------
The chart below illustrates the pattern of payments, under Minimum
Distribution Withdrawals for a male who purchases the Rollover IRA at age 70
with a single contribution of $100,000, with payments commencing at the end
of the first Contract Year.
PATTERN OF MINIMUM DISTRIBUTION WITHDRAWALS
$100,000 SINGLE CONTRIBUTION FOR A
SINGLE LIFE-MALE AGE 70
[THE FOLLOWING TABLE WAS REPRESENTED
AS AN AREA GRAPH IN THE PROSPECTUS]
Assumes 6.0% Rate of Return
Amount
Age Withdrawn
- --- ---------
70 $6,250
75 7,653
80 8,667
85 8,770
90 6,931
95 3,727
100 1,179
[END OF GRAPHICALLY REPRESENTED DATA]
Payments are calculated each year based on the Annuity Account Value at the
end of each year, using the recalculation method of determining payments.
(See "Part 1--Minimum Distribution Withdrawals" in the SAI.) Payments are
made annually, and it is further assumed that no Lump Sum Withdrawals are
taken.
This example assumes an annual rate of return of 6.0% compounded annually for
both the Investment Funds and the Guaranteed Period Account. This rate of
return is for illustrative purposes only and is not intended to represent an
expected or guaranteed rate of return. Your investment results will vary. In
addition, this example does not reflect any charges that may be applicable
under the Rollover IRA. Such charges would effectively reduce the actual
return.
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INCOME ANNUITY OPTIONS
Income annuity options provide periodic payments over a specified period of
time which may be fixed or may be based on your life. Annuity forms of
payment are calculated as of the Annuity Commencement Date, which is on file
with our Processing Office. You can change the Annuity Commencement Date by
writing to our Processing Office any time before the Annuity Commencement
Date. However, you may not choose a date later than the 28th day of any
month. Also, no Annuity Commencement Date will be later than the Processing
Date which follows your 85th birthday unless the IRA Assured Payment Option
or IRA APO Plus is in effect. Also, if the IRA Assured Payment Option or IRA
APO Plus was elected after age 78 (may apply beginning at older ages in some
states) and you subsequently terminate the option, the Annuity Commencement
Date must commence no later than the calendar year in which you attain age 90
(may be limited to age 85 in some states).
Before the Annuity Commencement Date, we will send you a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay you a
fixed annuity benefit on the "normal form" indicated for your Certificate as
of your Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or
(2) the Cash Value for any period certain only annuity form except that if
the period certain is more than five years, the amount applied will be no
less than 95% of the Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an income annuity option
prior to an Expiration Date will result in a market value adjustment. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
ANNUITY FORMS
o Life Annuity: An annuity which guarantees payments for the rest of your
life. Payments end with the last monthly payment before your death.
Because there is no death benefit associated with this annuity form, it
provides the highest monthly payment of any of the life income annuity
options, so long as you are living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of your life. In addition, if you die before a specific
period of time (the "certain period") has ended, payments will continue
to your beneficiary for the balance of the certain period. Certain
periods may be 5, 10, 15 or 20 years. A life annuity with a certain
period of 10 years is the normal form of annuity under the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
This option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity- refund certain are
available on either a single life or joint and survivor life basis.
The income annuity options outlined above are available in both fixed and
variable form, unless otherwise indicated. Fixed annuity payments are
guaranteed by us and will be based either on the tables of guaranteed annuity
payments in your Certificate or on our then current annuity rates, whichever
is more favorable for you. Variable income annuities may be funded through
the Common Stock Fund through the purchase of annuity units. The amount of
each variable annuity payment may fluctuate, depending upon the performance
of the Common Stock Fund. That is because the annuity unit value rises and
falls depending on whether the actual rate of net investment return (after
deduction of charges) is higher or lower than the assumed base rate. See
"Annuity Unit Values" in the SAI. Variable income annuities may also be
available by separate prospectus through the Common Stock or other Funds of
other separate accounts we offer.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here. Your registered representative
can provide details.
For each income annuity option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
income annuity option, your age (or your and the joint Annuitant's ages) and
in certain instances, the sex of the Annuitant(s). Once an income annuity
option is chosen and payments have commenced, no change can be made.
If, at the time you elect an income annuity option, the amount to be applied
is less than $2,000 or the initial payment under the option elected is less
than $20 monthly, we reserve the right to pay the Annuity Account Value in a
single sum rather than as payments under the annuity form chosen.
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- -----------------------------------------------------------------------------
PART 7: DEDUCTIONS AND CHARGES
- -----------------------------------------------------------------------------
CHARGES DEDUCTED FROM THE ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options
you select, subject to certain restrictions. We then periodically deduct
certain amounts from your Annuity Account Value. The charges described below
and under "Charges Deducted from the Investment Funds" below will not be
increased by us for the life of the Certificates. We may reduce certain
charges under sponsored arrangements. See "Sponsored Arrangements" below.
Charges are deducted proportionately from all the Investment Funds in which
your Annuity Account Value is invested on a pro rata basis, except as noted
below.
Distribution Fee
We deduct a sales load annually in an amount of 0.20% of each contribution
received during the first Contract Year. This sales load is deducted on each
of the first seven Processing Dates (so long as the Certificate is in force).
See "Example" below.
The distribution fee will not be deducted while the IRA Assured Payment
Option or IRA APO Plus is in effect.
UNDER CERTIFICATES ISSUED PRIOR TO MAY 1, 1996, THERE IS NO DISTRIBUTION FEE.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that (i) a Lump Sum Withdrawal or cumulative withdrawals during
a Contract Year exceed the free corridor amount, or (ii) if the Certificate
is surrendered to receive its Cash Value. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
If the IRA Assured Payment Option or IRA APO Plus is in effect, the
withdrawal charge will be imposed as a percentage of contributions (less
withdrawals), less the amount applied under the Life Contingent Annuity.
The applicable withdrawal charge percentage is determined by the Contract
Year in which the excess withdrawal is made or the Certificate is
surrendered, beginning with "Contract Year 1" with respect to each
contribution withdrawn or surrendered. For purposes of the table, for each
contribution, the Contract Year in which we receive that contribution is
"Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the
beginning of the Contract Year, minus any amount previously withdrawn
during that Contract Year.
While either the IRA Assured Payment Option or IRA APO Plus is in effect,
the free corridor amount is 10% of the Annuity Account Value at the
beginning of the Contract Year.
There is no withdrawal charge if a Lump Sum Withdrawal is taken to satisfy
minimum distribution requirements under the Certificate. A free corridor
amount is not applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions.
The withdrawal charge is to help cover sales expenses. Because of the way the
distribution fee is calculated the distribution fee and the withdrawal charge
combined will never exceed the 7.0% maximum withdrawal charge.
Example--The example below illustrates how the withdrawal charge and the
distribution fee would be calculated upon a withdrawal under the Rollover
IRA. This example assumes an initial contribution of $12,000 and subsequent
contributions of $12,000 each in the second and third Contract Years for
total contributions under the Certificate of $36,000. It also assumes a
withdrawal from the Investment Funds at the beginning of the fourth Contract
Year of 25% of an Annuity Account Value of $40,000.
The total withdrawal amount would be $10,000 ($40,000 x .25). In this case,
$6,000 ($40,000 x .15) would be the free corridor amount and could be
withdrawn without imposition of a withdrawal charge. The balance of $4,000
($10,000-$6,000) would be considered a withdrawal of a part of the initial
contribution of $12,000. This contribution would be subject to a 4.0%
withdrawal charge of $160 ($4,000 x .04) as indicated in the chart above.
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The distribution fee deducted on the Processing Date following the withdrawal
would be based on the remaining initial contribution of $8,000 ($12,000-
$4,000).
Transfer Charge
Currently there is no charge for transfers. We reserve the right to impose a
charge in the future at a maximum of $25 for each transfer among the
Investment Options in excess of five per Contract Year.
Guaranteed Minimum Death Benefit Charge
We deduct a charge for providing a minimum death benefit guarantee with
respect to the Investment Funds annually on each Processing Date. The charge
is equal to 0.20% of the GMDB in effect at such Processing Date.
If the amount collected from this charge exceeds the cost of providing the
benefits, it will be to our profit, and may be used to pay distribution
expenses not recovered from sales charges under the Certificates.
Annual Contract Fee
The annual contract fee is incurred at the beginning of the Contract Year and
deducted at the end of each Contract Year on the Processing Date. We deduct
this charge when determining the Cash Value payable if you surrender the
Certificate prior to the end of a Contract Year. The amount deducted is
determined by the amount of your initial contribution. The charge will be $30
per Contract Year if your initial contribution is less than $25,000, and zero
if your initial contribution equals $25,000 or more. This charge is to cover
a portion of our administrative expenses. See "Asset Based Administrative
Charge," below under "Charges Deducted from the Investment Funds."
Charges for State Premium and Other
Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium
taxes, that might be imposed in your state. Generally we deduct this charge
from the amount applied to provide an income annuity option. In certain
states, however, we may deduct the charge for taxes from contributions. The
current tax charge that might be imposed varies by state and ranges from 0%
to 2.25%.
Allocation of Certain Charges to the
Guaranteed Period Account
No portion of the distribution fee or the annual contract fee will be
deducted from the Guaranteed Period Account unless there is insufficient
value in the Investment Funds. If charges are deducted from the Guaranteed
Period Account, they will be deducted from the Annuity Account Value with
respect to the Guarantee Periods in order of the earliest Expiration Date(s)
first. If charges are deducted from the Guaranteed Period Account, you will
not receive the full Guaranteed Rate if held to the Expiration Date. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
CHARGES DEDUCTED FROM THE
INVESTMENT FUNDS
Mortality and Expense Risk Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for mortality and expense risks. The daily charge is at the
rate of 0.002477%, which is equivalent to an annual rate of 0.90%, on the
assets in each Investment Fund. Approximately 0.60% of this annual charge is
allocated to the mortality risk and 0.30% is allocated to the expense risk.
We will realize a gain from this charge to the extent it is not needed to
provide for benefits and expenses under the Certificate. We will use any gain
for any lawful purpose including payment of distribution expenses not
recovered from sales charges under the Certificate.
The mortality risk assumed is the risk that Annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables,
shown in each Certificate, will differ from actual mortality experience.
Lastly, we assume a mortality risk to the extent that the guaranteed minimum
death benefit charge is insufficient to pay any amount by which such death
benefit exceeds the Cash Value of the Certificate.
The expense risk assumed is the risk that it will cost us more to issue and
administer the Certificates than we expect.
Asset Based Administrative Charge
We will deduct a daily charge from the assets in each Investment Fund, to
compensate us for administrative expenses under the Certificates. The daily
charge is at a rate of 0.000692% (equivalent to an annual rate of 0.25%) on
the assets in each Investment Fund. The annual contract fee and the asset
based administrative charge is not designed to produce a profit for Equitable
Life.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against the Trust's assets, direct
operating expenses of the Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian
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charges and liability insurance), and certain investment-related expenses of
the Trust (such as brokerage commissions and other expenses related to the
purchase and sale of securities), are reflected in each Portfolio's daily
share price. The maximum investment advisory fees paid annually by the
Portfolios cannot be changed without a vote by shareholders. They are as
follows:
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
-------------------------------------
FIRST $350 NEXT $400 OVER $750
MILLION MILLION MILLION
----------- ----------- -----------
<S> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors ... .550% .525% .500%
Growth Investors .......... .550% .525% .500%
EQUITY SERIES:
Common Stock .............. .400% .375% .350%
Global .................... .550% .525% .500%
Aggressive Stock .......... .500% .475% .450%
FIXED INCOME SERIES:
Money Market .............. .400% .375% .350%
Intermediate Govt.
Securities ................ .500% .475% .450%
FIRST NEXT OVER
$500 $500 $1.5
MILLION MILLION BILLION
----------- ----------- -----------
EQUITY SERIES:
Growth & Income ........... .550% .525% .500%
FIRST NEXT OVER
$500 $1 $1.5
MILLION BILLION BILLION
----------- ----------- -----------
EQUITY SERIES:
International ............. .900% .850% .800%
</TABLE>
Investment advisory fees are established under the Trust's investment
advisory agreements between the Trust and its investment adviser, Alliance.
All of these fees and expenses are described more fully in the Trust
prospectus.
SPONSORED ARRANGEMENTS
For certain sponsored arrangements, we may reduce the distribution fee, the
annual contract fee and the withdrawal charge or change the minimum initial
contribution requirements. Under the IRA Assured Payment Option and IRA APO
Plus, we may increase Guaranteed Rates and reduce purchase rates under the
Life Contingent Annuity. We may also change the guaranteed minimum death
benefit. Sponsored arrangements include those in which an employer allows us
to sell Certificates to its employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the sponsoring organization among other factors. We
take all these factors into account when reducing charges. To qualify for
reduced charges, a sponsored arrangement must meet certain requirements,
including our requirements for size and number of years in existence.
Sponsored arrangements that have been set up solely to buy Certificates or
that have been in existence less than six months will not qualify for reduced
charges.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the distribution fee, withdrawal charge
or annual contract fee will reflect differences in costs or services and will
not be unfairly discriminatory.
Sponsored arrangements may be governed by the Code, the Employee Retirement
Income Security Act of 1974 (ERISA), or both. We make no representations as
to the impact of those and other applicable laws on such programs. WE
RECOMMEND THAT EMPLOYERS PURCHASING OR MAKING CERTIFICATES AVAILABLE FOR
PURCHASE UNDER A SPONSORED ARRANGEMENT SEEK THE ADVICE OF THEIR OWN LEGAL AND
BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The distribution fee, the withdrawal charge and the annual contract fee may
be reduced or eliminated when sales are made in a manner that results in
savings of sales and administrative expenses, such as sales through persons
who are compensated by clients for recommending investments and receive no
commission or reduced commissions in connection with the sale of the
Certificates. In no event will a reduction or elimination of a fee or charge
be permitted where it would be unfairly discriminatory.
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- -----------------------------------------------------------------------------
PART 8: VOTING RIGHTS
- -----------------------------------------------------------------------------
TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of the Trust. Since we own
the assets of the Separate Account, we are the legal owner of the shares and,
as such, have the right to vote on certain matters. Among other things, we
may vote:
o to elect the Trust's Board of Trustees,
o to ratify the selection of independent auditors for the Trust, and
o on any other matters described in the Trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because the Trust is a Massachusetts business trust, annual meetings are not
required. Whenever a shareholder vote is taken, we will give Certificate
Owners the opportunity to instruct us how to vote the number of shares
attributable to their Certificates. If we do not receive instructions in time
from all Certificate Owners, we will vote the shares of a Portfolio for which
no instructions have been received in the same proportion as we vote shares
of that Portfolio for which we have received instructions. We will also vote
any shares that we are entitled to vote directly because of amounts we have
in an Investment Fund in the same proportions that Certificate Owners vote.
Each Trust share is entitled to one vote. Fractional shares will be counted.
Voting generally is on a Portfolio-by-Portfolio basis except that shares will
be voted on an aggregate basis when universal matters, such as election of
Trustees and ratification of independent auditors, are voted upon. However,
if the Trustees determine that shareholders in a Portfolio are not affected
by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
VOTING RIGHTS 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
and 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 the Rollover IRA Certificate
Owners, we currently do not foresee any disadvantages 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
Certificate Owners, we will see to it that appropriate action is taken to
protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner
approval, Certificate Owners will be entitled to one vote for each
Accumulation Unit they have in the Investment Funds. Each Certificate Owner
who has elected a variable annuity payout may cast the number of votes equal
to the dollar amount of reserves we are holding for that annuity in the
Common Stock Fund divided by the Accumulation Unit Value for the Common Stock
Fund. We will cast votes attributable to any amounts we have in the
Investment Funds in the same proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
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- -----------------------------------------------------------------------------
PART 9: TAX ASPECTS OF THE CERTIFICATES
- -----------------------------------------------------------------------------
TAX-QUALIFIED INDIVIDUAL RETIREMENT ANNUITIES (IRAS)
Introduction
The Rollover IRA Certificate is designed to qualify as an IRA under Section
408(b) of the Code. Your rights under the Rollover IRA cannot be forfeited.
This prospectus contains the information which the Internal Revenue Service
(IRS) requires to be disclosed to an individual before he or she purchases an
IRA.
This Part covers some of the special tax rules that apply to individual
retirement arrangements. You should be aware that an IRA is subject to
certain restrictions in order to qualify for its special treatment under the
Federal tax law.
This prospectus provides our general understanding of applicable Federal
income tax rules, but does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Rollover IRA Certificates.
Further information on IRA tax matters can be obtained from any IRS district
office. Additional information regarding IRAs, including a discussion of
required distributions, can be found in IRS Publication 590, entitled
"Individual Retirement Arrangements (IRAs)," which is generally updated
annually.
The Rollover IRA Certificate has been approved by the IRS as to form for use
as an IRA. This IRS approval is a determination only as to the form of the
annuity and does not represent a determination of the merits of the annuity
as an investment.
Cancellation
You can cancel a Certificate issued as an IRA by following the directions in
Part 5 under "Free Look Period." Since there may be adverse tax consequences
if a Certificate is cancelled (and because we are required to report to the
IRS certain distributions from cancelled IRAs), you should consult with a tax
adviser before making any such decision. If you cancel this Certificate, you
may establish a new individual retirement arrangement if at the time you meet
the requirements for establishing an individual retirement arrangement.
Contributions to IRAs
Individuals may make three different types of contributions to purchase an
IRA, or as later additions to an existing IRA: "regular" contributions out of
earnings, tax-free "rollover" contributions from tax-qualified plans, or
direct custodian-to-custodian transfers from other individual retirement
arrangements ("direct transfers").
The initial contribution to the Certificate must be either a rollover or a
direct custodian-to-custodian transfer. See "Tax-Free Transfers and
Rollovers," discussed below. Any subsequent contributions you make may be any
of rollovers, direct transfers or "regular" IRA contributions. See
"Contributions Under the Certificates" in Part 5. The immediately following
discussion relates to "regular" IRA contributions. For the reasons noted in
"Tax-Free Transfers and Rollovers" below, you should consult with your tax
adviser before making any subsequent contributions to an IRA which is
intended to serve as a "conduit" IRA.
Generally, $2,000 is the maximum amount of deductible and nondeductible
contributions which may be made to all IRAs by an individual in any taxable
year. The above limit may be less when the individual's earnings are below
$2,000. This limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into an IRA.
The amount of IRA contributions for a tax year that an individual can deduct
depends on whether the individual (or the individual's spouse, if a joint
return is filed) is covered by an employer-sponsored tax-favored retirement
plan. If the individual's spouse does not work or elects to be treated as
having no compensation, the individual and the individual's spouse may
contribute up to $2,250 to individual retirement arrangements (but no more
than $2,000 to any one individual retirement arrangement). The non-working
spouse owns his or her individual retirement arrangements, even if the
working spouse makes contributions to purchase the spousal individual
retirement arrangements.
If neither the individual nor the individual's spouse is covered during any
part of the taxable year by an employer-sponsored tax-favored retirement plan
(including a qualified plan, a tax sheltered account or annuity under Section
403(b) of the Code (TSA) or a simplified employee pension plan), then
regardless of adjusted gross income (AGI), each working spouse may make
deductible contributions to an IRA for each tax year (MAXIMUM PERMISSIBLE
DOLLAR DEDUCTION) up to the lesser of $2,000 or 100% of compensation. In
certain cases, individuals covered by a tax-favored retirement plan include
persons eligible to participate in the plan although not actually
participating. Whether or not a person is covered by a retirement plan will
be reported on an employee's Form W-2.
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<PAGE>
If the individual is single and covered by a retirement plan during any part
of the taxable year, the deduction for IRA contributions phases out with AGI
between $25,000 and $35,000. If the individual is married and files a joint
return, and either the individual or the spouse is covered by a tax-favored
retirement plan during any part of the taxable year, the deduction for IRA
contributions phases out with AGI between $40,000 and $50,000. If the
individual is married, files a separate return and is covered by a
tax-favored retirement plan during any part of the taxable year, the
deduction for IRA contributions phases out with AGI between $0 and $10,000.
Married individuals filing separate returns must take into account the
retirement plan coverage of the other spouse, unless the couple has lived
apart for the entire taxable year. If AGI is below the phase-out range, an
individual is entitled to the Maximum Permissible Dollar Deduction. In
computing the partial deduction for IRA contributions the individual must
round the amount of the deduction to the nearest $10. The permissible
deduction for IRA contributions is a minimum of $200 if AGI is less than the
amount at which the deduction entirely phases out.
If the individual (or the individual's spouse, unless the couple has lived
apart the entire taxable year and their filing status is married, filing
separately) is covered by a tax-favored retirement plan, the deduction for
IRA contributions must be computed using one of two methods. Under the first
method, the individual determines AGI and subtracts $25,000 if the individual
is a single person, $40,000 if the individual is married and files a joint
return with the spouse, or $0 if the individual is married and files a
separate return. The resulting amount is the individual's Excess AGI. The
individual then determines the limit on the deduction for IRA contributions
using the following formula:
<TABLE>
<CAPTION>
<S> <C> <C>
$10,000-Excess AGI Maximum Adjusted
- ------------------ Permissible Dollar
$10,000 X Dollar Deduction
Deduction = Limit
</TABLE>
Under the second method, the individual determines his or her Excess AGI and
then refers to the table in Appendix V originally prepared by the IRS to
determine the deduction.
Contributions may be made for a tax year until the deadline for filing a
Federal income tax return for that tax year (without extensions). No
contributions are allowed for the tax year in which an individual attains age
70 1/2 or any tax year after that. A working spouse age 70 1/2 or over,
however, can contribute up to the lesser of $2,000 or 100% of "earned income"
to a spousal individual retirement arrangement for a non-working spouse until
the year in which the non-working spouse reaches age 70 1/2 .
An individual not eligible to deduct part or all of the IRA contribution may
still make nondeductible contributions on which earnings will accumulate on a
tax-deferred basis. The deductible and nondeductible contributions may not,
however, together exceed the lesser of the $2,000 limit (or $2,250 spousal
limit) or 100% of compensation for each tax year. See "Excess Contributions"
below. Individuals must keep their own records of deductible and
nondeductible contributions in order to prevent double taxation on the
distribution of previously taxed amounts. See "Distributions from IRA
Certificates" below.
An individual making nondeductible contributions in any taxable year, or
receiving amounts from any IRA to which he or she has made nondeductible
contributions, must file the required information with the IRS. Moreover,
individuals making nondeductible IRA contributions must retain all income tax
returns and records pertaining to such contributions until interest in such
IRAs are fully distributed.
Excess Contributions
Excess contributions to an IRA are subject to a 6% excise tax for the year in
which made and for each year thereafter until withdrawn. In the case of
"regular" IRA contributions any contribution in excess of the lesser of
$2,000 or 100% of compensation or earned income is an "excess contribution,"
(without regard to the deductibility or nondeductibility of IRA contributions
under this limit). Also, any "regular" contributions made after you reach age
70 1/2 are excess contributions. In the case of rollover IRA contributions,
excess contributions are amounts which are not eligible to be rolled over
(for example, after tax contributions to a qualified plan or minimum
distributions required to be made after age 70 1/2 ). An excess contribution
(rollover or "regular") which is withdrawn, however, before the time for
filing the individual's Federal income tax return for the tax year (including
extensions) is not includable in income and therefore is not subject to the
10% penalty tax on early distributions (discussed below under "Penalty Tax on
Early Distributions"), provided any earnings attributable to the excess
contribution are also withdrawn and no tax deduction is taken for the excess
contribution. The withdrawn earnings on the excess contribution, however,
would be includable in the individual's gross income and would be subject to
the 10% penalty tax. If excess contributions are not withdrawn before the
time for filing the individual's Federal income tax return for
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<PAGE>
the year (including extensions), "regular" contributions may still be
withdrawn after that time if the IRA contribution for the tax year did not
exceed $2,250 and no tax deduction was taken for the excess contribution; in
that event, the excess contribution would not be includable in gross income
and would not be subject to the 10% penalty tax. Lastly, excess "regular"
contributions may also be removed by underutilizing the allowable
contribution limits for a later year.
If excess rollover contributions are not withdrawn before the time for filing
the individual's Federal tax return for the year (including extensions) and
the excess contribution occurred as a result of incorrect information
provided by the plan, any such excess amount can be withdrawn if no tax
deduction was taken for the excess contribution. As above, excess rollover
contributions withdrawn under those circumstances would not be includable in
gross income and would not be subject to the 10% penalty tax.
Tax-Free Transfers and Rollovers
Rollover contributions may be made to an IRA from these sources: (i)
qualified plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii)
other individual retirement arrangements.
The rollover amount must be transferred to the Certificate either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within
60 days of the date the proceeds from another individual retirement
arrangement or an eligible rollover distribution from a qualified plan or TSA
were received. Generally the taxable portion of any distribution from a
qualified plan or TSA is an eligible rollover distribution and may be rolled
over tax-free to an IRA unless the distribution is (i) a required minimum
distribution under Section 401(a)(9) of the Code; or (ii) one of a series of
substantially equal periodic payments made (not less frequently than
annually) (a) for the life (or life expectancy) of the plan participant or
the joint lives (or joint life expectancies) of the plan participant and his
or her designated beneficiary, or (b) for a specified period of ten years or
more.
Under some circumstances, amounts from a Certificate may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" IRA treatment, the
source of funds used to establish the IRA must be a rollover contribution
from the qualified plan and the entire amount received from the IRA
(including any earnings on the rollover contribution) must be rolled over
into another qualified plan within 60 days of the date received. Similar
rules apply in the case of a TSA. If you make a contribution to the
Certificate which is from an eligible rollover distribution and you commingle
such contribution with other contributions, you may not be able to roll over
these eligible rollover distribution contributions and earnings to another
qualified plan (or TSA, as the case may be) at a future date, unless the Code
permits.
Under the conditions and limitations of the Code, an individual may elect for
each IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers
and can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Certificate
and rolled over into other individual retirement arrangements unless the
distribution was received under an inherited IRA. Tax-free rollovers are also
available to the surviving spouse beneficiary of a deceased individual, or a
spousal alternate payee of a qualified domestic relations order applicable to
a qualified plan. In some cases, IRAs can be transferred on a tax-free basis
between spouses or former spouses incidental to a judicial decree of divorce
or separation.
Distributions from IRA Certificates
Income or gains on contributions under IRAs are not subject to Federal income
tax until benefits are distributed to the individual. Distributions include
withdrawals from your Certificate, surrender of your Certificate and annuity
payments from your Certificate. Death benefits are also distributions. Except
as discussed below, the amount of any distribution from an IRA is fully
includable as ordinary income by the individual in gross income.
If the individual makes non-deductible IRA contributions, those contributions
are recovered tax-free when distributions are received. The individual must
keep records of all nondeductible contributions. At the end of each tax year
in which the individual has received a distribution, the individual
determines a ratio of the total nondeductible IRA contributions (less any
amounts previously withdrawn tax-free) to the total account balances of all
IRAs held by the individual at the end of the tax year (including rollover
IRAs) plus all IRA distributions made during such tax year. The resulting
ratio is then multiplied by all distributions from the IRA during that tax
year to determine the nontaxable portion of each distribution.
In addition, a distribution (other than a required minimum distribution
received after age 70 1/2 ) is not
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<PAGE>
taxable if (1) the amount received is a return of excess contributions which
are withdrawn, as described under "Excess Contributions" above, (2) the
entire amount received is rolled over to another individual retirement
arrangement (see "Tax-Free Transfers and Rollovers" above) or (3) in certain
limited circumstances, where the IRA acts as a "conduit," the entire amount
is paid into a qualified plan or TSA that permits rollover contributions.
Distributions from an IRA are not entitled to the special favorable five-year
averaging method (or, in certain cases, favorable ten-year averaging and
long-term capital gain treatment) available in certain cases to
distributions from qualified plans.
Required Minimum Distributions
The minimum distribution rules require IRA owners to start taking annual
distributions from their retirement plans by age 70 1/2 . The distribution
requirements are designed to provide for distribution of the owner's interest
in the IRA over the owner's life expectancy. Whether the correct amount has
been distributed is calculated on a year by year basis; there are no
provisions in the Code to allow amounts taken in excess of the required
amount to be carried over or carried back and credited to other years.
Generally, an individual must take the first required minimum distribution
with respect to the calendar year in which the individual turns age 70 1/2 .
The individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2 , or to delay taking it
until the three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date,"
which is the April 1st of the calendar year following the calendar year in
which the individual turns age 70 1/2 .) If the individual chooses to delay
taking the first annual minimum distribution, then the individual will have
to take two minimum distributions in that year--the delayed one for the first
year and the one actually for that year. Once minimum distributions begin,
they must be made at some time every year.
There are two approaches to taking minimum distributions--"account based" or
"annuity based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
An account based minimum distribution approach may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. An annuity based approach involves application
of the Annuity Account Value to an annuity for the life of the individual or
the joint lives of the individual and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options
are best for your own personal situation. Individuals who are participants in
more than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Your required minimum distribution for any taxable year is calculated by
taking into account the required minimum distribution from each of your
individual retirement arrangements. The IRS, however, does not require that
you make the required distribution from each individual retirement
arrangement that you maintain. As long as the total amount distributed
annually satisfies your overall minimum distribution requirement, you may
choose to take your annual required distribution from any one or more
individual retirement arrangements that you maintain.
An individual may recompute his or her minimum distribution amount each year
based on the individual's current life expectancy as well as that of the
spouse. No recomputation is permitted, however, for a beneficiary other than
a spouse. If there is an insufficient distribution in any year, a 50% tax may
be imposed on the amount by which the minimum required to be distributed
exceeds the amount actually distributed. The penalty tax may be waived by the
Secretary of the Treasury in certain limited circumstances. Failure to have
distributions made as the Code and Treasury regulations require may result in
disqualification of your IRA. See "Tax Penalty for Insufficient
Distributions" below.
Except as described in the next sentence, if the individual dies after
distribution in the form of an annuity has begun, or after the Required
Beginning Date, payment of the remaining interest must be made at least as
rapidly as under the method used prior to the individual's death. (The IRS
has indicated that an exception to the rule that payment of the remaining
interest must be made at least as rapidly as under the method used prior to
the individual's death applies if the beneficiary of the IRA is the surviving
spouse. In some circumstances, the surviving spouse may elect to "make the
IRA his or her own" and halt distributions until he or she reaches
age 70 1/2).
If an individual dies before the Required Beginning Date and before
distributions in the form of an
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annuity begin, distributions of the individual's entire interest under the
Certificate must be completed within five years after death, unless payments
to a designated beneficiary begin within one year of the individual's death
and are made over the beneficiary's life or over a period certain which does
not extend beyond the beneficiary's life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay
the commencement of such payments up until the individual would have attained
70 1/2 . In the alternative, a surviving spouse may elect to roll over the
inherited IRA into the surviving spouse's own IRA.
Taxation of Death Benefits
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if distribution had been made to
the individual.
If you elect to have your spouse be the sole primary beneficiary and to be
the successor Annuitant and Certificate Owner, then your surviving spouse
automatically becomes both the successor Certificate Owner and Annuitant, and
no death benefit is payable until the surviving spouse's death.
Guaranteed Minimum Death Benefit
The Code provides that no part of an individual retirement account may be
invested in life insurance contracts. Treasury Regulations provide that an
individual retirement account may be invested in an annuity contract which
provides a death benefit of the greater of premiums paid or the contract's
cash value. Your Certificate provides a minimum death benefit guarantee that
in certain circumstances may be greater than either of contributions made or
the Annuity Account Value. Although there is no ruling regarding the type of
minimum death benefit guarantee provided by the Certificate, Equitable Life
believes that the Certificate's minimum death benefit guarantee should not
adversely affect the qualification of the Certificate as an IRA.
Nevertheless, it is possible that the IRS could disagree, or take the
position that some portion of the charge in the Certificate for the minimum
death benefit guarantee should be treated for Federal income tax purposes as
a taxable partial withdrawal from the Certificate. If this were so, such a
deemed withdrawal would also be subject to tax penalty for Certificate Owners
under age 59 1/2 .
Tax Considerations for the IRA Assured Payment Option and IRA APO Plus
Although the Life Contingent Annuity does not have a Cash Value, it will be
assigned a value for tax purposes which will generally change each year. This
value must be taken into account when determining the amount of required
minimum distributions from your IRA even though the Life Contingent Annuity
may not be providing a source of funds to satisfy such required minimum
distribution. Accordingly, before you apply any IRA funds under the IRA
Assured Payment Option or IRA APO Plus or terminate such Options, you should
be aware of the tax considerations discussed below. Consult with your tax
adviser to determine the impact of electing the IRA Assured Payment Option
and IRA APO Plus in view of your own particular situation.
When funds have been allocated to the Life Contingent Annuity, you will
generally be required to determine your required minimum distribution by
annually recalculating your life expectancy. The IRA Assured Payment Option
and IRA APO Plus will not be available if you have previously made a
different election. Recalculation is no longer required once the only
payments you or your spouse receive are under the Life Contingent Annuity.
If prior to the date payments are to start under the Life Contingent Annuity,
you surrender your Certificate, or withdraw any remaining Annuity Account
Value, it may be necessary for you to satisfy your required minimum
distribution by accelerating the start date of payments for your Life
Contingent Annuity, or to the extent available, take distributions from other
IRA funds you may have. Alternatively you may convert your IRA Life
Contingent Annuity under the IRA Rollover to a non-qualifed Life Contingent
Annuity. This would be viewed as a distribution of the value of the Life
Contingent Annuity from the IRA, and therefore, would be a taxable event.
However, since the Life Contingent Annuity would no longer be part of an IRA,
its value would not have to be taken into account in determining future
required minimum distributions.
If you have elected a Joint and Survivor form of the Life Contingent Annuity,
the joint Annuitant must be your spouse. You must determine your required
minimum distribution by annually recalculating both your life expectancy and
your spouse's life expectancy. The IRA Assured Payment Option and IRA APO
Plus will not be available if you have previously made a different election.
Recalculation is no longer required once the only payments you or your spouse
receive are under the Life Contingent Annuity. The value of such an annuity
will change in the event of your death or the death of your spouse. For this
reason, it is important that we be informed if you or your spouse dies before
the Life Contingent Annuity has started payments so that a lower valuation
can
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be made. Otherwise a higher tax value may result in an overstatement of the
amount that would be necessary to satisfy your required minimum distribution
amount.
Allocations of funds to the Life Contingent Annuity may prevent the
Certificate from later receiving "conduit" IRA treatment. See "Tax-Free
Transfers and Rollovers" above.
Prohibited Transaction
An IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the IRA is borrowed against or used as collateral, its tax-
favored status will be lost as of the first day of the tax year in which the
event occurred. If this happens, the individual must include in Federal gross
income for that year an amount equal to the fair market value of the IRA
Certificate as of the first day of that tax year, less the amount of any
nondeductible contributions not previously withdrawn. Also, the early
distribution penalty tax of 10% will apply if the individual has not reached
age 59 1/2 before the first day of that tax year. See "Penalty Tax on Early
Distributions" below.
PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of IRA distributions will be subject to a 10% penalty tax
unless the distribution is made (1) on or after your death, (2) because you
have become disabled, (3) on or after the date when you reach age 59 1/2 , or
(4) in accordance with the exception outlined below if you are under 59 1/2 .
A payout over your life or life expectancy (or joint and survivor lives or
life expectancies), which is part of a series of substantially equal periodic
payments made at least annually, is also not subject to penalty tax. To
permit you to meet this exception, Equitable Life has two options:
Substantially Equal Payment Withdrawals and the IRA Assured Payment Option
with level payments, both of which are described in Part 6. If you are a
Rollover IRA Certificate Owner who will be under age 59 1/2 as of the date
the first payment is expected to be received and you choose either option,
Equitable Life will calculate the substantially equal annual payments under a
method we will select based on guidelines issued by the IRS (currently
contained in IRS Notice 89-25, Question and Answer 12). Although
Substantially Equal Payment Withdrawals and IRA Assured Payment Option
payments are not subject to the 10% penalty tax, they are taxable as
discussed in "Distributions from IRA Certificates," above. Once Substantially
Equal Payment Withdrawals or IRA Assured Payment Option payments begin, the
distributions should not be stopped or changed until the later of your
attaining age 59 1/2 or five years after the date of the first distribution,
or the penalty tax, including an interest charge for the prior penalty
avoidance, may apply to all withdrawals. Also, it is possible that the IRS
could view any additional withdrawal or payment you take from your
Certificate as changing your pattern of Substantially Equal Payment
Withdrawals or IRA Assured Payment Option payments for purposes of
determining whether the penalty applies.
TAX PENALTY FOR INSUFFICIENT
DISTRIBUTIONS
Failure to make required distributions discussed above in "Required Minimum
Distributions" may cause the disqualification of the IRA. Disqualification
may result in current taxation of your entire benefit. In addition a 50%
penalty tax may be imposed on the difference between the required
distribution amount and the amount actually distributed, if any.
We do not automatically make distributions from a Certificate before the
Annuity Commencement Date unless a request has been made. It is your
responsibility to comply with the minimum distribution rules. We will notify
you when our records show that your age 70 1/2 is approaching. If you do not
select a method, we will assume you are taking your minimum distribution from
another IRA that you maintain. You should consult with your tax adviser
concerning these rules and their proper application to your situation.
TAX PENALTY FOR EXCESS DISTRIBUTIONS OR ACCUMULATION
A 15% excise tax applies to an individual's aggregate excess distributions
from all tax-favored retirement plans (including IRAs). The excise tax is in
addition to the ordinary income tax due but is reduced by the amount (if any)
of the early distribution penalty tax imposed by the Code. The aggregate
distributions in any year will be subject to excise tax if they exceed an
indexed amount ($155,000 in 1996).
In addition, in certain cases the estate tax imposed on a deceased
individual's estate will be increased if the accumulated value of the
individual's interest in qualified annuities and tax favored retirement plans
is excessive.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax from IRA
distributions, unless the recipient elects not to be subject to income tax
withholding. The rate of withholding will depend on the type
49
<PAGE>
of distribution and, in certain cases, the amount of the distribution.
Special withholding rules apply to foreign recipients and United States
citizens residing outside the United States. If a recipient does not have
sufficient income tax withheld or does not make sufficient estimated income
tax payments, however, the recipient may incur penalties under the estimated
income tax rules. Recipients should consult their tax advisers to determine
whether they should elect out of withholding. Requests not to withhold
Federal income tax must be made in writing prior to receiving benefits under
the Certificate. Our Processing Office will provide forms for this purpose.
No election out of withholding is valid unless the recipient provides us with
the correct taxpayer identification number and a United States residence
address.
Certain states have indicated that income tax withholding will apply to
payments made from the Certificate to residents. In some states, a recipient
may elect out of state withholding. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. If
you need more information concerning a particular state or any required
forms, call our Processing Office at the toll-free number and consult your
tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1996, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,075
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemptions.
A withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than the Certificate Owner, a Federal generation skipping
tax may be payable with respect to the benefit at rates similar to the
maximum estate tax rate in effect at the time. The generation skipping tax
provisions generally apply to transfers which would also be subject to the
gift and estate tax rules. Individuals are generally allowed an aggregate
generation skipping tax exemption of $1 million. Because these rules are
complex, you should consult with your tax adviser for specific information,
especially where benefits are passing to younger generations, as opposed to a
spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account
for taxes. Equitable Life can set up reserves for such taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers among the Investment Funds or between the Guaranteed Period Account
and one or more Investment Funds are not taxable.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities and individual retirement arrangements. In addition,
the Treasury Department may amend existing regulations, issue new
regulations, or adopt new interpretations of existing laws. State tax laws
or, if you are not a United States resident, foreign tax laws, may affect the
tax consequences to you or the beneficiary. These laws may change from time
to time without notice and, as a result, the tax consequences may be altered.
There is no way of predicting whether, when or in what form any such change
would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
50
<PAGE>
- -----------------------------------------------------------------------------
PART 10: INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------------------------------
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life for the years ended December 31, 1995 and 1994
included in Equitable Life's Annual Report on Form 10-K, incorporated by
reference in the prospectus, have been examined by Price Waterhouse LLP,
independent accountants, whose reports thereon are incorporated herein by
reference. Such consolidated financial statements and consolidated financial
statement schedules have been incorporated herein by reference in reliance
upon the reports of Price Waterhouse LLP given upon their authority as
experts in accounting and auditing.
51
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- -----------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1997 to a Guarantee Period with an Expiration Date
of February 15, 2006 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2001.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2001
----------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2001 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value ..................... $144,048 $119,487
(2) Guaranteed Period Amount ............... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ...... 12,968 (11,593)
On February 15, 2001 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000 / (1)] ... $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)] .............. 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ..... 85,581 76,229
(7) Maturity Value ......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value ..................... 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
52
<PAGE>
APPENDIX II: GUARANTEED MINIMUM DEATH BENEFIT (GMDB) EXAMPLE
- -----------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB (see "Guaranteed Minimum Death Benefit (GMDB)" in Part 5);
and
(2) the death benefit provided with respect to the Guaranteed Period
Account (see "Death Benefit Amount" in Part 4).
The following is an example illustrating the calculation of the GMDB.
Assuming $100,000 is allocated to the Investment Funds (with no allocation to
the Money Market Fund or the Intermediate Government Securities Fund), no
subsequent contributions, no transfers and no withdrawals, the GMDB for an
Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
END OF
CONTRACT ANNUITY ACCOUNT NON-NEW YORK
YEAR VALUE GMDB NEW YORK GMDB
- ---------- --------------- -------------- -------------
<S> <C> <C> <C>
1 $105,000 $106,000(1) $105,000(4)
2 $108,675 $112,360(1) $108,675(4)
3 $124,976 $119,102(1) $119,102(5)
4 $135,912 $126,248(1) $126,248(5)
5 $149,503 $133,823(1) $133,823(5)
6 $149,503 $141,852(1) $141,852(5)
7 $161,463 $161,463(2) $161,463(5)
8 $161,463 $171,151(3) $161,463(4)
</TABLE>
The Annuity Account Values for Contract Years 1 through 8 are determined
based on hypothetical rates of return of 5.00%, 3.50%, 15.00%, 8.75%, 10.00%,
0.00%, 8.00% and 0.00%, respectively.
NON-NEW YORK
(1)For Contract Years 1 through 6, the GMDB equals the initial contribution
increased by 6%.
(2)At the end of the seventh Contract Year the GMDB calculated on the 6%
increase basis on that date of $150,363 is reset to the Annuity Account
Value of $161,463 since that amount is greater.
(3)Equals the prior GMDB of $161,463 increased by 6%.
NEW YORK
(4)At the end of Contract Years 1 and 2, and again at the end of Contract
Year 8, the GMDB is equal to the Annuity Account Value.
(5)At the end of Contract Years 3, 4, 5 and 6, the GMDB is equal to the
contributions increased by 6% instead of the Annuity Account Value,
since the GMDB cannot be greater than this amount. However, at the end
of the seventh Contract Year the GMDB is equal to the Annuity Account
Value of $161,463 even though it is greater than the contributions
increased at 6% ($150,363) due to the end of the seventh Contract Year
reset.
53
<PAGE>
APPENDIX III: GMDB SPECIAL ADJUSTMENT
- -----------------------------------------------------------------------------
A special adjustment is made to the GMDB if on the next Processing Date
following a withdrawal or transfer from the Investment Funds, both (i) the
Annuity Account Value is less than the GMDB, and (ii) the sum of the
withdrawals and transfers from the Investment Funds during the Contract Year
prior to such Processing Date is greater than the difference between the GMDB
(before reduction for withdrawals and transfers from the Investment Funds
during the prior Contract Year) and "GMDB contributions." GMDB contributions
are equal to the sum of all contributions made plus all transfers into the
Investment Funds, plus at the time of any seventh Contract Year reset, the
amount by which the GMDB is increased to match the then current Annuity
Account Value. Such GMDB contributions are not reduced by withdrawals or
transfers from the Investment Funds.
The special adjustment will be equal to: (A) x (B) -(C):
Where:
(A) equals the GMDB (before the special adjustment and reduction for
withdrawals and transfers from the Investment Funds during the prior
Contract Year),
(B) equals (i)/(ii);
where
(i) equals the sum of withdrawals and transfers from the Investment
Funds during the prior Contract Year, and
(ii) equals the Annuity Account Value (plus any withdrawals and
transfers from the Investment Funds during the prior Contract
Year), and
(C) equals the sum of withdrawals and transfers from the Investment
Funds during the prior Contract Year.
Example:
The following illustrates how a withdrawal would affect the non-New York GMDB
under a Certificate, assuming an initial contribution of $100,000, an Annuity
Account Value of $120,000 (with no allocation to the Money Market Fund or the
Intermediate Government Securities Fund) at the end of the fourth year and a
GMDB of $126,248 at the end of the fourth year. If no withdrawals or
transfers were to be made in the fifth year, the end of fifth year GMDB would
be $133,823. If a $60,000 withdrawal was made at the end of the fifth year
and a 0% return had been earned in the fifth year, the special adjustment
would be calculated using the above formula as follows:
(A) = $133,823
(B) = (i)/(ii) = $60,000/$120,000 = .5
(C) = $60,000
(A) X (B) - (C) = [($133,823 X .5) - $60,000] = $6,911.
The end of fifth year GMDB would equal $133,823 - $60,000 - $6,911 = $66,912.
The special adjustment was necessary in this case because (i) the end of
fifth year Annuity Account Value was less than the GMDB at the end of the
fifth year and (ii) the withdrawal of $60,000 was an amount greater than the
difference between the end of the fifth year GMDB (before reduction for the
withdrawal) and the GMDB contributions. In this case, that difference was
$33,823 ($133,823 - $100,000).
54
<PAGE>
APPENDIX IV: EXAMPLE OF PAYMENTS UNDER THE IRA ASSURED PAYMENT
OPTION AND IRA APO PLUS
- -----------------------------------------------------------------------------
The second column in the chart below illustrates the payments for a male age
70 who purchased the IRA Assured Payment Option on May 1, 1996 with a single
contribution of $100,000, with increasing annual payments. The payments are
to commence on February 15, 1997. It assumes that the fixed period is 15
years and that the Life Contingent Annuity will provide payments on a Single
Life basis. Based on Guaranteed Rates for the Guarantee Periods and the
current purchase rate for the Life Contingent Annuity, on May 1, 1996, the
initial payment would be $6,868.31 and would increase in each three year
period to a final payment of $10,055.89. The first payment under the Life
Contingent Annuity would be $11,061.48.
Alternatively as shown in the third and fourth columns, this individual could
purchase IRA APO Plus with the same $100,000 contribution, with the same
fixed period and the Life Contingent Annuity on a Single Life basis. Based on
Guaranteed Rates for the Guarantee Periods and the current purchase rate for
the Life Contingent Annuity, on May 1, 1996, the same initial payment of
$6,868.31 would be purchased under IRA APO Plus. However, unlike the payment
under the IRA Assured Payment Option that will increase every three years,
this initial payment under IRA APO Plus is not guaranteed to increase.
Therefore, only $79,081.41 is needed to purchase the initial payment stream,
and the remaining $20,918.59 is invested in the Investment Funds according to
the Certificate Owner's instructions. Any future increase in payments under
IRA APO Plus will depend on the investment performance in the Investment
Funds.
Assuming hypothetical average annual rates of return of 0% and 8% (after
deduction of charges) for the Investment Funds, the Annuity Account Value in
the Investment Funds would grow to $20,918.59 and $26,351.40 respectively
after three years. A portion of this amount is used to purchase the increase
in the payments at the beginning of the fourth year. The remainder will stay
in the Investment Funds to be drawn upon for the purchase of increases in
payments at the end of each third year thereafter during the fixed period and
at the end of the fixed period under the Life Contingent Annuity. Based on
Guaranteed Rates for the Guarantee Periods and purchase rates for the Life
Contingent Annuity as of May 1, 1996, the third and fourth columns illustrate
the increasing payments that would be purchased under IRA APO Plus assuming
0% and 8% rates of return respectively.
Under both options, while the Certificate Owner is living payments increase
annually after the 16th year under the Life Contingent Annuity based on the
increase in the Consumer Price Index, but in no event greater than 3% per
year nor less than 0%.
ANNUAL PAYMENTS
<TABLE>
<CAPTION>
GUARANTEED INCREASING PAYMENTS ILLUSTRATIVE ILLUSTRATIVE
UNDER THE IRA ASSURED PAYMENT PAYMENTS UNDER IRA PAYMENTS UNDER IRA
YEARS OPTION APO PLUS AT 0% APO PLUS AT 8%
- ------- ------------------------------ ------------------ ------------------
<S> <C> <C> <C>
1-3 $ 6,868.31 $6,868.31 $ 6,868.31
4-6 7,555.14 7,271.57 7,669.68
7-9 8,310.65 7,654.28 8,495.45
10-12 9,141.72 8,040.02 9,341.70
13-15 10,055.89 8,390.45 10,160.77
16 11,061.48 8,646.62 10,877.71
</TABLE>
As described above, a portion of the illustrated contribution is applied to
the Life Contingent Annuity. This amount will generally be larger under the
IRA Assured Payment Option than under IRA APO Plus, and conversely a smaller
portion of the contribution will be allocated to Guarantee Periods under the
former than the latter. In this illustration, $80,260.20 is allocated under
the IRA Assured Payment Option to the Guarantee Periods and under IRA APO
Plus, $88,935.43 is allocated to the Guarantee Periods and the Investment
Funds. The balance of the $100,000 ($19,739.80 and $11,064.57, respectively)
is applied to the Life Contingent Annuity.
The rates of return of 0% and 8% are for illustrative purposes only and are
not intended to represent an expected or guaranteed rate of return. Your
investment results will vary. Payments will also depend on the Guaranteed
Rates and Life Contingent Annuity purchase rates in effect as of the
Transaction Date. It is assumed that no Lump Sum Withdrawals are taken.
55
<PAGE>
APPENDIX V: IRS TAX DEDUCTION TABLE
- -----------------------------------------------------------------------------
If your Maximum Permissible Dollar Deduction is $2,000, use this table to
estimate the amount of your contribution which will be deductible.
<TABLE>
<CAPTION>
EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION
- ------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 $2,000 $2,550 $1,490 $5,050 $990 $ 7,550 $490
50 1,990 2,600 1,480 5,100 980 7,600 480
100 1,980 2,650 1,470 5,150 970 7,650 470
150 1,970 2,700 1,460 5,200 960 7,700 460
200 1,960 2,750 1,450 5,250 950 7,750 450
250 1,950 2,800 1,440 5,300 940 7,800 440
300 1,940 2,850 1,430 5,350 930 7,850 430
350 1,930 2,900 1,420 5,400 920 7,900 420
400 1,920 2,950 1,410 5,450 910 7,950 410
450 1,910 3,000 1,400 5,500 900 8,000 400
500 1,900 3,050 1,390 5,550 890 8,050 390
550 1,890 3,100 1,380 5,600 880 8,100 380
600 1,880 3,150 1,370 5,650 870 8,150 370
650 1,870 3,200 1,360 5,700 860 8,200 360
700 1,860 3,250 1,350 5,750 850 8,250 350
750 1,850 3,300 1,340 5,800 840 8,300 340
800 1,840 3,350 1,330 5,850 830 8,350 330
850 1,830 3,400 1,320 5,900 820 8,400 320
900 1,820 3,450 1,310 5,950 810 8,450 310
950 1,810 3,500 1,300 6,000 800 8,500 300
1,000 1,800 3,550 1,290 6,050 790 8,550 290
1,050 1,790 3,600 1,280 6,100 780 8,600 280
1,100 1,780 3,650 1,270 6,150 770 8,650 270
1,150 1,770 3,700 1,260 6,200 760 8,700 260
1,200 1,760 3,750 1,250 6,250 750 8,750 250
1,250 1,750 3,800 1,240 6,300 740 8,800 240
1,300 1,740 3,850 1,230 6,350 730 8,850 230
1,350 1,730 3,900 1,220 6,400 720 8,900 220
1,400 1,720 3,950 1,210 6,450 710 8,950 210
1,450 1,710 4,000 1,200 6,500 700 9,000 200
1,500 1,700 4,050 1,190 6,550 690 9,050 200
1,550 1,690 4,100 1,180 6,600 680 9,100 200
1,600 1,680 4,150 1,170 6,650 670 9,150 200
1,650 1,670 4,200 1,160 6,700 660 9,200 200
1,700 1,660 4,250 1,150 6,750 650 9,250 200
1,750 1,650 4,300 1,140 6,800 640 9,300 200
1,800 1,640 4,350 1,130 6,850 630 9,350 200
1,850 1,630 4,400 1,120 6,900 620 9,400 200
1,900 1,620 4,450 1,110 6,950 610 9,450 200
1,950 1,610 4,500 1,100 7,000 600 9,500 200
2,000 1,600 4,550 1,090 7,050 590 9,550 200
2,050 1,590 4,600 1,080 7,100 580 9,600 200
2,100 1,580 4,650 1,070 7,150 570 9,650 200
2,150 1,570 4,700 1,060 7,200 560 9,700 200
2,200 1,560 4,750 1,050 7,250 550 9,750 200
2,250 1,550 4,800 1,040 7,300 540 9,800 200
2,300 1,540 4,850 1,030 7,350 530 9,850 200
2,350 1,530 4,900 1,020 7,400 520 9,900 200
2,400 1,520 4,950 1,010 7,450 510 9,950 200
2,450 1,510 5,000 1,000 7,500 500 10,000 0
2,500 1,500
<FN>
- ------------
Excess AGI = Your AGI minus your THRESHOLD LEVEL:
If you are single, your Threshold Level is $25,000.
If you are married, your Threshold Level is $40,000.
If you are married and file a separate tax return, your Excess AGI = your
AGI.
</TABLE>
56
<PAGE>
- -----------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C>
Part 1: Minimum Distribution Withdrawals 2
Part 2: Accumulation Unit Values 2
Part 3: Annuity Unit Values 2
Part 4: Custodian and Independent Accountants 3
Part 5: Money Market Fund and Intermediate Government
Securities Fund Yield Information 3
Part 6: Long-Term Market Trends 5
Part 7: Financial Statements 7
</TABLE>
HOW TO OBTAIN A ROLLOVER IRA STATEMENT OF ADDITIONAL
INFORMATION
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an INCOME MANAGER Rollover IRA SAI:
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
57
<PAGE>
SUPPLEMENT DATED MAY 1, 1997 TO
ACCUMULATOR PROSPECTUS, DATED MAY 1, 1996
- -----------------------------------------------------------------------------
This supplement dated May 1, 1997, updates certain information in the
Accumulator prospectus of The Equitable Life Assurance Society of the United
States (EQUITABLE LIFE), dated May 1, 1996. You should read this supplement in
conjunction with the prospectus. You should keep the supplement and the
prospectus for future reference. We have filed with the Securities and Exchange
Commission (SEC) our statement of additional information (SAI) dated May 1,
1997. If you have previously received, but do not presently have, a copy of the
prospectus, you may obtain an additional copy of the prospectus, as well as a
copy of the SAI, from us, free of charge, if you write to Equitable Life,
Income Management Group, P.O. Box 1547, Secaucus, NJ 07096-1547, call (800)
789-7771 or if you only need a copy of the SAI, you may mail in the SAI request
form located at the end of the supplement. The SAI has been incorporated by
reference into this supplement.
In the supplement, each section of the prospectus in which a change has been
made is identified and the number of each prospectus page on which a change
occurs is also noted. Special terms used in the prospectus have the same
meaning in the supplement unless otherwise noted.
ON THE COVER PAGE OF THE PROSPECTUS, THE THIRD (INCLUDING THE CHART OF
INVESTMENT OPTIONS) AND FOURTH PARAGRAPHS ARE REPLACED BY THE FOLLOWING
PARAGRAPHS:
The Accumulator offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 21
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the
GUARANTEED PERIOD ACCOUNT.
We invest each Investment Fund in Class IA shares of a corresponding
portfolio (PORTFOLIO) of The Hudson River Trust (HR TRUST) or Class IB shares
of a corresponding Portfolio of EQ Advisors Trust (EQ TRUST), mutual funds
whose shares are purchased by separate accounts of insurance companies. The
prospectuses for HR Trust and EQ Trust, both of which accompany this
supplement, describe the investment objectives, policies and risks of the
Portfolios.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
EQUITY SERIES
- -----------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY INTERNATIONAL EQUITY AGGRESSIVE EQUITY
<S> <C> <C>
Alliance Common Stock Alliance Global Alliance Aggressive Stock
Alliance Growth & Income Alliance International Alliance Small Cap Growth
EQ/Putnam Growth & Income Value Morgan Stanley Emerging Markets Equity MFS Emerging Growth Companies
MFS Research T. Rowe Price International Stock Warburg Pincus Small Company Value
Merrill Lynch Basic Value Equity
T. Rowe Price Equity Income
----------------------------------- ----------------------------------------- -------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES FIXED INCOME SERIES
- ---------------------------------- ---------------------------------------------------------------------------
AGGRESSIVE FIXED INCOME DOMESTIC FIXED INCOME
<S> <C> <C>
Alliance Conservative Investors Alliance High Yield Alliance Intermediate Government Securities
Alliance Growth Investors Alliance Money Market
EQ/Putnam Balanced
Merrill Lynch World Strategy
--------------------------------- --------------------------- ---------------------------------------------
</TABLE>
THE FOLLOWING SENTENCE IS ADDED AT THE END OF THE FIFTH PARAGRAPH.
The Guarantee Periods currently available have Expiration Dates of February
15 in years 1998 through 2007.
THROUGHOUT THE PROSPECTUS ANY REFERENCE TO THE INVESTMENT FUNDS AND GUARANTEE
PERIODS REFER TO THE INVESTMENT FUNDS AND GUARANTEE PERIODS SET FORTH ABOVE.
- -----------------------------------------------------------------------------
Copyright 1997
The Equitable Life Assurance Society of the
United States, New York, New York 10104.
All rights reserved.
<PAGE>
THROUGHOUT THE PROSPECTUS (EXCEPT WHERE OTHERWISE NOTED) THE REFERENCE TO
"TRUST" IS REPLACED BY "HR TRUST AND EQ TRUST."
ON PAGE 2, UNDER THE HEADING "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE"
REPLACE THE ENTIRE SECTION WITH THE FOLLOWING SECTION:
Equitable Life's Annual Report on Form 10-K for the year ended December 31,
1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(EXCHANGE ACT) after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated
by reference in the prospectus and the supplement and to be a part hereof
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated herein by reference shall
be deemed to be modified or superseded for purposes of the prospectus and the
supplement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified and
superseded, to constitute a part of the prospectus and the supplement.
Equitable Life files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically
pursuant to EDGAR under CIK No. 0000727920. The SEC maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. The address of
the site is http://www.sec.gov.
Equitable Life will provide without charge to each person to whom a
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
ON PAGE 4, UNDER THE HEADING "GENERAL TERMS"
ADD THE FOLLOWING DEFINITIONS:
EQ TRUST--EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants, Inc.
(EQ Financial) is the manager of EQ Trust and has appointed advisers for each
of the Portfolios.
HR TRUST--The Hudson River Trust, a mutual fund in which the assets of
separate accounts of insurance companies are invested. Alliance Capital
Management L.P. (Alliance) is the adviser to HR Trust.
DELETE THE DEFINITION FOR "TRUST."
2
<PAGE>
ON PAGES 5, 6 AND 7, REPLACE THE "FEE TABLE" SECTION WITH THE FOLLOWING
SECTION:
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate so
that you may compare them on the same basis with other similar products. The
table reflects both the charges of the Separate Account and the expenses of HR
Trust and EQ Trust. Charges for applicable taxes such as state or local premium
taxes may also apply. For a complete description of the charges under the
Certificate, see "Part 6: Deductions and Charges." For a complete description
of each trust's charges and expenses, see the prospectuses for the HR Trust and
EQ Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. However, if there is insufficient
value in the Investment Funds all or a portion of the distribution fee and the
annual contract fee, if any, will be deducted from your Annuity Account Value
in the Guaranteed Period Account rather than from the Investment Funds. See
"Part 6: Deductions and Charges." A market value adjustment (either positive or
negative) also may be applicable as a result of a withdrawal, transfer or
surrender of amounts from a Guarantee Period. See "Part 4: The Guaranteed
Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
<TABLE>
<CAPTION>
<S> <C>
DISTRIBUTION FEE (SALES LOAD) AS A PERCENTAGE OF EACH CONTRIBUTION RECEIVED DURING THE
FIRST CONTRACT YEAR (deducted annually on each of the first seven Processing Dates)(1) ... 0.20%
</TABLE>
<TABLE>
<CAPTION>
CONTRACT
YEAR
----------
<S> <C> <C>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted upon 1 ... 7.00%
surrender or for certain withdrawals. The applicable withdrawal charge 2 ... 6.00
percentage is determined by the Contract Year in which the withdrawal is made 3 ... 5.00
or the Certificate is surrendered beginning with "Contract Year 1" with 4 ... 4.00
respect to each contribution withdrawn or surrendered. For each contribution, 5 ... 3.00
the Contract Year in which we receive that contribution is "Contract Year 6 ... 2.00
1")(2) 7 ... 1.00
8+ .. 0.00
TRANSFER CHARGE(3) ............................................................... $0.00
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GUARANTEED MINIMUM DEATH BENEFIT CHARGE (percentage deducted annually on each Processing
Date as a percentage of the guaranteed minimum death benefit then in effect)(4) ........... 0.35%
</TABLE>
ANNUAL CONTRACT FEE (DEDUCTED FROM ANNUITY ACCOUNT VALUE ON EACH PROCESSING
DATE)(5)
<TABLE>
<CAPTION>
<S> <C>
If the initial contribution is less than $25,000......................................... $30
If the initial contribution is $25,000 or more .......................................... $ 0
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH
INVESTMENT FUND)
<TABLE>
<CAPTION>
<S> <C>
MORTALITY AND EXPENSE RISK CHARGE ....................................................... 0.90%
ASSET BASED ADMINISTRATIVE CHARGE ........................................................ 0.25%
-------
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES................................................... 1.15%
=======
</TABLE>
3
<PAGE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH
PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
-----------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
CONSERVATIVE GROWTH GROWTH & COMMON ALLIANCE
HR TRUST INVESTORS INVESTORS INCOME STOCK GLOBAL
- ----------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.48% 0.53% 0.55% 0.38% 0.65%
Other Expenses 0.07% 0.06% 0.05% 0.03% 0.08%
-------------- ----------- ---------- ---------- ----------
TOTAL TRUST ANNUAL
EXPENSES(6) 0.55% 0.59% 0.60% 0.41% 0.73%
============== =========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE ALLIANCE ALLIANCE INTERMEDIATE ALLIANCE
ALLIANCE AGGRESSIVE SMALL MONEY GOVT. HIGH
HR TRUST INTERNATIONAL STOCK CAP GROWTH MARKET SECURITIES YIELD
- ----------------------------- --------------- ------------ ------------ ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.90% 0.55% 0.90% 0.35% 0.50% 0.60%
Other Expenses 0.18% 0.03% 0.10% 0.04% 0.09% 0.06%
--------------- ------------ ---------- -------------- ----------
TOTAL TRUST ANNUAL
EXPENSES(6) 1.08% 0.58% 1.00% 0.39% 0.59% 0.66%
=============== ============ ============ ========== ============== ==========
</TABLE>
<TABLE>
<CAPTION>
EQ/PUTNAM MFS MERRILL
GROWTH & EMERGING LYNCH
EQ/PUTNAM INCOME GROWTH MFS BASIC VALUE
EQ TRUST BALANCED VALUE COMPANIES RESEARCH EQUITY
- -------------------------------- ----------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.55% 0.55% 0.55% 0.55% 0.55%
12b-1 Fee(7) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.10% 0.05% 0.05% 0.05% 0.05%
----------- ----------- ----------- ---------- -------------
TOTAL EQ TRUST ANNUAL
EXPENSES(8) 0.90% 0.85% 0.85% 0.85% 0.85%
=========== =========== =========== ========== =============
</TABLE>
<TABLE>
<CAPTION>
MORGAN T. ROWE WARBURG
MERRILL STANLEY T. ROWE PRICE PINCUS
LYNCH EMERGING PRICE INTERNA- SMALL
WORLD MARKETS EQUITY TIONAL COMPANY
EQ TRUST STRATEGY EQUITY INCOME STOCK VALUE
- -------------------------------- ---------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.70% 1.15% 0.55% 0.75% 0.65%
12b-1 Fee(7) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.25% 0.35% 0.05% 0.20% 0.10%
---------- ---------- --------- ---------- ---------
TOTAL EQ TRUST ANNUAL
EXPENSES(8) 1.20% 1.75% 0.85% 1.20% 1.00%
========== ========== ========= ========== =========
</TABLE>
- ------------
Notes:
(1) The amount deducted is based on contributions that have not been
withdrawn. See "Part 6: Deductions and Charges," "Distribution Fee."
(2) Deducted upon a withdrawal with respect to amounts in excess of the
15% free corridor amount, and upon a surrender. See "Part 6:
Deductions and Charges," "Withdrawal Charge."
(3) We reserve the right to impose a charge in the future at a maximum of
$25 for each transfer among the Investment Options in excess of five
per Contract Year.
(4) See "Part 6: Deductions and Charges," "Guaranteed Minimum Death
Benefit Charge."
(5) This charge is incurred at the beginning of the Contract Year and
deducted on the Processing Date. See "Part 6: Deductions and
Charges," "Annual Contract Fee."
(6) The amounts shown for the Portfolios of HR Trust (other than Alliance
Small Cap Growth) have been restated to reflect advisory fees which
went into effect as of May 1, 1997. "Other Expenses" are based on the
average daily net assets in each Portfolio for the year ended December
31, 1996. The amounts shown for the Alliance Small Cap Growth
Portfolio are estimated for the current fiscal year as this Portfolio
commenced operations on May 1, 1997. The investment advisory fee for
each Portfolio may vary from year to year depending upon the average
daily net assets of the respective Portfolio of HR Trust. The maximum
investment advisory fees, however, cannot be increased without a vote
of that Portfolios shareholders. The other direct operating expenses
will also fluctuate from year to year depending on actual expenses.
See "HR Trust Charges to Portfolios" in Part 6.
(7) The Class IB shares of EQ Trust are subject to fees imposed under a
distribution plan (herein, the "Rule 12b-1 Plan") adopted by EQ Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended. The Rule 12b-1 Plan provides that EQ Trust, on behalf of each
Portfolio, may pay annually up to 0.25% of the average daily net
assets of a Portfolio attributable to its Class IB shares in respect
of activities primarily intended to result in the sale of the Class IB
shares. The 12b-1 fee may be increased only by action of the Board of
Trustees of EQ Trust up to a maximum of 0.50% per annum.
(8) "Other Expenses" shown are based on estimated amounts (after expense
waiver or limitation) for the current fiscal year, as EQ Trust
commenced operations on May 1, 1997. The maximum investment advisory
fees cannot be increased without a vote of that Portfolio's
shareholders. The other direct operating expenses will fluctuate from
year to year depending on actual expenses, but pursuant to agreement,
cannot together with other fees specified exceed the total annual
expenses specified. See "EQ Trust Charges to Portfolios" in Part 6.
4
<PAGE>
EXAMPLES
The examples below show the expenses that a hypothetical Certificate Owner
would pay in the two situations noted below assuming a $1,000 contribution
invested in one of the Investment Funds listed, and a 5% annual return on
assets.(1) The annual contract fee was computed based on an initial
contribution of $10.000.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be greater
or less than those shown. Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
Alliance Conservative
Investors $ 90.26 $123.66 $159.71 $278.92
Alliance Growth Investors 90.65 124.85 161.72 282.98
Alliance Growth & Income 90.75 125.15 162.22 284.01
Alliance Common Stock 88.86 119.44 152.64 264.56
Alliance Global 92.05 129.06 168.75 297.11
Alliance International 95.53 139.48 186.10 331.55
Alliance Aggressive Stock 90.55 124.55 161.22 281.96
Alliance Small Cap Growth 94.73 137.10 -- --
Alliance Money Market 88.67 118.84 151.63 262.49
Alliance Intermediate
Government Securities 90.65 124.85 161.72 282.98
Alliance High Yield 91.35 126.96 165.25 290.09
EQ TRUST
- ----------
EQ/Putnam Balanced $ 93.74 $134.13 -- --
EQ/Putnam Growth & Income
Value 93.24 132.63 -- --
MFS Emerging Growth
Companies 93.24 132.63 -- --
MFS Research 93.24 132.63 -- --
Merrill Lynch Basic Value
Equity 93.24 132.63 -- --
Merrill Lynch World
Strategy 96.72 143.04 -- --
Morgan Stanley Emerging
Markets Equity 102.19 159.26 -- --
T. Rowe Price Equity Income 93.24 132.63 -- --
T. Rowe Price International
Stock 96.72 143.04 -- --
Warburg Pincus Small
Company Value 94.73 137.10 -- --
</TABLE>
- --------------
* See footnote on next page.
5
<PAGE>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
HR TRUST
- --------
Alliance Conservative Investors $25.97 $ 79.83 $136.40 $285.19
Alliance Growth Investors 26.36 81.02 138.41 289.26
Alliance Growth & Income 26.46 81.32 138.91 290.27
Alliance Common Stock 24.57 75.61 129.33 270.83
Alliance Global 27.76 85.22 145.43 303.37
Alliance International 31.24 95.66 162.80 337.84
Alliance Aggressive Stock 26.26 80.72 137.90 288.23
Alliance Small Cap Growth 30.44 93.27 -- --
Alliance Money Market 24.38 75.02 128.33 268.78
Alliance Intermediate Government
Securities 26.36 81.02 138.41 289.26
Alliance High Yield 27.06 83.12 141.92 296.33
EQ TRUST
- --------
EQ/Putnam Balanced $29.45 $ 90.30 -- --
EQ/Putnam Growth & Income Value 28.95 88.80 -- --
MFS Emerging Growth Companies 28.95 88.80 -- --
MFS Research 28.95 88.80 -- --
Merrill Lynch Basic Value Equity 28.95 88.80 -- --
Merrill Lynch World Strategy 32.43 99.21 -- --
Morgan Stanley Emerging Markets
Equity 37.90 115.42 -- --
T. Rowe Price Equity Income 28.95 88.80 -- --
T. Rowe Price International Stock 32.43 99.21 -- --
Warburg Pincus Small Company
Value 30.44 93.27 -- --
</TABLE>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
- ------------
Notes:
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity at the end of any of the periods shown in the
examples. If the amount applied to purchase an annuity is less than
$2,000, or the initial payment is less than $20 we may pay the amount to
the payee in a single sum instead of as payments under an annuity form.
See "Income Annuity Options" in Part 5. The examples do not reflect
charges for applicable taxes such as state or local premium taxes that
may also be deducted in certain jurisdictions.
6
<PAGE>
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on May 1, 1995. The
following table shows the Accumulation Unit Values, as of May 1, 1995 and the
last Business Day for the periods shown. There are no Accumulation Unit
Values for Alliance Small Cap Growth, Alliance High Yield, and the Investment
Funds investing in Class IB shares of EQ Trust Portfolios as such Investment
Funds were not available prior to the date of this supplement.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
-------------------------------
MAY 1, 1995 DECEMBER 1995 DECEMBER 1996 MARCH 1997
------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
Alliance Conservative
Investors $ 14.647383 $ 16.549050 $ 17.209382 17.009080
Alliance Growth
Investors 20.073331 23.593613 26.260729 25.712963
Alliance Growth &
Income 10.376155 11.989601 14.231408 14.317214
Alliance Common
Stock 102.335691 124.519251 152.955877 147.037726
Alliance Global 19.478146 22.293921 25.253538 24.366634
Alliance International 10.125278 11.033925 11.976127 11.827319
Alliance Aggressive
Stock 44.025496 54.591448 65.938687 64.279288
Alliance Money Market 23.150932 23.830754 24.810781 25.046934
Alliance Intermediate
Govt. Securities 12.498213 13.424767 11.976127 13.741339
Alliance High Yield 19.578616 21.602062 26.238452 26.305394
</TABLE>
ON PAGE 8, UNDER THE HEADING "TRANSFERS," DELETE THE SECOND SENTENCE.
ON PAGE 11 UNDER THE HEADING "EQUITABLE LIFE."
REPLACE THE THIRD SENTENCE OF THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Our home office is located at 1290 Avenue of the Americas, New York, New York
10104.
REPLACE THE SECOND AND THIRD PARAGRAPHS WITH THE FOLLOWING PARAGRAPHS:
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996, AXA beneficially owned
63.8% of the outstanding shares of common stock of the Holding Company
(assuming conversion of convertible preferred stock held by AXA). Under its
investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $239.8 billion of assets as of December 31, 1996.
ON PAGES 11 AND 12 REPLACE THE HEADING "THE TRUST" WITH "HR TRUST" AND ADD THE
FOLLOWING SENTENCE AFTER THE FIFTH SENTENCE OF THE FIRST PARAGRAPH:
Investment Funds that invest in Portfolios of HR Trust purchase Class IA
shares of a corresponding Portfolio of HR Trust.
7
<PAGE>
ON PAGE 12 IN THE HEADING "THE TRUST'S INVESTMENT ADVISOR" AND IN THE FIRST
SENTENCE OF THE PARAGRAPH UNDER THE HEADING REPLACE "THE TRUST" WITH "HR
TRUST."
IN THE FIRST PARAGRAPH OF THIS SECTION, REPLACE THE THIRD SENTENCE WITH THE
FOLLOWING SENTENCE:
On December 31, 1996, Alliance was managing approximately $182.8 billion in
assets.
DELETE THE SECOND PARAGRAPH.
ON PAGE 12, INSERT THE FOLLOWING SECTIONS AFTER THE LAST PARAGRAPH:
EQ TRUST
EQ Trust is an open-end management investment company. As a "series type" of
mutual fund, EQ Trust issues different series of stock, each of which relates
to a different Portfolio of EQ Trust. EQ Trust commenced operations on May 1,
1997. EQ Trust does not impose a sales charge or "load" for buying and
selling it shares. All dividend distributions to EQ Trust are reinvested in
full and fractional shares of the Portfolio to which they relate. Investment
Funds that invest in Portfolios of EQ Trust purchase Class IB shares of a
corresponding Portfolio of EQ Trust. More detailed information about EQ
Trust, its investment objectives, policies and restrictions, risks, expenses,
the Rule 12b-1 Plan relating to the Class IB shares, and all other aspects of
its operations appears in its prospectus which accompanies this supplement
and in its statement of additional information.
EQ TRUST'S MANAGER AND ADVISERS
EQ Trust is managed by EQ Financial Consultants, Inc. (EQ Financial) which,
subject to supervision and direction of the Trustees of EQ Trust, has overall
responsibility for the general management of EQ Trust. EQ Financial is an
investment adviser registered under the 1940 Act, and a broker-dealer
registered under the Exchange Act. EQ Financial is a Delaware corporation and
an indirect, wholly-owned subsidiary of Equitable Life. EQ Financial's main
office is located at 1290 Avenue of the Americas, New York, New York 10104.
EQ Financial has entered into investment advisory agreements with Putnam
Investments, Massachusetts Financial Services Company, Merrill Lynch Asset
Management, L.P., Morgan Stanley Asset Management, Inc., T. Rowe Price
Associates, Inc. and Rowe Price-Fleming International Inc., and Warburg,
Pincus Counsellors, Inc., each of which serve as advisers to EQ/Putnam, MFS,
Merrill Lynch, Morgan Stanley, T. Rowe Price, and Warburg Pincus Portfolios,
respectively, of EQ Trust.
ON PAGE 13, UNDER THE HEADING "INVESTMENT POLICIES AND OBJECTIVES OF THE
TRUST'S PORTFOLIOS"
ADD THE FOLLOWING SENTENCES TO THE END OF THE FIRST PARAGRAPH:
Set forth below is a summary of the investment policies and objectives of
each Portfolio. This summary is qualified in its entirely by reference to the
prospectus for HR Trust and EQ Trust both of which accompany this supplement.
Please read the prospectuses for each of the trusts carefully before
investing.
DELETE THE DESCRIPTION OF "AGGRESSIVE STOCK" AND INSERT THE FOLLOWING
DESCRIPTIONS:
<TABLE>
<CAPTION>
<S> <C> <C>
Alliance Aggressive Primarily common stocks and other equity-type securities Long-term growth of
Stock issued by quality small and intermediate sized companies capital
with strong growth prospects and in covered options on
those securities.
Alliance Small Cap Primarily U.S. common stocks and other equity type Long-term growth of
Growth securities issued by smaller companies with favorable capital
growth prospects.
Alliance High Yield Primarily a diversified mix of high yield, fixed- High return by
income securities involving greater volatility maximizing current
of price and risk of principal and income than income and, to the
high quality fixed-income securities. The extent consistent
medium and lower quality debt securities with that objective,
in which the Portfolio may invest are capital appreciation
known as "junk bonds."
</TABLE>
8
<PAGE>
INSERT THE FOLLOWING DESCRIPTIONS AFTER THE DESCRIPTION OF "INTERMEDIATE
GOVERNMENT SECURITIES:"
<TABLE>
<CAPTION>
<S> <C> <C>
EQ/Putnam Balanced A well-diversified portfolio of stocks and bonds that Balanced investment
will produce both capital growth and current income.
EQ/Putnam Growth & Primarily common stocks that offer potential for Capital growth and,
Income Value capital growth, consistent with the Portfolios' secondarily, current
investment objective, common stocks that offer income
potential for current income.
MFS Emerging Growth Primarily (i.e., at lest 80% of its assets uder normal Long-term growth of
Companies circumstances) in common stocks of emerging growth capital
companies that the Portfolio adviser believes are
early in their life cycle but which have the
potential to become major enterprises.
MFS Research A substantial portion of assets invested in Long-term growth of
common stock or securities convertible into capital and future income
common stock of companies believed by the Portfolio
adviser to possess better than average prospects for
long-term growth.
Merrill Lynch Basic Investment in securities, primarily equities, that the Capital appreciation
Value Equity Portfolio adviser believes are undervalued and and, secondarily, income
therefore represent basic investment value.
Merrill Lynch World Investment primarily in a portfolio of equity and High total investment
Strategy fixed income securities, including convertible return
securities, of U.S. and foreign issuers.
Morgan Stanley Emerging Primarily equity securities of emerging market country Long-term capital
Markets Equity* (i.e. foreign) issuers. appreciation
T. Rowe Price Equity Primarily dividend paying common stocks of established Substantial dividend
Income companies. income and also capital
appreciation
T. Rowe Price Primarily common stocks of established non-United Long-term growth of
International Stock States companies. capital
Warburg Pincus Small Primarily in a portfolio of equity securities of small Long-term capital
Company Value capitalization companies (i.e., companies having market appreciation
capitalizations of $1 billion or less at the time of
initial purchase) that the Portfolio adviser
considers to be relatively undervlaued.
</TABLE>
- ------------
* Will be available on or about September 2, 1997.
9
<PAGE>
ON PAGE 14, REPLACE THE FIRST AND SECOND PARAGRAPHS WITH THE FOLLOWING
PARAGRAPHS:
This Part presents performance data for each of the Investment Funds included
in the tables below. The performance data were calculated by two methods. The
first method presented in the tables under "SEC Standardized Performance
Data," reflects all applicable fees and charges, including the guaranteed
minimum death benefit charge, but not the charges for any applicable taxes
such as premium taxes.
The second method presented in the tables under "Rate of Return Data for
Investment Funds," also reflects all applicable fees and charges, but does
not reflect the distribution fee, the withdrawal charge, the guaranteed
minimum death benefit charge, the annual contract fee or the charge for tax
such as premium taxes. These additional charges would effectively reduce the
rates of return credited to a particular Certificate.
HR Trust Portfolios
The performance data shown for the Investment Funds investing in Class IA
shares of HR Trust Portfolios (other than the Alliance Small Cap Growth
Portfolio which commenced operations on May 1, 1997), are based on the actual
investment results of the Portfolios and have been adjusted for the fees and
charges applicable under the Certificates.
The performance data for the Alliance Money Market and Alliance Common Stock
Investment Funds that invest in corresponding HR Trust Portfolios, for
periods prior to March 22, 1985, reflect the investment results of two
open-end management separate accounts (the "predecessor separate accounts")
which were reorganized in unit investment trust form. The "Since inception"
figures for these Investment Funds are based on the date of inception of the
predecessor separate accounts. These performance data have been adjusted to
reflect the maximum investment advisory fee payable for the corresponding
Portfolio of HR Trust, as well as an assumed charge of 0.06% for direct
operating expenses.
EQ Trust Portfolios
The Investment Funds of the Separate Account that invest in Class IB shares
of Portfolios of EQ Trust have only recently been established and no
Certificates funded by those Investment Funds have been issued as of the date
of this Supplement. EQ Trust commenced operations on May 1, 1997. Therefore,
no actual historical performance data for any of these Portfolios are
available. In this connection, see the discussion immediately following the
tables below.
ON PAGE 14, REPLACE THE HEADING "PERFORMANCE DATA FOR A CERTIFICATE" WITH
"STANDARDIZED PERFORMANCE DATA."
IN THE FIRST SENTENCE OF THE THIRD PARAGRAPH UNDER THIS HEADING CHANGE THE
DATE FROM "DECEMBER 31, 1995" TO "DECEMBER 31, 1996."
10
<PAGE>
ON PAGES 14 AND 15, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING TABLES
AND FOOTNOTES:
STANDARDIZED PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION
- ------------------------------ --------- ------- ------- -------- -----------
<S> <C> <C> <C> <C> <C>
Alliance Conservative
Investors (3.31)% 3.24% 4.85% -- 6.29%
Alliance Growth Investors 4.00 7.89 8.32 -- 12.17
Alliance Growth & Income 11.40 10.64 -- -- 7.66
Alliance Common Stock 15.54 13.91 13.32 13.88% 13.41
Alliance Global 5.98 9.40 11.11 -- 8.96
Alliance International 1.24 -- -- -- 6.07
Alliance Aggressive Stock 13.49 12.32 9.35 16.64 18.12
Alliance Money Market (3.19) 1.55 1.80 3.97 5.23
Alliance Intermediate Govt.
Securities (4.73) 0.47 3.11 -- 4.52
Alliance High Yield 14.16 9.34 12.29 -- 9.41
</TABLE>
STANDARDIZED PERFORMANCE DATA
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1996
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION*
- ------------------------------ ------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative
Investors $ 967 $1,100 $1,267 -- $ 1,629
Alliance Growth Investors 1,040 1,256 1,491 -- 2,506
Alliance Growth & Income 1,114 1,355 -- -- 1,344
Alliance Common Stock 1,155 1,478 1,869 $3,668 14,040
Alliance Global 1,060 1,309 1,694 -- 2,359
Alliance International 1,012 -- -- -- 1,125
Alliance Aggressive Stock 1,135 1,417 1,564 4,663 6,244
Alliance Money Market 968 1,047 1,093 1,475 2,261
Alliance Intermediate Govt.
Securities 953 1,014 1,166 -- 1,304
Alliance High Yield 1,142 1,307 1,785 -- 2,459
</TABLE>
- ------------
* The "Since Inception" dates for the Portfolios of HR Trust are as follows:
Alliance Conservative Investors (October 2, 1989); Alliance Growth Investors
(October 2, 1989); Alliance Growth & Income (October 1, 1993); Alliance
Common Stock (January 13, 1976); Alliance Global (August 27, 1987); Alliance
International (April 3, 1995); Alliance Aggressive Stock (January 27, 1986);
Alliance Small Cap Growth (May 1, 1997); Alliance Money Market (July 13,
1981); Alliance Intermediate Government Securities (April 1, 1991); an
Alliance High Yield (January 2, 1987).
ON PAGE 16, INSERT THE FOLLOWING PARAGRAPHS BEFORE THE "RATE OF RETURN DATA FOR
INVESTMENT FUNDS" SECTION:
Additional investment performance information appears in the attached HR
Trust and EQ Trust prospectuses.
The Alliance Small Cap Growth Portfolio of HR Trust commenced operations
on May 1, 1997. Therefore, no actual historical performance data are
available. However, historical performance of a composite of six other
advisory accounts managed by Alliance is described in the attached HR Trust
prospectus. According to that prospectus, these accounts have substantially
the same investment objectives and policies, and are managed in accordance
with essentially the same investment strategies
11
<PAGE>
and techniques, as those of the Alliance Small Cap Growth Portfolio. It
should be noted that these accounts are not subject to certain of the
requirements and restrictions to which the Alliance Small Cap Growth
Portfolio is subject and that they are managed for tax exempt clients of
Alliance, who may have different investment goals. The investment
performance information included in the HR Trust prospectus for all
Portfolios other than the Alliance Small Cap Portfolio is based on actual
historical performance.
The investment performance data for HR Trust's Alliance Small Cap
Portfolio and for each of the Portfolios of EQ Trust, contained in the HR
Trust and the EQ Trust prospectuses, are provided by those prospectuses to
illustrate the past performance of each respective Portfolio adviser in
managing a substantially similar investment vehicles as measured against
specified market indices and do not represent the past or future
performance of any Portfolio. None of the performance data contained in the
HR Trust and EQ Trust prospectuses reflects fees and charges imposed under
your Certificate, which fees and charges would reduce such performance
figures. Therefore, the performance data for each of the Portfolios
described in the EQ Trust prospectus and for the Alliance Small Cap
Portfolio in the HR Trust prospectus may be of limited use and are not
intended to be a substitute for actual performance of the corresponding
Portfolios, nor are such results an estimate or guarantee of future
performance for these Portfolios.
ON PAGE 16, INSERT THE FOLLOWING SECTION UNDER THE HEADING "PORTFOLIO
INCEPTION DATES AND COMPARATIVE BENCHMARKS:"
ALLIANCE HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master
Index.
ON PAGES 16, 17 AND 18, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING
TABLES AND FOOTNOTES:
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 5.47% 6.08% -- -- -- 7.77%
Lipper Income 8.95 8.91 9.55 -- -- -- 9.55
Benchmark 8.78 10.14 9.64 -- -- -- 10.42
ALLIANCE GROWTH
INVESTORS 11.30 10.00 9.48 -- -- -- 14.23
Lipper Flexible Portfolio 12.51 9.26 9.30 -- -- -- 9.99
Benchmark 16.94 15.84 13.02 -- -- -- 12.73
ALLIANCE GROWTH &
INCOME 18.70 12.69 -- -- -- -- 11.47
Lipper Growth & Income 19.96 15.39 -- -- -- -- 14.78
Benchmark 21.28 17.93 -- -- -- -- 17.24
ALLIANCE COMMON STOCK 22.84 15.87 14.39 14.49 15.17 14.17% 13.90
Lipper Growth 18.78 14.80 12.39 13.08 14.04 13.60 13.42
Benchmark 22.96 19.66 15.20 15.28 16.79 14.55 14.63
ALLIANCE GLOBAL 13.28 11.44 12.19 -- -- -- 10.43
Lipper Global 17.89 8.49 10.29 -- -- -- 3.65
Benchmark 13.48 12.91 10.82 -- -- -- 7.44
ALLIANCE INTERNATIONAL 8.54 -- -- -- -- -- 10.90
Lipper International 13.36 -- -- -- -- -- 14.33
Benchmark 6.05 -- -- -- -- -- 8.74
ALLIANCE Aggressive Stock 20.79 14.33 10.55 17.24 -- -- 18.79
Lipper Small Company
Growth 16.55 12.70 17.53 16.29 -- -- 16.47
Benchmark 17.85 14.14 14.80 14.29 -- -- 13.98
ALLIANCE MONEY MARKET 4.11 3.82 3.12 4.68 5.85 -- 6.05
Lipper Money Market 3.82 3.60 2.93 4.52 5.72 -- 5.89
Benchmark 5.25 5.07 4.37 5.67 6.72 -- 6.97
12
<PAGE>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ---------- -----------
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57% 2.80% 4.38% -- -- -- 5.75%
Lipper Gen. U.S.
Government 1.57 3.99 5.21 -- -- -- 6.76
Benchmark 4.06 5.37 6.23 -- -- -- 7.43
ALLIANCE HIGH YIELD 21.46 11.43 13.34 -- -- -- 10.13
Lipper High Yield 12.46 7.93 11.47 -- -- -- 9.13
Benchmark 11.06 9.59 12.76 -- -- -- 11.24
</TABLE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE
INVESTORS 3.99% 17.34% 34.32% -- -- -- 72.02%
Lipper Income 8.95 29.47 58.37 -- -- -- 94.21
Benchmark 8.78 33.60 58.40 -- -- -- 105.23
ALLIANCE GROWTH
INVESTORS 11.30 33.11 57.28 -- -- -- 162.18
Lipper Flexible Portfolio 12.51 30.84 56.65 -- -- -- 100.79
Benchmark 16.94 55.46 84.42 -- -- -- 138.49
ALLIANCE GROWTH &
INCOME 18.70 43.09 -- -- -- -- 42.30
Lipper Growth & Income 19.96 53.82 -- -- -- -- 56.73
Benchmark 21.28 63.99 -- -- -- -- 67.75
ALLIANCE COMMON STOCK 22.84 55.58 95.88 287.01 731.70 1,314.86% 1,430.82
Lipper Growth 18.78 51.65 80.51 243.70 627.03 1,185.21 1,298.19
Benchmark 22.96 71.34 102.85 314.34 925.25 1,416.26 1,655.74
ALLIANCE GLOBAL 13.28 38.40 77.77 -- -- -- 152.69
Lipper Global 17.89 28.45 63.87 -- -- -- 39.73
Benchmark 13.48 43.95 67.12 -- -- -- 95.62
ALLIANCE INTERNATIONAL 8.54 -- -- -- -- -- 19.76
Lipper International 13.36 -- -- -- -- -- 26.53
Benchmark 6.05 -- -- -- -- -- 15.78
ALLIANCE Aggressive Stock 20.79 49.45 65.10 390.47 -- -- 556.42
Lipper Small Company
Growth 16.55 43.42 142.70 352.31 -- -- 428.32
Benchmark 17.85 46.89 99.38 280.32 -- -- 318.19
ALLIANCE MONEY MARKET 4.11 11.90 16.59 58.03 134.78 -- 148.19
Lipper Money Market 3.82 11.18 15.58 55.73 130.46 -- 141.99
Benchmark 5.25 15.99 23.86 73.61 165.31 -- 184.26
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES 2.57 8.63 23.89 -- -- -- 37.89
Lipper Gen. U.S.
Government 1.57 12.45 28.92 -- -- -- 45.71
Benchmark 4.06 16.98 35.30 -- -- -- 51.07
ALLIANCE HIGH YIELD 21.46 38.37 87.00 -- -- -- 162.38
Lipper High Yield 12.46 25.77 72.39 -- -- -- 142.30
Benchmark 11.06 31.63 82.29 -- -- -- 190.43
</TABLE>
- ------------
* See footnotes on next page.
13
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
--------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS -- -- -- -- -- 2.79%
ALLIANCE GROWTH
INVESTORS -- -- -- -- -- 3.53
ALLIANCE GROWTH
& INCOME -- -- -- -- -- --
ALLIANCE COMMON
STOCK** (3.09)% 31.91% 16.02% 6.21% 21.03% 24.16
ALLIANCE GLOBAL -- -- -- (13.62) 9.61 25.29
ALLIANCE
INTERNATIONAL -- -- -- -- -- --
ALLIANCE
AGGRESSIVE
STOCK -- -- 33.83 6.06 (0.03) 41.86
ALLIANCE MONEY
MARKET** 9.59 6.91 5.39 5.41 6.09 7.93
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- -- -- --
ALLIANCE
HIGH YIELD -- -- -- 3.49 8.48 3.93
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE
CONSERVATIVE
INVESTORS 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02% 3.99%
ALLIANCE GROWTH
INVESTORS 9.39 47.19 3.69 13.95 (4.27) 24.92 11.30
ALLIANCE GROWTH
& INCOME -- -- -- (0.55) (1.72) 22.65 18.70
ALLIANCE COMMON
STOCK** (9.17) 36.30 2.03 23.39 (3.26) 30.93 22.84
ALLIANCE GLOBAL (7.15) 29.06 (1.65) 30.60 4.02 17.45 13.28
ALLIANCE
INTERNATIONAL -- -- -- -- -- 10.34 8.54
ALLIANCE
AGGRESSIVE
STOCK 6.92 84.73 (4.28) 15.41 (4.92) 30.13 20.79
ALLIANCE MONEY
MARKET** 6.99 4.97 2.37 1.78 2.82 4.53 4.11
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES -- 11.30 4.38 9.27 (5.47) 12.03 2.57
ALLIANCE
HIGH YIELD (2.26) 23.03 11.02 21.74 (3.90) 18.54 21.46
</TABLE>
- ------------
* Returns do not reflect the distribution fee, the withdrawal charge, the
guaranteed minimum death benefit charge, the annual contract fee and any
charge for tax such as premium taxes.
** Prior to 1984 the Year-by-Year Rates of Return were:
<PAGE>
1976 1977 1978 1979 1980 1981 1982 1983
ALLIANCE
COMMON STOCK 8.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22% 24.67%
ALLIANCE MONEY
MARKET -- -- -- -- -- 5.71 11.72 7.70%
On page 25, under the heading "Transfers Among Investment Options," delete the
first bulleted paragraph.
ON PAGE 25, UNDER THE HEADING "DOLLAR COST AVERAGING."
REPLACE THE FIRST SENTENCE IN THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE.
If you have at least $10,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage
of your Annuity Account Value transferred from the Alliance Money Market Fund
to other Investment Funds on a monthly, quarterly, or annual basis.
REPLACE THE SECOND AND THIRD SENTENCES IN THE SECOND PARAGRAPH WITH THE
FOLLOWING SENTENCES.
The minimum amount that may be transferred on each Transaction Date is $250.
The maximum amount which may be transferred is equal to the Annuity Account
Value in the Alliance Money Market Fund at the time the option is elected,
divided by the number of transfers scheduled to made each Contract Year.
ON PAGE 29, INSERT THE FOLLOWING SECTION BEFORE THE "CASH VALUE" SECTION:
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
The GMIB provides a minimum amount of guaranteed lifetime income upon the
application of the Annuity Account Value in the Investment Funds to purchase
the Assured Payment Plan (Life Annuity with a Period Certain). The Assured
Payment Plan provides payments during a period certain with payments
continuing for life thereafter. On the Transaction Date, the amount of the
periodic lifetime income to be purchased under the Assured Payment Plan will
be based on the greater of (i) the Annuity Account Value in the
14
<PAGE>
Investment Funds and (ii) an amount equal to the GMDB (without regard to the
seventh Contract Year reset) described above, reduced by any remaining
withdrawal charges; each divided by "guaranteed maximum annuity purchase
rates" under the Certificate. The guaranteed maximum annuity purchase rates
are based on (i) interest at 2.5% if the GMIB is exercised within 30 days
following a Contract Date anniversary in years 7 through 9 and at 3% if
exercised within 30 days following the 10th or later Contract Date
anniversary, and (ii) mortality based on the 1983 Individual Annuity
Mortality Table "a" projected with modified Scale G. The mortality table used
in determining such annuity purchase rates assumes that mortality will
improve in the future and is more conservative than the basis underlying
current annuity purchase rates. Your Annuity Account Value in the Investment
Funds will depend on the performance of such Funds. The amount equal to the
GMDB (as discussed above) does not have an Annuity Account Value or a Cash
Value and is used solely for purposes of calculating the GMIB.
If you have any Annuity Account Value in the Guaranteed Period Account under
your Accumulator Certificate as of the Transaction Date that you exercise the
GMIB, such Annuity Account Value will also be applied (at current annuity
purchase rates) toward the purchase of payments under the Assured Payment
Plan. Such Annuity Account Value will increase the payments provided by the
GMIB. A market value adjustment may apply.
When you exercise the GMIB, we automatically determine whether the
application of your Annuity Account Value in the Investment Funds at current
purchase rates under the Assured Payment Plan (with a period certain as
specified below) would produce higher lifetime income, and if so, the higher
income will be provided.
In addition, you can elect any of our income annuity options at any time.
See "Income Annuity Options" below.
The GMIB applies only if your election of the Assured Payment Plan meets the
following conditions:
o The Assured Payment Plan is purchased within 30 days following the
7th or later Contract Date anniversary under your Accumulator
Certificate; provided it is not purchased earlier than the
Annuitant's age 60, nor later than the Annuitant's age 83.
o The period certain you select is as indicated below, based on the
Annuitant's issue age for the Assured Payment Plan Certificate and
the type of payments selected;
<TABLE>
<CAPTION>
LEVEL PAYMENTS
- -------------------------------------
ANNUITANT
ISSUE AGE PERIOD CERTAIN
- ----------------- -------------------
<S> <C>
60 through 80 10 years
81 through 83 90 less issue age
</TABLE>
<TABLE>
<CAPTION>
INCREASING PAYMENTS
- -----------------------------------
ANNUITANT
ISSUE AGE PERIOD CERTAIN
- ----------------- -----------------
<S> <C>
60 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
</TABLE>
o Payments start one payment mode after the Contract Date of the
Assured Payment Plan Certificate.
Each year on your Contract Date anniversary, if you are eligible to exercise
the GMIB, we will send you a notice of how much income could be provided
under such option on the Contract Date anniversary. You may then notify us
within 30 days following the Contract Date anniversary if you want to
exercise the GMIB by submitting the proper form and returning your
Accumulator Certificate. The income to be provided under the Assured Payment
Plan Certificate will be determined on the Transaction Date that we receive
your request and the Certificate and, therefore, may differ from the notice.
It will be based on the GMIB as of such Transaction Date.
The Assured Payment Plan (Life Annuity with a Period Certain) is offered
through our Prospectus for the Assured Payment Plan, which may be obtained
from your registered representative. You should read it carefully before you
decide to purchase such Plan.
15
<PAGE>
GMIB CHARGE
If you elect to have GMIB added to your Certificate, an additional 0.10% charge
will be applied against the GMDB for providing the GMIB. The charge will be
added as of the Processing Date following election of this benefit. The
combined GMDB/GMIB charge will be 0.45% of the GMDB in effect on each
Processing Date.
ON PAGE 31, UNDER THE HEADING, "DISTRIBUTION OF THE CERTIFICATES," REPLACE
THE FOURTH AND FIFTH SENTENCES OF THE FIRST PARAGRAPH WITH THE FOLLOWING TWO
SENTENCES.
EDI's principal business address is 1290 Avenue of the Americas, New York,
New York 10104. EDI was paid a fee of $1,204,370 for 1996 and $126,914 for
1995 for its services under its "Distribution Agreement" with Equitable Life
and the Separate Account.
ON PAGE 33, DELETE THE SECTION WITH THE HEADING "TRUST CHARGES TO PORTFOLIOS,"
AND REPLACE WITH THE FOLLOWING SECTIONS.
HR TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HR Trust's assets, other
direct operating expenses of HR Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of HR Trust
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
maximum investment advisory fees paid annually by the Portfolios cannot be
changed without a vote by shareholders. They are as follows:
AVERAGE DAILY NET ASSETS
<TABLE>
<CAPTION>
FIRST NEXT NEXT NEXT
$750 MILLION $750 MILLION $1 BILLION $2.5 BILLION THEREAFTER
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative Investors ....... 0.475% 0.425% 0.375% 0.350% 0.325%
Alliance Growth Investors.............. 0.550% 0.500% 0.450% 0.425% 0.400%
Alliance Growth & Income............... 0.550% 0.525% 0.500% 0.480% 0.470%
Alliance Common Stock.................. 0.475% 0.425% 0.375% 0.355% 0.345%*
Alliance Global........................ 0.675% 0.600% 0.550% 0.530% 0.520%
Alliance International................. 0.900% 0.825% 0.800% 0.780% 0.770%
Alliance Aggressive Stock.............. 0.625% 0.575% 0.525% 0.500% 0.475%
Alliance Small Cap Growth.............. 0.900% 0.850% 0.825% 0.800% 0.775%
Alliance Money Market.................. 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance Intermediate Govt Securities 0.500% 0.475% 0.450% 0.430% 0.420%
Alliance High Yield.................... 0.600% 0.575% 0.550% 0.530% 0.520%
</TABLE>
- ------------
* On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
Investment advisory fees are established under HR Trust's investment advisory
agreements between HR Trust and its investment adviser, Alliance. All of
these fees and expenses are described more fully in the HR Trust prospectus.
EQ TRUST CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQ Trust's assets, the 12b-1
fee, other direct operating expenses of EQ Trust (such as trustees' fees,
expenses of independent auditors and legal counsel, administrative service
fees, custodian fees, and liability insurance), and certain
investment-related expenses of EQ Trust (such as brokerage commissions and
other expenses related to the purchase and sale of securities), are reflected
in each Portfolio's daily share price. The investment management fees paid
annually by the Portfolios cannot be changed without a vote by shareholders.
They are as follows:
16
<PAGE>
<TABLE>
<CAPTION>
AVERAGE DAILY NET
ASSETS
-----------------------
<S> <C>
EQ/Putnam Balanced..................... 0.55%
EQ/Putnam Growth and Income Value ..... 0.55%
MFS Emerging Growth Companies ........ 0.55%
MFS Research........................... 0.55%
Merrill Lynch Basic Value Equity ...... 0.55%
Merrill Lynch World Strategy........... 0.55%
Morgan Stanley Emerging Markets
Equity................................... 0.55%
T. Rowe Price Equity Income............ 0.55%
T. Rowe Price International Stock ..... 0.55%
Warburg Pincus Small Company Value .... 0.55%
</TABLE>
Investment management fees are established under EQ Trust's Investment
Management Agreement between EQ Trust and its investment manager, EQ
Financial. EQ Financial has entered into expense limitation agreements with
EQ Trust, with respect to each Portfolio, pursuant to which EQ Financial has
agreed to waive or limit its fees and total annual operating expenses
(expressed as a percentage of the Portfolios' average daily net assets) to
0.85% each for the EQ/Putnam Growth & Income Value, MFS Research, Merrill
Lynch Basic Value Equity, T. Rowe Price Equity, and MFS Emerging Growth
Companies Portfolios; 0.90% for the EQ/Putnam Balanced Portfolio; 1.00% for
Warburg Pincus Small Company Value Portfolio; 1.20% each for T. Rowe Price
International Stock and Merrill Lynch World Strategy Portfolios; and 1.75%
for Morgan Stanley Emerging Markets Equity Portfolio. See the prospectus for
EQ Trust for more information.
The Rule 12b-1 Plan provides that EQ Trust, on
behalf of each Portfolio, may pay annually up to 0.25% of the average daily
net assets of a Portfolio attributable to its Class IB shares in respect of
activities primarily intended to result in the sale of the Class IB shares.
The 12b-1 fees, which may be waived in the discretion of EDI, may be
increased only by action of the Board of Trustees of EQ Trust up to a maximum
of 0.50% per annum. All of these fees and expenses are described more fully
in the EQ Trust Prospectus.
ON PAGE 35, UNDER THE HEADING "TRUST VOTING RIGHTS"
REPLACE THE FIRST SENTENCE OF THE SECOND PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Because HR TRUST is a Massachusetts Business Trust and EQ Trust is a Delaware
business trust, annual meetings are not required.
ON PAGE 35, UNDER THE HEADING "VOTING RIGHTS OF OTHERS," REPLACE THE FIRST TWO
SENTENCES OF THE PARAGRAPH WITH THE FOLLOWING SENTENCES:
Currently we control each trust. EQ Trust shares currently are sold only to
our separate accounts. HR Trust shares are held by other separate accounts
of ours and by separate accounts of insurance companies affiliated and
unaffiliated with us.
ON PAGE 37, UNDER THE HEADING "FEDERAL AND STATE INCOME TAX WITHHOLDING,"
REPLACE THE FOURTH SENTENCE OF THE THIRD PARAGRAPH WITH THE FOLLOWING
SENTENCE:
For 1997, a recipient of periodic payments (e.g., monthly or annual payments)
which total less than a $14,400 taxable amount will generally be exempt from
federal income tax withholding, unless the recipient specifies a different
choice of withholding exemption.
17
<PAGE>
INSERT THE FOLLOWING APPENDIX AFTER PAGE 46 "APPENDIX III:"
APPENDIX IV: GMIB EXAMPLES
The GMIB is equal to:
(A) the greater of
(i) the Annuity Account Value in the Investment Funds, and
(ii) an amount equal to the GMDB (without regard to the
seventh Contract Year reset), reduced by any remaining
withdrawal charges; divided by
(B) the guaranteed maximum annuity purchase rates.
The examples below assume a male age 60 has purchased an Accumulator
Certificate with an initial contribution of $100,000 that is allocated
100% to the Investment Funds (excluding the Fixed Income Series). The
GMDB (without regard to the seventh Contract Year reset) in the 10th
Contract Year is $179,085 at 6% interest. Assuming hypothetical rates
of return (after deduction of charges) in the Investment Funds of 0%
in Example 1 and 8% in Example 2 during the 10 Contract Years, the
GMIB in the 10th Contract Year (assuming level payments under the
Assured Payment Plan) would be as follows:
<TABLE>
<CAPTION>
EXAMPLE 1 EXAMPLE 2
----------- -----------
<S> <C> <C>
(1) Hypothetical Rate of Return................................... 0% 8%
(2) Annuity Account Value as of the Contract Date ................ $100,000 $100,000
(3) The greater of (i) the GMDB (without regard to the seventh
Contract Year reset) and (ii) the Annuity Account Value as of
the 10th Contract Date anniversary ........................... $179,085 $215,892
(4) Guaranteed Maximum Annuity Purchase Rates for level payments
under the Assured Payment Plan ............................... $14.73 $14.73
(5) GMIB as of 10th Contract Date anniversary ((3) / (4)) ........ $12,160 $14,659
</TABLE>
In Example 1, the GMDB (without regard to the seventh Contract Year
reset) which is higher than the Annuity Account Value would provide a
GMIB of $12,160. In Example 2, the Annuity Account Value, which at
this point is higher than the GMDB (without regard to the seventh
Contract Year reset), would provide a GMIB of $14,659.
The rates of return discussed above are for illustrative purposes only
and are not intended to represent an expected or guaranteed rate of
return. Your investment results will vary. The level of GMIB under the
Assured Payment Plan will also depend on the guaranteed maximum
annuity purchase rates as of the Transaction Date and the type of
payments selected. The examples assume no transfers or withdrawals,
which would affect the GMDB and, thus, the GMIB.
18
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
--------
Part 1: Accumulation Unit Values 2
Part 2: Annuity Unit Values 2
Part 3: Custodian and Independent Accountants 3
Part 4: Alliance Money Market Fund and Alliance Intermediate 3
Government Securities Fund Yield Information
Part 5: Long-Term Market Trends 4
Part 6: Financial Statements 6
</TABLE>
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Accumulator SAI:
(Supplement dated May 1, 1997 to Accumulator Prospectus,
dated May 1, 1996)
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
<PAGE>
INCOME MANAGER(SM)
ACCUMULATOR PROSPECTUS
DATED MAY 1, 1996
-----------------
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- -----------------------------------------------------------------------------
This prospectus describes certificates The Equitable Life Assurance Society
of the United States (EQUITABLE LIFE, WE, OUR and US) offers under a
combination variable and fixed deferred annuity contract (ACCUMULATOR) issued
on a group basis or as individual contracts. Enrollment under a group
contract will be evidenced by issuance of a certificate. Certificates and
individual contracts each will be referred to as "Certificates." Accumulator
Certificates are used for after-tax contributions to a non-qualified annuity.
A minimum initial contribution of $10,000 is required to put the Certificate
into effect.
The Accumulator is designed to provide retirement income at a future date.
Contributions accumulate on a tax-deferred basis and can be later distributed
under a number of different methods which are designed to be responsive to
the owner's (CERTIFICATE OWNER, YOU and YOUR) objectives.
The Accumulator offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 9
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the
GUARANTEED PERIOD ACCOUNT.
<TABLE>
<CAPTION>
Investment Funds
- ------------------------------------------------------------------------------ Guarantee Periods
Asset Allocation Series: Equity Series: Fixed Income Series: Expiration Dates:
- ---------------------------- ---------------------- ------------------------ -----------------
<S> <C> <C> <C>
o Conservative Investors o Growth & Income o Money Market February 15,
o Growth Investors o Common Stock o Intermediate o 1997 through 2006
o Global Government
o International Securities
o Aggressive Stock
</TABLE>
We invest each Investment Fund in shares of a corresponding portfolio
(PORTFOLIO) of The Hudson River Trust (TRUST), a mutual fund whose shares are
purchased by separate accounts of insurance companies. The prospectus for the
Trust, which accompanies this prospectus, describes the investment
objectives, policies and risks of the Portfolios.
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). Each Guarantee Period has its
own Guaranteed Rates.
You may choose from a variety of payout options, including variable annuities
and fixed annuities.
This prospectus provides information about the Accumulator that prospective
investors should know before investing. You should read it carefully and
retain it for future reference. The prospectus is not valid unless
accompanied by a current prospectus for the Trust, which you should also read
carefully.
Registration statements relating to Separate Account No. 45 (SEPARATE
ACCOUNT) and interests under the Guarantee Periods have been filed with the
Securities and Exchange Commission (SEC). The statement of additional
information (SAI), dated May 1, 1996, which is part of the registration
statement for the Separate Account, is available free of charge upon request
by writing to our Processing Office or calling 1-800-789-7771, our toll-free
number. The SAI has been incorporated by reference into this prospectus. The
Table of Contents for the SAI appears at the back of this prospectus.
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- -----------------------------------------------------------------------------
Copyright 1996
The Equitable Life Assurance Society of the United States, New York, New York
10019.
All rights reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1995 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE
ACT) after the date hereof and prior to the termination of the offering of
the securities offered hereby shall be deemed to be incorporated by reference
in this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this prospectus.
Equitable Life files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically
pursuant to EDGAR under CIK No. 0000727920.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 787
Seventh Avenue, New York, New York 10019. Attention: Corporate Secretary
(telephone: (212) 554-1234).
2
<PAGE>
PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
FEE TABLE PAGE 5
Condensed Financial Information 7
PART 1: SUMMARY PAGE 8
What is the INCOME MANAGER? 8
Investment Options 8
Contributions 8
Transfers 8
Free Look Period 8
Services We Provide 8
Withdrawals 9
Death Benefits 9
Surrendering the Certificates 9
Income Annuity Options 9
Taxes 9
Deductions from Annuity
Account Value 9
Deductions from Investment
Funds 10
Trust Charges to Portfolios 10
PART 2: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE INVESTMENT FUNDS PAGE 11
Equitable Life 11
Separate Account No. 45 11
The Trust 11
The Trust's Investment Adviser 12
Investment Policies and Objectives of the
Trust's Portfolios 13
PART 3: INVESTMENT PERFORMANCE PAGE 14
Performance Data for a Certificate 14
Rate of Return Data for Investment
Funds 15
Communicating Performance Data 18
Money Market Fund and Intermediate Government
Securities Fund
Yield Information 19
PART 4: THE GUARANTEED PERIOD ACCOUNT PAGE 20
Guarantee Periods 20
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 21
Death Benefit Amount 22
Investments 22
PART 5: PROVISIONS OF THE CERTIFICATES
AND SERVICES WE PROVIDE PAGE 23
Availability of the Certificates 23
Contributions Under the Certificates 23
Methods of Payment 23
Allocation of Contributions 23
Free Look Period 24
Annuity Account Value 24
Transfers Among Investment Options 25
Dollar Cost Averaging 25
Withdrawals 26
Death Benefit 26
When the Certificate Owner Dies
Before the Annuitant 28
Cash Value 29
Surrendering the Certificates to
Receive the Cash Value 29
Income Annuity Options 29
When Payments are Made 31
Assignment 31
Distribution of the Certificates 31
PART 6: DEDUCTIONS AND CHARGES PAGE 32
Charges Deducted from the Annuity
Account Value 32
Charges Deducted from the Investment
Funds 33
Trust Charges to Portfolios 33
Group or Sponsored Arrangements 34
Other Distribution Arrangements 34
PART 7: VOTING RIGHTS PAGE 35
Trust Voting Rights 35
Voting Rights of Others 35
Separate Account Voting Rights 35
Changes in Applicable Law 35
PART 8: TAX ASPECTS OF THE CERTIFICATES PAGE 36
Tax Changes 36
Taxation of Non-Qualified Annuities 36
Federal and State Income Tax
Withholding 37
Other Withholding 37
Special Rules for Certificates Issued in
Puerto Rico 38
Impact of Taxes to Equitable Life 38
Transfers Among Investment Options 38
PART 9: KEY FACTORS IN RETIREMENT PLANNING PAGE 39
Introduction 39
Inflation 39
Starting Early 40
Tax-Deferral 40
Investment Options 41
The Benefit of Annuitization 42
PART 10: INDEPENDENT ACCOUNTANTS PAGE 43
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE PAGE 44
APPENDIX II: GUARANTEED MINIMUM
DEATH BENEFIT (GMDB) EXAMPLE PAGE 45
APPENDIX III: GMDB SPECIAL ADJUSTMENT PAGE 46
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS PAGE 47
</TABLE>
3
<PAGE>
- -----------------------------------------------------------------------------
GENERAL TERMS
- -----------------------------------------------------------------------------
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE--The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT--The individual who is the measuring life for determining annuity
benefits.
ANNUITY ACCOUNT VALUE--The sum of the amounts in the Investment Options under
the Accumulator Certificate. See "Annuity Account Value" in Part 5.
ANNUITY COMMENCEMENT DATE--The date on which amounts are applied to provide
an annuity benefit.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns an Accumulator Certificate and has the
right to exercise all rights under the Certificate.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The date on which the Annuitant is enrolled under the group
annuity contract, or the effective date of the individual contract. This is
usually the Business Day we receive the initial contribution at our
Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificates.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
INVESTMENT FUNDS--The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS--The choices for investment: the Investment Funds and each
available Guarantee Period.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
PORTFOLIOS--The portfolios of the Trust that correspond to the Investment
Funds of the Separate Account.
PROCESSING DATE--The day when we deduct certain charges from the Annuity
Account Value. If the Processing Date is not a Business Day, it will be on
the next succeeding Business Day. The Processing Date will be once each year
on each anniversary of the Contract Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 1.
SAI--The statement of additional information for the Separate Account under
the Accumulator.
SEPARATE ACCOUNT--Equitable Life's Separate Account No. 45.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
TRUST--The Hudson River Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested.
VALUATION PERIOD--Each Business Day together with any preceding non-business
days.
4
<PAGE>
- -----------------------------------------------------------------------------
FEE TABLE
- -----------------------------------------------------------------------------
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them on the same basis with other similar products.
The table reflects both the charges of the Separate Account and the expenses
of the Trust. Charges for applicable taxes such as state or local premium
taxes may also apply. For a complete description of the charges under the
Certificate, see "Part 6: Deductions and Charges." For a complete description
of the Trust's charges and expenses, see the prospectus for the Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. However, if there is insufficient
value in the Investment Funds all or a portion of the distribution fee and
the annual contract fee, if any, will be deducted from your Annuity Account
Value in the Guaranteed Period Account rather than from the Investment Funds.
See "Part 6: Deductions and Charges." A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
- ----------------------------------------------------------------
DISTRIBUTION FEE (SALES LOAD) AS A PERCENTAGE OF EACH CONTRIBUTION RECEIVED
DURING THE FIRST CONTRACT YEAR (deducted annually on each of the first seven
Processing Dates)(1) .................................................. 0.20%
<TABLE>
<CAPTION>
Contract
Year
--------
<S> <C>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted upon surrender 1 ...... 7.00%
or for certain withdrawals. The applicable withdrawal charge percentage is 2 ...... 6.00
determined by the Contract Year in which the withdrawal is made or the 3 ...... 5.00
Certificate is surrendered beginning with "Contract Year 1" with respect to 4 ...... 4.00
each contribution withdrawal or surrendered. For each contribution, the 5 ...... 3.00
Contract Year in which we receive that contribution is "Contract Year 1")(2) 6 ...... 2.00
7 ...... 1.00
8+ ..... 0.00
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Transfer Charge(3) ................................................................................. $0.00
Guaranteed Minimum Death Benefit Charge (percentage deducted annually on each Processing Date as a
percentage of the guaranteed minimum death benefit then in effect)(4) ............................. 0.35%
ANNUAL CONTRACT FEE (DEDUCTED FROM ANNUITY ACCOUNT VALUE ON EACH PROCESSING DATE)(5)
- ---------------------------------------------------------------------------------------------------
If the initial contribution is less than $25,000 .................................................. $30
If the initial contribution is $25,000 or more .................................................... $0
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH INVESTMENT FUND)
- ---------------------------------------------------------------------------------------------------
Mortality and Expense Risk Charge .................................................................. 0.90%
Asset Based Administrative Charge .................................................................. 0.25%
------
Total Separate Account Annual Expenses ............................................................ 1.15%
======
</TABLE>
TRUST ANNUAL EXPENSES(AS A PERCENTAGE OF AVERAGE NET ASSETS IN EACH PORTFOLIO)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
-----------------------------------------------------------
CONSERVATIVE GROWTH GROWTH & COMMON
INVESTORS INVESTORS INCOME STOCK GLOBAL
-------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.55% 0.52% 0.55% 0.35% 0.53%
Other Expenses 0.04% 0.04% 0.05% 0.03% 0.08%
-------------- ----------- ---------- -------- --------
TOTAL TRUST ANNUAL EXPENSES(6) 0.59% 0.56% 0.60% 0.38% 0.61%
============== =========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
AGGRESSIVE MONEY GOVT.
INTERNATIONAL STOCK MARKET SECURITIES
--------------- ------------ -------- --------------
<S> <C> <C> <C> <C>
Investment Advisory Fee 0.90% 0.46% 0.40% 0.50%
Other Expenses 0.13% 0.03% 0.04% 0.07%
--------------- ------------ -------- --------------
TOTAL TRUST ANNUAL
EXPENSES(6) 1.03% 0.49% 0.44% 0.57%
=============== ============ ======== ==============
</TABLE>
5
<PAGE>
- ------------
Notes:
(1)The amount deducted is based on contributions that have not been
withdrawn. See "Part 6: Deductions and Charges," "Distribution Fee."
(2)Deducted upon a withdrawal with respect to amounts in excess of the 15%
free corridor amount, and upon a surrender. See "Part 6: Deductions and
Charges," "Withdrawal Charge."
(3)We reserve the right to impose a charge in the future at a maximum of
$25 for each transfer among the Investment Options in excess of five per
Contract Year.
(4)See "Part 6: Deductions and Charges," "Guaranteed Minimum Death Benefit
Charge."
(5)This charge is incurred at the beginning of the Contract Year and
deducted on the Processing Date. See "Part 6: Deductions and Charges,"
"Annual Contract Fee."
(6)Expenses shown for all Portfolios are for the fiscal year ended December
31, 1995. The amount shown for the International Portfolio, which was
established on April 3, 1995, is annualized. The investment advisory fee
for each Portfolio may vary from year to year depending upon the average
daily net assets of the respective Portfolio of the Trust. The maximum
investment advisory fees, however, cannot be increased without a vote of
that Portfolio's shareholders. The other direct operating expenses will
also fluctuate from year to year depending on actual expenses. See
"Trust Charges to Portfolios" in Part 6.
EXAMPLES
- --------
The examples below show the expenses that a hypothetical Certificate Owner
would pay in the two situations noted below assuming a $1,000 contribution
invested in one of the Investment Funds listed, and a 5% annual return on
assets.(1) The annual contract fee was computed based on an initial
contribution of $10,000.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $90.65 $124.85 $161.72 $282.98
Growth Investors 90.36 123.96 160.23 279.95
EQUITY SERIES:
Growth & Income 90.75 125.15 162.22 284.01
Common Stock 88.57 118.54 151.12 261.44
Global 90.85 125.45 162.72 285.01
International 95.03 138.00 183.64 326.72
Aggressive Stock 89.66 121.85 156.59 272.79
FIXED INCOME SERIES:
Money Market 89.16 120.34 154.16 267.65
Intermediate Government
Securities 90.46 124.26 160.73 280.97
</TABLE>
6
<PAGE>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $26.36 $81.02 $138.41 $289.26
Growth Investors 26.07 80.13 136.91 286.22
EQUITY SERIES:
Growth & Income 26.46 81.32 138.91 290.27
Common Stock 24.28 74.72 127.82 267.73
Global 26.56 81.62 139.41 291.27
International 30.74 94.16 160.32 332.98
Aggressive Stock 25.37 78.02 133.38 279.07
FIXED INCOME SERIES:
Money Market 24.87 76.52 130.85 273.93
Intermediate Government
Securities 26.17 80.43 137.41 287.22
</TABLE>
- ------------
Notes:
(1)The amount accumulated could not be paid in the form of an annuity at
the end of any of the periods shown in the examples. If the amount
applied to purchase an annuity is less than $2,000, or the initial
payment is less than $20 we may pay the amount to the payee in a single
sum instead of as payments under an annuity form. See "Income Annuity
Options" in Part 5. The examples do not reflect charges for applicable
taxes such as state or local premium taxes that may also be deducted in
certain jurisdictions.
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on May 1, 1995. The
following table shows the Accumulation Unit Values, as of May 1, 1995 and the
last Business Day for the periods shown.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
-----------------------------
MAY 1, 1995 DECEMBER 1995 MARCH 1996
------------- --------------- ------------
<S> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $ 14.647383 $ 16.549050 $ 16.173096
Growth Investors 20.073331 23.593613 23.915983
EQUITY SERIES:
Growth & Income 10.376155 11.989601 12.223906
Common Stock 102.335691 124.519251 129.576942
Global 19.478146 22.293921 23.053487
International 10.125278 11.033925 11.330624
Aggressive Stock 44.025496 54.591448 60.791588
FIXED INCOME SERIES:
Money Market 23.150932 23.830754 24.060696
Intermediate Govt.
Securities 12.498213 13.424767 13.280243
</TABLE>
7
<PAGE>
- -----------------------------------------------------------------------------
PART 1: SUMMARY
- -----------------------------------------------------------------------------
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE INCOME MANAGER?
The INCOME MANAGER is a family of annuities designed to provide for
retirement income. The Accumulator is a non-qualified deferred annuity
designed to provide retirement income at a future date through the investment
of funds on an after-tax basis. Generally, earnings will accumulate without
being subject to annual income tax, until withdrawn. The Accumulator features
a combination of Investment Options, consisting of Investment Funds providing
variable returns and Guarantee Periods providing guaranteed interest. Fixed
and variable income annuities are also available. The Accumulator may not be
available in all states.
INVESTMENT OPTIONS
The Accumulator offers the following Investment Options which permit you to
create your own strategy for retirement savings. All available Investment
Options may be selected under a Certificate.
INVESTMENT FUNDS
o Asset Allocation Series: the Conservative Investors and Growth Investors
Funds
o Equity Series: the Growth & Income, Common Stock, Global, International
and Aggressive Stock Funds
o Fixed Income Series: the Money Market and Intermediate Government
Securities Funds
GUARANTEE PERIODS
o Guarantee Periods maturing in each of calendar years 1997 through 2006.
CONTRIBUTIONS
o To put a Certificate into effect, you must make an initial contribution
of at least $10,000.
o Subsequent contributions may be made in an amount of at least $1,000.
TRANSFERS
You may make an unlimited number of transfers among the Investment Funds.
However, there are restrictions for transfers to and from the Guarantee
Periods. Transfers from a Guarantee Period may result in a market value
adjustment. Transfers among Investment Options are currently free of charge.
Transfers among the Investment Options are not taxable.
FREE LOOK PERIOD
You have the right to examine the Accumulator Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You may
cancel it by sending it to our Processing Office. Your refund will equal the
Annuity Account Value, reflecting any investment gain or loss, and any
positive or negative market value adjustment, through the date we receive
your Certificate at our Processing Office.
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the calendar
year;
o Three additional reports of your Certificate values each year;
o Annual and semi-annual statements of the Trust; and
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values and
Guaranteed Rates applicable to the Guarantee Periods. Also call during our
regular business hours to speak to one of our customer service
representatives.
O PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
8
<PAGE>
O FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
O FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
O FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
WITHDRAWALS
o Lump Sum Withdrawals--After the first Contract Year and before the Annuity
Commencement Date while the Certificate is in effect, you may take a Lump
Sum Withdrawal from your Certificate once per Contract Year at any time
during such Contract Year. The minimum withdrawal amount is $1,000.
o Periodic Withdrawals--You may also withdraw funds under our Periodic
Withdrawal option, where the minimum withdrawal amount is $250.
Withdrawals may be subject to a withdrawal charge and withdrawals from
Guarantee Periods prior to their Expiration Dates will result in a market
value adjustment. Withdrawals may be subject to income tax and tax penalty.
DEATH BENEFITS
If the Annuitant and successor Annuitant, if any, die before the Annuity
Commencement Date, the Accumulator provides a death benefit. The beneficiary
will be paid the greater of the Annuity Account Value in the Investment Funds
and the guaranteed minimum death benefit, plus any death benefit provided
with respect to the Guaranteed Period Account.
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time before
the Annuity Commencement Date while the Annuitant is living. Withdrawal
charges and a market value adjustment may apply. A surrender may also be
subject to income tax and tax penalty.
INCOME ANNUITY OPTIONS
The Certificates provide income annuity options to which amounts may be
applied at the Annuity Commencement Date. The income annuity options are
offered on a fixed and variable basis.
TAXES
Generally, earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject
to tax penalty.
DEDUCTIONS FROM ANNUITY
ACCOUNT VALUE
Distribution Fee
We deduct a sales load annually in an amount of 0.20% of each contribution
received during the first Contract Year. This sales load is deducted on each
of the first seven Processing Dates. The amount deducted is based on
contributions that have not been withdrawn.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of the initial and each
subsequent contribution if a withdrawal exceeds the 15% free corridor amount
or if the Certificate is surrendered. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For each contribution the Contract Year in which we receive
that contribution is "Contract Year 1."
Guaranteed Minimum Death Benefit Charge
We deduct annually on each Processing Date an amount equal to 0.35% of the
guaranteed minimum death benefit in effect on such Processing Date.
Annual Contract Fee
The charge will be $30 per Contract Year if your initial contribution is less
than $25,000, and zero if your initial contribution is $25,000 or more.
9
<PAGE>
Charges for State Premium and Other Applicable Taxes
Generally, we deduct a charge for premium or other applicable taxes from the
Annuity Account Value on the Annuity Commencement Date. The current tax
charge that might be imposed varies by state and ranges from 0 to 3.5% (the
rate is 1% in Puerto Rico and 5% in the Virgin Islands).
DEDUCTIONS FROM INVESTMENT FUNDS
Mortality and Expense Risk Charge
We charge each Investment Fund a daily asset based charge for mortality and
expense risks equivalent to an annual rate of 0.90%.
Asset Based Administrative Charge
We charge each Investment Fund a daily asset based charge to cover a portion
of the administrative expenses under the Certificate equivalent to an annual
rate of 0.25%.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees and other expenses of the Trust are charged daily
against the Trust's assets. These are reflected in the Portfolio's daily
share price and in the daily Accumulation Unit Value for the Investment
Funds.
10
<PAGE>
- -----------------------------------------------------------------------------
PART 2: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
- -----------------------------------------------------------------------------
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our home office is located
at 787 Seventh Avenue, New York, New York 10019. We are authorized to sell
life insurance and annuities in all fifty states, the District of Columbia,
Puerto Rico and the Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding shares of
common stock of the Holding Company plus convertible preferred stock. Under
its investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $195.3 billion of assets as of December 31, 1995.
SEPARATE ACCOUNT NO. 45
Separate Account No. 45 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment
Company Act of 1940 (1940 Act). This registration does not involve any
supervision by the SEC of the management or investment policies of the
Separate Account. The Separate Account has several Investment Funds, each of
which invests in shares of a corresponding Portfolio of the Trust. Because
amounts allocated to the Investment Funds are invested in a mutual fund,
investment return and principal will fluctuate and the Certificate Owner's
Accumulation Units may be worth more or less than the original cost when
redeemed.
Under the New York Insurance Law, the portion of the Separate Account's
assets equal to the reserves and other liabilities relating to the
Certificates are not chargeable with liabilities arising out of any other
business we may conduct. Income, gains or losses, whether or not realized,
from assets of the Separate Account are credited to or charged against the
Separate Account without regard to our other income gains or losses. We are
the issuer of the Certificates, and the obligations set forth in the
Certificates (other than those of Annuitants or Certificate Owners) are our
obligations.
In addition to contributions made under the Accumulator Certificates, we may
allocate to the Separate Account monies received under other contracts,
certificates, or agreements. Owners of all such contracts, certificates or
agreements will participate in the Separate Account in proportion to the
amounts they have in the Investment Funds that relate to their contracts,
certificates or agreements. We may retain in the Separate Account assets that
are in excess of the reserves and other liabilities relating to the
Accumulator Certificates or to other contracts, certificates or agreements,
or we may transfer the excess to our General Account.
We reserve the right, subject to compliance with applicable law; (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove
Investment Funds (or sub-funds) from, the Separate Account, or to add other
separate accounts; (2) to combine any two or more Investment Funds or
sub-funds thereof; (3) to transfer the assets we determine to be the share of
the class of contracts to which the Certificate belongs from any Investment
Fund to another Investment Fund; (4) to operate the Separate Account or any
Investment Fund as a management investment company under the 1940 Act, in
which case charges and expenses that otherwise would be assessed against an
underlying mutual fund would be assessed against the Separate Account; (5) to
deregister the Separate Account under the 1940 Act, provided that such action
conforms with the requirements of applicable law; (6) to restrict or
eliminate any voting rights as to the Separate Account; and (7) to cause one
or more Investment Funds to invest some or all of their assets in one or more
other trusts or investment companies. If any changes are made that result in
a material change in the underlying investment policy of an Investment Fund,
you will be notified as required by law.
THE TRUST
The Trust is an open-end diversified management investment company, more
commonly called a mu-
11
<PAGE>
tual fund. As a "series" type of mutual fund, it issues several different
series of stock, each of which relates to a different Portfolio of the Trust.
The Trust commenced operations in January 1976 with a predecessor of its
Common Stock Portfolio. The Trust does not impose a sales charge or "load"
for buying and selling its shares. All dividend distributions to the Trust
are reinvested in full and fractional shares of the Portfolio to which they
relate. More detailed information about the Trust, its investment objec-
tives, policies, restrictions, risks, expenses and all other aspects of its
operations appears in its prospectus which accompanies this prospectus or in
its statement of additional information.
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Alliance Capital Management L.P. (Alliance), which is
registered with the SEC as an investment adviser under the Investment
Advisers Act of 1940. Alliance, a publicly-traded limited partnership, is
indirectly majority-owned by Equitable Life. On December 31, 1995, Alliance
was managing over $146.5 billion in assets. Alliance acts as an investment
adviser to various separate accounts and general accounts of Equitable Life
and other affiliated insurance companies. Alliance also provides management
and consulting services to mutual funds, endowment funds, insurance
companies, foreign entities, qualified and non-tax qualified corporate funds,
public and private pension and profit-sharing plans, foundations and
tax-exempt organizations.
Alliance's record as an investment manager is based, in part, on its ability
to provide a diversity of investment services to domestic, international and
global markets. Alliance prides itself on its ability to attract and retain a
quality, professional work force. Alliance employs more than 160 investment
professionals, including 68 research analysts. Portfolio managers have an
average investment experience of more than 16 years.
Alliance's main office is located at 1345 Avenue of the Americas, New York,
New York 10105.
12
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF THE TRUST'S PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of
each Portfolio will affect its return and its risks. There is no guarantee
that these objectives will be achieved.
The policies and objectives of the Trust's Portfolios are as follows:
<TABLE>
<CAPTION>
Portfolio Investment Policy Objective
- --------------------------- ---------------------------------------------------- -----------------------------
<S> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors Diversified mix of publicly-traded, fixed-income and High total return without, in
equity securities; asset mix and security selection the adviser's opinion, undue
are primarily based upon factors expected to reduce risk to principal
risk. The Portfolio is generally expected to hold
approximately 70% of its assets in fixed income
securities and 30% in equity securities.
Growth Investors Diversified mix of publicly-traded, fixed-income and High total return consistent
equity securities; asset mix and security selection with the adviser's
based upon factors expected to increase possibility determination of reasonable
of high long-term return. The Portfolio is generally risk
expected to hold approximately 70% of its assets in
equity securities and 30% in fixed income
securities.
EQUITY SERIES:
Growth & Income Primarily income producing common stocks and High total return through a
securities convertible into common stocks. combination of current income
and capital appreciation
Common Stock Primarily common stock and other equity-type Long-term growth of capital
instruments. and increasing income
Global Primarily equity securities of non-United States as Long-term growth of capital
well as United States companies.
International Primarily equity securities selected principally to Long-term growth of capital
permit participation in non-United States companies
with prospects for growth.
Aggressive Stock Primarily common stocks and other equity-type Long-term growth of capital
securities issued by medium and other smaller sized
companies with strong growth potential.
FIXED INCOME SERIES:
Money Market Primarily high quality short-term money market High level of current income
instruments. while preserving assets and
maintaining liquidity
Intermediate Government Primarily debt securities issued or guaranteed by High current income
Securities the U.S. government, its agencies and consistent with relative
instrumentalities. Each investment will have a final stability of principal
maturity of not more than 10 years or a duration not
exceeding that of a 10-year Treasury note.
</TABLE>
13
<PAGE>
- -----------------------------------------------------------------------------
PART 3: INVESTMENT PERFORMANCE
- -----------------------------------------------------------------------------
This Part presents performance data for each of the Investment Funds
calculated by two methods. The first method, used in calculating values for
the two tables in "Performance Data for a Certificate," reflects all
applicable fees and charges other than the charge for tax such as premium
taxes. The second method, used in preparing rates of return for the three
tables in "Rate of Return Data for Investment Funds," reflects all fees and
charges other than the distribution fee, the withdrawal charge, the
guaranteed minimum death benefit charge, the annual contract fee and the
charge for tax such as premium taxes. These additional charges would
effectively reduce the rates of return credited to a particular Certificate.
The Separate Account commenced operations in May 1995 and no Certificates
were issued prior to that date. The calculations of investment performance
shown below are based on the actual investment results of the Portfolios of
the Trust, from which certain fees and charges applicable under the
Accumulator have been deducted. The results shown are not an estimate or
guarantee of future investment performance, and do not reflect the actual
experience of amounts invested under a particular Certificate.
See "Part 4: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
PERFORMANCE DATA FOR A CERTIFICATE
The standardized performance data in the following tables illustrate the
average annual total return of the Investment Funds over the periods shown,
assuming a single initial contribution of $1,000 and the surrender of the
Certificate at the end of each period. These tables (which reflect the first
calcu- lation method described above) are prepared in a manner prescribed by
the SEC for use when we advertise the performance of the Separate Account. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
Each calculation assumes that the $1,000 contribution was allocated to only
one Investment Fund, no transfers or subsequent contributions were made and
no amounts were allocated to any other Investment Option under the
Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of
a Certificate which is surrendered on December 31, 1995 by the $1,000
contribution made at the beginning of each period illustrated. The annual
contract fee is computed based on an initial contribution of $10,000. The
result of that calculation is the total growth rate for the period. Then we
annualize that growth rate to obtain the average annual percentage increase
(decrease) during the period shown. When we "annualize," we assume that a
single rate of return applied each year during the period will produce the
ending value, taking into account the effect of compounding.
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
----------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION*
- ---------------------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors $1,117 $1,162 $1,454 -- $ 1,567
Growth Investors 1,176 1,288 2,000 -- 2,254
EQUITY SERIES:
Growth & Income 1,154 -- -- -- 1,124
Common Stock 1,236 1,487 2,089 $3,471 11,447
Global 1,102 1,521 1,942 -- 2,092
International -- -- -- -- 1,030
Aggressive Stock 1,228 1,353 2,444 -- 5,194
</TABLE>
14
<PAGE>
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995
(CONTINUED)
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
---------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION*
- ----------------------------- ------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
FIXED INCOME SERIES:
Money Market $ 972 $1,022 $1,103 $1,494 $2,184
Intermediate Govt. Securities 1,047 1,085 -- -- 1,270
</TABLE>
- ------------
* See footnote below.
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1995
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
--------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION*
- ----------------------------- -------- ------- ------- -------- ------------
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors 11.72% 5.15% 7.77% -- 6.63%
Growth Investors 17.62 8.81 14.86 -- 12.31
EQUITY SERIES:
Growth & Income 15.35 -- -- -- 3.98
Common Stock 23.63 14.14 15.87 13.25% 12.96
Global 10.15 15.01 14.20 -- 8.55
International -- -- -- -- 3.04
Aggressive Stock 22.83 10.59 19.57 -- 17.91
FIXED INCOME SERIES:
Money Market (2.77) 0.73 1.98 4.10 5.34
Intermediate Govt. Securities 4.73 2.76 -- -- 4.90
</TABLE>
- ------------
* The "Since Inception" dates are as follows: Conservative Investors
(October 2, 1989); Growth Investors (October 2, 1989); Growth & Income
(October 1, 1993); Common Stock (January 13, 1976); Global (August 27, 1987);
International (April 3, 1995); Aggressive Stock (January 27, 1986); Money
Market (July 13, 1981); and Intermediate Government Securities (April 1,
1991). The "Since Inception" numbers for the International Fund are
unannualized.
RATE OF RETURN DATA FOR INVESTMENT FUNDS
The following tables (which reflect the second calculation method described
above) provide you with information on rates of return on an annualized,
cumulative and year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of
return reflect performance over a stated period of time. Annualized rates of
return represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
Performance data of the Money Market and Common Stock Funds for the periods
prior to March 22, 1985, reflect the investment results of two open-end
management separate accounts (the "predecessor separate accounts") which were
reorganized in unit investment trust form. The "Since Inception" figures for
these Funds are based on the date of inception of the predecessor separate
accounts. This performance data has been adjusted to reflect the maximum
investment advisory fee payable for the corresponding Portfolio of the Trust
as well as an assumed charge of 0.06% for direct operating expenses.
Performance data for the remaining Investment Funds reflect (i) the
investment results of the corresponding Portfolios of the Trust from the date
of inception of those Portfolios and (ii) the actual investment advisory fee
and direct operating expenses of the relevant Portfolio.
15
<PAGE>
The performance data for all periods has also been adjusted to reflect the
Separate Account mortality and expense risk charge, and the asset based
administrative charge equal to a total of 1.15% relating to the Certificates,
as well as the Trust's expenses.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality
and expense risk charge and the asset based administrative charge under the
Certificates. Comparisons with these benchmarks, therefore, are of limited
use. We include them because they are widely known and may help you to
understand the universe of securities from which each Portfolio is likely to
select its holdings. Benchmark data reflect the reinvestment of dividend
income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
Asset Allocation Series:
CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond Composite
Index and 30% Standard & Poor's 500 Index.
GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond Index
and 70% Standard & Poor's 500 Index.
Equity Series:
GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index and 25%
Value Line Convertible Index.
COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
GLOBAL: August 27, 1987; Morgan Stanley Capital International World Index.
INTERNATIONAL: April 1, 1995; Morgan Stanley Capital International Europe,
Australia, Far East Index.
AGGRESSIVE STOCK: January 27, 1986; 50% Standard & Poor's Mid-Cap Total
Return Index and 50% Russell 2000 Small Stock Index.
Fixed Income Series:
MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill Index.
INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman Intermediate
Government Bond Index.
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity products,
including managed separate accounts of insurance companies. According to
Lipper Analytical Services, Inc., the data are presented net of investment
management fees, direct operating expenses and asset-based charges applicable
under insurance policies or annuity contracts. Lipper data provide a more
accurate picture than market benchmarks of the Accumulator performance
relative to other variable annuity products.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE INVESTORS 19.02% 7.32% 8.89% -- -- 8.39%
Lipper Income 21.25 9.65 11.99 -- -- 9.79
Benchmark 24.11 10.41 11.73 -- -- 10.55
GROWTH INVESTORS 24.92 10.87 15.77 -- -- 14.70
Lipper Flexible Portfolio 21.58 9.32 11.43 -- -- 9.44
Benchmark 32.05 13.35 14.70 -- -- 11.97
EQUITY SERIES:
GROWTH & INCOME 22.65 -- -- -- -- 8.40
Lipper Growth & Income 31.18 -- -- -- -- 12.76
Benchmark 34.93 -- -- -- -- 15.45
COMMON STOCK 30.93 16.05 16.80 13.84 13.06% 13.47
Lipper Growth 31.08 12.09 15.53 12.05 12.26 12.25
Benchmark 37.54 15.30 16.57 14.87 14.79 14.24
</TABLE>
16
<PAGE>
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:* (CONTINUED)
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
GLOBAL 17.45% 16.86% 15.16% -- -- 10.09%
Lipper Global 13.87 13.45 9.10 -- -- 2.52
Benchmark 20.72 15.83 11.74 -- -- 6.75
INTERNATIONAL -- -- -- -- -- 10.34**
Lipper International -- -- -- -- -- 12.21**
Benchmark -- -- -- -- -- 9.17**
AGGRESSIVE STOCK 30.13 12.61 20.35 -- -- 18.59
Lipper Small Company Growth 28.19 15.26 25.72 -- -- 16.06
Benchmark 29.69 13.67 20.16 -- -- 13.58
FIXED INCOME SERIES:
MONEY MARKET 4.53 3.04 3.29 4.81% -- 6.19
Lipper Money Market 4.35 2.88 3.10 4.71 -- 6.27
Benchmark 5.74 4.34 4.47 5.77 -- 7.09
INTERMEDIATE GOVERNMENT
SECURITIES 12.03 4.99 -- -- -- 6.43
Lipper Gen. U.S. Government 15.47 6.27 -- -- -- 7.87
Benchmark 14.41 6.74 -- -- -- 8.17
</TABLE>
- ------------
* See footnote on next page.
** Unannualized.
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE INVESTORS 19.02% 23.60% 53.06% -- -- 65.42%
Lipper Income 21.25 31.95 76.42 -- -- 79.42
Benchmark 24.11 34.58 74.09 -- -- 87.24
GROWTH INVESTORS 24.92 36.28 108.00 -- -- 135.55
Lipper Flexible Portfolio 21.58 30.92 72.73 -- -- 76.92
Benchmark 32.05 45.64 98.56 -- -- 102.72
EQUITY SERIES:
GROWTH & INCOME 22.65 -- -- -- -- 19.89
Lipper Growth & Income 31.18 -- -- -- -- 31.42
Benchmark 34.93 -- -- -- -- 38.14
COMMON STOCK 30.93 56.29 117.35 265.55% 530.07% 1,146.22
Lipper Growth 31.08 41.29 107.30 215.49 483.45 920.87
Benchmark 37.54 53.30 115.25 300.11 692.18 1,327.94
GLOBAL 17.45 59.57 102.53 -- -- 123.08
Lipper Global 13.87 46.36 55.44 -- -- 23.09
Benchmark 20.72 55.39 74.20 -- -- 72.38
INTERNATIONAL -- -- -- -- -- 10.34**
Lipper International -- -- -- -- -- 12.21**
Benchmark -- -- -- -- -- 9.17**
AGGRESSIVE STOCK 30.13 42.79 152.49 -- -- 443.46
Lipper Small Company Growth 28.19 55.24 268.67 -- -- 337.96
Benchmark 29.69 46.89 150.49 -- -- 254.09
FIXED INCOME SERIES:
MONEY MARKET 4.53 9.40 17.55 59.97 -- 138.38
Lipper Money Market 4.35 8.87 16.48 58.55 -- 140.42
Benchmark 5.74 13.58 24.45 75.23 -- 170.07
</TABLE>
- ------------
* See footnote on next page.
** Unannualized.
17
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:* (CONTINUED)
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INTERMEDIATE GOVERNMENT
SECURITIES 12.03% 15.72% -- -- -- 34.43 %
Lipper Gen. U.S. Government 15.47 20.05 -- -- -- 43.43
Benchmark 14.41 21.60 -- -- -- 45.17
</TABLE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988
-------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION
SERIES:
CONSERVATIVE
INVESTORS -- -- -- -- -- --
GROWTH INVESTORS -- -- -- -- -- --
EQUITY SERIES:
GROWTH & INCOME -- -- -- -- -- --
COMMON STOCK*** 24.67% (3.09)% 31.91% 16.02% 6.21% 21.03%
GLOBAL -- -- -- -- (13.62) 9.61
INTERNATIONAL -- -- -- -- -- --
AGGRESSIVE STOCK -- -- -- 33.83 6.06 (0.03)
FIXED INCOME SERIES:
MONEY MARKET*** 7.70 9.59 6.91 5.39 5.41 6.09
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- -- -- -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995
------- -------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION
SERIES:
CONSERVATIVE
INVESTORS 2.79% 5.14% 18.51% 4.50% 9.54% (5.20)% 19.02%
GROWTH INVESTORS 3.53 9.39 47.19 3.69 13.95 (4.27) 24.92
EQUITY SERIES:
GROWTH & INCOME -- -- -- -- (0.55) (1.72) 22.65
COMMON STOCK*** 24.16 (9.17) 36.30 2.03 23.39 (3.26) 30.93
GLOBAL 25.29 (7.15) 29.06 (1.65) 30.60 4.02 17.45
INTERNATIONAL -- -- -- -- -- -- 10.34
AGGRESSIVE STOCK 41.86 6.92 84.73 (4.28) 15.41 (4.92) 30.13
FIXED INCOME SERIES:
MONEY MARKET*** 7.93 6.99 4.97 2.37 1.78 2.82 4.53
INTERMEDIATE
GOVERNMENT
SECURITIES -- -- 11.30 4.38 9.27 (5.47) 12.03
</TABLE>
- ------------
* Returns do not reflect the distribution fee, the withdrawal charge, the
guaranteed minimum death benefit charge and the annual contract fee.
The Year-by-Year Rates of Return are different from those previously
published, because the previous rates were calculated based on
historical end of month values and are now calculated using daily
historical values.
** Unannualized.
<TABLE>
<CAPTION>
*** Prior to 1983 the Year-by-Year Rates of Return were: 1976 1977 1978 1979 1980 1981 1982
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCK 8.20% (10.28)% 6.99% 28.35% 48.39% (6.94)% 16.22%
MONEY MARKET -- -- -- -- -- 5.71 11.72
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may
describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance of the Investment Funds
with (1) that of other insurance company separate accounts or mutual funds
included in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS 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 which are shown under "Benchmarks" and "Fund Inception Dates and
Comparative Benchmarks" in this Part 3, or (3) data developed by us derived
from such indices or averages. The Morningstar Variable Annuity/Life Report
consists of nearly 700 variable life and annuity funds, all of which report
their data net of investment management fees, direct operating expenses and
separate account charges. VARDS is a monthly reporting service that monitors
approximately 760 variable life and variable annuity funds on performance and
account information. Advertisements or other communications furnished to
present or prospective Certificate Owners may also include evaluations of an
Investment Fund or Portfolio by financial publications that are nationally
recognized such as Barron's, Morningstar's Variable Annuity Sourcebook,
Business Week, Chicago Tribune, Forbes, Fortune, Institutional Investor,
Investment Adviser, Investment Dealer's Digest, Investment Management Weekly,
Los Angeles Times, Money, Money Management Letter, Kiplinger's Personal
Finance, Financial Planning,
18
<PAGE>
National Underwriter, Pension & Investments, USA Today, Investor's Daily, The
New York Times, and The Wall Street Journal.
MONEY MARKET FUND AND INTERMEDIATE GOVERNMENT SECURITIES FUND YIELD
INFORMATION
The current yield and effective yield of the Money Market Fund and
Intermediate Government Securities Fund may appear in reports and promotional
material to current or prospective Certificate Owners.
Money Market Fund
Current yield for the Money Market Fund will be based on net changes in a
hypothetical investment over a given seven-day period, exclusive of capital
changes, and then "annualized" (assuming that the same seven-day result would
occur each week for 52 weeks). "Effective yield" is calculated in a manner
similar to that used to calculate current yield, but when annualized, any
income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings
are compounded weekly. Money Market Fund yields and effective yields assume
the deduction of all Certificate charges and expenses other than the
distribution fee, withdrawal charge, guaranteed minimum death benefit charge
and any charge for tax such as premium tax. See "Part 4: Money Market Fund
and Intermediate Government Securities Fund Yield Information" in the SAI.
Intermediate Government Securities Fund
Current yield for the Intermediate Government Securities Fund will be based
on net changes in a hypothetical investment over a given 30-day period,
exclusive of capital changes, and then "annualized" (assuming that the same
30-day result would occur each month for 12 months). "Effective yield" is
calculated in a manner similar to that used to calculate current yield, but
when annualized, any income earned by the investment is assumed to be
reinvested. The "effective yield" will be slightly higher than the "current
yield" because any earnings are compounded monthly.
Intermediate Government Securities Fund yields and effective yields assume
the deduction of all Certificate charges and expenses other than the
distribution fee, withdrawal charge, guaranteed minimum death benefit charge
and any charge for tax such as premium tax. See "Part 4: Money Market Fund
and Intermediate Government Securities Fund Yield Information" in the SAI.
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PART 4: THE GUARANTEED PERIOD ACCOUNT
- -----------------------------------------------------------------------------
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. The Guaranteed
Rate for each allocation is the annual interest rate applicable to new
allocations to that Guarantee Period, which was in effect on the Transaction
Date for the allocation. We may establish different Guaranteed Rates under
different classes of Certificates. We use the term GUARANTEED PERIOD AMOUNT
to refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
on any Business Day, therefore, will be the sum of the present value of the
Maturity Value in each Guarantee Period, using the Guaranteed Rate in effect
for new allocations to each such Guarantee Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1997 through 2006.
Not all Guarantee Periods will be available to Annuitants ages 71 and above.
See "Allocation of Contributions" in Part 5. As Guarantee Periods expire we
expect to add maturity years so that generally 10 are available in all states
at any time.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no transfers or withdrawals are made and no charges
are allocated to the Guarantee Period). The required amount is the present
value of that Maturity Value at the Guaranteed Rate on the Transaction Date
for the contribution, which may also be expressed as the price per $100 of
Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of May 1, 1996 and the related price
per $100 of Maturity Value for each currently available Guarantee Period were
as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH
EXPIRATION DATE GUARANTEED PRICE PER $100
FEBRUARY 15TH OF RATE AS OF OF MATURITY
MATURITY YEAR MAY 1, 1996 VALUE
- ---------------- ------------ --------------
<S> <C> <C>
1997 4.54% $96.53
1998 5.16 91.37
1999 5.37 86.40
2000 5.51 81.59
2001 5.62 76.93
2002 5.75 72.32
2003 5.88 67.82
2004 5.85 64.19
2005 5.98 59.98
2006 6.08 56.08
</TABLE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of
years 1997 through 2001, then according to the above table the lump sum
contribution you would have to make as of May 1, 1996 would be $432.82 (i.e.,
the sum of the price per $100 of Maturity Value for each maturity year from
1997 through 2001).
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The above table is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted or withdrawals or transfers from Guarantee Periods. Actual
calculations will also be based on Guaranteed Rates on each actual
Transaction Date, which may differ.
Options at Expiration Date
We will notify you on or before December 31st prior to the Expiration Date of
each Guarantee Period in which you have any Guaranteed Period Amount. You may
elect one of the following options to be effective at the Expiration Date,
subject to the restrictions set forth on the prior page and under "Allocation
of Contributions" in Part 5:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges
which may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR
TRANSFERS, WITHDRAWALS OR SURRENDER
PRIOR TO THE EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a
Guarantee Period prior to its Expiration Date will cause any remaining
Guaranteed Period Amount for that Guarantee Period to be increased or
decreased by a market value adjustment. The amount of the adjustment will
depend on two factors: (a) the difference between the Guaranteed Rate
applicable to the amount being withdrawn and the Guaranteed Rate on the
Transaction Date for new allocations to a Guarantee Period with the same
Expiration Date, and (b) the length of time remaining until the Expiration
Date. In general, if interest rates have risen between the time when an
amount was originally allocated to a Guarantee Period and the time it is
withdrawn, the market value adjustment will be negative, and vice versa; and
the longer the period of time remaining until the Expiration Date, the
greater the impact of the interest rate difference. Therefore, it is possible
that a significant rise in interest rates could result in a substantial
reduction in your Annuity Account Value in the Guaranteed Period Account
related to longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Guarantee Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal of a portion of the amount in a Guarantee Period will be a
percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds from a Guarantee Period. This percentage is
determined by (i) dividing the amount of the withdrawal or transfer from the
Guarantee Period by (ii) the Annuity Account Value in such Guarantee Period
prior to the withdrawal or transfer. See Appendix I for an example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate
in (1)(c) above.
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DEATH BENEFIT AMOUNT
The death benefit provided with respect to the Guaranteed Period Account is
equal to the Annuity Account Value in the Guaranteed Period Account or, if
greater, the sum of the Guaranteed Period Amounts in each Guarantee Period.
See "Annuity Account Value" in Part 5.
INVESTMENTS
Amounts allocated to Guarantee Periods will be held in a "nonunitized"
separate account established by Equitable Life under the laws of New York.
This separate account provides an additional measure of assurance that full
payment of amounts due under the Guarantee Periods will be made. Under the
New York Insurance Law, the portion of the separate account's assets equal to
the reserves and other contract liabilities relating to the Certificates are
not chargeable with liabilities arising out of any other business we may
conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933 (1933 Act),
nor is the general account an investment company under the 1940 Act.
Accordingly, the general account is not subject to regulation under the 1933
Act or the 1940 Act. However, the market value adjustment interests under the
Certificates are registered under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in this prospectus for your information that
relates to the general account (other than market value adjustment
interests). The disclosure, however, may be subject to certain generally
applicable provisions of the Federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
22
<PAGE>
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PART 5: PROVISIONS OF THE CERTIFICATES AND SERVICES WE PROVIDE
- -----------------------------------------------------------------------------
The provisions of your Certificate may be restricted by applicable laws or
regulations.
AVAILABILITY OF THE CERTIFICATES
The Certificates are available for Annuitant issue ages 20 through 83 (may be
limited to age 78 in some states). These Certificates may not be available in
all states.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your initial contribution must be at least $10,000.
Subsequent contributions may be made in an amount of at least $1,000 at any
time up until the Certificate is within seven years of the Annuity
Commencement Date. We may refuse to accept any contributions if the sum of
all contributions under a Certificate would then total more than $1,500,000.
We may also refuse to accept any contribution if the sum of all contributions
under all Equitable annuity accumulation certificates/contracts that you own
would then total more than $2,500,000.
Contributions are credited as of the Transaction Date.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check. All
contributions made by check must be drawn on a bank or credit union in the
U.S., in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. All contributions should be sent to Equitable
Life at our Processing Office address designated for contributions.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will be invested at the value next
determined following receipt for contributions allocated to the Investment
Funds. Contributions allocated to the Guaranteed Period Account will receive
the Guaranteed Rate(s) in effect for the applicable Guarantee Period(s) on
the date contributions are received. Wire orders not accompanied by complete
information, may be retained for a period not exceeding five Business Days
while an attempt is made to obtain the required information. If the required
information cannot be obtained within those five Business Days, the
Processing Office will inform the broker-dealer, on behalf of the applicant,
of the reasons for the delay and return the contribution immediately to the
applicant, unless the applicant specifically consents to our retaining the
contribution until the required information is received by the Processing
Office.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate will not be issued until the receipt and
acceptance of a properly completed application. During the time from receipt
of the initial contribution until a signed application is received from the
Certificate Owner, no other financial transactions may be requested.
If an application is not received within ten days of receipt of the initial
contribution via wire order, or if an incomplete application is received and
cannot be completed within ten days of receipt of the initial contribution,
the amount of the initial contribution will be returned to the applicant.
After your Certificate has been issued, subsequent contributions may be
transmitted by wire.
ALLOCATION OF CONTRIBUTIONS
You have two options from which to choose for allocation of your
contributions: Self-Directed Allocation and Principal Assurance.
Self-Directed Allocation
You design your own investment program by allocating your contributions among
the Investment Options in any way you choose. Your contributions may be
allocated to one or up to all of the available Investment Options at any
time. We allocate contributions among the Investment Options according to
your allocation percentages. Allocations must be in whole percentages.
Allocation percentages can be changed at any time by writing to our
Processing Office, or by telephone. The change will be effective on the
Transaction Date and will remain in effect for future contributions unless
another change is requested. Allocation of the initial contribution is
subject to the provisions for the free look period. See "Free Look Period"
below. Allocation of any contri-
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<PAGE>
bution to the Guaranteed Period Account is subject to the following
restrictions.
o No more than 60% of any contribution may be allocated to the
Guaranteed Period Account.
o For Annuitants ages 71 through 74, allocations may not be made to a
Guarantee Period with a maturity year that would exceed the year in
which the Annuitant will attain age 80. For Annuitants ages 75 and
above, allocations may be made only to Guarantee Periods with
maturities of five years or less; however, in no event may
allocations be made to Guarantee Periods with maturities beyond the
February 15th immediately following the Annuity Commencement Date.
Principal Assurance
This option is designed to assure that your Maturity Value in a specified
Guarantee Period equals your initial contribution, while at the same time
allowing you to invest in the Investment Funds. The maturity year you select
for such specified Guaranteed Period may not be later than 10 years nor
earlier than seven years. However, in no event may you elect a year beyond
the year in which the Annuitant will attain age 80. In order to accomplish
this strategy, we will allocate a portion (equal to the present value) of
your initial contribution to a Guarantee Period based on the year you select.
See "Guaranteed Rates and Price Per $100 of Maturity Value" in Part 4. You
may allocate the balance of your contribution to the Investment Funds in any
way you choose. Such allocations to the Investment Funds must be in whole
percentages. Allocation of the portion of your initial contribution to the
Investment Funds is subject to the provisions for the free look period. See
"Free Look Period" below.
Principal Assurance may only be elected at issue of your Certificate and
assumes no withdrawals or transfers of the amount allocated to the specified
Guarantee Period.
Subsequent contributions must be allocated under "Self-Directed Allocation"
described above.
Allocations to the Investment Funds
A contribution allocated to an Investment Fund purchases Accumulation Units
in that Investment Fund based on the Accumulation Unit Value for that
Investment Fund computed on the Transaction Date.
Allocations to the Guaranteed Period Account
Contributions allocated to the Guaranteed Period Account will have the
Guaranteed Rate for the specified Guarantee Period offered on the Transaction
Date.
FREE LOOK PERIOD
You have the right to examine the Accumulator Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You cancel it
by sending it to our Processing Office. The free look is extended if your
state requires a refund period of longer than 10 days. This right applies
only to the initial owner of a Certificate.
Your refund will equal the Annuity Account Value reflecting any investment
gain or loss, and any positive or negative market value adjustment, through
the date we receive your Certificate at our Processing Office. Some states
may require that we calculate the refund differently. In those states that
require that we calculate the refund differently, we may require that any
portion of your initial contribution that you request to have allocated to
the Investment Funds, be allocated to the Money Market Fund until the end of
the free look period.
We follow these same procedures if you change your mind before a Certificate
has been issued, but after a contribution has been made. See "Part 8: Tax
Aspects of the Certificates" for possible consequences of canceling your
Certificate during the free look period.
If you cancel your Certificate during the free look period, we may require
that you wait six months before you may apply for a Certificate with us
again.
ANNUITY ACCOUNT VALUE
The Annuity Account Value is the sum of the Annuity Account Values in the
Investment Funds and the Guaranteed Period Account.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal
to the number of Accumulation Units in that Investment Fund times the
Accumulation Unit Value for the Investment Fund for that date. The number of
Accumulation Units in an Investment Fund at any time is equal to the sum of
Accumulation Units purchased by contributions and transfers less the sum of
Accumulation Units redeemed for withdrawals, transfers or deductions for
charges.
The number of Accumulation Units purchased or sold in any Investment Fund
equals the dollar amount of the transaction divided by the Accumulation Unit
Value for that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation
24
<PAGE>
Unit Value. The Accumulation Unit Value varies with the investment
performance of the corresponding Portfolios of the Trust, which in turn
reflects the investment income and realized and unrealized capital gains and
losses of the Portfolios, as well as the Trust fees and expenses. The
Accumulation Unit Value is also stated after deduction of the Separate
Account asset charges relating to the Certificates. A description of the
computation of the Accumulation Unit Value is found in the SAI.
Annuity Account Value in Guaranteed Period Account
The Annuity Account Value in the Guaranteed Period Account on any Business
Day will be the sum of the present value of the Maturity Value in each
Guarantee Period, using the Guaranteed Rate in effect for new allocations to
such Guarantee Period on such date. (This is equivalent to the Guaranteed
Period Amount increased or decreased by the full market value adjustment.)
The Annuity Account Value, therefore, may be higher or lower than the
contributions (less withdrawals) accumulated at the Guaranteed Rate. At the
Expiration Date the Annuity Account Value in the Guaranteed Period Account
will equal the Maturity Value. See "Part 4: The Guaranteed Period Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject
to the following restrictions.
o Transfers are permitted to or from a Guarantee Period once per quarter o
during each Contract Year. Such transfers may be made at any time during
each quarter.
o Transfers out of a Guarantee Period other than at the Expiration Date will
o result in a market value adjustment. See "Part 4: The Guaranteed Period
Account."
o Transfers to Guarantee Periods are subject to the restrictions set forth o
under "Guarantee Periods and Expiration Dates" in Part 4 and are limited
based on the attained age of the Annuitant. See "Allocation of
Contributions" above.
Transfer requests must be made directly to our Processing Office. Your
request for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which
the amounts are to be transferred. Your transfer request may be in writing or
by telephone.
For telephone transfer requests, procedures have been established by
Equitable Life that are considered to be reasonable and are designed to
confirm that instructions communicated by telephone are genuine. Such
procedures include requiring certain personal identification information
prior to acting on telephone instructions and providing written confirmation.
In light of the procedures established, Equitable Life will not be liable for
following telephone instructions that it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must
be on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer
to or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in
writing.
DOLLAR COST AVERAGING
If you have at least $10,000 of Annuity Account Value in the Money Market
Fund, you may choose to have a specified dollar amount transferred from the
Money Market Fund to other Investment Funds on a monthly basis. The main
objective of dollar cost averaging is to attempt to shield your investment
from short term price fluctuations. Since the same dollar amount is
transferred to other Investment Funds each month, more Accumulation Units are
purchased in an Investment Fund if the value per Accumulation Unit is low and
fewer Accumulation Units are purchased if the value per Accumulation Unit is
high. Therefore, a lower average value per Accumulation Unit may be achieved
over the long term. This plan of investing allows you to take advantage of
market fluctuations but does not assure a profit or protect against a loss in
declining markets.
The dollar cost averaging option may be elected at the time you apply for the
Certificate or at a later date. The minimum amount that may be transferred
each month is $250. The maximum amount which may be transferred is equal to
the Annuity Account Value in the Money Market Fund at the time the option is
elected, divided by 12.
The transfer date will be the same calendar day each month as the Contract
Date. If, on any transfer date, the Annuity Account Value in the Money Market
Fund is equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred and the dollar cost
averaging option
25
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will end. You may change the transfer amount once each Contract Year, or
cancel this option by sending us satisfactory notice to our Processing Office
at least seven calendar days before the next transfer date.
WITHDRAWALS
The Accumulator is an annuity contract, even though you may elect to receive
your benefits in a non- annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while the Annuitant is
alive. Two withdrawal options are available: Lump Sum Withdrawals and
Periodic Withdrawals. Withdrawals may result in withdrawal charges. See "Part
6: Deductions and Charges." Withdrawals may also be taxable and subject to
tax penalty. See "Part 8: Tax Aspects of the Certificates."
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration
Date" in Part 4.
As a deterrent to early withdrawal (generally prior to age 59 1/2 ) the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 8: Tax Aspects
of the Certificates."
o LUMP SUM WITHDRAWALS--After the first Contract Year, you may take a Lump
Sum Withdrawal once per Contract Year at any time during such Contract
Year. The minimum amount of such withdrawal is $1,000. A request to
withdraw more than 90% of the Cash Value as of the date of the
withdrawal will result in the termination of the Certificate and will be
treated as a surrender of the Certificate for its Cash Value. See
"Surrendering the Certificates to Receive the Cash Value," below.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to
us which specifies the Investment Options from which the Lump Sum
Withdrawal will be taken. If we have received the information we
require, the requested withdrawal will become effective on the
Transaction Date and proceeds will usually be mailed within seven
calendar days thereafter, but we may delay payment as described in "When
Payments Are Made" below. If we receive only partially completed
information, our Processing Office will contact you for specific
instructions before your request can be processed.
o PERIODIC WITHDRAWALS--Periodic Withdrawals provide level percentage or
level amount payouts. You may choose to receive Periodic Withdrawals on
a quarterly or annual frequency. You select a dollar amount or
percentage of the Annuity Account Value to be withdrawn, subject to a
maximum of 2.5% quarterly and 10.0% annually, but in no event may any
payment be less than $250. If at the time a Periodic Withdrawal is to be
made, the withdrawal amount would be less than $250, no payment will be
made and your Periodic Withdrawal election will terminate.
You select the date of the month when the withdrawals will be made, but
you may not choose a date later than the 28th day of the month. If no
date is selected, withdrawals will be made on the same calendar day of
the month as the Contract Date. The commencement of payments under the
Periodic Withdrawal option may not be elected to start sooner than 28
days after issue of the Certificate.
You may elect Periodic Withdrawals at any time by completing the proper
form and sending it to our Processing Office. You may change the payment
frequency of your Periodic Withdrawals once each Contract Year or cancel
this withdrawal option at any time by sending notice in a form
satisfactory to us. The notice must be received at our Processing Office
at least seven calendar days prior to the next scheduled withdrawal
date. You may also change the amount or percentage of your Periodic
Withdrawals once in each Contract Year. However, you may not change the
amount or percentage in any Contract Year where you have previously
taken another withdrawal under the Lump Sum Withdrawal option described
above.
Unless you specify otherwise, Periodic Withdrawals will be withdrawn on
a pro rata basis from your Annuity Account Value in the Investment
Funds. If there is insufficient value or no value in the Investment
Funds, any additional amount of the withdrawal required or the total
amount of the withdrawal, as applicable, will be withdrawn from the
Guarantee Periods in order of the earliest Expiration Date(s) first.
Withdrawal Charges
Withdrawals in excess of the 15% free corridor amount may be subject to a
withdrawal charge. See "Withdrawal Charge" in Part 6.
DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of proof satisfactory to us of the Annuitant's death,
prior to the Annuity Commencement Date, we will pay the death benefit to
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the beneficiary named in your Certificate. You designate the beneficiary at
the time you apply for the Certificate. While the Certificate is in effect,
you may change your beneficiary by writing to our Processing Office. The
change will be effective on the date the written submission was signed. The
death benefit payable will be determined as of the date we receive such proof
of death and any required instructions as to the method of payment.
The death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the guaranteed minimum death benefit defined below; and
(2) the death benefit provided with respect to the Guaranteed Period
Account. See "Part 4: The Guaranteed Period Account."
Guaranteed Minimum Death Benefit (GMDB)
Applicable to Certificates issued in all states except New York
- -----------------------------------------------------------------------------
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter (except as adjusted at the end of the seventh Contract Year, see
(1) below), the GMDB is equal to (a) the GMDB determined on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. In addition, interest (see (2) below) is credited to and becomes part
of the GMDB on each Processing Date.
(1) At the end of the seventh Contract Year, the GMDB calculated on such date
will be set at the then GMDB determined above or, if greater, the current
Annuity Account Value in the Investment Funds.
(2) Interest will be calculated at the effective annual GMDB interest rate of
6% for Annuitant issue ages 69 and under; 3% for issue ages 70 through 74;
and 0% for issue ages 75 and above, except with respect to amounts in the
Money Market Fund and the Intermediate Government Securities Fund where
the interest credit will be based on the lesser of the applicable interest
rate above and the actual rate of return for the Money Market Fund during
the Contract Year such amounts are invested. Contributions, transfers and
withdrawals during the Contract Year will be taken into account. The above
applicable GMDB interest rate will be reduced once subsequent
contributions exceed certain levels as explained in (3) below. Under
Certificates Issued Prior to July 17, 1995, Amounts In The Intermediate
Government Securities Fund Are Credited With The Applicable GMDB Interest
Rate Shown Above Rather Than The Money Market Fund Rate.
(3) Depending on the Annuitant's issue age, the GMDB interest rate may be
reduced based on the ratio of total contributions made after a specified
age to net contributions* made prior to that age. The specified ages and
ratios are shown in the table below; the interest rate is shown in the
applicable ratio column.
<TABLE>
<CAPTION>
REDUCED GMDB INTEREST RATES
RATIO OF
CONTRIBUTIONS ON OR
AFTER THE SPECIFIED
AGE TO NET
CONTRIBUTIONS* BEFORE
THE SPECIFIED AGE
---------------------
100% MORE
SPECIFIED THROUGH THAN
ISSUE AGE AGE 250% 250%
- ------------- ------------- ----------- --------
<S> <C> <C> <C>
20-69 70 3% 0%
70-74 75 0% 0%
75+ N/A 0% 0%
</TABLE>
There is no reduction in the GMDB interest rate if
the ratio is less than 100%.
*Net contributions are determined on the Processing
Date after the Annuitant reaches the specified age
and are defined as cumulative contributions made
under the Certificate prior to the specified age,
minus cumulative withdrawals made under the
Certificate prior to the specified age.
- ---------------------------------------------------
The GMDB interest rate may be different if there is a successor
Annuitant/Certificate Owner election at issue of the Certificate. See
"Successor Annuitant," below.
Applicable to Certificates issued in New York
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter (except as adjusted at the end of the seventh Contract Year, in
accordance with (1) above) the GMDB is equal to (a) the GMDB calculated on
the immediately preceding Business Day, plus (b) any subsequent contributions
and transfers into the Investment Funds, less (c) any transfers and
withdrawals from such Funds. Additionally, on each Processing Date the GMDB
is reset at the greater of the current GMDB and the current Annuity Account
Value in the Investment Funds. On no date (except possibly at the end of the
seventh Contract Year) however, will the GMDB be greater than (a) the portion
of the initial contribution allocated to the Investment Funds, plus (b) any
subsequent contributions and transfers into the Investment Funds, less (c)
any transfers and withdrawals from such Funds, plus (d) interest (in
accordance with (2) above) that is credited on each Processing Date plus (e)
any amount by which the GMDB is increased due to the seventh Contract Year
reset in (1) above.
See Appendix II for an example of the calculation of the GMDB.
27
<PAGE>
How Withdrawals and Transfers Affect the GMDB
Whenever a withdrawal or transfer from the Investment Funds is made, the GMDB
is immediately reduced by the amount of the withdrawal or transfer. In
addition, a "special adjustment" will be made to the GMDB on the next
Processing Date to realign the GMDB with the Annuity Account Value. The
special adjustment will be made to the GMDB if on the next Processing Date
following a withdrawal or transfer from the Investment Funds, both (i) the
Annuity Account Value is less than the GMDB, and (ii) the sum of the
withdrawals and transfers from the Investment Funds during the Contract Year
prior to such Processing Date is greater than the difference between the GMDB
(before reduction for withdrawals and transfers from the Investment Funds
during the Contract Year) and "GMDB contributions." GMDB contributions are
equal to the sum of all contributions made plus all transfers into the
Investment Funds, plus at the time of any seventh Contract Year reset, the
amount by which the GMDB is increased to match the then current Annuity
Account Value. Such GMDB contributions are not reduced by withdrawals or
transfers from the Investment Funds. See Appendix III for a further
discussion and an example of the special adjustment.
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the income
annuity option you have chosen under your Certificate. If no income annuity
option has been chosen at the time of the Annuitant's death, the beneficiary
will receive the death benefit in a lump sum. However, subject to certain
exceptions in the Certificate, Equitable Life's rules then in effect and any
other applicable requirements under the Code, the beneficiary may elect to
apply the death benefit to one or more income annuity options offered by
Equitable Life. See "Income Annuity Options" below. Note that if you are both
the Certificate Owner and the Annuitant, only a life annuity or an annuity
that does not extend beyond the life expectancy of the beneficiary may be
elected.
Successor Annuitant
If you are both the Certificate Owner and the Annuitant and you elect your
spouse to be both the sole primary beneficiary and the successor Annuitant/
Certificate Owner, then no death benefit is payable until your surviving
spouse's death.
If you elect a successor Annuitant/Certificate Owner at issue of your
Certificate, the applicable GMDB interest rate may be higher than that
indicated in item (2) above under "Guaranteed Minimum Death Benefit (GMDB)."
If the Annuitant is between issue ages 70 and 74 (inclusive) and elects a
successor Annuitant/Certificate Owner age 74 or under, the GMDB interest rate
is 6%. If the Annuitant is over age 75 and elects a successor
Annuitant/Certificate Owner, the GMDB interest rate is based on the age of
the younger Annuitant as follows:
<TABLE>
<CAPTION>
ANNUITANT AGE OF SUCCESSOR INTEREST
ISSUE AGE ANNUITANT RATE
- --------------- ---------------- ------------
<S> <C> <C>
20 - 69 N/A 6%
70 - 74 74 and under 6%
70 - 74 75 and over 3%
75 and over 20 - 69 6%
75 and over 70 - 74 3%
75 and over 75 and over 0%
- --------------- ---------------- ------------
</TABLE>
The GMDB interest rate based on election of a successor Annuitant/Certificate
Owner is only applicable if the successor Annuitant/Certificate Owner is
elected at issue of the Certificate. This election may only be changed as a
result of a change in marital status.
Depending on the Annuitant's and the successor Annuitant/Certificate Owner's
issue ages, the GMDB interest rate may be reduced based on the ratio of total
contributions made after a specified age (based on the age of the younger
Annuitant) to net contributions* made prior to that age. The specified ages
and ratios are shown in the table below; the interest rate is shown in the
ratio column.
<TABLE>
<CAPTION>
SUCCESSOR ANNUITANT/
CERTIFICATE OWNER
REDUCED GMDB INTEREST RATES
RATIO OF CONTRIBUTIONS
ON OR AFTER THE
SPECIFIED AGE (BASED
ON AGE OF YOUNGER
ANNUITANT) TO NET
CONTRIBUTIONS* BEFORE
THE SPECIFIED AGE
----------------------
YOUNGER 100%
ANNUITANT SUCCESSOR SPECIFIED THROUGH
ISSUE AGE ANNUITANT AGE AGE 250%
- ------------- --------------- ----------- ---------
<S> <C> <C> <C>
20 - 69 N/A 70 3%
70 - 74 74 and under 75 3%
70 - 74 75 and over 75 0%
75 and over 20 - 69 70 3%
75 and over 70 and over 75 0%
</TABLE>
There is no reduction in the GMDB interest rate if the ratio is less than
100%. When the ratio is more than 250%, the GMDB interest rate is 0%.
*Net contributions are determined on the Processing Date after the Annuitant
reaches the specified age and are defined as cumulative contributions made
under the Certificate prior to the specified age, minus cumulative withdrawals
made under the Certificate prior to the specified age.
THE GMDB INTEREST RATE BASED ON A SUCCESSOR ANNUITANT/CERTIFICATE OWNER DOES
NOT APPLY UNDER CERTIFICATES ISSUED PRIOR TO MAY 1, 1996.
WHEN THE CERTIFICATE OWNER DIES BEFORE THE ANNUITANT
When you are not the Annuitant and you die before the Annuity Commencement
Date, the beneficiary named to receive the death benefit upon the Annuitant's
death will automatically succeed as Certifi-
28
<PAGE>
cate Owner (unless you name a different person as a successor Owner in a
written form acceptable to us and send it to our Processing Office). The
Certificate provides that the original Certificate Owner's entire interest in
the Certificate be completely distributed to the named beneficiary by the
fifth anniversary of such Owner's death (unless an income annuity option is
elected and payments begin within one year after the Certificate Owner's
death and are made over the beneficiary's life or over a period not to exceed
the beneficiary's life expectancy). If an income annuity option has not been
elected, as described above, on the fifth anniversary of your death, we will
pay any Annuity Account Value remaining on such date, less any applicable
withdrawal charge. If the successor Certificate Owner is your surviving
spouse, no distributions are required as long as both the surviving spouse
and the Annuitant are living.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward
or downward market value adjustment. See "Part 4: The Guaranteed Period
Account." We do not guarantee any minimum Cash Value except for amounts in a
Guarantee Period held to the Expiration Date. On any date before the Annuity
Commencement Date while the Certificate is in effect, the Cash Value is equal
to: (1) the Annuity Account Value; (2) less any withdrawal charge; and (3)
less any annual contract fee incurred but not yet deducted. The free corridor
amount will not apply when calculating the withdrawal charge applicable upon
a surrender. See "Part 6: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
the Annuitant is living and before the Annuity Commencement Date.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate will be terminated
as of that date. You may receive the Cash Value in a single sum payment or
apply it under one or more of the income annuity options described below. We
will usually pay the Cash Value within seven calendar days, but we may delay
payment as described in "When Payments are Made" below.
In some cases, surrenders may have adverse tax consequences. See "Part 8: Tax
Aspects of the Certificates."
INCOME ANNUITY OPTIONS
Income annuity options provide periodic payments over a specified period of
time which may be fixed or may be based on the Annuitant's life. Annuity
forms of payment are calculated as of the Annuity Commencement Date, which is
on file with our Processing Office. You can change the Annuity Commencement
Date by writing to our Processing Office any time before the Annuity
Commencement Date. However, you may not choose a date later than the 28th day
of any month. Also, based on the issue age of the Annuitant, the Annuity
Commencement Date may not be later than (i) the Processing Date which follows
the Annuitant's 85th birthday for issue ages 74 and under; (ii) 10 years
after the Contract Date for issue ages 75 through 80; and (iii) the
Processing Date which follows the Annuitant's 90th birthday for issue ages 81
through 83. Different age ranges may apply in some states.
Before the Annuity Commencement Date, we will send a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay fixed
annuity benefits on the "normal form" indicated for your Certificate as of
the Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or
(2) the Cash Value for any period certain only annuity form except that if
the period certain is more than five years, the amount applied will be no
less than 95% of the Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an income annuity option
prior to an Expiration Date will result in a market value adjustment. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
ANNUITY FORMS
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with
this annuity form, it provides the highest monthly payment of any of the
life income annuity options, so long as the Annuitant is living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before a specified period of time (the "certain period") has ended,
payments will continue to the beneficiary for the balance of the certain
period. Certain periods may be 5, 10, 15 or 20 years. A life annuity
with a certain period of 10 years is the normal form of annuity under
the Certificates.
29
<PAGE>
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
This option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The income annuity options outlined above are available in both fixed and
variable form, unless otherwise indicated. Fixed annuity payments are
guaranteed by us and will be based either on the tables of guaranteed annuity
payments in your Certificate or on our then current annuity rates, whichever
is more favorable for the Annuitant. Variable income annuities may be funded
through the Common Stock Fund through the purchase of annuity units. The
amount of each variable annuity payment may fluctuate, depending upon the
performance of the Common Stock Fund. That is because the annuity unit value
rises and falls depending on whether the actual rate of net investment return
(after deduction of charges) is higher or lower than the assumed base rate.
See "Annuity Unit Values" in the SAI. Variable income annuities may also be
available by separate prospectus through the Common Stock or other Funds of
other separate accounts we offer.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here. Your registered representative
can provide details.
For each income annuity option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
income annuity option, the Annuitant's age (or the Annuitant's and joint
Annuitant's ages) and in certain instances, the sex of the Annuitant(s). Once
an income annuity option is chosen and payments have commenced, no change can
be made.
If, at the time you elect an income annuity option, the amount to be applied
is less than $2,000 or the initial payment under the option elected is less
than $20 monthly, we reserve the right to pay the Annuity Account Value in a
single sum rather than as payments under the annuity form chosen.
ASSURED PAYMENT PLAN
If you are the Owner and the Annuitant, you may apply your Annuity Account
Value, in whole or in part, to purchase the Assured Payment Plan (Life
Annuity with a Period Certain), provided you meet the issue age and payment
restrictions for the Assured Payment Plan. If you apply a part of the Annuity
Account Value, it will be considered a withdrawal. See "Withdrawals" above.
The Assured Payment Plan, is designed to provide guaranteed level or
increasing annual payments for your life or for your life and the life of a
joint Annuitant. If the Annuity Account Value is applied from an Accumulator
Certificate to purchase the Assured Payment Plan at a time when the dollar
amount of the withdrawal charge is greater than 2% of remaining contributions
(after withdrawals), such withdrawal charge will not be deducted. However, a
new withdrawal charge schedule will apply under the Assured Payment Plan. For
purposes of the Assured Payment Plan withdrawal charge schedule, the year in
which your Annuity Account Value is applied under the Assured Payment Plan
will be "Contract Year 1." If the Annuity Account Value is applied from the
Accumulator when the dollar amount of the withdrawal charge is 2% or less,
such withdrawal charge will not be deducted and there will be no withdrawal
charge schedule under the Assured Payment Plan. You should consider the
timing of your purchase as it relates to the potential for withdrawal charges
under the Assured Payment Plan. No subsequent contributions will be permitted
under the Assured Payment Plan Certificate.
You may also apply your Annuity Account Value to purchase the Assured Payment
Plan (Period Certain) once withdrawal charges are no longer in effect. This
version of the Assured Payment Plan provides for annual payments for a
specified period. No withdrawal charges will apply under the Assured Payment
Plan Certificate.
The Assured Payment Plan (Life Annuity with a Period Certain) and Assured
Payment Plan (Period Certain) are described in our prospectus for the Assured
Payment Plan, dated May 1, 1996. Copies are available from your registered
representative.
To purchase this annuity form we also require the return of your Certificate.
An Assured Payment Plan Certificate will be issued putting this annuity form
into effect.
Depending upon your circumstances, this may be accomplished on a tax-free
basis. Consult your tax adviser.
30
<PAGE>
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds,
payment of any portion of the Annuity Account Value (less any applicable
withdrawal charge) from the Investment Funds, and, upon surrender, payment of
the Cash Value from the Investment Funds will be made within seven calendar
days after the Transaction Date. Payments or application of proceeds from the
Investment Funds can be deferred for any period during which (1) the New York
Stock Exchange is closed or trading on it is restricted, (2) sales of
securities or determination of the fair value of an Investment Fund's assets
is not reasonably practicable because of an emergency, or (3) the SEC, by
order, permits us to defer payment in order to protect persons with interest
in the Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account (other than for death benefits) for up to six
months while you are living. We may also defer payments for any amount
attributable to a contribution made in the form of a check for a reasonable
amount of time (not to exceed 15 days) to permit the check to clear.
ASSIGNMENT
The Certificates may be assigned at any time before the Annuity Commencement
Date and for any purpose other than as collateral or security for a loan.
Equitable Life will not be bound by an assignment unless it is in writing and
we have received it at our Processing Office. In some cases, an assignment
may have adverse tax consequences. See "Part 8: Tax Aspects of the
Certificates."
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI),
an indirect wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI is
registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's
principal business address is 787 Seventh Avenue, New York, New York 10019.
For 1995, EDI was paid a fee of $126,914 for its services under its
"Distribution Agreement" with Equitable Life and the Separate Account.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents, as well as by
unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation (including for EDI and its
affiliates) will not exceed six percent of total contributions made under a
Certificate. EDI may also receive compensation and reimbursement for its
marketing services under the terms of its distribution agreement with
Equitable Life. Broker-dealers receiving sales compensation will generally
pay a portion thereof to their registered representatives as commission
related to sales of the Certificates. The offering of the Certificates is
intended to be continuous.
31
<PAGE>
- -----------------------------------------------------------------------------
PART 6: DEDUCTIONS AND CHARGES
- -----------------------------------------------------------------------------
CHARGES DEDUCTED FROM THE
ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options
you select, subject to certain restrictions. We then periodically deduct
certain amounts from your Annuity Account Value. The charges described below
and under "Charges Deducted from the Investment Funds" below will not be
increased by us for the life of the Certificates. We may reduce certain
charges under group or sponsored arrangements. See "Group or Sponsored
Arrangements" below. Charges are deducted proportionately from all the
Investment Funds in which your Annuity Account Value is invested on a pro
rata basis, except as noted below.
Distribution Fee
We deduct a sales load annually in an amount of 0.20% of each contribution
received during the first Contract Year. This sales load is deducted on each
of the first seven Processing Dates (so long as the Certificate is in force).
See "Example" below.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that a withdrawal exceeds the free corridor amount, or if the
Certificate is surrendered to receive its Cash Value. We determine the
withdrawal charge separately for each contribution in accordance with the
table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For each contribution, the Contract Year in which we receive
that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the
beginning of the Contract Year minus any amount previously withdrawn
during that Contract Year.
Any withdrawal requested that exceeds the free corridor amount will be
subject to the withdrawal charge. The 15% free corridor amount is not
applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge, the Federal income tax law
treats earnings as withdrawn first. See "Part 8: Tax Aspects of the
Certificates."
The withdrawal charge is to help cover sales expenses. Because of the way the
distribution fee is calculated the distribution fee and the withdrawal charge
combined will never exceed the 7.0% maximum withdrawal charge.
Example--The example below illustrates how the withdrawal charge and the
distribution fee would be calculated upon a withdrawal. This example assumes
an initial contribution of $12,000 and subsequent contributions of $12,000
each in the second and third Contract Years for total contributions under the
Certificate of $36,000. It also assumes a withdrawal from the Investment
Funds at the beginning of the fourth Contract Year of 25% of an Annuity
Account Value of $40,000.
The total withdrawal amount would be $10,000 ($40,000 x .25). In this case,
$6,000 ($40,000 x .15) would be the free corridor amount and could be
withdrawn without imposition of a withdrawal charge. The balance of $4,000
($10,000 - $6,000) would be considered a withdrawal of a part of the initial
contribution of $12,000. This contribution would be subject to a 4.0%
withdrawal charge of $160 ($4,000 x .04) as indicated in the chart above.
The distribution fee deducted on the Processing Date following the withdrawal
would be based on the remaining initial contribution of $8,000
($12,000-$4,000).
32
<PAGE>
Transfer Charge
Currently there is no charge for transfers. We reserve the right to impose a
charge in the future at a maximum of $25 for each transfer among the
Investment Options in excess of five per Contract Year.
Guaranteed Minimum Death Benefit Charge
We deduct a charge for providing a minimum death benefit guarantee with
respect to the Investment Funds annually on each Processing Date. The charge
is equal to 0.35% of the GMDB in effect at such Processing Date.
If the amount collected from this charge exceeds the cost of providing the
benefits, it will be to our profit, and may be used to pay distribution
expenses not recovered from sales charges under the Certificates.
Annual Contract Fee
The annual contract fee is incurred at the beginning of the Contract Year and
deducted at the end of each Contract Year on the Processing Date. We deduct
this charge when determining the Cash Value payable if you surrender the
Certificate prior to the end of a Contract Year. The amount deducted is
determined by the amount of your initial contribution. The charge will be $30
per Contract Year if your initial contribution is less than $25,000, and zero
if your initial contribution equals $25,000 or more. This charge is to cover
a portion of our administrative expenses. See "Asset Based Administrative
Charge," below under "Charges Deducted from the Investment Funds."
Charges for State Premium and Other Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium
taxes, that might be imposed in your state. Generally we deduct this charge
from the amount applied to provide an income annuity option. In certain
states, however, we may deduct the charge for taxes from contributions. The
current tax charge that might be imposed varies by state and ranges from 0%
to 3.5% (the rate is 1% in Puerto Rico and 5% in the Virgin Islands).
Allocation of Certain Charges to the
Guaranteed Period Account
No portion of the distribution fee or the annual contract fee will be
deducted from the Guaranteed Period Account, unless there is insufficient
value in the Investment Funds. If charges are deducted from the Guaranteed
Period Account, they will be deducted from the Annuity Account Value with
respect to the Guarantee Periods in order of the earliest Expiration Date(s)
first. If charges are deducted from the Guaranteed Period Account, you will
not receive the full Guaranteed Rate if held to the Expiration Date. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
CHARGES DEDUCTED FROM THE
INVESTMENT FUNDS
Mortality and Expense Risk Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for mortality and expense risks. The daily charge is at the
rate of 0.002477%, which is equivalent to an annual rate of 0.90%, on the
assets in each Investment Fund. Approximately 0.60% of this annual charge is
allocated to the mortality risk and 0.30% is allocated to the expense risk.
We will realize a gain from this charge to the extent it is not needed to
provide for benefits and expenses under the Certificate. We will use any gain
for any lawful purpose including payment of distribution expenses not
recovered from sales charges under the Certificate.
The mortality risk assumed is the risk that Annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables,
shown in each Certificate, will differ from actual mortality experience.
Lastly, we assume a mortality risk to the extent that the guaranteed minimum
death benefit charge is insufficient to pay any amount by which such death
benefit exceeds the Cash Value of the Certificate.
The expense risk assumed is the risk that it will cost us more to issue and
administer the Certificates than we expect.
Asset Based Administrative Charge
We will deduct a daily charge from the assets in each Investment Fund, to
compensate us for a portion of the administrative expenses under the
Certificates. The daily charge is at a rate of 0.000692% (equivalent to an
annual rate of 0.25%) on the assets in each Investment Fund. The annual
contract fee and the asset based administrative charge are not designed to
produce a profit for Equitable Life.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against the Trust's assets, direct
operating expenses of the Trust
33
<PAGE>
(such as trustees' fees, expenses of independent auditors and legal counsel,
bank and custodian charges and liability insurance), and certain
investment-related expenses of the Trust (such as brokerage commissions and
other expenses related to the purchase and sale of securities), are reflected
in each Portfolio's daily share price. The maximum investment advisory fees
paid annually by the Portfolios cannot be changed without a vote by
shareholders. They are as follows:
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
-------------------------------------
FIRST $350 NEXT $400 OVER $750
MILLION MILLION MILLION
----------- ----------- -----------
<S> <C> <C> <C>
ASSET ALLOCATION SERIES:
Conservative Investors ... .550% .525% .500%
Growth Investors .......... .550% .525% .500%
EQUITY SERIES:
Common Stock .............. .400% .375% .350%
Global .................... .550% .525% .500%
Aggressive Stock .......... .500% .475% .450%
FIXED INCOME SERIES:
Money Market .............. .400% .375% .350%
Intermediate Govt.
Securities ................ .500% .475% .450%
FIRST $500 NEXT $500 OVER $1
MILLION MILLION BILLION
----------- ----------- -----------
EQUITY SERIES:
Growth & Income ........... .550% .525% .500%
FIRST NEXT OVER
$500 $1 $1.5
MILLION BILLION BILLION
----------- ----------- -----------
EQUITY SERIES:
International ............. .900% .850% .800%
</TABLE>
Investment advisory fees are established under the Trust's investment
advisory agreements between the Trust and its investment adviser, Alliance.
All of these fees and expenses are described more fully in the Trust
prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the distribution
fee, the withdrawal charge and the annual contract fee or change the minimum
initial contribution requirements. We may also change the guaranteed minimum
death benefit. Group arrangements include those in which a trustee or an
employer, for example, purchases contracts covering a group of individuals on
a group basis. Sponsored arrangements include those in which an employer
allows us to sell Certificates to its employees or retirees on an individual
basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these
factors into account when reducing charges. To qualify for reduced charges, a
group or sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy Certificates or that have
been in existence less than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the distribution fee, withdrawal charge
or annual contract fee will reflect differences in costs or services and will
not be unfairly discriminatory.
Group and sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR
MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE
ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The distribution fee, the withdrawal charge and the annual contract fee may
be reduced or eliminated when sales are made in a manner that results in
savings of sales and administrative expenses, such as sales through persons
who are compensated by clients for recommending investments and receive no
commission or reduced commissions in connection with the sale of the
Certificates. In no event will a reduction or elimination of a fee or charge
be permitted where it would be unfairly discriminatory.
34
<PAGE>
- -----------------------------------------------------------------------------
PART 7: VOTING RIGHTS
- -----------------------------------------------------------------------------
TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of the Trust. Since we own
the assets of the Separate Account, we are the legal owner of the shares and,
as such, have the right to vote on certain matters. Among other things, we
may vote:
o to elect the Trust's Board of Trustees,
o to ratify the selection of independent auditors for the Trust, and
o on any other matters described in the Trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because the Trust is a Massachusetts business trust, annual meetings are not
required. Whenever a shareholder vote is taken, we will give Certificate
Owners the opportunity to instruct us how to vote the number of shares
attributable to their Certificates. If we do not receive instructions in time
from all Certificate Owners, we will vote the shares of a Portfolio for which
no instructions have been received in the same proportion as we vote shares
of that Portfolio for which we have received instructions. We will also vote
any shares that we are entitled to vote directly because of amounts we have
in an Investment Fund in the same proportions that Certificate Owners vote.
Each Trust share is entitled to one vote. Fractional shares will be counted.
Voting generally is on a Portfolio-by-Portfolio basis except that shares will
be voted on an aggregate basis when universal matters, such as election of
Trustees and ratification of independent auditors, are voted upon. However,
if the Trustees determine that shareholders in a Portfolio are not affected
by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
VOTING RIGHTS 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
and 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 the Accumulator Certificate
Owners, we currently do not foresee any disadvantages 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
Certificate Owners, we will see to it that appropriate action is taken to
protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner
approval, Certificate Owners will be entitled to one vote for each
Accumulation Unit they have in the Investment Funds. Each Certificate Owner
who has elected a variable annuity payout may cast the number of votes equal
to the dollar amount of reserves we are holding for that annuity in the
Common Stock Fund divided by the Accumulation Unit Value for the Common Stock
Fund. We will cast votes attributable to any amounts we have in the
Investment Funds in the same proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
35
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- -----------------------------------------------------------------------------
PART 8: TAX ASPECTS OF THE CERTIFICATES
- -----------------------------------------------------------------------------
This prospectus generally covers our understanding of the current Federal
income tax rules that apply to an annuity purchased with after-tax dollars
(non-qualified annuity).
This prospectus does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Accumulator Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities. In addition, the Treasury Department may amend
existing regulations, issue new regulations, or adopt new interpretations of
existing laws. State tax laws or, if you are not a United States resident,
foreign tax laws, may affect the tax consequences to you or the beneficiary.
These laws may change from time to time without notice and, as a result, the
tax consequences may be altered. There is no way of predicting whether, when
or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
TAXATION OF NON-QUALIFIED ANNUITIES
Equitable Life has designed the Accumulator Certificate to qualify as an
"annuity" for purposes of Federal income tax law. Gains in the Annuity
Account Value of the Certificate generally will not be taxable to an
individual until a distribution occurs, either by a withdrawal of part or all
of its value or as a series of periodic payments. However, there are some
exceptions to this rule: (1) if a Certificate fails the investment
diversification requirements; (2) if an individual transfers a Certificate as
a gift to someone other than a spouse (or divorced spouse), any gain in its
Annuity Account Value will be taxed at the time of transfer; (3) the
assignment or pledge of any portion of the value of a Certificate will be
treated as a distribution of that portion of the Certificate; and (4) when an
insurance company (or its affiliate) issues more than one non-qualified
deferred annuity certificate or contract during any calendar year to the same
taxpayer, the certificates or contracts are required to be aggregated in
computing the taxable amount of any distribution.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Certificate
unless an exception under the Code applies.
Prior to the Annuity Commencement Date, any withdrawals which do not
terminate your total interest in the Certificate are taxable to you as
ordinary income to the extent there has been a gain in the Annuity Account
Value. The balance of the distribution is treated as a return of the
"investment" or "basis" in the Certificate and is not taxable. Generally, the
investment or basis in the Certificate equals the contributions made, less
any amounts previously withdrawn which were not taxable. Special rules may
apply if contributions made to another annuity certificate or contract prior
to August 14, 1982 are transferred to a Certificate in a tax-free exchange.
To take advantage of these rules, you should notify us prior to such an
exchange.
If you surrender or cancel the Certificate, the distribution is taxable to
the extent it exceeds the investment in the Certificate.
Once annuity payments begin, a portion of each payment is considered to be a
tax-free recovery of investment based on the ratio of the investment to the
expected return under the Certificate. The remainder of each payment will be
taxable. In the case of a variable annuity, special rules apply if the
payments received in a year are less than the amount permitted to be
recovered tax-free. In the case of a life annuity, after the total investment
has been recovered, future payments are fully taxable. If payments cease as a
result of death, a deduction for any unrecovered investment will be allowed.
The taxable portion of a distribution is treated as ordinary income and is
subject to income tax withholding. See "Federal and State Income Tax
Withholding" below. In addition, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date the taxpayer attains age 59 1/2 , (2) made on or after your death, (3)
attributable to the disability of the taxpayer, (4) part of a series of
substantially equal installments as an annuity for the life (or life
expectancy) of the taxpayer or the joint lives (or joint life expectancies)
of the taxpayer and a beneficiary, or (5) with respect to income allocable to
amounts contributed to an annuity certificate or contract prior to August 14,
1982 which are transferred to the Certificate in a tax-free exchange.
36
<PAGE>
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 5, the beneficiary is generally
subject to the same tax treatment as would apply to you, had you surrendered
the Certificate (discussed above).
If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a lump sum death benefit first becomes payable and
before any benefit is actually paid. The tax computation will reflect your
investment in the Certificate.
The Certificate provides a minimum guaranteed death benefit that in certain
circumstances may be greater than either the contributions made or the
Annuity Account Value. This provision provides investment protection against
an untimely termination of a Certificate on the death of an Annuitant at a
time when the Certificate's Annuity Account Value might otherwise have
provided a lower benefit. Although we do not believe that the provision of
this benefit should have any adverse tax effect, it is possible that the IRS
could take a contrary position and could assert that some portion of the
charges for the minimum guaranteed death benefit should be treated for
Federal income tax purposes as a partial withdrawal from the Certificate. If
this were so, such a deemed withdrawal could be taxable, and for Certificate
Owners under age 59 1/2 , also subject to tax penalty.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax on the taxable
portion of annuity payments, unless the recipient elects not to be subject to
income tax withholding. The rate of withholding will depend on the type of
distribution and, in certain cases, the amount of the distribution. Special
withholding rules apply to foreign recipients and United States citizens
residing outside the United States. If a recipient does not have sufficient
income tax withheld or does not make sufficient estimated income tax
payments, however, the recipient may incur penalties under the estimated
income tax rules. Recipients should consult their tax advisers to determine
whether they should elect out of withholding. Requests not to withhold
Federal income tax must be made in writing prior to receiving benefits under
the Certificate. Our Processing Office will provide forms for this purpose.
No election out of withholding is valid unless the recipient provides us with
the correct taxpayer identification number and a United States residence
address.
Certain states have indicated that income tax withholding will apply to
payments made from the Certificate to residents. In some states, a recipient
may elect out of state withholding. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. If
you need more information concerning a particular state or any required
forms, call our Processing Office at the toll-free number and consult your
tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1996, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,075
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemption. A
withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than you, a Federal generation skipping tax may be
payable with respect to the benefit at rates similar to the maximum estate
tax rate in effect at the time. The generation skipping tax provisions
generally apply to transfers which would also be subject to the gift and
estate tax rules. Individuals are generally allowed an aggregate generation
skipping tax exemption of $1 million. Because these rules are complex, you
should consult with your tax adviser for specific information, especially
where benefits are passing to younger generations, as opposed to a spouse or
child.
37
<PAGE>
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
SPECIAL RULES FOR CERTIFICATES ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from Accumulator Certificates
as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents
is excludable from U.S. taxation. Income from Accumulator Certificates is
also subject to Puerto Rico tax. The computation of the taxable portion of
amounts distributed from a Certificate may differ in the two jurisdictions.
Therefore, an individual might have to file both U.S. and Puerto Rico tax
returns, showing different amounts of income for each. Puerto Rico generally
provides a credit against Puerto Rico tax for U.S. tax paid. Depending on an
individual's personal situation and the timing of the different tax
liabilities, an individual may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account
for taxes. Equitable Life can set up reserves for such taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers among the Investment Funds or between the Guaranteed Period Account
and one or more Investment Funds are not taxable.
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<PAGE>
PART 9: KEY FACTORS IN RETIREMENT PLANNING
INTRODUCTION
The Accumulator is available to help meet the retirement income and
investment needs of individuals. In assessing these retirement needs, some
key factors need to be addressed: (1) the impact of inflation on fixed
retirement incomes; (2) the importance of planning early for retirement; (3)
the benefits of tax-deferral; (4) the selection of an appropriate investment
strategy; and (5) the benefit of annuitization. Each of these factors is
addressed below.
Unless otherwise noted, all of the following presentations use an assumed
annual rate of return of 7.5% compounded annually. This rate of return is for
illustrative purposes only and is not intended to represent an expected or
guaranteed rate of return for any investment vehicle, including the
Accumulator. In addition, unless otherwise noted, none of the illustrations
reflect any charges that may be applied under a particular investment
vehicle, including the Accumulator. Such charges would effectively reduce the
actual return under any investment vehicle.
All earnings in these presentations are assumed to accumulate tax-deferred
unless otherwise noted. Most programs designed for retirement savings offer
tax-deferral. Monies are taxed upon withdrawal and a 10% penalty tax may
apply to premature withdrawals. Certain retirement programs prohibit early
withdrawals. See "Part 8: Tax Aspects of the Certificates." Where taxes are
taken into consideration in these presentations, a 28% tax rate is assumed.
The source of the data used by us to compile the charts which appear in this
Part 9 (other than charts 1, 2, 3, 4 and 7) is Ibbotson Associates, Inc.
Chicago. Stocks, Bonds, Bills and Inflation 1996 Yearbook (TM). All rights
reserved.
In reports or other communications or in advertising material we may make use
of these or other graphic or numerical illustrations that we prepare showing
the impact of inflation, planning early for retirement, tax-deferral,
diversification and other concepts important to retirement planning.
INFLATION
Inflation erodes purchasing power. This means that, in an inflationary
period, the dollar is worth less as time passes. Because many people live on
a fixed income during retirement, inflation is of particular concern to them.
The charts that follow illustrate the detrimental impact of inflation over an
extended period of time. Between 1965 and 1995, the average annual inflation
rate was 5.39%. As demonstrated in Chart 1, this 5.39% annual rate of
inflation would cause the purchasing power of $35,000 to decrease to only
$7,246 after 30 years.
In Chart 2, the impact of inflation is examined from another perspective.
Specifically, the chart illustrates the additional income needed to maintain
the purchasing power of $35,000 over a thirty year period. Again, the
1965-1995 historical inflation rate of 5.39% is used. In this case, an
additional $134,064 would be required to maintain the purchasing power of
$35,000 after 30 years.
CHART 1
[THE FOLLOWING TABLE WAS REPRESENTED AS A
3-D BAR GRAPH IN THE PROSPECTUS]
Today -- $35,000
10 years -- $20,705
20 years -- $12,248
30 years -- $ 7,246
[END OF GRAPHICALLY REPRESENTED DATA]
CHART 2
ANNUAL INCOME NEEDED
[THE FOLLOWING TABLE WAS REPRESENTED AS A
3-D BAR GRAPH IN THE PROSPECTUS]
Today -- $ 35,000
10 years -- $ 59,165
20 years -- $100,013
30 years -- $169,064
Increase Needed: $24,165 $65,013 $134,064
[END OF GRAPHICALLY REPRESENTED DATA]
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<PAGE>
STARTING EARLY
The impact of inflation accentuates the need to begin a retirement program
early. The value of starting early is illustrated in the following charts.
As shown in Chart 3, if an individual makes annual contributions of $2,500 to
his or her retirement program beginning at age 30, he or she would accumulate
$414,551 by age 65 under the assumptions described earlier. If that
individual waited until age 50, he or she would only accumulate $70,193 by
age 65 under the same assumptions.
CHART 3
[THE FOLLOWING TABLE WAS REPRESENTED AS
A STACKED AREA GRAPH IN THE PROSPECTUS:]
30 ................. $414,551
40 ................. $182,691
50 ................. $ 70,193
BLACK - Age 30 GRAY - Age 40 DOTTED - Age 50
[END OF GRAPHICALLY REPRESENTED DATA]
In Table 1, the impact of starting early is demonstrated in another format.
For example, if an individual invests $300 monthly, he or she would
accumulate $387,193 in thirty years under our assumptions. In contrast, if
that individual invested the same $300 per month for 15 years, he or she
would accumulate only $97,804 under our assumptions.
TABLE 1
<TABLE>
<CAPTION>
MONTHLY
CONTRIBUTION YEAR 10 YEAR 15 YEAR 20 YEAR 25 YEAR 30
- -------------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 20 $ 3,532 $ 6,520 $ 10,811 $ 16,970 $ 25,813
50 8,829 16,301 27,027 42,425 64,532
100 17,659 32,601 54,053 84,851 129,064
200 35,317 65,202 108,107 169,701 258,129
300 52,969 97,804 162,160 254,552 387,193
</TABLE>
Chart 4 presents an additional way to demonstrate the significant impact of
starting to make contributions to a retirement program earlier rather than
later. It assumes that an individual had a goal to accumulate $250,000
(pre-tax) by age 65. If he or she starts at age 30, under our assumptions he
or she could reach the goal by making a monthly pre-tax contribution of $130
(equivalent to $93 after taxes). The total net cost for the 30 year old in
this hypothetical example would be $39,265. If the individual in this
hypothetical example waited until age 50, he or she would have to make a
monthly pre-tax contribution of $767 (equivalent to $552 after taxes) to
attain the goal, illustrating the importance of starting early.
CHART 4
GOAL: $250,000 BY AGE 65
[THE FOLLOWING TABLE WAS REPRESENTED
AS A BAR GRAPH IN THE PROSPECTUS:]
$ 93 a Month ............. 30 $39,265 $210,735
$212 a Month ............. 40 $63,641 $186,359
$552 a Month ............. 50 $99,383 $150,617
BLACK - Net Cost
WHITE - Tax-Deferred Earnings at 7.5%
[END OF GRAPHICALLY REPRESENTED DATA]
TAX-DEFERRAL
Contributing to a retirement plan early is part of an effective strategy for
addressing the impact of inflation. Another part of such a strategy is to
carefully select the types of retirement programs in which to invest. In
deciding where to invest retirement contributions, there are three basic
types of programs.
The first type offers the most tax benefits, and therefore is potentially the
most beneficial for accumulating funds for retirement. Contributions are made
with pre-tax dollars or are tax-deductible and earnings grow income
tax-deferred. An example of this type of program is the deductible Individual
Retirement Annuity (IRA).
The second type of program also provides for tax deferred earnings growth;
however, contributions are made with after-tax dollars. Examples of this type
of program are non-deductible IRAs and non-qualified annuities.
The third approach to retirement savings is fully taxable. Contributions are
made with after-tax dol-
40
<PAGE>
lars and earnings are taxed each year. Examples of this type of program
include certificates of deposit, savings accounts, and taxable stock, bond or
mutual fund investments.
Consider an example. For the type of retirement program that offers both
pre-tax contributions and tax-deferral, assume that a $2,000 annual pre-tax
contribution is made for thirty years. In this example, the retirement funds
would be $176,363 after thirty years (assuming a 7.5% rate of return, no
withdrawals and assuming the deduction of the 1.15% Separate Account daily
asset charge and the $30 annual contract fee--but no withdrawal charge or
other charges under the Certificate, or Trust charges to Portfolios), and
such funds would be $222,309 without the effect of any charges. Assuming a
lump sum withdrawal was made in year thirty and a 28% tax bracket, these
amounts would be $126,981 and $160,062, respectively.
For the type of program that offers only tax-deferral, assume an after-tax
annual contribution of $1,440 for thirty years and the same rate of return.
The after-tax contribution is derived by taxing the $2,000 pre-tax
contribution again assuming a 28% tax bracket. In this example, the
retirement funds would be $126,275 after thirty years assuming the deduction
of charges and no withdrawals, and $160,062 without the effect of charges.
Assuming a lump sum withdrawal in year thirty, the total after-tax amount
would be $103,014 with charges deducted and $127,341 without charges as
described above.
For the fully taxable investment, assume an after-tax contribution of $1,440
for thirty years. Earnings are taxed annually. After thirty years, the amount
of this fully taxable investment is $108,046.
Keep in mind that taxable investments have fees and charges too (investment
advisory fees, administrative charges, 12b-1 fees, sales loads, brokerage
commissions, etc.). We have not attempted to apply these fees and charges to
the fully taxable amounts since this is intended merely as an example of tax
deferral.
Again, it must be emphasized that the assumed rate of return of 7.5%
compounded annually used in these examples is for illustrative purposes only
and is not intended to represent a guaranteed or expected rate of return on
any investment vehicle. Moreover, early withdrawals of tax-deferred
investments are generally subject to a 10% penalty tax.
INVESTMENT OPTIONS
Selecting an appropriate retirement program is clearly an important part of
an effective retirement planning strategy. Carefully choosing among
Investment Options is another essential component.
During the 1965-1995 period, common stock average annual returns outperformed
the average annual returns of fixed investments such as long-term government
bonds and Treasury Bills (T-Bills). See "Notes" below. Common stocks earned
an average annual return of 10.68% over this period, in contrast to 6.72% and
7.92% for the other two investment categories. Significantly, common stock
returns also outpaced inflation which grew at 5.39% over this period.
Although common stock returns have historically outpaced returns of fixed
investments, people often allocate a significant percentage of their
retirement funds to fixed return investments. Their primary concern is the
preservation of principal. Given this concern, Chart 5 illustrates the impact
of exposing only the interest generated by a fixed investment to the stock
market. In this illustration, the fixed investment is represented by a
Treasury Bill return and the stock investment is represented by the Standard
& Poor's 500 ("S&P 500").
The chart assumes that a $20,000 fixed investment was made on January 1,
1980. If the interest on that investment were to accumulate based upon the
return of the S&P 500, the total investment would have been worth $131,033 in
1995. Had the interest been reinvested in the fixed investment, the fixed
investment would have grown to $62,379. As illustrated in Chart 5,
significant opportunities for growth exist while preserving principal. See
"Notes" below.
CHART 5
$131,033 with Interest Exposed to Stock Market (S&P 500)
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PROSPECTUS]
Market Value Market Value
Month of S&P 500 If 100% in
Ending & Fixed Acct 3 Mo. T-Bill
1980 J 20,160 20,160
F 20,338 20,339
M 20,547 20,586
A 20,823 20,845
M 21,031 21,014
J 21,183 21,142
J 21,369 21,254
A 21,515 21,390
S 21,708 21,550
O 21,930 21,755
N 22,333 21,964
D 22,522 22,252
1981 J 22,619 22,483
F 22,888 22,724
M 23,239 22,999
A 23,386 23,247
M 23,637 23,514
J 23,878 23,832
J 24,129 24,127
A 24,156 24,436
S 24,196 24,739
O 24,659 25,039
N 25,079 25,306
D 25,118 25,527
1982 J 25,195 25,731
F 25,113 25,968
M 25,278 26,222
A 25,722 26,518
M 25,770 26,799
J 25,861 27,057
J 25,945 27,341
A 26,850 27,549
S 27,028 27,689
O 27,937 27,852
N 28,411 28,028
D 28,690 28,216
1983 J 29,131 28,410
F 29,492 28,587
M 29,965 28,767
A 30,862 28,971
M 30,943 29,171
J 31,495 29,366
J 31,284 29,584
A 31,627 29,808
S 31,938 30,035
O 31,930 30,263
N 32,348 30,475
D 32,418 30,698
1984 J 32,490 30,931
F 32,222 31,150
M 32,577 31,378
A 32,826 31,632
M 32,297 31,879
J 32,719 32,118
J 32,701 32,381
A 34,295 32,650
S 34,470 32,931
O 34,708 33,260
N 34,705 33,503
D 35,205 33,717
1985 J 36,503 33,936
F 36,845 34,133
M 37,000 34,345
A 37,089 34,592
M 38,272 34,820
J 38,673 35,012
J 38,748 35,229
A 38,744 35,423
S 38,262 35,635
O 39,208 35,867
N 40,706 36,086
D 41,803 36,320
1986 J 42,011 36,524
F 43,792 36,717
M 45,230 36,938
A 45,021 37,130
M 46,493 37,312
J 47,036 37,506
J 45,602 37,701
A 47,609 37,874
S 45,430 38,045
O 46,935 38,220
N 47,703 38,369
D 47,070 38,557
1987 J 50,789 38,719
F 52,147 38,885
M 53,115 39,068
A 52,912 39,240
M 53,327 39,389
J 55,086 39,578
J 56,925 39,760
A 58,441 39,947
S 57,685 40,127
O 49,695 40,367
N 47,333 40,509
D 49,428 40,667
1988 J 50,743 40,785
F 52,280 40,972
M 51,393 41,152
A 51,824 41,342
M 52,174 41,553
J 53,765 41,756
J 53,732 41,969
A 52,733 42,217
S 54,245 42,478
O 55,302 42,738
N 54,915 42,981
D 55,673 43,252
1989 J 58,362 43,490
F 57,529 43,755
M 58,548 44,048
A 60,672 44,343
M 62,465 44,694
J 62,377 45,011
J 66,323 45,326
A 67,365 45,662
S 67,310 45,958
O 66,344 46,271
N 67,446 46,590
D 68,687 46,874
1990 J 65,533 47,142
F 66,234 47,410
M 67,578 47,714
A 66,541 48,043
M 71,214 48,370
J 70,982 48,674
J 70,955 49,005
A 66,481 49,329
S 64,314 49,625
O 64,286 49,962
N 67,252 50,247
D 68,667 50,548
1991 J 70,922 50,811
F 74,664 51,055
M 76,053 51,280
A 76,316 51,552
M 78,820 51,794
J 76,216 52,011
J 78,945 52,266
A 80,422 52,507
S 79,523 52,748
O 80,405 52,970
N 78,042 53,176
D 84,752 53,378
1992 J 83,616 53,560
F 84,486 53,710
M 83,290 53,892
A 85,196 54,065
M 85,604 54,216
J 84,717 54,390
J 87,387 54,558
A 86,078 54,700
S 86,890 54,842
O 87,176 54,969
N 89,486 55,095
D 90,453 55,249
1993 J 91,013 55,376
F 92,016 55,498
M 93,614 55,637
A 91,858 55,770
M 93,843 55,893
J 94,136 56,033
J 93,836 56,167
A 96,699 56,308
S 96,183 56,454
O 97,774 56,578
N 97,093 56,720
D 98,087 56,850
1994 J 100,753 56,992
F 98,615 57,112
M 95,249 57,266
A 96,281 57,421
M 97,589 57,605
J 95,734 57,783
J 98,297 57,945
A 101,558 58,159
S 99,666 58,375
O 101,566 58,596
N 98,647 58,813
D 99,883 59,072
1995 J 102,044 59,320
F 105,307 59,557
M 107,925 59,831
A 110,571 60,095
M 114,257 60,419
J 116,566 60,703
J 119,871 60,976
A 120,235 61,263
S 124,521 61,526
O 124,249 61,816
N 128,920 62,075
D 131,033 63,379
$62,379 Without Interest Exposed to Stock Market
(S&P 500)
[END OF GRAPHICALLY REPRESENTED DATA]
Another variation of the example in Chart 5 is to gradually transfer
principal from a fixed investment into the stock market. Chart 6 assumes that
a $20,000 fixed investment was made on January 1, 1980. For the next two
years, $540 is transferred monthly into the stock market (represented by the
S&P 500). The total investment, given this strategy,
41
<PAGE>
would have grown to $139,695 in 1995. In contrast, had the principal not been
transferred, the fixed investment would have grown to $62,379. See "Notes"
below.
CHART 6
$139,695 with Principal Transfer
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PROSPECTUS]
Market Value Market Value
Month of S&P 500 If 100% in
Ending & Fixed Acct 3 Mo. T-Bil
1980 J 20540 20160
F 20702 20339
M 20770 20586
A 21068 20845
M 21425 21014
J 21659 21142
J 22000 21254
A 22149 21390
S 22394 21550
O 22623 21755
N 23446 21964
D 23372 22252
1981 J 23246 22483
F 23569 22724
M 24053 22999
A 24031 23247
M 24246 23514
J 24324 23832
J 24514 24127
A 24051 24436
S 23651 24739
O 24397 25039
N 25087 25306
D 24857 25527
1982 J 24193 25731
F 23594 25968
M 23618 26222
A 24248 26518
M 23995 26799
J 23892 27057
J 23731 27341
A 25407 27549
S 25647 27689
O 27281 27852
N 28031 28028
D 28386 28216
1983 J 29041 28410
F 29568 28587
M 30282 28767
A 31737 28971
M 31721 29171
J 32549 29366
J 32000 29584
A 32424 29808
S 32790 30035
O 32616 30263
N 33176 30475
D 33142 30698
1984 J 33104 30931
F 32544 31150
M 32969 31378
A 33202 31632
M 32246 31879
J 32767 32118
J 32593 32381
A 34841 32650
S 34959 32931
O 35133 33260
N 35058 33503
D 35692 33717
1985 J 37434 33936
F 37844 34133
M 37970 34345
A 37984 34592
M 39531 34820
J 40023 35012
J 40038 35229
A 39976 35423
S 39254 35635
O 40428 35867
N 42341 36086
D 43701 36320
1986 J 43926 36524
F 46184 36717
M 47968 36938
A 47659 37130
M 49498 37312
J 50136 37506
J 48265 37701
A 50769 37874
S 47982 38045
O 49830 38220
N 50767 38369
D 49918 38557
1987 J 54519 38719
F 56165 38885
M 57317 39068
A 57035 39240
M 57525 39389
J 59630 39578
J 61849 39760
A 63662 39947
S 62711 40127
O 52932 40367
N 50090 40509
D 52585 40667
1988 J 54165 40785
F 55951 40972
M 54862 41152
A 55344 41342
M 55720 41553
J 57582 41756
J 57509 41969
A 56280 42217
S 58018 42478
O 59225 42738
N 58749 42981
D 59588 43252
1989 J 62695 43490
F 61691 43755
M 62824 44048
A 65234 44343
M 67232 44694
J 67118 45011
J 71581 45326
A 72728 45662
S 72661 45958
O 71544 46271
N 72760 46590
D 74150 46874
1990 J 70617 47142
F 71385 47410
M 72851 47714
A 71676 48043
M 76833 48370
J 76576 48674
J 76526 49005
A 71611 49329
S 69246 49625
O 69192 49962
N 72438 50247
D 73964 50548
1991 J 76420 50811
F 80470 51055
M 81977 51280
A 82241 51552
M 84947 51794
J 82165 52011
J 85076 52266
A 86666 52507
S 85709 52748
O 86662 52970
N 84157 53176
D 91300 53378
1992 J 90106 53560
F 91047 53710
M 89770 53892
A 91798 54065
M 92244 54216
J 91302 54390
J 94130 54558
A 92765 54700
S 93626 54842
O 93940 54969
N 96377 55095
D 97388 55249
1993 J 97994 55376
F 99055 55498
M 100732 55637
A 98899 55770
M 100989 55893
J 101297 56033
J 100991 56167
A 103992 56308
S 103458 56454
O 105136 56578
N 104425 56720
D 105474 56850
1994 J 108259 56992
F 106046 57112
M 102533 57266
A 103617 57421
M 104976 57605
J 103062 57783
J 105741 57945
A 109118 58159
S 107170 58375
O 109151 58596
N 106146 58813
D 107426 59072
1995 J 109681 59320
F 113071 59557
M 115775 59831
A 118526 60095
M 122319 60419
J 124733 60703
J 128155 60976
A 128547 61263
S 132973 61526
O 132710 61816
N 137525 62075
D 139695 62379
$62,379 Without Principal Transfer
[END OF GRAPHICALLY REPRESENTED DATA]
NOTES
1. Common Stocks: Standard & Poor's (S&P) Composite Index is an unmanaged
weighted index of the stock performance of 500 industrial,
transportation, utility and financial companies. Results shown assume
reinvestment of dividends. Both market value and return on common stock
will vary.
2. U.S. Government Securities: Long-term Government Bonds are measured
using a one-bond portfolio constructed each year containing a bond with
approximately a 20-year maturity and a reasonably current coupon. U.S.
Treasury Bills are 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. U.S. Government
securities are guaranteed as to principal and interest, and if held to
maturity, offer a fixed rate of return. However, market value and
return on such securities will fluctuate prior to maturity.
The Accumulator can be an effective program for diversifying ongoing
investments between various asset categories. In addition, the Accumulator
offers special features which help address the risk associated with timing
the equity markets, such as dollar cost averaging. By transferring the same
dollar amount each month from the Money Market Fund to other Investment
Funds, dollar cost averaging attempts to shield your investment from short
term price fluctuations. This, however, does not assure a profit or protect
against a loss in declining markets.
THE BENEFIT OF ANNUITIZATION
An individual may shift the risk of outliving his or her principal by
electing a lifetime income annuity. See "Income Annuity Options," in Part 5.
Chart 7 below shows the monthly income that can be generated under various
forms of life annuities, as compared to receiving level payments of interest
only or principal and interest from the investment. Calculations in the Chart
are based on the following assumption: a $100,000 contribution was made at
one of the ages shown, annuity payments begin immediately, and a 5%
annuitization interest rate is used. For purposes of this example, principal
and interest are paid out on a level basis over 15 years. In the case of the
interest only scenario, the principal is always available and may be left to
other individuals at death. Under the principal and interest scenario, a
portion of the principal will be left at death, assuming the individual dies
within the 15 year period. In contrast, under the life annuity scenarios,
there is no residual amount left.
CHART 7
MONTHLY INCOME
($100,000 CONTRIBUTION)
<TABLE>
<CAPTION>
JOINT AND SURVIVOR*
-----------------------------------
INTEREST PRINCIPAL AND
ONLY FOR INTEREST FOR SINGLE 50% TO 66.67% TO 100% TO
ANNUITANT LIFE 15 YEARS LIFE SURVIVOR SURVIVOR SURVIVOR
- ----------- ---------- -------------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Male 65 $401 $785 $ 617 $560 $544 $513
Male 70 401 785 685 609 588 549
Male 75 401 785 771 674 646 598
Male 80 401 785 888 760 726 665
Male 85 401 785 1,045 878 834 757
</TABLE>
- ------------
The numbers are based on 5% interest compounded annually and the 1983
Individual Annuity Mortality Table "a" projected with modified Scale G.
Annuity purchase rates available at annuitization may vary, depending
primarily on the annuitization interest rate, which may not be less than an
annual rate of 2.5%.
* The Joint and Survivor Annuity Forms are based on male and female
Annuitants of the same age.
42
<PAGE>
- -----------------------------------------------------------------------------
PART 10: INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------------------------------
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life for the years ended December 31, 1995 and 1994
included in Equitable Life's Annual Report on Form 10-K, incorporated by
reference in the prospectus, have been examined by Price Waterhouse LLP,
independent accountants, whose reports thereon are incorporated herein by
reference. Such consolidated financial statements and consolidated financial
statement schedules have been incorporated herein by reference in reliance
upon the reports of Price Waterhouse LLP given upon their authority as
experts in accounting and auditing.
43
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- -----------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1997 to a Guarantee Period with an Expiration Date
of February 15, 2006 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2001.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2001
----------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2001 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value ..................... $144,048 $119,487
(2) Guaranteed Period Amount ............... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ...... 12,968 (11,593)
February 15, 2001 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000 / (1)] ... $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)] .............. 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ..... 85,581 76,229
(7) Maturity Value ......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value ..................... 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
44
<PAGE>
APPENDIX II: GUARANTEED MINIMUM DEATH BENEFIT (GMDB) EXAMPLE
- -----------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB (see "Guaranteed Minimum Death Benefit (GMDB)" in Part 5);
and
(2) the death benefit provided with respect to the Guaranteed Period
Account (see "Death Benefit Amount" in Part 4).
The following is an example illustrating the calculation of the GMDB.
Assuming $100,000 is allocated to the Investment Funds (with no allocation to
the Money Market Fund or Intermediate Government Securities Fund), no
subsequent contributions, no transfers and no withdrawals, the GMDB for an
Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
END OF
CONTRACT ANNUITY ACCOUNT NON-NEW YORK
YEAR VALUE GMDB NEW YORK GMDB
- ---------- --------------- -------------- -------------
<S> <C> <C> <C>
1 $105,000 $106,000(1) $105,000(4)
2 $108,675 $112,360(1) $108,675(4)
3 $124,976 $119,102(1) $119,102(5)
4 $135,912 $126,248(1) $126,248(5)
5 $149,503 $133,823(1) $133,823(5)
6 $149,503 $141,852(1) $141,852(5)
7 $161,463 $161,463(2) $161,463(5)
8 $161,463 $171,151(3) $161,463(4)
</TABLE>
The Annuity Account Values for Contract Years 1 through 8 are determined
based on hypothetical rates of return of 5.00%, 3.50%, 15.00%, 8.75%, 10.00%,
0.00%, 8.00% and 0.00%, respectively.
NON-NEW YORK
(1)For Contract Years 1 through 6, the GMDB equals the initial contribution
increased by 6%.
(2)At the end of the seventh Contract Year the GMDB calculated on the 6%
increase basis on that date of $150,363 is reset to the Annuity Account
Value of $161,463 since that amount is greater.
(3)Equals the prior GMDB of $161,463 increased by 6%.
NEW YORK
(4)At the end of Contract Years 1 and 2, and again at the end of Contract
Year 8, the GMDB is equal to the Annuity Account Value.
(5)At the end of Contract Years 3, 4, 5 and 6, the GMDB is equal to the
contributions increased by 6% instead of the Annuity Account Value,
since the GMDB cannot be greater than this amount. However, at the end
of the seventh Contract Year the GMDB is equal to the Annuity Account
Value of $161,463 even though it is greater than the contributions
increased at 6% ($150,363) due to the end of the seventh Contract Year
reset.
45
<PAGE>
APPENDIX III: GMDB SPECIAL ADJUSTMENT
- -----------------------------------------------------------------------------
A special adjustment is made to the GMDB if on the next Processing Date
following a withdrawal or transfer from the Investment Funds, both (i) the
Annuity Account Value is less than the GMDB, and (ii) the sum of the
withdrawals and transfers from the Investment Funds during the Contract Year
prior to such Processing Date is greater than the difference between the GMDB
(before reduction for withdrawals and transfers from the Investment Funds
during the prior Contract Year) and "GMDB contributions." GMDB contributions
are equal to the sum of all contributions made plus all transfers into the
Investment Funds, plus at the time of any seventh Contract Year reset, the
amount by which the GMDB is increased to match the then current Annuity
Account Value. Such GMDB contributions are not reduced by withdrawals or
transfers from the Investment Funds.
The special adjustment will be equal to: (A) x (B) -(C):
Where:
(A) equals the GMDB (before the special adjustment and reduction for
withdrawals and transfers from the Investment Funds during the prior
Contract Year),
(B) equals (i)/(ii);
where
(i) equals the sum of withdrawals and transfers from the Investment
Funds during the prior Contract Year, and
(ii) equals the Annuity Account Value (plus any withdrawals and
transfers from the Investment Funds during the prior Contract Year),
and
(C) equals the sum of withdrawals and transfers from the Investment
Funds during the prior Contract Year.
Example:
The following illustrates how a withdrawal would affect the non-New York GMDB
under a Certificate, assuming an initial contribution of $100,000, an Annuity
Account Value of $120,000 (with no allocation to the Money Market Fund or the
Intermediate Government Securities Fund) at the end of the fourth year and a
GMDB of $126,248 at the end of the fourth year. If no withdrawals or
transfers were to be made in the fifth year, the end of fifth year GMDB would
be $133,823. If a $60,000 withdrawal was made at the end of the fifth year
and a 0% return had been earned in the fifth year, the special adjustment
would be calculated using the above formula as follows:
(A) = $133,823
(B) = (i)/(ii) = $60,000/$120,000 = .5
(C) = $60,000
(A) X (B) - (C) = [($133,823 X .5) - $60,000] = $6,911.
The end of fifth year GMDB would equal $133,823 - $60,000 - $6,911 = $66,912.
The special adjustment was necessary in this case because (i) the end of
fifth year Annuity Account Value was less than the GMDB at the end of the
fifth year and (ii) the withdrawal of $60,000 was an amount greater than the
difference between the end of the fifth year GMDB (before reduction for the
withdrawal) and the GMDB contributions. In this case, that difference was
$33,823 ($133,823 - $100,000).
46
<PAGE>
- -----------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
------
Part 1: Accumulation Unit Values 2
Part 2: Annuity Unit Values 2
Part 3: Custodian and Independent Accountants 3
Part 4: Money Market Fund and Intermediate Government 3
Securities Fund Yield Information
Part 5: Long-Term Market Trends 4
Part 6: Financial Statements 6
</TABLE>
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Accumulator SAI:
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
47
<PAGE>
SUPPLEMENT TO
EQUITABLE ACCUMULATOR
(IRA AND NQ)
PROSPECTUS DATED MAY 1, 1997
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- --------------------------------------------------------------------------------
This prospectus supplement describes the Combined Guaranteed Minimum Income
Benefit and Guaranteed Minimum Death Benefit offered to Annuitant issue ages 76
or older under the Equitable Accumulator Prospectus. Capitalized terms in this
supplement have the same meaning as in the prospectus.
The Combined Guaranteed Minimum Income Benefit and Guaranteed Minimum Death
Benefit discussed on page 19 of the prospectus under "baseBUILDER Benefits" is
available for Annuitant issue ages 76 or older at charge of 0.30%. The benefit
is as discussed below:
The Guaranteed Minimum Income Benefit may be exercised only within 30 days
following the 7th or later Contract Date anniversary, but in no event
later than the Annuitant's age 90.
The period certain will be 90 less the Annuitant's age at election.
The Guaranteed Minimum Death Benefit applicable to the combined benefit is as
follows:
4% to Age 85 Roll Up - On the Contract Date, the Guaranteed Minimum Death
Benefit is equal to the portion of the initial contribution. Thereafter,
the Guaranteed Minimum Death Benefit is credited with interest at 4% on
each Contract Date anniversary through the Annuitant's age 85 (or on the
date of the Annuitant's death if earlier), and 0% thereafter, and is
adjusted for any subsequent contributions and withdrawals.
The Guaranteed Minimum Income Benefit base described under "How Withdrawals
Affect Your Guaranteed Minimum Income Benefit and Guaranteed Minimum Death
Benefit" on page 26 of the prospectus is as follows:
The Guaranteed Minimum Income Benefit benefit base is equal to the initial
contribution on the Contract Date. Thereafter, the Guaranteed Minimum
Income Benefit benefit base is credited with interest at 4% on each
Contract Date anniversary through the Annuitant's age 85 (or on the date
of the Annuitant's death if earlier), and 0% thereafter, and is adjusted
for any subsequent contributions and withdrawals.
- --------------------------------------------------------------------------------
SUPPLEMENT DATED MAY 1, 1997
<PAGE>
May 1, 1997
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
PROFILE OF THE EQUITABLE ACCUMULATOR (IRA AND NQ)
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
This Profile is a summary of some of the more important points that you should
know and consider before purchasing a Certificate. The Certificate is more
fully described in the prospectus which accompanies this Profile. Please read
the prospectus carefully.
1. THE ANNUITY CERTIFICATE. The Equitable Accumulator Certificate is a
combination variable and fixed deferred annuity issued by Equitable Life.
Certificates can be issued as individual retirement annuities (IRAs) or
non-qualified annuities (NQ) for after-tax contributions only. The Equitable
Accumulator Certificate is designed to provide for the accumulation of
retirement savings and for income through the investment, during an
accumulation phase, of (a) rollover contributions, direct transfers from other
individual retirement arrangements and additional IRA contributions or (b)
after-tax money.
You may invest in Investment Funds where your Certificate's value may vary up
or down depending upon investment performance. You may also invest in
Guarantee Periods (also called "GIROs" or Guaranteed Fixed Interest Accounts)
that when held to maturity provide guaranteed interest rates that we have set
and a guarantee of principal. If you make any transfers or withdrawals, the
Guaranteed Fixed Interest Account's investment value may increase or decrease
until maturity due to interest rate changes. Earnings accumulate under your
Certificate on a tax-deferred basis until amounts are distributed. Amounts
distributed under the Equitable Accumulator Certificate may be subject to
income tax.
The Investment Funds offer a potential for better returns than the interest
rates guaranteed under Guaranteed Fixed Interest Accounts, but the Investment
Funds involve risk and you can lose money. You may make transfers among the
Investment Funds and Guaranteed Fixed Interest Accounts. The value of
Guaranteed Fixed Interest Accounts prior to their maturity fluctuates and you
can lose money on premature transfers or withdrawals.
The Certificate provides a number of distribution methods during the
accumulation phase and for converting to annuity income. The amount
accumulated under your Certificate during the accumulation phase will affect
the amount of distribution or annuity benefits you receive.
You can elect at issue of the Certificate for an additional charge, the
base-BUILDER, which provides a combined Guaranteed Minimum Income Benefit and
Guaranteed Minimum Death Benefit. The Guaranteed Minimum Income Benefit
provides a minimum amount of guaranteed lifetime income regardless of
investment performance when converting, at specific times, to the Income
Manager (Life Annuity with a Period Certain).
1
<PAGE>
2. ANNUITY PAYMENTS. When you are ready to start receiving income, annuity
income is available by applying your Certificate's value to the Income Manager
(Life Annuity with a Period Certain). You can also have your Certificate's
value applied to any of the following INCOME ANNUITY OPTIONS: (1) Life Annuity
- - payments for your life, (2) Life Annuity - Period Certain - payments for
your life, but with payments continuing to the beneficiary for the balance of
the 5, 10, 15 or 20 years (as you select) if you die before the end of the
selected period; (3) Life Annuity - Refund Certain - payments for your life,
with payments continuing to the beneficiary after your death until any
remaining amount applied to this option runs out; and (4) Period Certain
Annuity - payments for a specified period of time, usually 5, 10, 15 or 20
years, with no life contingencies. Options (2) and (3) are also available as a
Joint and Survivor Annuity - payments for your life, and after your death,
continuation of payments to the survivor for life. Income Annuity Options
(other than the Refund Certain which is only available on a fixed basis) are
available as a fixed annuity, or as a variable annuity, where the dollar
amount of your payments will depend upon the investment performance of the
Investment Funds. Once you begin receiving income annuity payments, you cannot
change your annuity option.
3. PURCHASE. You can purchase an Equitable Accumulator IRA Certificate by
rolling over or transferring at least $5,000 or more from one or more
individual retirement arrangements. You may add additional amounts of $1,000
or more at any time (subject to certain restrictions). Additional amounts are
limited to $2,000 per year, but additional rollover or transfer amounts are
unlimited.
An Equitable Accumulator NQ Certificate can be purchased with $5,000 or more.
Additional amounts of $1,000 or more can be made at anytime (subject to
certain restrictions).
4. INVESTMENT OPTIONS. You may invest in any or all of the following
Investment Funds, which invest in shares of corresponding portfolios of The
Hudson River Trust (HR Trust) and EQ Advisors Trust (EQ Trust). The portfolios
are described in the prospectuses for HR Trust and EQ Trust.
<TABLE>
<CAPTION>
HR TRUST INVESTMENT FUNDS EQ TRUST INVESTMENT FUNDS
- --------------------------------- -------------------------------------------------------------------------
<S> <C> <C>
Alliance Aggressive Stock MFS Research Merrill Lynch World Strategy
Alliance Common Stock MFS Emerging Growth Companies Merrill Lynch Basic Value
Equity
Alliance Small Cap Growth EQ/Putnam Growth & Income Value
Alliance High Yield EQ/Putnam International Equity
Alliance Money Market EQ/Putnam Investors Growth
</TABLE>
You may also invest in one or more Guaranteed Fixed Interest Accounts
currently maturing in years 1998 through 2007.
2
<PAGE>
5. EXPENSES. The Certificates have expenses as follows: As a percentage of
assets in the Investment Funds, a daily charge is deducted for mortality and
expense risks (including the Guaranteed Minimum Death Benefit) at an annual
rate of 1.10%, a daily charge is deducted for administration expenses at an
annual rate of 0.25%. If the baseBUILDER combined Guaranteed Minimum Income
Benefit and Guaranteed Minimum Death Benefit is elected, there is an annual
charge of 0.30% as a percentage of the Guaranteed Minimum Income Benefit
benefit base on each Contract Date anniversary.
The charges for the portfolios of HR Trust range from 0.64% to 1.25% of the
average daily assets of HR Trust portfolios, depending upon HR Trust
portfolios selected (generally based on 1996 other expenses). The charges for
the portfolios of EQ Trust range from 0.85% to 1.20% of the average daily
assets of EQ Trust portfolio. These amounts, together with the Alliance Small
Cap Growth Portfolio, are based on estimates and, for EQ Trust, a current
expense cap. The Rule 12b-1 fee for the portfolios of HR Trust and EQ Trust
are 0.25% of the average daily assets of HR Trust and EQ Trust, respectively.
Charges for state premium and other applicable taxes may also apply at the
time you elect to start receiving income annuity payments.
A withdrawal charge is imposed as a percentage of each contribution withdrawn
in excess of a free corridor amount, or if the Certificate is surrendered. The
free corridor amount for withdrawals is 15% of the Certificate's value at the
beginning of the year. The withdrawal charge does not apply under certain of
the distribution methods available under the Equitable Accumulator IRA
Certificate. When applicable, the withdrawal charge is determined in
accordance with the table below, based on the year a contribution is
withdrawn. The year in which we receive your contribution is "Year 1."
Year of Contribution Withdrawal
1 2 3 4 5 6 7 8+
--------------------------------------------------------
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
The following chart is designed to help you understand the charges in the
Certificate. The "Total Annual Charges" column shows the combined total of the
Certificate charges deducted as a percentage of assets in the Investment Funds
and the portfolio charges, as shown in the first two columns. The last two
columns show you two examples of the charges, in dollars, that you would pay
under a Certificate, and include the benefit based charge for the baseBUILDER
combined Guaranteed Minimum Death and Income Benefits. The examples assume
that you invested $1,000 in a Certificate which earns 5% annually and that you
withdraw your money: (1) at the end of year 1, and (2) at the end of year 10.
For year 1, the Total Annual Charges are assessed as well as the withdrawal
charge. For year 10, the example shows the aggregate of all the annual charges
assessed for the 10 years, including the withdrawal charge. No charges for
state premium and other applicable taxes are assumed in the examples.
3
<PAGE>
<TABLE>
<CAPTION>
EXAMPLES
TOTAL ANNUAL TOTAL ANNUAL TOTAL Total Annual
CERTIFICATE PORTFOLIO ANNUAL Expenses at End of:
INVESTMENT FUND CHARGES CHARGES CHARGES (1) (2)
<S> <C> <C> <C> <C>
1 Year 10 Years
Alliance Aggressive Stock 1.35% 0.83% 2.18% $92.08 $282.95
Alliance Common Stock 1.35 0.66 2.01 90.39 265.88
Alliance Small Cap Growth 1.35 1.25 2.60 96.25 323.95
Alliance High Yield 1.35 0.91 2.26 92.88 290.88
Alliance Money Market 1.35 0.64 1.99 90.19 263.86
EQ/Putnam Growth & Income Value 1.35 0.85 2.20 92.28 284.94
EQ/Putnam International Equity 1.35 1.20 2.55 95.76 319.15
EQ/Putnam Investors Growth 1.35 0.85 2.20 92.28 284.94
MFS Research 1.35 0.85 2.20 92.28 284.94
MFS Emerging Growth Companies 1.35 0.85 2.20 92.28 284.94
Merrill Lynch World Strategy 1.35 1.20 2.55 95.76 319.15
Merrill Lynch Basic Value Equity 1.35 0.85 2.20 92.28 284.94
</TABLE>
For Investment Funds investing in portfolios with less than 10 years of
operations, charges have been estimated. The charges reflect any expense
reimbursement or waiver or limitation. For more detailed information, see
the Fee Table in the prospectus.
4
<PAGE>
6. TAXES. In most cases, your earnings are not taxed until distributions are
made from your Certificate. If you are younger than age 59 1/2 when you
receive any distributions, you may be charged a 10% Federal tax penalty on the
amount received.
7. ACCESS TO YOUR MONEY. During the accumulation phase, you also may receive
distributions under a Certificate through the following WITHDRAWAL OPTIONS.
Under IRA and NQ Certificates: (1) Lump Sum Withdrawals of at least $1,000
taken at any time; and (2) Systematic Withdrawals paid monthly, quarterly or
annually, subject to certain restrictions, including a maximum percentage of
your Certificate's value. Under IRA Certificates: (1) Substantially Equal
Payment Withdrawals (if you are less than age 59 1/2), paid monthly, quarterly
or annually based on life expectancy; and (2) Minimum Distribution Withdrawals
(after you are age 70 1/2), which pays the minimum amount necessary to meet
minimum distribution requirements in the Internal Revenue Code.
You also have access to your Certificate's value by surrendering the
Certificate. All or a portion of certain withdrawals may be subject to a
withdrawal charge to the extent that the withdrawal exceeds the free corridor
amount. A free corridor amount does not apply to a surrender. Withdrawals and
surrenders may be subject to income tax and a tax penalty. Withdrawals from
Guaranteed Fixed Interest Accounts prior to their maturity may result in a
market value adjustment.
8. PERFORMANCE. During the accumulation phase, your Certificate's value in the
Investment Funds may vary up or down depending upon the investment performance
of the Investment Funds you have selected. The following chart shows total
returns for certain Investment Funds for the time periods shown. The results
indicated reflect all of the charges, except the baseBUILDER Combined
Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit charge
for the optional Guaranteed Minimum Income Benefit, and the withdrawal charge.
If included, the baseBUILDER Combined Guaranteed Minimum Income Benefit and
Guaranteed Minimum Death Benefit charge, the withdrawal charge and any premium
taxes would reduce the performance numbers shown below. Past performance is
not a guarantee of future results.
The performance data for the Alliance Aggressive Stock, Alliance Common Stock,
Alliance High Yield and Alliance Money Market do not reflect Rule 12b-1 fees
prior to October 1996. There is no performance data for the Alliance Small Cap
Growth Fund and the Investment Funds investing in EQ Trust portfolios, as such
Investment Funds were not available under the Certificates prior to May 1,
1997.
5
<PAGE>
<TABLE>
<CAPTION>
CALENDAR YEAR
INVESTMENT FUND 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Aggressive Stock 20.46% 29.87% (5.11)% 15.17% (4.47)% 84.35% 6.70% 41.57% (0.23)% 5.85%
Alliance Common Stock 22.51 30.67 (3.46) 23.14 1.82 36.03 (9.36) 23.90 20.79 5.99
Alliance High Yield 21.14 18.30 (4.09) 21.49 10.79 22.79 (2.46) 3.72 8.26 3.29
Alliance Money Market 3.84 4.32 2.62 1.57 2.16 4.75 6.77 7.72 5.87 5.19
</TABLE>
9. DEATH BENEFIT. If the Annuitant dies before amounts are applied under an
income annuity option, the named beneficiary will be paid a death benefit. The
death benefit is equal to (1) your Certificate's value in the Investment Funds
and Guaranteed Fixed Interest Accounts, or if greater, the Guaranteed Minimum
Death Benefit.
If you are between the ages of 20 to 79, you choose one of two types of
Guaranteed Minimum Death Benefit available under the Certificate: a "6% to Age
80 Roll Up" and an "Annual Ratchet to Age 80." Both types are described below.
Both benefits are based on the amount you initially put in and are adjusted
for additional contributions and withdrawals. For ages 80 through 83 a return
of the money you have invested in the Investment Funds will apply.
6% to Age 80 Roll Up (Not available in New York) -- We add interest to the
initial amount at 6% (4% for amounts in the Alliance Money Market Fund and
Guaranteed Fixed Interest Accounts) through the Annuitant's age 80 (or on the
date of the Annuitant's death, if earlier).
Annual Ratchet to Age 80 --This is the amount reset each year through the
Annuitant's age 80 to the Certificate's value, if it is higher than the prior
year's Guaranteed Minimum Death Benefit.
6
<PAGE>
10. OTHER INFORMATION.
QUALIFIED PLANS. If the Certificates will be purchased by certain types of
plans qualified under Section 401(a), or 401(k) of the Internal Revenue Code,
please consult your tax adviser first. Any discussion of taxes in this profile
does not apply.
GUARANTEED MINIMUM INCOME BENEFIT. The Guaranteed Minimum Income Benefit, as
part of the baseBUILDER, is an optional benefit that provides a minimum amount
of guaranteed lifetime income for your future. When you are ready to convert
(at specified future times) your Certificate's value to the Income Manager
(Life Annuity with a Period Certain) the minimum amount of lifetime income
that will be provided will be the greater of (i) your Guaranteed Minimum
Income Benefit or (ii) your Certificate's current value applied at current
annuity purchase factors. A different form of Guaranteed Minimum Income
Benefit may be available to Annuitants ages 76 and older.
FREE LOOK. You can examine the Certificate for a period of 10 days after you
receive it, and return it to us for a refund. The free look period is longer
in some states.
Your refund will equal your Certificate's value, reflecting any investment
gain or loss, in the Investment Funds, and any increase or decrease in the
value of any amounts held in the Guaranteed Fixed Interest Accounts, through
the date we receive your Certificate. Some states or Federal income tax
regulations may require that we calculate the refund differently.
PRINCIPAL ASSURANCE. This option is designed to assure the return of your
original amount invested on a Guaranteed Fixed Interest Account maturity date,
by putting a portion of your money in a particular GIRO, and the balance in
the Investment Funds in any way you choose. Assuming that you make no
transfers or withdrawals of the portion in the Guaranteed Fixed Interest
Accounts, such amount will grow to your original investment upon maturity.
DOLLAR COST AVERAGING. Special Dollar Cost Averaging - You can elect when you
apply for your Certificate to allocate your contribution to the Alliance Money
Market Fund and have it transferred from the Alliance Money Market Fund into
the other Investment Funds on a monthly basis over the first twelve months, in
which case mortality and expense risk and administration charges will not be
deducted from the amount remaining in the Alliance Money Market Fund during
this period. General Dollar Cost Averaging -You can elect at any time to put
money into the Alliance Money Market Fund and have a dollar amount or
percentage transferred from the Alliance Money Market Fund into the other
Investment Funds on a periodic basis over a longer period of time, and all
applicable charges deducted from the value in the Alliance Money Market Fund
will apply. Dollar cost averaging does not assure a profit or protect against
a loss should market prices decline.
REPORTS. We will provide you with an annual statement of your Certificate's
values as of the last day of each year, and three additional reports of your
Certificate's values each year. You also will be provided with written
confirmations of each financial transaction, and copies of annual and
semi-annual statements of HR Trust and EQ Trust.
You may call toll-free at 1-800-789-7771 for a recording of daily Investment
Fund values and guaranteed rates applicable to Guaranteed Fixed Interest
Accounts.
7
<PAGE>
11. INQUIRIES. If you need more information, please contact your registered
representative. You may also contact us, at:
The Equitable Life Assurance Society of the United States
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Telephone 1-800-789-7771 and Fax 1-201-583-2224
8
<PAGE>
EQUITABLE ACCUMULATOR
(IRA AND NQ)
PROSPECTUS DATED MAY 1, 1997
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- -----------------------------------------------------------------------------
This prospectus describes certificates The Equitable Life Assurance Society
of the United States (EQUITABLE LIFE, WE, OUR and US) offers under a
combination variable and fixed deferred annuity contract issued on a group
basis or as individual contracts. Enrollment under a group contract is
evidenced by issuance of a certificate. Certificates and individual contracts
are each referred to as "Certificates." Certificates can be issued as
individual retirement annuities (IRA), or non-qualified annuities for
after-tax contributions only (NQ). Under IRA Certificates we accept only
initial contributions that are rollover contributions or that are direct
transfers from other individual retirement arrangements, as described in this
prospectus. A minimum initial contribution of $5,000 is required to put an
IRA or NQ Certificate into effect.
The Certificates are designed to provide for the accumulation of retirement
savings and for income. Contributions accumulate on a tax-deferred basis and
can be distributed under a number of different methods which are designed to
be responsive to the owner's (CERTIFICATE OWNER, YOU and YOUR) objectives.
The Certificates offer investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 12
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the
GUARANTEED PERIOD ACCOUNT.
We invest each Investment Fund in Class IB shares of a corresponding
portfolio (PORTFOLIO) of EQ Advisors Trust (EQ TRUST) and The Hudson River
Trust (HR TRUST), mutual funds whose shares are purchased by separate
accounts of insurance companies. The prospectuses for EQ Trust and HR Trust,
both of which accompany this prospectus, describe the investment objectives,
policies and risks, of the Portfolios.
INVESTMENTS FUNDS
<TABLE>
<CAPTION>
<S> <C> <C>
O EQ/PUTNAM GROWTH & O MFS EMERGING GROWTH O ALLIANCE MONEY MARKET
INCOME VALUE COMPANIES O ALLIANCE HIGH YIELD
O EQ/PUTNAM INVESTORS O MERRILL LYNCH BASIC VALUE O ALLIANCE COMMON STOCK
GROWTH EQUITY
O EQ/PUTNAM INTERNATIONAL O MERRILL LYNCH WORLD O ALLIANCE AGGRESSIVE STOCK
EQUITY STRATEGY
O MFS RESEARCH O ALLIANCE SMALL CAP GROWTH
</TABLE>
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). Each Guarantee Period has its
own Guaranteed Rates. The Guarantee Periods currently available have
Expiration Dates of February 15, in years 1998 through 2007.
This prospectus provides information about IRA and NQ Certificates that
prospective investors should know before investing. You should read it
carefully and retain it for future reference. The prospectus is not valid
unless accompanied by current prospectuses for EQ Trust and HR Trust, both of
which you should also read carefully.
<PAGE>
Registration statements relating to Separate Account No. 49 (SEPARATE
ACCOUNT) and interests under the Guarantee Periods have been filed with the
Securities and Exchange Commission (SEC). The statement of additional
information (SAI), dated May 1, 1997, which is part of the registration
statement for the Separate Account, is available free of charge upon request
by writing to our Processing Office or calling 1-800-789-7771, our toll-free
number. The SAI has been incorporated by reference into this prospectus. The
Table of Contents for the SAI appears at the back of this prospectus.
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
Copyright 1997 The Equitable Life Assurance Society of the United States, New
York, New York 10104.
All rights reserved. BASEBUILDER is a service mark of The Equitable Life
Assurance Society of the United States.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(EXCHANGE ACT) after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated
by reference in this prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated herein by reference shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified and superseded, to constitute a part of
this prospectus. Equitable Life files its Exchange Act documents and reports,
including its annual and quarterly reports on Form 10-K and Form 10-Q,
electronically pursuant to EDGAR under CIK No. 0000727920. The SEC maintains
a web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
2
<PAGE>
PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
FEE TABLE PAGE 6
PART 1: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE
INVESTMENT FUNDS PAGE 9
Equitable Life 9
Separate Account No. 49 9
EQ Trust 9
EQ Trust's Manager and Advisers 10
HR Trust 10
HR Trust's Manager and Adviser 10
Investment Policies and Objectives of
EQ Trust's and HR Trust's Portfolios 11
PART 2: THE GUARANTEED PERIOD
ACCOUNT PAGE 13
Guarantee Periods 13
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 14
Investments 15
PART 3: PROVISIONS OF THE
CERTIFICATES AND SERVICES
WE PROVIDE PAGE 16
What is the Equitable Accumulator? 16
Contributions Under the Certificates 16
Methods of Payment 16
Allocation of Contributions 17
Free Look Period 17
Annuity Account Value 18
Transfers Among Investment Options 18
Dollar Cost Averaging 19
baseBUILDER Benefits 19
Guaranteed Minimum Income Benefit 19
Death Benefit 20
When the NQ Certificate Owner Dies Before
the Annuitant 21
Cash Value 21
Surrendering the Certificates to
Receive the Cash Value 22
When Payments are Made 22
Assignment 22
Services We Provide 22
Distribution of the Certificates 23
PART 4: DISTRIBUTION METHODS UNDER THE
CERTIFICATES PAGE 24
Withdrawal Options 24
Annuity Benefits and Payout Annuity Options 27
PART 5: DEDUCTIONS AND CHARGES PAGE 29
Charges Deducted from the Annuity
Account Value 29
Charges Deducted from the Investment
Funds 30
EQ Trust Charges to Portfolios 30
HR Trust Charges to Portfolios 30
Group or Sponsored Arrangements 31
Other Distribution Arrangements 31
PART 6: VOTING RIGHTS PAGE 32
EQ Trust and HR Trust Voting Rights 32
Voting Rights of Others 32
Separate Account Voting Rights 32
Changes in Applicable Law 32
PART 7: TAX ASPECTS OF THE CERTIFICATES PAGE 33
Tax Changes 33
Taxation of Non-Qualified Annuities 33
Special Rules for NQ Certificates Issued in
Puerto Rico 34
IRA Tax Information 34
Federal and State Income Tax
Withholding 40
Other Withholding 40
Impact of Taxes to Equitable Life 41
Transfers Among Investment Options 41
PART 8: INDEPENDENT ACCOUNTANTS PAGE 42
PART 9: INVESTMENT PERFORMANCE PAGE 43
Standardized Performance Data 43
Rate of Return Data for Investment
Funds 45
Communicating Performance Data 46
Alliance Money Market Fund Yield Information 47
APPENDIX I: MARKET VALUE
ADJUSTMENT EXAMPLE PAGE 48
APPENDIX II: QUALIFIED PLAN
CERTIFICATES--NQ CERTIFICATE PAGE 49
APPENDIX III: GUARANTEED MINIMUM
DEATH BENEFIT EXAMPLE PAGE 50
APPENDIX IV: IRS CHART--ESTIMATED
DEDUCTION TABLE PAGE 51
STATEMENT OF ADDITIONAL
INFORMATION TABLE OF CONTENTS PAGE 52
</TABLE>
3
<PAGE>
GENERAL TERMS
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE--The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT--The individual who is the measuring life for determining benefits
under the Certificates. Under NQ Certificates the Annuitant can be different
from the Certificate Owner; under IRA Certificates, the Annuitant and
Certificate Owner must be the same individual.
ANNUITY ACCOUNT VALUE--The sum of the amounts in the Investment Options under
the Certificate. See "Annuity Account Value" in Part 3.
ANNUITY COMMENCEMENT DATE--The date on which Annuity Benefit payments
automatically commence.
BASEBUILDER (SERVICE MARK)--Protection benefits, consisting of the
Guaranteed Minimum Income Benefit and the Guaranteed Minimum Death Benefit.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns a Certificate and has the right to
exercise all rights under the Certificate. Under NQ Certificates the
Certificate Owner can be different from the Annuitant; under IRA Certificates
the Certificate Owner must be the same individual as the Annuitant.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The effective date of the Certificates. This is usually the
Business Day we receive the initial contribution at our Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EQ TRUST--EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants, Inc.
(EQ Financial) is the manager of EQ Trust and has appointed advisers for each
of the Portfolios.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEED MINIMUM DEATH BENEFIT--The minimum amount payable upon death of
the Annuitant.
GUARANTEED MINIMUM INCOME BENEFIT--The minimum amount of future guaranteed
lifetime income.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificates. Guarantee Periods
may also be referred to as Guaranteed Interest Rate Options (GIROs) or
"Guaranteed Fixed Interest Accounts."
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods
and the Modal Payment Portion of such Account.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
HR TRUST--The Hudson River Trust, a mutual fund in which the assets of
separate accounts of insurance companies are invested. Alliance Capital
Management L.P. (Alliance) is the manager and adviser to HR Trust.
INVESTMENT FUNDS--The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS--The choices for investment: the Investment Funds and each
available Guarantee Period.
IRA--An individual retirement annuity, as defined in Section 408(b) of the
Code.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
PORTFOLIOS--The portfolios of HR Trust and EQ Trust that correspond to the
Investment Funds of the Separate Account.
PROCESSING DATE--The day when we deduct certain charges from the Annuity
Account Value. If the Processing Date is not a Business Day, it will be on
the next succeeding Business Day. The Processing Date will be once each year
on each anniversary of the Contract Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 3.
4
<PAGE>
SAI--The statement of additional information for the Separate Account under
the Certificates.
SEPARATE ACCOUNT--Equitable Life's Separate Account No. 49.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
VALUATION PERIOD--Each Business Day together with any preceding non-business
days.
5
<PAGE>
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificates
so that you may compare them with other similar products. The table reflects
both the charges of the Separate Account and the expenses of EQ Trust and HR
Trust. Charges for applicable taxes such as state or local premium taxes may
also apply. For a complete description of the charges under the Certificates,
see "Part 5: Deductions and Charges." For a complete description of each
trust's charges and expenses, see the prospectuses for EQ Trust and HR Trust.
As explained in Part 2, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table that will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 2: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSE (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted upon surrender
or for certain withdrawals. The applicable withdrawal charge percentage is
determined by the Contract Year in which the withdrawal is made or a
Certificate is surrendered beginning with Contract Year 1 with respect to
each contribution withdrawn or surrendered. For each contribution, the
Contract Year in which we receive that contribution is "Contract
Year 1").(1)
<TABLE>
<CAPTION>
CONTRACT
YEAR
- ----------
<S> <C>
1 ..... 7.00%
2 ..... 6.00%
3 ..... 5.00%
4 ..... 4.00%
5 ..... 3.00%
6 ..... 2.00%
7 ..... 1.00%
8+ .... 0.00%
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH
INVESTMENT FUND)
<TABLE>
<CAPTION>
<S> <C>
MORTALITY AND EXPENSE RISKS(2) ............................................................... 1.10%
ADMINISTRATION(3) ............................................................................ 0.25%
-------
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES ..................................................... 1.35%
=======
OPTIONAL BENEFIT EXPENSE (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
BASEBUILDER COMBINED GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED MINIMUM DEATH BENEFIT
EXPENSE (calculated as a percentage of the Guaranteed Minimum Income Benefit benefit
base)(4) .................................................................................... 0.30%
</TABLE>
- ------------
See footnotes on next page.
6
<PAGE>
HR TRUST AND EQ TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET
ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT TOTAL
MANAGEMENT & 12B-1 OTHER ANNUAL
PORTFOLIOS ADVISORY FEES FEE(5) EXPENSES EXPENSES
- ----------------------------------- --------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
EQ TRUST
EQ/Putnam Growth & Income Value(6) 0.55% 0.25% 0.05% 0.85%
EQ/Putnam Investors Growth(6) 0.55% 0.25% 0.05% 0.85%
EQ/Putnam International Equity(6) 0.70% 0.25% 0.25% 1.20%
MFS Research(6) 0.55% 0.25% 0.05% 0.85%
MFS Emerging Growth Companies(6) 0.55% 0.25% 0.05% 0.85%
Merrill Lynch Basic Value Equity(6) 0.55% 0.25% 0.05% 0.85%
Merrill Lynch World Strategy(6) 0.70% 0.25% 0.25% 1.20%
HR TRUST
Alliance Money Market(7) 0.35% 0.25% 0.04% 0.64%
Alliance High Yield(7) 0.60% 0.25% 0.06% 0.91%
Alliance Common Stock(7) 0.38% 0.25% 0.03% 0.66%
Alliance Aggressive Stock(7) 0.55% 0.25% 0.03% 0.83%
Alliance Small Cap Growth(7) 0.90% 0.25% 0.10% 1.25%
</TABLE>
- ------------
Notes:
(1) Deducted upon a withdrawal with respect to amounts in excess of the 15%
free corridor amount, and upon surrender of a Certificate. See "Part 5:
Deductions and Charges," "Withdrawal Charge."
(2) A portion of this charge is for providing the Guaranteed Minimum Death
Benefit. See "Mortality and Expense Risks Charge" in Part 5.
(3) We reserve the right to increase this charge to an annual rate of 0.35%,
the maximum permitted under the Certificates.
(4) If the baseBUILDER Combined Guaranteed Minimum Income Benefit and
Guaranteed Minimum Death Benefit is elected, this charge is deducted
annually on each Processing Date. See "Guaranteed Minimum Income Benefit
Benefit Base" in Part 4 and "baseBUILDER Combined Guaranteed Minimum
Income Benefit and Guaranteed Minimum Death Benefit Charge" in Part 5.
(5) The Class IB shares of HR Trust and EQ Trust are subject to fees imposed
under distribution plans (herein, the "Rule 12b-1 Plans") adopted by HR
Trust and EQ Trust pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended. The Rule 12b-1 Plans provide that HR Trust and
EQ Trust, on behalf of each Portfolio, may pay annually up to 0.25% of
the average daily net assets of a Portfolio attributable to its Class IB
shares in respect of activities primarily intended to result in the sale
of the Class IB shares.
(6) "Other Expenses" shown are based on estimated amounts (after expense
waiver or limitation) for the current fiscal year, as EQ Trust commenced
operations on May 1, 1997. The maximum investment advisory fees cannot
be increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will fluctuate from year to year depending on
actual expenses but pursuant to agreement, cannot together with other
fees specified exceed total annual expenses specified. See "EQ Trust
Charges to Portfolios" in Part 5.
(7) The amounts shown for the Portfolios of HR Trust (other than Alliance
Small Cap Growth) have been restated to reflect advisory fees which went
into effect as of May 1, 1997. "Other Expenses" are based on average
daily net assets in each Portfolio during 1996. The amounts shown for
the Alliance Small Cap Growth Portfolio are estimated for the current
fiscal year as this Portfolio commenced operations on May 1, 1997. The
investment advisory fee for each Portfolio may vary from year to year
depending upon the average daily net assets of the respective Portfolio
of HR Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. See "HR Trust Charges to Portfolios" in
Part 5.
7
<PAGE>
EXAMPLES
The examples below show the expenses that a hypothetical Certificate Owner
(who has elected the baseBUILDER Combined Guaranteed Minimum Income Benefit
and Guaranteed Minimum Death Benefit) would pay in the two situations noted
below assuming a $1,000 contribution invested in one of the Investment Funds
listed, and a 5% annual return on assets.(1)
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
- -----------------------------------------------------------------------------
IF YOU SURRENDER YOUR CERTIFICATE AT IF YOU DO NOT SURRENDER YOUR
THE END OF EACH PERIOD SHOWN, THE YOUR CERTIFICATE AT THE END
EXPENSES WOULD BE: OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 1 YEAR 3 YEARS
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
EQ TRUST
EQ/Putnam Growth
& Income Value $92.28 $125.02 $25.46 $78.59
EQ/Putnam
Investors Growth 92.28 125.02 25.46 78.59
EQ/Putnam Int'l
Equity 95.76 135.44 28.94 89.01
MFS Research 92.28 125.02 25.46 78.59
MFS Emerging
Growth Companies 92.28 125.02 25.46 78.59
Merrill Lynch
Basic Value Equity 92.28 125.02 25.46 78.59
Merrill Lynch
World Strategy 95.76 135.44 28.94 89.01
HR TRUST
Alliance Money
Market 90.19 118.74 23.37 72.31
Alliance High Yield 92.88 126.82 26.06 80.39
Alliance Common
Stock 90.39 119.34 23.57 72.91
Alliance Aggressive
Stock 92.08 124.42 25.26 78.00
Alliance Small Cap
Growth 96.25 136.92 29.43 90.49
</TABLE>
- ------------
Note:
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity at the end of any of the periods shown in the
examples. If the amount applied to purchase an annuity is less than
$2,000, or the initial payment is less than $20 we may pay the amount to
the payee in a single sum instead of as payments under an annuity form.
See "Annuity Benefits and Distribution Options" in Part 4. The examples
do not reflect charges for applicable taxes such as state or local
premium taxes that may also be deducted in certain jurisdictions.
8
<PAGE>
PART 1: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Our home office is located at
1290 Avenue of the Americas, New York, New York 10104. We are authorized to
sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico and the Virgin Islands. We maintain local offices
throughout the United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996 AXA, beneficially owned
63.8% of the outstanding common stock of the Holding Company (assuming
conversion of convertible preferred stock held by AXA). Under its investment
arrangements with Equitable Life 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 Life. AXA, a
French company, is the holding company for an international group of
insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $239.8 billion of assets as of December 31, 1996.
SEPARATE ACCOUNT NO. 49
Separate Account No. 49 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment
Company Act of 1940, as amended (1940 Act). This registration does not
involve any supervision by the SEC of the management or investment policies
of the Separate Account. The Separate Account has several Investment Funds,
each of which invests in shares of a corresponding Portfolio of HR Trust and
EQ Trust. Because amounts allocated to the Investment Funds are invested in a
mutual fund, investment return and principal will fluctuate and the
Certificate Owner's Accumulation Units may be worth more or less than the
original cost when redeemed.
Under the New York Insurance Law, the portion of the Separate Account's
assets equal to the reserves and other liabilities relating to the
Certificates are not chargeable with liabilities arising out of any other
business we may conduct. Income, gains or losses, whether or not realized,
from assets of the Separate Account are credited to or charged against the
Separate Account without regard to our other income gains or losses. We are
the issuer of the Certificates, and the obligations set forth in the
Certificates (other than those of Annuitants or Certificate Owners) are our
obligations.
In addition to contributions made under the Certificates, we may allocate to
the Separate Account monies received under other contracts, certificates, or
agreements. Owners of all such contracts, certificates or agreements will
participate in the Separate Account in proportion to the amounts they have in
the Investment Funds that relate to their contracts, certificates or
agreements. We may retain in the Separate Account assets that are in excess
of the reserves and other liabilities relating to the Certificates or to
other contracts, certificates or agreements, or we may transfer the excess to
our General Account.
We reserve the right, subject to compliance with applicable law; (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove
Investment Funds (or sub-funds) from, the Separate Account, or to add other
separate accounts; (2) to combine any two or more Investment Funds or
sub-funds thereof; (3) to transfer the assets we determine to be the share of
the class of contracts to which the Certificates belong from any Investment
Fund to another Investment Fund; (4) to operate the Separate Account or any
Investment Fund as a management investment company under the 1940 Act, in
which case charges and expenses that otherwise would be assessed against an
underlying mutual fund would be assessed against the Separate Account; (5) to
deregister the Separate Account under the 1940 Act, provided that such action
conforms with the requirements of applicable law; (6) to restrict or
eliminate any voting rights as to the Separate Account; and (7) to cause one
or more Investment Funds to invest some or all of their assets in one or more
other trusts or investment companies. If any changes are made that result in
a material change in the underlying investment policy of an Investment Fund,
you will be notified as required by law.
EQ TRUST
EQ Trust is an open-end management investment company. As a "series type" of
mutual fund, EQ Trust
9
<PAGE>
issues different series of stock, each of which relates to a different
Portfolio of the EQ Trust. EQ Trust commenced operations on May 1, 1997. EQ
Trust does not impose a sales charge or "load" for buying and selling its
shares. All dividend distributions to EQ Trust are reinvested in full and
fractional shares of the Portfolio to which they relate. Investment Funds
that invest in Portfolios of EQ Trust purchase Class IB shares of a
corresponding Portfolio of EQ Trust. More detailed information about EQ
Trust, its investment objectives, policies and restrictions, risks, expenses,
the Rule 12b-1 Plan relating to the Class IB shares, and all other aspects of
its operations appears in its prospectus which accompanies this prospectus or
in its statement of additional information.
EQ TRUST'S MANAGER AND ADVISERS
EQ Trust is managed by EQ Financial Consultants, Inc. (EQ Financial) which,
subject to supervision and direction of the Trustees of EQ Trust, has overall
responsibility for the general management and administration of EQ Trust. EQ
Financial is an investment adviser registered under the 1940 Act, and a
broker-dealer registered under the Exchange Act. EQ Financial is a Delaware
corporation and an indirect, wholly-owned subsidiary of Equitable Life.
EQ Financial's main office is located at 1290 Avenue of the Americas, New
York, New York 10104.
EQ Financial has entered into investment advisory agreements with Putnam
Investments, Massachusetts Financial Services Company, and Merrill Lynch
Asset Management, L.P., which serve as advisers to the EQ/Putnam, MFS and
Merrill Lynch Portfolios, respectively, of EQ Trust.
HR TRUST
HR 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
Portfolio of HR Trust. HR Trust commenced operations in January 1976 with a
predecessor of its Alliance Common Stock Portfolio. HR Trust does not impose
a sales charge or "load" for buying and selling its shares. All dividend
distributions to HR Trust are reinvested in full and fractional shares of the
Portfolio to which they relate. Investment Funds that invest in Portfolios of
HR Trust purchase Class IB shares of a corresponding Portfolio of HR Trust.
More detailed information about HR Trust, its investment objectives,
policies, restrictions, risks, expenses, the Rule 12b-1 Plan relating to the
Class IB shares, and all other aspects of its operations appears in its
prospectus which accompanies this prospectus or in its statement of
additional information.
HR TRUST'S MANAGER AND ADVISER
HR Trust is managed and advised by Alliance Capital Management L.P.
(Alliance), which is registered with the SEC as an investment adviser under
the 1940 Act. Alliance, a publicly-traded limited partnership, is indirectly
majority-owned by Equitable Life. On December 31, 1996, Alliance was managing
approximately $182.8 billion in assets. Alliance acts as an investment
adviser to various separate accounts and general accounts of Equitable Life
and other affiliated insurance companies. Alliance also provides management
and consulting services to mutual funds, endowment funds, insurance
companies, foreign entities, qualified and non-tax qualified corporate funds,
public and private pension and profit-sharing plans, foundations and
tax-exempt organizations.
Alliance's main office is located at 1345 Avenue of the Americas, New York,
New York 10105.
10
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF EQ TRUST'S PORTFOLIOS AND HR TRUST'S
PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of
each Portfolio will affect its return and its risks. There is no guarantee
that these objectives will be achieved. Set forth below is a summary of the
investment policies and objectives of each Portfolio. This summary is
qualified in its entirety by reference to the prospectuses for EQ Trust and
HR Trust, both of which accompany this prospectus. Please read the
prospectuses for each of the trusts carefully before investing.
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- ----------- --------------------------------------------------- ----------
<S> <C> <C>
EQ TRUST
EQ/Putnam Growth & Primarily common stocks that offer potential for Capital growth and,
Income Value capital growth, consistent with the Portfolio's secondarily, current income
investment objective, common stocks that offer
potential for current income.
EQ/Putnam Investors Primarily common stocks in view of the Portfolio Long-term growth of capital
Growth adviser's belief that equity ownership affords the and any increased income that
best opportunity for capital growth over the long results from this growth
term.
EQ/Putnam International Primarily a diversified portfolio of equity Capital appreciation
Equity securities of companies organized under the laws of a
country other than the United States.
MFS Research A substantial portion of assets invested in common Long-term growth of capital
stock or securities convertible into common stock of and future income
companies believed by the Portfolio adviser to
possess better than average prospects for long-term
growth.
MFS Emerging Growth Primarily (i.e., at least 80% of its assets under Long-term growth of capital
Companies normal circumstances) in common stocks of emerging
growth companies that the Portfolio adviser believes
are early in their life cycle but which have the
potential to become major enterprises.
Merrill Lynch Basic Investment in securities, primarily equities, that Capital appreciation and,
Value Equity the Portfolio adviser believes are undervalued and secondarily, income
therefore represent basic investment value.
Merrill Lynch World Investment primarily in a portfolio of equity and High total investment return
Strategy fixed income securities, including convertible
securities, of U.S. and foreign issuers.
HR TRUST
Alliance Money Market Primarily high quality U.S. dollar denominated money High level of current income
market instruments. while preserving assets and
maintaining liquidity
Alliance High Yield Primarily a diversified mix of high yield, High return by maximizing
fixed-income securities involving greater volatility current income and, to the
of price and risk of principal and income than high extent consistent with that
quality fixed-income securities. The medium and lower objective, capital
quality debt securities in which the Portfolio may appreciation
invest are known as "junk bonds."
Alliance Common Stock Primarily common stock and other equity-type Long-term growth of capital
instruments. and increasing income
11
<PAGE>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- ---------- --------------------------------------------------- ---------
Alliance Aggressive Primarily common stocks and other equity-type Long-term growth of capital
Stock securities issued by quality small and intermediate
sized companies with strong growth prospects and in
covered options on those securities.
Alliance Small Cap Primarily U.S. common stocks and other equity type Long-term growth of capital
Growth securities issued by smaller companies with favorable
growth prospects.
</TABLE>
12
<PAGE>
PART 2: THE GUARANTEED PERIOD ACCOUNT
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. The Guaranteed
Rate for each allocation is the annual interest rate applicable to new
allocations to that Guarantee Period, which was in effect on the Transaction
Date for the allocation. We may establish different Guaranteed Rates under
other classes of Certificates. We use the term GUARANTEED PERIOD AMOUNT to
refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
with respect to the Guarantee Periods on any Business Day, therefore, will be
the sum of the present value of the Maturity Value in each Guarantee Period,
using the Guaranteed Rate in effect for new allocations to such Guarantee
Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1998 through 2007. Not all of these Guarantee Periods will be
available for ages 76 and above. See "Allocation of Contributions" in Part 3.
Also, the Guarantee Periods may not be available for investment in all
states. As Guarantee Periods expire we expect to add maturity years so that
generally 10 are available at any time.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no transfers or withdrawals are made and no charges
are allocated to the Guarantee Period). The required amount is the present
value of that Maturity Value at the Guaranteed Rate on the Transaction Date
for the contribution, which may also be expressed as the price per $100 of
Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of April 15, 1997 and the related
price per $100 of Maturity Value for each currently available Guarantee
Period were as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH GUARANTEED
EXPIRATION DATE RATE AS OF PRICE
FEBRUARY 15TH OF APRIL 15, PER $100 OF
MATURITY YEAR 1997 MATURITY VALUE
- ---------------- ------------ --------------
<S> <C> <C>
1998 4.93% $96.05
1999 5.40 90.78
2000 5.64 85.58
2001 5.76 80.65
2002 5.86 75.91
2003 5.94 71.39
2004 6.03 66.99
2005 6.09 62.89
2006 6.17 58.89
2007 6.23 55.16
</TABLE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of
years 1998 through 2002, then according to the above table the lump sum
contribution you would have to make as of April 15,
13
<PAGE>
1997 would be $428.97 (the sum of the prices per $100 of Maturity Value for
each maturity year from 1998 through 2002).
The above example is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted, withdrawals or transfers to be made from Guarantee Periods or for
the market value adjustment that would apply to such transactions. Actual
calculations will be based on Guaranteed Rates on each actual Transaction
Date, which may differ.
Options at Expiration Date
We will notify you on or before December 31st prior to the Expiration Date of
each Guarantee Period in which you have any Guaranteed Period Amount. You may
elect one of the following options to be effective at the Expiration Date,
subject to the restrictions set forth on the prior page and under "Allocation
of Contributions" in Part 3:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges which
may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR
TRANSFERS, WITHDRAWALS OR SURRENDER
PRIOR TO THE EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a
Guarantee Period prior to its Expiration Date will cause any remaining
Guaranteed Period Amount for that Guarantee Period to be increased or
decreased by a market value adjustment. The amount of the adjustment will
depend on two factors: (a) the difference between the Guaranteed Rate
applicable to the amount being withdrawn and the Guaranteed Rate on the
Transaction Date for new allocations to a Guarantee Period with the same
Expiration Date, and (b) the length of time remaining until the Expiration
Date. In general, if interest rates have risen between the time when an
amount was originally allocated to a Guarantee Period and the time it is
withdrawn, the market value adjustment will be negative, and vice versa; and
the longer the period of time remaining until the Expiration Date, the
greater the impact of the interest rate difference. Therefore, it is possible
that a significant rise in interest rates could result in a substantial
reduction in your Annuity Account Value in the Guaranteed Period Account
related to longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market value
adjustment applicable to such Guarantee Period, which may be positive or
negative.
<PAGE>
The market value adjustment (positive or negative) resulting from a
withdrawal (including any withdrawal charges) of a portion of the amount in a
Guarantee Period will be a percentage of the market value adjustment that
would be applicable upon a withdrawal of all funds from a Guarantee Period.
This percentage is determined by (i) dividing the amount of the withdrawal or
transfer from the Guarantee Period by (ii) the Annuity Account Value in such
Guarantee Period prior to the withdrawal or transfer. See Appendix I for an
example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our proce-
14
<PAGE>
dures then in effect. For purposes of calculating the market value adjustment
only, we reserve the right to add up to 0.25% to the current rate in (1)(c)
above.
INVESTMENTS
Amounts allocated to Guarantee Periods will be held in a "nonunitized"
separate account established by Equitable Life under the laws of New York.
This separate account provides an additional measure of assurance that full
payment of amounts due under the Guarantee Periods will be made. Under the
New York Insurance Law, the portion of the separate account's assets equal to
the reserves and other contract liabilities relating to the Certificates are
not chargeable with liabilities arising out of any other business we may
conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933, as amended
(1933 Act), nor is the general account an investment company under the 1940
Act. Accordingly, the general account is not subject to regulation under the
1933 Act or the 1940 Act. However, the market value adjustment interests
under the Certificates are registered under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in the prospectus for your information that
relates to the general account (other than market value adjustment
interests). The disclosure, however, may be subject to certain generally
applicable provisions of the Federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
15
<PAGE>
PART 3: PROVISIONS OF THE CERTIFICATES AND SERVICES
WE PROVIDE
WHAT IS THE EQUITABLE ACCUMULATOR?
The Equitable Accumulator is a deferred annuity designed to provide for the
accumulation of retirement savings, and for income at a future date.
Investment Options available are Investment Funds providing variable returns
and Guarantee Periods providing guaranteed interest when held to maturity.
Equitable Accumulator Certificates can be issued as individual retirement
annuities (IRAs) or non-qualified annuities for after-tax contributions only
(NQ). The provisions of your Certificate may be restricted by applicable laws
or regulations. The Certificates may not be available in all states.
Earnings generally accumulate on a tax-deferred basis until withdrawn or when
distributions become payable. Withdrawals made prior to 59 1/2 may be subject
to tax penalty.
IRA CERTIFICATES
IRA Certificates are available for Annuitant issue ages 20 through 78. IRA
Certificates are not available in Puerto Rico.
NQ CERTIFICATES
NQ Certificates are available for Annuitant issue ages 20 through 83.
When issued with the appropriate endorsement, an NQ Certificate may be
purchased by a plan qualified under Section 401(a) of the Code. Such
purchases may not be available in all states. Plan fiduciaries considering
purchase of a Certificate should read the important information in Appendix
II.
CONTRIBUTIONS UNDER THE CERTIFICATES
The minimum initial contribution is $5,000. Under IRA Certificates we will
only accept initial contributions which are either rollover contributions
under Sections 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code, or
direct custodian-to-custodian transfers from other individual retirement
arrangements. See "IRA Tax Information" in Part 7.
Under NQ Certificates, you may make subsequent contributions of at least
$1,000 at any time until the Annuitant reaches age 84.
Under IRA Certificates your subsequent contributions of at least $1,000 may
be made at any time until you reach age 79. Subsequent IRA Certificate
contributions may be "regular" IRA contributions (limited to a maximum of
$2,000 a year), or rollover contributions or direct transfers as described
above.
"Regular" IRA contributions may not be made for the taxable year in which you
attain age 70 1/2 or thereafter. Rollover and direct transfer contributions
may be made until you attain age 79. However, under the Code any amount
contributed after you attain age 70 1/2 must be net of your required minimum
distribution for the year in which the rollover or direct transfer
contribution is made. See "IRA Tax Information" in Part 7. For the
consequences of making a "regular" IRA contribution to your IRA Certificate,
also see Part 7.
We may refuse to accept any contribution if the sum of all contributions
under all accumulation Certificates with the same Annuitant would then total
more than $1,500,000. We reserve the right to limit aggregate contributions
made after the first Contract Year to 150% of first year contributions. We
may also refuse to accept any contribution if the sum of all contributions
under all Equitable Life annuity accumulation certificates/contracts that you
own would then total more than $2,500,000.
Contributions are credited as of the Transaction Date.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check drawn on a
bank or credit union in the U.S., in U.S. dollars and made payable to
Equitable Life. All checks are accepted subject to collection. Contributions
must be sent to Equitable Life at our Processing Office address designated
for contributions. Your initial contribution must be accompanied by a
completed application which is acceptable to us. In the event the application
information is incomplete or the application is otherwise not acceptable, we
may retain your contribution for a period not exceeding five Business Days
while an attempt is made to obtain the required information. If the required
information cannot be obtained within those five Business Days, the
Processing Office will inform the broker-dealer, on behalf of the applicant,
of the reasons for the delay or non-acceptability and return the contribution
immediately to the appli-
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cant, unless the applicant specifically consents to our retaining the
contribution until the required information is received by the Processing
Office.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will be invested at the value next
determined following receipt for contributions allocated to the Investment
Funds. Contributions allocated to the Guaranteed Period Account will receive
the Guaranteed Rate(s) in effect for the applicable Guarantee Period(s) on
the Business Day contributions are received. Wire orders not accompanied by
complete information may be retained as described above.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate generally will not be issued until the
receipt and acceptance of a properly completed application. In certain cases
we may issue a Certificate based on information forwarded electronically. In
these cases, you must sign our Acknowledgment of Receipt form.
Where a signed application is required, no financial transactions will be
permitted until such time as we receive such signed application and have
issued the Certificate. Where an Acknowledgment of Receipt is required,
financial transactions will only be permitted if requested in writing, signed
by the Certificate Owner and signature guaranteed until we receive such
signed Acknowledgment of Receipt.
After your Certificate has been issued, subsequent contributions may be
transmitted by wire.
ALLOCATION OF CONTRIBUTIONS
You may choose Self-Directed, Principal Assurance or Dollar Cost Averaging
allocations. Dollar Cost Averaging is described below.
A contribution allocated to an Investment Fund purchases Accumulation Units
in that Investment Fund based on the Accumulation Unit Value for that
Investment Fund computed for the Transaction Date. A contribution allocated
to the Guaranteed Period Account will have the Guaranteed Rate for the
specified Guarantee Period offered on the Transaction Date.
Self-Directed Allocation
You allocate your contributions to one or up to all of the available
Investment Options. Allocations among the Investment Options must be in whole
percentages. Allocation percentages can be changed at any time by writing to
our Processing Office, or by telephone. The change will be effective on the
Transaction Date and will remain in effect for future contributions unless
another change is requested.
At Annuitant ages 76 and above, allocations to Guarantee Periods must be
limited to those with maturities of five years or less and with maturity
dates no later than the February 15th immediately following the Annuity
Commencement Date.
Principal Assurance
This option (for Annuitant issue ages 20 through 75) assures that your
Maturity Value in a specified Guarantee Period will equal your initial
contribution on the Guarantee Period's Expiration Date, while at the same
time allowing you to invest in the Investment Funds. It may be elected only
at issue of your Certificate and assumes no withdrawals or transfers from the
Guarantee Period. The maturity year generally may not be later than 10 years
nor earlier than seven years from the Contract Date. In order to accomplish
this strategy, we will allocate a portion of your initial contribution to the
selected Guarantee Period. See "Guaranteed Rates and Price Per $100 of
Maturity Value" in Part 2. The balance of your initial contribution and all
subsequent contributions must be allocated under "Self-Directed Allocation"
as described above.
If you are applying for an IRA Certificate, before you select a maturity year
that would extend beyond the year in which you will attain age 70 1/2, you
should consider your ability to take minimum distributions from other IRA
funds that you may have or from the Investment Funds to the extent possible.
See "Required Minimum Distributions" in Part 7.
FREE LOOK PERIOD
You have the right to examine your Certificate for a period of 10 days after
you receive it, and to return it to us for a refund. You cancel it by sending
it to our Processing Office. The free look is extended if your state requires
a refund period of longer than 10 days.
Your refund will equal the Annuity Account Value reflecting any investment
gain or loss, and any positive or negative market value adjustment, through
the date we receive your Certificate at our Processing Office. Some states or
Federal income tax regulations may require that we calculate the refund
differently. If you cancel your Certificate during the
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free look period, we may require that you wait six months before you may
apply for a Certificate with us again.
We follow these same procedures if you change your mind before you receive
your Certificate, but after a contribution has been made. See "Part 7: Tax
Aspects of the Certificates" for possible consequences of cancelling your
Certificate during the free look period.
ANNUITY ACCOUNT VALUE
Your Annuity Account Value is the sum of the amounts in the Investment
Options.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal
to the number of Accumulation Units in that Investment Fund times the
Accumulation Unit Value for the Investment Fund for that date. The number of
Accumulation Units in an Investment Fund at any time is equal to the sum of
Accumulation Units purchased by contributions and transfers less the sum of
Accumulation Units redeemed for withdrawals, transfers or deductions for
charges.
The number of Accumulation Units purchased or sold in any Investment Fund
equals the dollar amount of the transaction divided by the Accumulation Unit
Value for that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the corresponding Portfolios of each respective
trust, which in turn reflects the investment income and realized and
unrealized capital gains and losses of the Portfolios, as well as each
respective trust's fees and expenses. The Accumulation Unit Value is also
stated after deduction of the Separate Account asset charges relating to the
Certificates. A description of the computation of the Accumulation Unit Value
is found in the SAI.
Annuity Account Value in Guaranteed Period
Account
The Annuity Account Value in the Guaranteed Period Account on any Business
Day will be the sum of the present value of the Maturity Value in each
Guarantee Period, using the Guaranteed Rate in effect for new allocations to
such Guarantee Period on such date. (This is equivalent to the Guaranteed
Period Amount increased or decreased by the full market value adjustment.)
The Annuity Account Value, therefore, may be higher or lower than the
contributions (less withdrawals) accumulated at the Guaranteed Rate. At the
Expiration Date the Annuity Account Value in the Guaranteed Period Account
will equal the Maturity Value. See "Part 2: The Guaranteed Period Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject
to the following restrictions.
o Transfers out of a Guarantee Period other than at the Expiration Date
will result in a market value adjustment. See "Part 2: The Guaranteed
Period Account."
o At Annuitant age 76 and above, transfers to Guarantee Periods must be
limited to those with maturities of five years or less and with
maturity dates no later than the February 15th immediately following
the Annuity Commencement Date.
o Transfers may not be made to a Guarantee Period with an Expiration
Date in the current calender year, or if the Guaranteed Rate is 3%.
<PAGE>
Transfer requests must be made directly to our Processing Office. Your
request for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which
the amounts are to be transferred. Your transfer request may be in writing or
by telephone.
For telephone transfer requests, procedures have been established by
Equitable Life that are considered to be reasonable and are designed to
confirm that instructions communicated by telephone are genuine. Such
procedures include requiring certain personal identification information
prior to acting on telephone instructions and providing written confirmation.
In light of the procedures established, Equitable Life will not be liable for
following telephone instructions that it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must
be on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer
to or from Investment Funds will be made at the Accumulation Unit Value
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<PAGE>
next computed after the Transaction Date. All transfers will be confirmed in
writing.
DOLLAR COST AVERAGING
We offer two programs for Dollar Cost Averaging as described below. The main
objective of dollar cost averaging is to attempt to shield your investment
from short term price fluctuations. Since the same dollar amounts are
transferred to other Investment Funds periodically, more Accumulation Units
are purchased in an Investment Fund if the value per Accumulation Unit is low
and fewer Accumulation Units are purchased if the value per Accumulation Unit
is high. Therefore, a lower average value per Accumulation Unit may be
achieved over the long term. This plan of investing allows you to take
advantage of market fluctuations but does not assure a profit or protect
against a loss in declining markets.
Special Dollar Cost Averaging
For Certificate Owners who (at issue of the Certificate) want to dollar cost
average their entire initial contribution from the Alliance Money Market Fund
into the other Investment Funds monthly over a period of twelve months, we
offer a Special Dollar Cost Averaging program under which the mortality and
expense risks and the administration charges normally deducted from the
Alliance Money Market Fund will not be deducted. See "Charges Deducted from
the Investment Funds" in Part 5.
General Dollar Cost Averaging
If you have at least $5,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage
of your Annuity Account Value transferred from the Alliance Money Market Fund
to other Investment Funds on a monthly, quarterly or annual basis. This
program may be elected at any time.
The minimum amount that may be transferred on each Transaction Date is $250.
The maximum amount which may be transferred is equal to the Annuity Account
Value in the Alliance Money Market Fund at the time the option is elected,
divided by the number of transfers scheduled to be made each Contract Year.
Dollar cost averaging may not be elected while the systematic withdrawal
option is in effect.
The transfer date will be the same calendar day of the month as the Contract
Date. If, on any transfer date, the Annuity Account Value in the Alliance
Money Market Fund is equal to or less than the amount you have elected to
have transferred, the entire amount will be transferred and the dollar cost
averaging option will end. You may change the transfer amount once each
Contract Year, or cancel this option by sending us satisfactory notice to our
Processing Office at least seven calendar days before the next transfer date.
BASEBUILDER BENEFITS
The baseBUILDER option provides guaranteed benefits in the form of a Combined
Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit. The
combined benefit is available for Annuitant issue ages 20 through 75 and is
subject to an additional charge (see "baseBUILDER Combined Guaranteed Minimum
Income Benefit and Guaranteed Minimum Death Benefit Charge" in Part 5). If
you do not elect the combined benefit, the Guaranteed Minimum Death Benefit
is still provided under the Certificate.
If the Annuitant is age 76 or older and you are interested in the Combined
Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit, ask
your registered representative for a copy of the prospectus supplement
describing this benefit. The combined benefit is not currently available in
New York.
The main advantages of the Guaranteed Minimum Income Benefit relate to
amounts allocated to the Investment Funds. Before electing the baseBUILDER
Combined Guaranteed Minimum Income Benefit and Guaranteed Minimum Death
Benefit, you should consider the extent to which you expect to utilize the
Investment Funds. You elect baseBUILDER guaranteed benefits when you apply
for a Certificate and once elected, they may not be changed or cancelled.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit provides a minimum amount of guaranteed
lifetime income when you exchange your Equitable Accumulator Certificate for
an Income Manager (Life Annuity with a Period Certain) certificate during the
periods of time indicated below. The Income Manager provides payments during
a period certain with payments continuing for life thereafter.
On the Transaction Date that you exercise the Guaranteed Minimum Income
Benefit, the annual lifetime income that will be provided under the Income
Manager (Life Annuity with a Period Certain) will be the greater of (i) your
Guaranteed Minimum Income Benefit, and (ii) the income provided by
application of your Annuity Account Value at our then current annuity
factors. The Guaranteed Minimum Income Benefit does not provide an Annuity
Account Value or guarantee performance of your
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Investment Options. Because this benefit is based on conservative actuarial
factors, the level of lifetime income that it guarantees may often be less
than the level that would be provided by application of your Annuity Account
Value at current annuity factors. It should therefore be regarded as a safety
net.
Illustrated below are Guaranteed Minimum Income Benefit amounts per $100,000
of initial contribution, for a male age 60 (at issue) on Contract Date
anniversaries as indicated below, assuming no subsequent contributions or
withdrawals and assuming there were no allocations to the Alliance Money
Market Fund or the Guaranteed Period Account.
<TABLE>
<CAPTION>
GUARANTEED MINIMUM INCOME BENEFIT
ANNUAL
CONTRACT DATE INCOME PAYABLE
ANNIVERSARY FOR LIFE WITH
AT ELECTION 10 YEAR PERIOD CERTAIN
- -------------- ---------------------------------
<S> <C>
7 $ 8,992
10 12,160
15 18,358
20 27,856
</TABLE>
Withdrawals will reduce your Guaranteed Minimum Income Benefit, see "How
Withdrawals Affect Your Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit" in Part 5.
The Guaranteed Minimum Income Benefit may be exercised only within 30 days
following the 7th or later Contract Date anniversary under your Equitable
Accumulator Certificate. However, it may not be exercised earlier than the
Annuitant's age 60, nor later than the Annuitant's age 83; except that for
Annuitant issue ages 20 to 44, it may be exercised following the 15th or
later Contract Date anniversary.
When you exercise the Guaranteed Minimum Income Benefit, you will receive an
Income Manager (Life Annuity with a Period Certain) certificate in exchange,
with at least the minimum annual income specified and a period certain based
on the Annuitant's age at the time the benefit is exercised as follows:
<TABLE>
<CAPTION>
LEVEL PAYMENTS*
- -----------------------------------
PERIOD CERTAIN
YEARS
ANNUITANT'S ---------------
AGE AT ELECTION IRA NQ
- ------------------- ------- -------
<S> <C> <C>
60 to 75 10 10
76 9 10
77 8 10
78 7 10
79 7 10
80 7 10
81 7 9
82 7 8
83 7 7
</TABLE>
- ----------
* Other forms and period certains may also be available.
Payments will start one payment mode from the Contract Date of the Income
Manager certificate.
Each year on your Contract Date anniversary, if you are eligible to exercise
the Guaranteed Minimum Income Benefit, we will send you an eligibility notice
illustrating how much income could be provided on the Contract Date
anniversary. You may then notify us within 30 days following the Contract
Date anniversary if you want to exercise the Guaranteed Minimum Income
Benefit by submitting the proper form and returning your Equitable
Accumulator Certificate. The amount of income you actually receive will be
determined on the Transaction Date that we receive your properly completed
exercise notice.
You may also apply your Cash Value at any time to an Income Manager (Life
Annuity with a Period Certain) or, you may always apply your Annuity Account
Value to any of our life annuity benefits. The annuity benefits are discussed
in Part 4. These benefits differ from the Income Manager and may provide
higher or lower income levels, but do not have all the features of the Income
Manager. You may request an illustration from your registered representative.
The Income Manager (Life Annuity with a Period Certain) is offered through
our prospectus for the Income Manager dated May 1, 1997, which may be
obtained from your registered representative. We will also provide a
prospectus with the eligibility notice. You should read it carefully before
you decide to exercise your Guaranteed Minimum Income Benefit.
Successor Annuitant/Certificate Owner
If the successor Annuitant/Certificate Owner election (discussed below) was
elected at issue of the Certificate and is in effect at your death, the
Guaranteed Minimum Income Benefit will continue to be available on Contract
Date anniversaries seven and later based on the Contract Date of your
Equitable Accumulator Certificate, provided the Guaranteed Minimum Income
Benefit is exercised as specified above based on the age of the successor
Annuitant/ Certificate Owner.
DEATH BENEFIT
Generally, upon receipt of proof satisfactory to us of your death prior to
the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the
time you apply for the Certificate. While the Certificate is in effect, you
may change your beneficiary by writing to our Processing Office. The change
will be effective on the date the written submission was signed. The death
benefit payable will be determined as of the date we receive such proof of
death and any required instructions as to the method of payment.
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The death benefit is equal to the Annuity Account Value or, if greater, the
Guaranteed Minimum Death Benefit described below.
Guaranteed Minimum Death Benefit (Applicable to Certificates issued in all
states except New York for Annuitant issue age 20-79)
The amount of your Guaranteed Minimum Death Benefit is based on either the
"6% to Age 80 Roll Up" or the "Annual Ratchet to Age 80" whichever you elect
when you apply for a Certificate. Once elected, the benefit may not be
changed.
6% to Age 80 Roll Up--On the Contract Date the Guaranteed Minimum Death
Benefit is equal to the initial contribution. Thereafter, the Guaranteed
Minimum Death Benefit is credited with interest at 6% (4% for amounts in the
Alliance Money Market Fund and the Guarantee Periods) on each Contract Date
anniversary through the Annuitant's age 80 (or on the date of the Annuitant's
death, if earlier), and 0% thereafter, and is adjusted for any subsequent
contributions and withdrawals. The 6% to Age 80 Roll Up is not available in
New York.
Annual Ratchet to Age 80--On the Contract Date, the Guaranteed Minimum Death
Benefit is equal to the initial contribution. Thereafter, the Guaranteed
Minimum Death Benefit is reset through the Annuitant's age 80 to the Annuity
Account Value on a Contract Date anniversary if higher than the current
Guaranteed Minimum Death Benefit, and is adjusted for any subsequent
contributions and withdrawals.
Guaranteed Minimum Death Benefit (Applicable to Certificates issued in New
York for Annuitant issue age 20 -79) On the Contract Date, the GMDB is equal
to the initial contribution. Thereafter, the GMDB is reset through the
Annuitant's age 80 to the Annuity Account Value on a Contract Date
anniversary if higher than the current GMDB, and is adjusted for any
subsequent contributions and withdrawals.
Upon your death, the GMDB will be reset to the Annuity Account Value in the
Investment Funds, plus the sum of the Guaranteed Period Amounts in each
Guarantee Period, if greater than the GMDB determined above.
Applicable to Certificates in issued in all states for Annuitant issue ages
80 through 83
On the Contract Date, the GMDB is equal to the portion of the initial
contribution allocated to the Investment Funds. Thereafter, the GMDB is equal
to such portion of the initial contribution plus (a) any subsequent
contributions and transfers into the Investment Funds, less (b) any transfers
and withdrawals from such Funds.
Withdrawals will reduce your Guaranteed Minimum Death Benefit, see "How
Withdrawals and Transfer Affect Your Guaranteed Minimum Death Benefit and
Guaranteed Minimum Income Benefit" below.
Withdrawals will reduce your Guaranteed Minimum Death Benefit, see "How
Withdrawals Affect Your Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit" in Part 4. See Appendix III for an example of the
calculation of the Guaranteed Minimum Death Benefit.
How Death Benefit Payment is Made
We will pay the death benefit to the beneficiary in the form of the annuity
benefit you have chosen under your Certificate. If no annuity benefit has
been chosen at the time of the Annuitant's death, the beneficiary will
receive the death benefit in a lump sum. However, subject to any exceptions
in the Certificate, Equitable Life's rules then in effect and any other
applicable requirements under the Code, the beneficiary may elect to apply
the death benefit to one or more annuity benefits offered by Equitable Life.
See "Annuity Benefits and Distribution Options" in Part 4. Note that if you
are both the Certificate Owner and the Annuitant, only a life annuity or an
annuity that does not extend beyond the life expectancy of the beneficiary
may be elected.
Successor Annuitant
If you are both the Certificate Owner and the Annuitant and you elect your
spouse to be both the sole primary beneficiary and the successor Annuitant/
Certificate Owner, then no death benefit is payable until your surviving
spouse's death.
On the Contract Date anniversary following your death, if the successor
Annuitant/Certificate Owner election was elected at issue of your Certificate
and is in effect at your death, the Guaranteed Minimum Death Benefit will be
reset at the greater of the current Guaranteed Minimum Death Benefit and the
current Annuity Account Value. In determining whether the Guaranteed Minimum
Death Benefit can continue to grow, we will use the age (as of the Contract
Date anniversary) of the successor Annuitant/Certificate Owner.
WHEN THE NQ CERTIFICATE OWNER DIES
BEFORE THE ANNUITANT
When you are not the Annuitant under an NQ Certificate and you die before the
Annuity Commencement Date, the beneficiary named to receive the death benefit
upon the Annuitant's death will automatically succeed as Certificate Owner
(unless you name a different person as a successor Owner in a written form
acceptable to us and send it to our
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<PAGE>
Processing Office). The Certificate provides that the original Certificate
Owner's entire interest in the Certificate be completely distributed to the
named beneficiary by the fifth anniversary of such Owner's death (unless an
annuity benefit is elected and payments begin within one year after the
Certificate Owner's death and are made over the beneficiary's life or over a
period not to exceed the beneficiary's life expectancy). If an annuity
benefit has not been elected, as described above, on the fifth anniversary of
your death, we will pay any Annuity Account Value remaining on such date,
less any applicable withdrawal charge. If the successor Certificate Owner is
your surviving spouse, no distributions are required as long as both the
surviving spouse and the Annuitant are living.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward
or downward market value adjustment. See "Part 2: The Guaranteed Period
Account." We do not guarantee any minimum Cash Value except for amounts in a
Guarantee Period held to the Expiration Date. On any date before the Annuity
Commencement Date while the Certificate is in effect, the Cash Value is equal
to the Annuity Account Value, less any withdrawal charge. The free corridor
amount will not apply when calculating the withdrawal charge applicable upon
a surrender. See "Part 5: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
you are living and before the Annuity Commencement Date. For a surrender to
be effective, we must receive your written request and the Certificate at our
Processing Office. The Cash Value will be determined on the Transaction Date.
All benefits under the Certificate will be terminated as of that date.
You may receive the Cash Value in a single sum payment or apply it under one
or more of the annuity benefits. See "Annuity Benefits and Distribution
Options" in Part 4. We will usually pay the Cash Value within seven calendar
days, but we may delay payment as described in "When Payments are Made"
below.
For the tax consequences of surrenders, see "Part 7: Tax Aspects of the
Certificates."
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds,
payment of any portion of the Annuity Account Value (less any applicable
withdrawal charge) from the Investment Funds, and, upon surrender, payment of
the Cash Value from the Investment Funds will be made within seven calendar
days after the Transaction Date. Payments or application of proceeds from the
Investment Funds can be deferred for any period during which (1) the New York
Stock Exchange is closed or trading on it is restricted, (2) sales of
securities or determination of the fair value of an Investment Fund's assets
is not reasonably practicable because of an emergency, or (3) the SEC, by
order, permits us to defer payment in order to protect persons with interest
in the Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account (other than for death benefits) for up to six
months while you are living. We may also defer payments for any amount
attributable to a contribution made in the form of a check for a reasonable
amount of time (not to exceed 15 days) to permit the check to clear.
ASSIGNMENT
The IRA Certificates are not assignable or transferable except through
surrender to us. They may not be borrowed against or used as collateral for a
loan or other obligation.
The NQ Certificates may be assigned at any time before the Annuity
Commencement Date and for any purpose other than as collateral or security
for a loan. Equitable Life will not be bound by an assignment unless it is in
writing and we have received it at our Processing Office. In some cases, an
assignment may have adverse tax consequences. See "Part 7: Tax Aspects of the
Certificates."
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the
calendar year;
o Three additional reports of your Certificate values each year;
o Annual and semi-annual statements of each trust; and
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values
and Guaranteed Rates applicable to the Guarantee Periods. Also call
during our regular business hours to speak to one of our customer
service representatives.
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<PAGE>
o PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive, 4th Floor
Secaucus, NJ 07096
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI),
an indirect wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI is
registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's
principal business address is 1290 Avenue of the Americas, New York, New York
10104. For 1996, EDI was paid a fee of $1,204,370 for its services under a
"Distribution Agreement" with Equitable Life and the Separate Account.
The Certificates will be sold by registered representatives of EDI, as well
as by unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation will generally not exceed 6.0%
of total contributions made under the Certificates. EDI may also receive
compensation and reimbursement for its marketing services under the terms of
its distribution agreement with Equitable Life. Broker-dealers receiving
sales compensation will generally pay a portion thereof to their registered
representatives as commissions related to sales of the Certificates. The
offering of the Certificates is intended to be continuous.
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<PAGE>
PART 4: DISTRIBUTION METHODS UNDER THE CERTIFICATES
The Certificates offer several distribution methods specifically designed to
provide retirement income. IRA Certificates permit Lump Sum Withdrawals,
Substantially Equal Payment Withdrawals, Systematic Withdrawals and Minimum
Distribution Withdrawals. NQ Certificates permit Lump Sum Withdrawals and
Systematic Withdrawals. The Certificates also offer fixed and variable
annuity benefits and Income Manager distribution options. IRA Certificate
Owners should consider how the distribution method selected may affect the
ability to comply with the minimum distribution rules discussed in "Part 7:
Tax Aspects of the Certificates."
For IRA retirement benefits subject to minimum distribution requirements, we
will send a form outlining the distribution options available before you
reach age 70 1/2 (if you have not begun your distribution in the form of a
life contingent annuity before that time).
WITHDRAWAL OPTIONS
The Certificates are annuity contracts, even though you may elect to receive
your benefits in a non-annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while you are alive. See
"Part 5: Deductions and Charges."
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration
Date" in Part 2. Withdrawals may be taxable and subject to tax penalty. See
"Part 7: Tax Aspects of the Certificates."
As a deterrent to early withdrawal (generally prior to age 59 1/2) the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 7: Tax Aspects
of the Certificates."
LUMP SUM WITHDRAWALS
(Available under IRA and NQ Certificates)
You may take Lump Sum Withdrawals at any time subject to a minimum withdrawal
amount of $1,000. A request to withdraw more than 90% of the Cash Value as of
the Transaction Date will result in the termination of the Certificate and
will be treated as a surrender of the Certificate for its Cash Value. See
"Surrendering the Certificates to Receive the Cash Value," in Part 3.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal
will be taken. If we have received the information we require, the requested
withdrawal will become effective on the Transaction Date and proceeds will
usually be mailed within seven calendar days thereafter, but we may delay
payment as described in "When Payments Are Made" in Part 3. If we receive
only partially completed information, our Processing Office will contact you
for specific instructions before your request can be processed.
Lump Sum Withdrawals in excess of the 15% free corridor amount may be subject
to a withdrawal charge.
SYSTEMATIC WITHDRAWALS
(Available under IRA and NQ Certificates)
Under IRA Certificates this option may be elected only if you are between age
59 1/2 to 70 1/2.
Systematic Withdrawals provide level percentage or level amount payouts. You
may choose to receive Systematic Withdrawals on a monthly, quarterly or
annual basis. You select a dollar amount or percentage of the Annuity Account
Value to be withdrawn, subject to a maximum of 1.2% monthly, 3.6% quarterly
and 15.0% annually, but in no event may any payment be less than $250. If at
the time a Systematic Withdrawal is to be made, the withdrawal amount would
be less than $250, no payment will be made and your Systematic Withdrawal
election will terminate.
You select the date of the month when the withdrawals will be made, but you
may not choose a date later than the 28th day of the month. If no date is
selected, withdrawals will be made on the same calendar day of the month as
the Contract Date. The commencement of payments under the Systematic
Withdrawal option may not be elected to start sooner than 28 days after issue
of the Certificate.
You may elect Systematic Withdrawals at any time by completing the proper
form and sending it to our Processing Office. You may change the payment
frequency of your Systematic Withdrawals once each Contract Year or cancel
this withdrawal option at any time by sending notice in a form satisfactory
to us. The notice must be received at our Processing Office at least seven
calendar days prior to the next scheduled withdrawal date. You may also
change the amount or percentage of your Systematic Withdraw-
24
<PAGE>
als once in each Contract Year. However, you may not change the amount or
percentage in any Contract Year where you have previously taken another
withdrawal under the Lump Sum Withdrawal option described above.
Unless you specify otherwise, Systematic Withdrawals will be withdrawn on a
pro rata basis from your Annuity Account Value in the Investment Funds. If
there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal required or the total amount of the
withdrawal, as applicable, will be withdrawn from the Guarantee Periods in
order of the earliest Expiration Date(s) first.
Systematic Withdrawals are not subject to a withdrawal charge, except to the
extent that, when added to a Lump Sum Withdrawal previously taken in the same
Contract Year, the Systematic Withdrawal exceeds the 15% free corridor
amount. See "Withdrawal Charge" in Part 5.
SUBSTANTIALLY EQUAL PAYMENT WITHDRAWALS
(Available under IRA Certificates)
Substantially Equal Payment Withdrawals provide distributions from the
Annuity Account Value of the amounts necessary so that the 10% penalty tax,
normally applicable to distributions made prior to age 59 1/2, does not
apply. See "Penalty Tax on Early Distributions," in Part 7. Once
distributions begin, they should not be changed or stopped until the later of
age 59 1/2 or five years from the date of the first distribution. If you
change or stop the distributions or take a Lump Sum Withdrawal, you may be
liable for the 10% penalty tax that would have otherwise been due on all
prior distributions made under this option and for any interest thereon.
Substantially Equal Payment Withdrawals may be elected at any time if you are
below age 59 1/2. You can elect this option by submitting the proper form.
You select the day and the month when the first withdrawal will be made, but
it may not be sooner than 28 days after the issue of the Certificate. In no
event may you elect to receive the first payment in the same Contract Year in
which a Lump Sum Withdrawal was taken. We will calculate the amount of the
distribution under a method we select and payments will be made monthly,
quarterly or annually as you select. These payments will continue to be made
until we receive written notice from you to cancel this option. Such notice
must be received at our Processing Office at least seven calendar days prior
to the next scheduled withdrawal date. A Lump Sum Withdrawal taken while
Substantially Equal Payment Withdrawals are in effect will cancel such
withdrawals. You may elect to start receiving Substantially Equal Payment
Withdrawals again, but in no event can the payments start in the same
Contract Year in which a Lump Sum Withdrawal was taken. We will calculate a
new distribution amount.
Unless you specify otherwise, Substantially Equal Payment Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the
Investment Funds. If there is insufficient value or no value in the
Investment Funds, any additional amount of the withdrawal or the total amount
of the withdrawal, as applicable, will be withdrawn from the Guarantee
Periods in order of the earliest Expiration Date(s) first. A market value
adjustment may apply.
Substantially Equal Payment Withdrawals are not subject to a withdrawal
charge.
MINIMUM DISTRIBUTION WITHDRAWALS
(Available under IRA Certificates)
Minimum Distribution Withdrawals provide distributions from the Annuity
Account Value of the amounts necessary to meet minimum distribution
requirements set forth in the Code. This option may be elected in the year in
which you attain age 70 1/2. You can elect Minimum Distribution Withdrawals
by submitting the proper election form. The minimum amount we will pay out is
$250. You may elect Minimum Distribution Withdrawals for each Certificate you
own, subject to our rules then in effect. Currently, Minimum Distribution
Withdrawal payments will be made annually.
Unless you specify otherwise, Minimum Distributions Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the
Investment Funds. If there is insufficient value or no value in the
Investment Funds, any additional amount of the withdrawal required or the
total amount of the withdrawal, as applicable, will be withdrawn from the
Guarantee Periods in order of the earliest Expiration Date(s) first.
Minimum Distribution Withdrawals are not subject to a withdrawal charge,
except to the extent that, when added to a Lump Sum Withdrawal previously
taken in the same Contract Year, the Minimum Distribution Withdrawal exceeds
the 15% free corridor amount. See "Withdrawal Charge" in Part 5.
EXAMPLE
The chart below illustrates the pattern of payments, under Minimum
Distribution Withdrawals for a male who purchases an IRA Certificate at age
70
25
<PAGE>
with a single contribution of $100,000, with payments commencing at the end
of the first Contract Year.
PATTERN OF MINIMUM DISTRIBUTION WITHDRAWALS
$100,000 SINGLE CONTRIBUTION FOR A
SINGLE LIFE-MALE AGE 78
[THE FOLLOWING TABLE WAS REPRESENTED
AS AN AREA GRAPH IN THE PROSPECTUS]
Assumes 5.8% Rate of Return
<TABLE>
<CAPTION>
AMOUNT
AGE WITHDRAWN
--- ---------
<S> <C>
70 $8,250
75 7,653
80 8,667
85 8,770
90 6,931
95 3,727
100 1,179
</TABLE>
[END OF GRAPHICALLY REPRESENTED DATA]
Payments are calculated each year based on the Annuity Account Value at the
end of each year, using the recalculation method of determining payments.
(See "Part 1--Minimum Distribution Withdrawals" in the SAI.) Payments are
made annually, and it is further assumed that no Lump Sum Withdrawals are
taken.
This example assumes an annual rate of return of 6.0% compounded annually for
both the Investment Funds and the Guaranteed Period Account. This rate of
return is for illustrative purposes only and is not intended to represent an
expected or guaranteed rate of return. Your investment results will vary. In
addition, this example does not reflect any charges that may be applicable
under the Rollover IRA. Such charges would effectively reduce the actual
return.
HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED
MINIMUM DEATH BENEFIT
Except as described in the next sentence, each withdrawal will cause a
reduction in your current Guaranteed Minimum Death Benefit and Guaranteed
Minimum Income Benefit benefit base (described below) on a pro rata basis.
Your current Guaranteed Minimum Death Benefit if based on the 6% to Age 80
Roll Up, and your Guaranteed Minimum Income Benefit benefit base, will be
reduced on a dollar-for-dollar basis as long as the sum of your withdrawals
in any Contract Year is 6% or less of the beginning of Contract Year
Guaranteed Minimum Death Benefit. Once a withdrawal is made that causes
cumulative withdrawals in a Contract Year to exceed 6% of the beginning of
Contract Year Guaranteed Minimum Death Benefit, that withdrawal and any
subsequent withdrawals in that Contract Year will cause a pro rata reduction
to occur.
Reduction on a dollar-for-dollar basis means your current Guaranteed Minimum
Death Benefit and Guaranteed Minimum Income Benefit benefit base are reduced
by the dollar amount of the withdrawal. Reduction on a pro rata basis means
that we calculate the percentage of the Annuity Account Value as of the
Transaction Date that is being withdrawn and we reduce your current
Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit
benefit base by that same percentage. For example, if your Annuity Account
Value is $10,000 and you withdraw $4,000 you have withdrawn 40% ($4,000/
$10,000) of your Annuity Account Value. If your Guaranteed Minimum Death
Benefit was $20,000 prior to the withdrawal, it would be reduced by $8,000
($20,000 x .40) and your new Guaranteed Minimum Death Benefit after the
withdrawal would be $12,000 ($20,000 - $8,000).
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your Guraanteed Minimum
Death Benefit or Guaranteed Minimum Income Benefit.
Guaranteed Minimum Income Benefit Benefit Base--The Guaranteed Minimum Income
Benefit benefit base is equal to the initial contribution on the Contract
Date. Thereafter, the Guaranteed Minimum Income Benefit benefit base is
credited with interest at 6% (4% for amounts in the Alliance Money Market
Fund and the Guarantee Periods) on each Contract Date anniversary through the
Annuitant's age 80, and 0% thereafter, and is adjusted for any subsequent
contributions and withdrawals. The Guaranteed Minimum Income Benefit benefit
base will also be reduced by any withdrawal charge remaining on the
Transaction Date that you exercise your Guaranteed Minimum Income Benefit.
Your Guaranteed Minimum Income Benefit benefit base is applied to guaranteed
minimum annuity factors to determine the Guaranteed Minimum Income Benefit.
The guaranteed minimum annuity factors are based on (i) interest at 2.5% if
the Guaranteed Minimum Income Benefit is exercised within 30 days following a
Contract Date anniversary in years 7 through 9 and at 3% if exercised within
30 days following the 10th or later Contract Date anniversary, and (ii)
mortality tables that assume increasing longevity. These interest and
mortality factors are generally more conservative than the basis underlying
current annuity factors, which means that they would produce less periodic
income for an equal amount applied.
Your Guaranteed Minimum Income Benefit benefit base does not create an
Annuity Account Value or a Cash Value and is used solely for purposes of
calculating the Guaranteed Minimum Income Benefit.
26
<PAGE>
ANNUITY BENEFITS AND PAYOUT ANNUITY
OPTIONS
The Equitable Accumulator Certificates offer annuity benefits and Income
Manager payout annuity options, described below, for providing retirement
income.
ANNUITY BENEFITS
Annuity benefits under the Equitable Accumulator provide periodic payments
over a specified period of time which may be fixed or may be based on the
Annuitant's life. Annuity forms of payment are calculated as of the Annuity
Commencement Date, which is on file with our Processing Office. You can
change the Annuity Commencement Date by writing to our Processing Office any
time before the Annuity Commencement Date. However, you may not choose a date
later than the 28th day of any month. Also, based on the issue age of the
Annuitant, the Annuity Commencement Date may not be later than the Processing
Date which follows the Annuitant's 90th birthday (may be different in some
states).
Before the Annuity Commencement Date, we will send a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay fixed
annuity benefits on the "normal form" indicated for your Certificate as of
the Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or
(2) the Cash Value for any period certain only annuity form except that if
the period certain is more than five years, the amount applied will be no
less than 95% of the Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an annuity benefit prior
to an Expiration Date will result in a market value adjustment. See "Market
Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 2.
Annuity Forms
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with this
annuity form, it provides the highest monthly payment of any of the life
income annuity options, so long as the Annuitant is living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before a specified period of time (the "certain period") has ended,
payments will continue to the beneficiary for the balance of the certain
period. Certain periods may be 5, 10, 15 or 20 years. A life annuity with
a certain period of 10 years is the normal form of annuity under the
Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to you
for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments will
continue to your beneficiary until that amount has been recovered. This
option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life income
to you and, after your death, continuation of income to the survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The annuity forms outlined above are available in both fixed and variable
form, unless otherwise indicated. Fixed annuity payments are guaranteed by us
and will be based either on the tables of guaranteed annuity payments in your
Certificate or on our then current annuity rates, whichever is more favorable
for the Annuitant. Variable income annuities may be funded through the
Investment Funds through the purchase of annuity units. The amount of each
variable annuity payment may fluctuate, depending upon the performance of the
Investment Funds. That is because the annuity unit value rises and falls
depending on whether the actual rate of net investment return (after
deduction of charges) is higher or lower than the assumed base rate. See
"Annuity Unit Values" in the SAI. Variable income annuities may also be
available by separate prospectus through the Funds of other separate accounts
we offer.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here. Your registered representative
can provide details.
For each annuity benefit, we will issue a separate written agreement putting
the benefit into effect. Before we pay any annuity benefit, we require the
return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
annuity form, the Annuitant's age (or the Annuitant's and joint Annuitant's
ages) and in certain
27
<PAGE>
instances, the sex of the Annuitant(s). Once an income annuity form is chosen
and payments have commenced, no change can be made.
If, at the time you elect an annuity form, the amount to be applied is less
than $2,000 or the initial payment under the form elected is less than $20
monthly, we reserve the right to pay the Annuity Account Value in a single
sum rather than as payments under the annuity form chosen.
INCOME MANAGER PAYOUT ANNUITY OPTIONS
Under Certificates, you may apply your Annuity Account Value to an Income
Manager (Life Annuity with a Period Certain) payout annuity certificate.
These certificates provide guaranteed payments for your life or for your life
and the life of a joint Annuitant, and are available provided the Owner and
Annuitant meet the issue age and payment requirements. Income Manager
certificates may not be available in all states. Income Manager payout
annuities provide guaranteed level (IRA and NQ Certificates) or guaranteed
increasing (NQ Certificates) payments.
If you apply a part of the Annuity Account Value under any of the above
Income Manager payout annuity certificates, it will be considered a
withdrawal and may be subject to withdrawal charges. See "Withdrawal Options"
above. If 100% of the Annuity Account Value is applied from an Equitable
Accumulator Certificate at a time when the dollar amount of the withdrawal
charge is greater than 2% of remaining contributions (after withdrawals),
such withdrawal charge will not be deducted. However, a new withdrawal charge
schedule will apply under the new certificate. For purposes of the withdrawal
charge schedule, the year in which your Annuity Account Value is applied
under the new certificate will be "Contract Year 1." If 100% of the Annuity
Account Value is applied from the Equitable Accumulator when the dollar
amount of the withdrawal charge is 2% or less, such withdrawal charge will
not be deducted and there will be no withdrawal charge schedule under the new
certificate. You should consider the timing of your purchase as it relates to
the potential for withdrawal charges under the new certificate. No subsequent
contributions will be permitted under an Income Manager certificate.
You may also apply your Annuity Account Value to an Income Manager (Period
Certain) payout annuity once withdrawal charges are no longer in effect. This
version of the Income Manager provides for annual payments for a specified
period. No withdrawal charges will apply under this Income Manager
certificate.
The payout annuities are described in our prospectus for the Income Manager.
Copies of the most current version are available from your registered
representative. To purchase an Income Manager payout annuity we also require
the return of your Equitable Accumulator Certificate. An Income Manager
payout annuity certificate will be issued to put one of these options into
effect. Depending upon your circumstances, this may be accomplished on a
tax-free basis. Consult your tax adviser.
28
<PAGE>
PART 5: DEDUCTIONS AND CHARGES
CHARGES DEDUCTED FROM THE
ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options
you select, subject to certain restrictions. We then periodically deduct
certain amounts from your Annuity Account Value. Unless otherwise indicated,
the charges described below and under "Charges Deducted from the Investment
Funds" below will not be increased by us for the life of the Certificates. We
may reduce certain charges under sponsored arrangements. See "Sponsored
Arrangements" below.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that (i) a Lump Sum Withdrawal or cumulative withdrawals during
a Contract Year exceed the free corridor amount, or (ii) if the Certificate
is surrendered to receive its Cash Value. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the excess withdrawal is made or the Certificate is
surrendered, beginning with "Contract Year 1" with respect to each
contribution withdrawn or surrendered. For purposes of the table, for each
contribution, the Contract Year in which we receive that contribution is
"Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the beginning
of the Contract Year, minus any amount previously withdrawn during that
Contract Year.
There is no withdrawal charge if a Lump Sum Withdrawal is taken to satisfy
minimum distribution requirements under the Certificate. A free corridor
amount is not applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge, the Federal income tax law
treats earnings under Equitable Accumulator Certificates as withdrawn first.
See "Part 7: Tax Aspects of the Certificates."
The withdrawal charge is to help cover sales expenses.
For NQ Certificates issued to a charitable remainder trust, the free corridor
amount will be changed to be the greater of (1) the current Annuity Account
Value, less contributions that have not been withdrawn (earnings in the
Certificate) and (2) the free corridor amount defined above.
baseBUILDER Combined Guaranteed Minimum Income Benefit and Guaranteed Minimum
Death Benefit Charge
If you elect the Combined Guaranteed Minimum Income Benefit and Guaranteed
Minimum Death Benefit, we deduct a charge annually on each Processing Date.
The charge is equal to a percentage of the Guaranteed Minimum Income Benefit
benefit base in effect on the Processing Date. The percentage is equal to
0.30%. The Guaranteed Minimum Income Benefit benefit base is described under
"How Withdrawals Affect Your Guaranteed Minimum Income Benefit and Guaranteed
Minimum Death Benefit" in Part 4.
This charge will be deducted from your Annuity Account Value in the
Investment Funds on a pro rata basis. If there is insufficient value in the
Investment Funds, all or a portion of such charge will be deducted from the
Guarantee Periods in order of the earliest Expiration Date(s) first. A market
value adjustment may apply. See "Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the Expiration Date" in Part 2.
Charges for State Premium and Other
Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium
taxes, that might be imposed in your state. Generally we deduct this charge
from
29
<PAGE>
the amount applied to provide an income annuity option. In certain states,
however, we may deduct the charge for taxes from contributions. The current
tax charge that might be imposed varies by state and ranges from 0% to 2.25%
for IRA Certificates, and from 0% to 3.5% for NQ Certificates (1% in Puerto
Rico and 5% in the Virgin Islands).
CHARGES DEDUCTED FROM THE
INVESTMENT FUNDS
Mortality and Expense Risks Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for mortality and expense risks, including the Guaranteed
Minimum Death Benefit. The daily charge is at the rate of 0.003032%, which is
equivalent to an annual rate of 1.10%, on the assets in each Investment Fund.
The mortality risk assumed is the risk that Annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables,
shown in each Certificate, will differ from actual mortality experience.
Lastly, we assume a mortality risk to the extent that at the time of death,
the Guaranteed Minimum Death Benefit exceeds the Cash Value of the
Certificate. The expense risk assumed is the risk that it will cost us more
to issue and administer the Certificates than we expect.
Administration Charge
We will deduct a daily charge from the assets in each Investment Fund, to
compensate us for administration expenses under the Certificates. The daily
charge is at a rate of 0.000692% (equivalent to an annual rate of 0.25%) on
the assets in each Investment Fund. We reserve the right to increase this
charge to an annual rate of 0.35%, the maximum permitted under the
Certificates.
EQ TRUST CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQ Trust's assets, the 12b-1
fee, direct operating expenses of EQ Trust (such as trustees' fees, expenses
of independent auditors and legal counsel, administrative service fees,
custodian fees, and liability insurance), and certain investment-related
expenses of EQ Trust (such as brokerage commissions and other expenses
related to the purchase and sale of securities), are reflected in each
Portfolio's daily share price. The investment management fees paid annually
by the Portfolio cannot be changed without a vote by shareholders. They are
as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY
NET ASSETS
--------------
<S> <C>
EQ/Putnam Growth & Income
Value.......................... 0.55%
EQ/Putnam Investors Growth .... 0.55%
EQ/Putnam International Equity 0.70%
MFS Research ................... 0.55%
MFS Emerging Growth Companies .. 0.55%
Merrill Lynch Basic Value
Equity ........................ 0.55%
Merrill Lynch World Strategy .. 0.70%
</TABLE>
Investment management fees are established under EQ Trust's Investment
Management Agreement between EQ Trust and its investment manager, EQ
Financial. EQ Financial has entered into expense limitation agreements with
EQ Trust, with respect to each Portfolio, pursuant to which EQ Financial has
agreed to waive or limit its fees and total annual operating expenses
(expressed as a percentage of the Portfolios' average daily net assets) to
0.85% each for the EQ/Putnam Growth & Income Value, EQ/Putnam Growth
Investors, MFS Research, MFS Emerging Growth Companies, and Merrill Lynch
Basic Value Equity Portfolios; and 1.20% each for EQ/Putnam International
Equity and Merrill Lynch World Strategy Portfolios. See the prospectus for EQ
Trust for more information.
The Rule 12b-1 Plan provides that EQ Trust, on behalf of each Portfolio, may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fees, which
may be waived in the discretion of EDI, may be increased only by action of
the Board of Trustees of EQ Trust up to a maximum of 0.50% per annum. All of
these fees and expenses are described more fully in the EQ Trust prospectus.
<PAGE>
HR TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HR Trust's assets, the 12b-1
fee, direct operating expenses of HR Trust (such as trustees' fees, expenses
of independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of HR Trust
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
maximum investment advisory fees paid annually by the Portfolios cannot be
changed without a vote by shareholders. They are as follows:
30
<PAGE>
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS
----------------------------------------------------
FIRST NEXT NEXT NEXT
$750 $750 $1 $2.5
MILLION MILLION BILLION BILLION THEREAFTER
--------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Alliance
Money
Market...... 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance
High Yield . 0.600% 0.575% 0.550% 0.530% 0.520%
Alliance
Common
Stock ...... 0.475% 0.425% 0.375% 0.355% 0.345%*
Alliance
Aggressive
Stock ...... 0.625% 0.575% 0.525% 0.500% 0.475%
Alliance
Small Cap
Growth...... 0.900% 0.850% 0.825% 0.800% 0.775%
</TABLE>
*On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
Investment advisory fees are established under HR Trust's investment advisory
agreements between the HR Trust and its investment adviser, Alliance.
The Rule 12b-1 Plan provides that HR Trust, on behalf of each Portfolio may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fee, which
may be waived in the discretion of EDI, may be increased only by action of
the Board of Trustees of the HR Trust up to a maximum of 0.50% per annum. All
of these fees and expenses are described more fully in the HR Trust
prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal
charge or change the minimum initial contribution requirements. We may also
change the Guaranteed Minimum Death Benefit and the Guaranteed Minimum Income
Benefit. We may also offer Investment Funds investing in Class IA shares of
HR Trust and EQ Trust, which are not subject to the 12b-1 fee. Sponsored
arrangements include those in which an employer allows us to sell
Certificates to its employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group or sponsoring organization among other
factors. We take all these factors into account when reducing charges. To
qualify for reduced charges, a group or sponsored arrangement must meet
certain requirements, including our requirements for size and number of years
in existence. Group or sponsored arrangements that have been set up solely to
buy Certificates or that have been in existence less than six months will not
qualify for reduced charges.
We may also establish different Guaranteed Rates for the Guarantee Periods
under different classes of Certificates for group or sponsored arrangements.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the withdrawal charge will reflect
differences in costs or services and will not be unfairly discriminatory.
Group or sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR
MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE
ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
Charges may be reduced or eliminated when sales are made in a manner that
results in savings of sales and administrative expenses, such as sales
through persons who are compensated by clients for recommending investments
and receive no commission or reduced commissions in connection with the sale
of the Certificates. In no event will a reduction or elimination of charges
be permitted where it would be unfairly discriminatory.
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PART 6: VOTING RIGHTS
EQ TRUST AND HR TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of EQ Trust or HR Trust.
Since we own the assets of the Separate Account, we are the legal owner of
the shares and, as such, have the right to vote on certain matters. Among
other things, we may vote:
o to elect each trust's Board of Trustees,
o to ratify the selection of independent auditors for each trust, and
o on any other matters described in each trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because EQ Trust is a Delaware business trust and HR Trust is a Massachusetts
business trust, annual meetings are not required. Whenever a shareholder vote
is taken, we will give Certificate Owners the opportunity to instruct us how
to vote the number of shares attributable to their Certificates. If we do not
receive instructions in time from all Certificate Owners, we will vote the
shares of a Portfolio for which no instructions have been received in the
same proportion as we vote shares of that Portfolio for which we have
received instructions. We will also vote any shares that we are entitled to
vote directly because of amounts we have in an Investment Fund in the same
proportions that Certificate Owners vote.
Each share of each trust is entitled to one vote. Fractional shares will be
counted. Voting generally is on a Portfolio-by-Portfolio basis except that
shares will be voted on an aggregate basis when universal matters, such as
election of Trustees and ratification of independent auditors, are voted
upon. However, if the Trustees determine that shareholders in a Portfolio are
not affected by a particular matter, then such shareholders generally would
not be entitled to vote on that matter.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQ Trust shares currently are sold only to
our separate accounts. HR Trust shares are held by other separate accounts of
ours and by separate accounts of insurance companies affiliated and
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 the Certificate Owners, we currently do
not foresee any disadvantages arising out of this. HR 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 HR Trust's
response to any of those events insufficiently protects our Certificate
Owners, we will see to it that appropriate action is taken to protect our
Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner
approval, Certificate Owners will be entitled to one vote for each
Accumulation Unit they have in the Investment Funds. Each Certificate Owner
who has elected a variable annuity payout may cast the number of votes equal
to the dollar amount of reserves we are holding for that annuity in an
Investment Fund divided by the Accumulation Unit Value for that Investment
Fund. We will cast votes attributable to any amounts we have in the
Investment Funds in the same proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
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PART 7: TAX ASPECTS OF THE CERTIFICATES
This Part of the prospectus generally covers our understanding of the current
Federal income tax rules that apply to NQ and IRA Certificates.
This Part does not apply to NQ Certificates used as the investment vehicle
for qualified plans discussed in Appendix II.
This prospectus does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities and individual retirement arrangements. In addition,
the Treasury Department may amend existing regulations, issue new
regulations, or adopt new interpretations of existing laws. State tax laws
or, if you are not a United States resident, foreign tax laws, may affect the
tax consequences to you or the beneficiary. These laws may change from time
to time without notice and, as a result, the tax consequences may be altered.
There is no way of predicting whether, when or in what form any such change
would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
TAXATION OF NON-QUALIFIED ANNUITIES
This section generally covers our understanding of the current Federal income
tax laws that apply to a non-qualified annuity purchased with only after-tax
dollars.
Equitable Life has designed the NQ Certificate to qualify as an "annuity" for
purposes of Federal income tax law. Gains in the Annuity Account Value of the
Certificate generally will not be taxable to an individual until a
distribution occurs, either by a withdrawal of part or all of its value or as
a series of periodic payments. However, there are some exceptions to this
rule: (1) if a Certificate fails the investment diversification requirements;
(2) if an individual transfers a Certificate as a gift to someone other than
a spouse (or divorced spouse), any gain in its Annuity Account Value will be
taxed at the time of transfer; (3) the assignment or pledge of any portion of
the value of a Certificate will be treated as a distribution of that portion
of the Certificate; and (4) when an insurance company (or its affiliate)
issues more than one non-qualified deferred annuity certificate or contract
during any calendar year to the same taxpayer, the certificates or contracts
are required to be aggregated in computing the taxable amount of any
distribution.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Certificate
unless an exception under the Code applies.
Withdrawals
Prior to the Annuity Commencement Date, any withdrawals which do not
terminate your total interest in the Certificate are taxable to you as
ordinary income to the extent there has been a gain in the Annuity Account
Value, and is subject to income tax withholding. See "Federal and State
Income Tax Withholding" below. The balance of the distribution is treated as
a return of the "investment" or "basis" in the Certificate and is not
taxable. Generally, the investment or basis in the Certificate equals the
contributions made, less any amounts previously withdrawn which were not
taxable. Special rules may apply if contributions made to another annuity
certificate or contract prior to August 14, 1982 are transferred to a
Certificate in a tax-free exchange. To take advantage of these rules, you
must notify us prior to such an exchange.
If you surrender or cancel the Certificate, the distribution is taxable to
the extent it exceeds the investment in the Certificate.
Annuity Payments
Once annuity payments begin, a portion of each payment is considered to be a
tax-free recovery of investment based on the ratio of the investment to the
expected return under the Certificate. The remainder of each payment will be
taxable. In the case of a variable annuity, special rules apply if the
payments received in a year are less than the amount permitted to be
recovered tax-free. In the case of a life annuity, after the total investment
has been recovered, future payments are fully taxable. If payments cease as a
result of death, a deduction for any unrecovered investment will be allowed.
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Early Distribution Penalty Tax
In addition to income tax, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date the taxpayer attains age 59 1/2, (2) made on or after the taxpayer's
death, (3) attributable to the disability of the taxpayer, (4) part of a
series of substantially equal installments as an annuity for the life (or
life expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of the taxpayer and a beneficiary, or (5) with respect to
income allocable to amounts contributed to an annuity certificate or contract
prior to August 14, 1982 which are transferred to the Certificate in a
tax-free exchange.
Payments as a Result of Death
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 4, the beneficiary is generally
subject to the same tax treatment as would apply to you, had you surrendered
the Certificate (discussed above).
If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a lump sum death benefit first becomes payable and
before any benefit is actually paid. The tax computation will reflect your
investment in the Certificate.
The Certificate provides a minimum guaranteed death benefit that in certain
circumstances may be greater than either the contributions made or the
Annuity Account Value. This provision provides investment protection against
an untimely termination of a Certificate on the death of an Annuitant at a
time when the Certificate's Annuity Account Value might otherwise have
provided a lower benefit. Although we do not believe that the provision of
this benefit should have any adverse tax effect, it is possible that the IRS
could take a contrary position and could assert that some portion of the
charges for the minimum guaranteed death benefit should be treated for
Federal income tax purposes as a partial withdrawal from the Certificate. If
this were so, such a deemed withdrawal could be taxable, and for Certificate
Owners under age 59 1/2, also subject to tax penalty.
Special distribution requirements apply upon the death of the owner of a
non-qualified annuity. That is, in the case of a contract where the owner and
annuitant are different, even though the annuity contract could continue
because the annuitant has not died, Federal tax law requires that the person
who succeeds as owner of the contract take distribution of the contract
within a specified period of time.
SPECIAL RULES FOR NQ CERTIFICATES
ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from NQ Certificates as
U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents
is excludable from U.S. taxation. Income from NQ Certificates is also subject
to Puerto Rico tax. The computation of the taxable portion of amounts
distributed from a Certificate may differ in the two jurisdictions.
Therefore, an individual might have to file both U.S. and Puerto Rico tax
returns, showing different amounts of income for each. Puerto Rico generally
provides a credit against Puerto Rico tax for U.S. tax paid. Depending on an
individual's personal situation and the timing of the different tax
liabilities, an individual may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
IRA TAX INFORMATION
TAX-QUALIFIED INDIVIDUAL RETIREMENT
ANNUITIES (IRAS)
This prospectus contains the information which the Internal Revenue Service
(IRS) requires to be disclosed to an individual before he or she purchases an
IRA.
The IRA Certificate is designed to qualify as an IRA under Section 408(b) of
the Code. Your rights under the IRA Certificate cannot be forfeited.
<PAGE>
This prospectus covers some of the special tax rules that apply to individual
retirement arrangements. You should be aware that an IRA is subject to
certain restrictions in order to qualify for its special treatment under the
Federal tax law.
This prospectus provides our general understanding of applicable Federal
income tax rules, but does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the IRA Certificates.
Further information on IRA tax matters can be obtained from any IRS district
office. Additional information regarding IRAs, including a discussion of
required distributions, can be found in IRS Publication 590, entitled
"Individual Retirement Arrangements (IRAs)," which is generally updated
annually.
The IRA Certificate has been approved by the IRS as to form for use as an
IRA. This IRS approval is a
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determination only as to the form of the annuity, does not represent a
determination of the merits of the annuity as an investment, and may not
address certain features under the IRA Certificates.
Cancellation
You can cancel a Certificate issued as an IRA by following the directions in
Part 3 under "Free Look Period." Since there may be adverse tax consequences
if a Certificate is cancelled (and because we are required to report to the
IRS certain distributions from cancelled IRAs), you should consult with a tax
adviser before making any such decision. If you cancel this Certificate, you
may establish a new individual retirement arrangement if at the time you meet
the requirements for establishing an individual retirement arrangement.
Contributions to IRAs
Individuals may make three different types of contributions to purchase an
IRA, or as later additions to an existing IRA: "regular" contributions out of
earnings, tax-free "rollover" contributions from tax-qualified plans, or
direct custodian-to-custodian transfers from other individual retirement
arrangements ("direct transfers").
The initial contribution to the Certificate must be either a rollover or a
direct custodian-to-custodian transfer. See "Tax-Free Transfers and
Rollovers," discussed below. Any subsequent contributions you make may be any
of rollovers, direct transfers or "regular" IRA contributions. See
"Contributions Under the Certificates" in Part 3. The immediately following
discussion relates to "regular" IRA contributions. For the reasons noted in
"Tax-Free Transfers and Rollovers" below, you should consult with your tax
adviser before making any subsequent contributions to an IRA which is
intended to serve as a "conduit" IRA.
Generally, $2,000 is the maximum amount of deductible and nondeductible
contributions which may be made to all IRAs by an individual in any taxable
year. The above limit may be less when the individual's earnings are below
$2,000. This limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into an IRA.
The amount of IRA contributions for a tax year that an individual can deduct
depends on whether the individual (or the individual's spouse, if a joint
return is filed) is covered by an employer-sponsored tax-favored retirement
plan. If the individual's spouse does not work or elects to be treated as
having no compensation, the individual and the individual's spouse may
contribute up to $4,000 to individual retirement arrangements (but no more
than $2,000 to any one individual retirement arrangement). The non-working
spouse owns his or her individual retirement arrangements, even if the
working spouse makes contributions to purchase the spousal individual
retirement arrangements.
If neither the individual nor the individual's spouse is covered during any
part of the taxable year by an employer-sponsored tax-favored retirement plan
(including a qualified plan, a tax sheltered account or annuity under Section
403(b) of the Code (TSA) or a simplified employee pension plan), then
regardless of adjusted gross income (AGI), each working spouse may make
deductible contributions to an IRA for each tax year (MAXIMUM PERMISSIBLE
DOLLAR DEDUCTION) up to the lesser of $2,000 or 100% of compensation. In
certain cases, individuals covered by a tax-favored retirement plan include
persons eligible to participate in the plan although not actually
participating. Whether or not a person is covered by a retirement plan will
be reported on an employee's Form W-2.
If the individual is single and covered by a retirement plan during any part
of the taxable year, the deduction for IRA contributions phases out with AGI
between $25,000 and $35,000. If the individual is married and files a joint
return, and either the individual or the spouse is covered by a tax-favored
retirement plan during any part of the taxable year, the deduction for IRA
contributions phases out with AGI between $40,000 and $50,000. If the
individual is married, files a separate return and is covered by a
tax-favored retirement plan during any part of the taxable year, the
deduction for IRA contributions phases out with AGI between $0 and $10,000.
Married individuals filing separate returns must take into account the
retirement plan coverage of the other spouse, unless the couple has lived
apart for the entire taxable year. If AGI is below the phase-out range, an
individual is entitled to the Maximum Permissible Dollar Deduction. In
computing the partial deduction for IRA contributions the individual must
round the amount of the deduction to the nearest $10. The permissible
deduction for IRA contributions is a minimum of $200 if AGI is less than the
amount at which the deduction entirely phases out.
If the individual (or the individual's spouse, unless the couple has lived
apart the entire taxable year and their filing status is married, filing
separately) is covered by a tax-favored retirement plan, the deduction for
IRA contributions must be computed using one of two methods. Under the first
method, the individual determines AGI and subtracts $25,000 if the individual
is a single person, $40,000 if the individual is married and files a joint
return with
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the spouse, or $0 if the individual is married and files a separate return.
The resulting amount is the individual's Excess AGI. The individual then
determines the limit on the deduction for IRA contributions using the
following formula:
<TABLE>
<CAPTION>
<S> <C> <C>
$10,000-Excess AGI X Maximum = Adjusted
$10,000 Permissible Dollar
Dollar Deduction
Deduction Limit
</TABLE>
Under the second method, the individual determines his or her Excess AGI and
then refers to the table in Appendix IV originally prepared by the IRS to
determine the deduction.
Contributions may be made for a tax year until the deadline for filing a
Federal income tax return for that tax year (without extensions). No
contributions are allowed for the tax year in which an individual attains age
70 1/2 or any tax year after that. A working spouse age 70 1/2 or over,
however, can contribute up to the lesser of $2,000 or 100% of "earned income"
to a spousal individual retirement arrangement for a non-working spouse until
the year in which the non-working spouse reaches age 70 1/2.
An individual not eligible to deduct part or all of the IRA contribution may
still make nondeductible contributions on which earnings will accumulate on a
tax-deferred basis. The deductible and nondeductible contributions to the
individual's IRA (or the nonworking spouse's IRA) may not, however, together
exceed the maximum $2,000 per person limit. See "Excess Contributions" below.
Individuals must keep their own records of deductible and nondeductible
contributions in order to prevent double taxation on the distribution of
previously taxed amounts. See "Distributions from IRA Certificates" below.
An individual making nondeductible contributions in any taxable year, or any
individual who has made nondeductible contributions to an IRA in prior years
and is receiving amounts from any IRA must file the required information with
the IRS. Moreover, individuals making nondeductible IRA contributions must
retain all income tax returns and records pertaining to such contributions
until interests in all IRAs are fully distributed.
EXCESS CONTRIBUTIONS
Excess contributions to an IRA are subject to a 6% excise tax for the year in
which made and for each year thereafter until withdrawn. In the case of
"regular" IRA contributions any contribution in excess of the lesser of
$2,000 or 100% of compensation or earned income is an "excess contribution,"
(without regard to the deductibility or nondeductibility of IRA contributions
under this limit). Also, any "regular" contributions made after you reach age
70 1/2 are excess contributions. In the case of rollover IRA contributions,
excess contributions are amounts which are not eligible to be rolled over
(for example, after tax contributions to a qualified plan or minimum
distributions required to be made after age 70 1/2). An excess contribution
(rollover or "regular") which is withdrawn, however, before the time for
filing the individual's Federal income tax return for the tax year (including
extensions) is not includable in income and therefore is not subject to the
10% penalty tax on early distributions (discussed below under "Penalty Tax on
Early Distributions"), provided any earnings attributable to the excess
contribution are also withdrawn and no tax deduction is taken for the excess
contribution. The withdrawn earnings on the excess contribution, however,
would be includable in the individual's gross income and would be subject to
the 10% penalty tax. If excess contributions are not withdrawn before the
time for filing the individual's Federal income tax return for the year
(including extensions), "regular" contributions may still be withdrawn after
that time if the IRA contribution for the tax year did not exceed $2,000 and
no tax deduction was taken for the excess contribution; in that event, the
excess contribution would not be includable in gross income and would not be
subject to the 10% penalty tax. Lastly, excess "regular" contributions may
also be removed by underutilizing the allowable contribution limits for a
later year.
If excess rollover contributions are not withdrawn before the time for filing
the individual's Federal tax return for the year (including extensions) and
the excess contribution occurred as a result of incorrect information
provided by the plan, any such excess amount can be withdrawn if no tax
deduction was taken for the excess contribution. As above, excess rollover
contributions withdrawn under those circumstances would not be includable in
gross income and would not be subject to the 10% penalty tax.
TAX-FREE TRANSFERS AND ROLLOVERS
Rollover contributions may be made to an IRA from these sources: (i)
qualified plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii)
other individual retirement arrangements.
The rollover amount must be transferred to the Certificate either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within
60 days of the date the proceeds from another individual retire-
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ment arrangement or an eligible rollover distribution from a qualified plan
or TSA were received. Generally the taxable portion of any distribution from
a qualified plan or TSA is an eligible rollover distribution and may be
rolled over tax-free to an IRA unless the distribution is (i) a required
minimum distribution under Section 401(a)(9) of the Code; or (ii) one of a
series of substantially equal periodic payments made (not less frequently
than annually) (a) for the life (or life expectancy) of the plan participant
or the joint lives (or joint life expectancies) of the plan participant and
his or her designated beneficiary, or (b) for a specified period of ten years
or more.
Under some circumstances, amounts from a Certificate may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" IRA treatment, the
source of funds used to establish the IRA must be a rollover contribution
from the qualified plan and the entire amount received from the IRA
(including any earnings on the rollover contribution) must be rolled over
into another qualified plan within 60 days of the date received. Similar
rules apply in the case of a TSA. If you make a contribution to the
Certificate which is from an eligible rollover distribution and you commingle
such contribution with other contributions, you may not be able to roll over
these eligible rollover distribution contributions and earnings to another
qualified plan (or TSA, as the case may be) at a future date, unless the Code
permits.
Under the conditions and limitations of the Code, an individual may elect for
each IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers
and can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Certificate
and rolled over into other individual retirement arrangements unless the
distribution was received under an inherited IRA. Tax-free rollovers are also
available to the surviving spouse beneficiary of a deceased individual, or a
spousal alternate payee of a qualified domestic relations order applicable to
a qualified plan. In some cases, IRAs can be transferred on a tax-free basis
between spouses or former spouses incidental to a judicial decree of divorce
or separation.
DISTRIBUTIONS FROM IRA CERTIFICATES
Income or gains on contributions under IRAs are not subject to Federal income
tax until benefits are distributed to the individual. Distributions include
withdrawals from your Certificate, surrender of your Certificate and annuity
payments from your Certificate. Death benefits are also distributions. Except
as discussed below, the amount of any distribution from an IRA is fully
includable as ordinary income by the individual in gross income.
If the individual has made non-deductible IRA contributions, those
contributions are recovered tax-free when distributions are received. The
individual must keep records of all nondeductible contributions. At the end
of each tax year in which the individual has received a distribution, the
individual determines a ratio of the total nondeductible IRA contributions
(less any amounts previously withdrawn tax-free) to the total account
balances of all IRAs held by the individual at the end of the tax year
(including rollover IRAs) plus all IRA distributions made during such tax
year. The resulting ratio is then multiplied by all distributions from the
IRA during that tax year to determine the nontaxable portion of each
distribution.
In addition, a distribution (other than a required minimum distribution
received after age 70 1/2 ) is not taxable if (1) the amount received is a
return of excess contributions which are withdrawn, as described under
"Excess Contributions" above, (2) the entire amount received is rolled over
to another individual retirement arrangement (see "Tax-Free Transfers and
Rollovers" above) or (3) in certain limited circumstances, where the IRA acts
as a "conduit," the entire amount is paid into a qualified plan or TSA that
permits rollover contributions.
Distributions from an IRA are not entitled to the special favorable five-year
averaging method (or, in certain cases, favorable ten-year averaging and
long-term capital gain treatment) available in certain cases to distributions
from qualified plans.
REQUIRED MINIMUM DISTRIBUTIONS
The minimum distribution rules require IRA owners to start taking annual
distributions from their retirement plans by age 70 1/2. The distribution
requirements are designed to provide for distribution of the owner's interest
in the IRA over the owner's life expectancy. Whether the correct amount has
been distributed is calculated on a year by year basis; there are no
provisions in the Code to allow amounts taken in excess of the required
amount to be carried over or carried back and credited to other years.
Generally, an individual must take the first required minimum distribution
with respect to the calendar year in which the individual turns age 70 1/2.
The individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2, or to delay taking it
until the
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three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date,"
which is the April 1st of the calendar year following the calendar year in
which the individual turns age 70 1/2.) If the individual chooses to delay
taking the first annual minimum distribution, then the individual will have
to take two minimum distributions in that year--the delayed one for the first
year and the one actually for that year. Once minimum distributions begin,
they must be made at some time every year.
There are two approaches to taking minimum distributions--"account based" or
"annuity based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
An account based minimum distribution approach may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. An annuity based approach involves application
of the Annuity Account Value to an annuity for the life of the individual or
the joint lives of the individual and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options
are best for your own personal situation. Individuals who are participants in
more than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Your required minimum distribution for any taxable year is calculated by
taking into account the required minimum distribution from each of your
individual retirement arrangements. The IRS, however, does not require that
you make the required distribution from each individual retirement
arrangement that you maintain. As long as the total amount distributed
annually satisfies your overall minimum distribution requirement, you may
choose to take your annual required distribution from any one or more
individual retirement arrangements that you maintain.
An individual may recompute his or her minimum distribution amount each year
based on the individual's current life expectancy as well as that of the
spouse. No recomputation is permitted, however, for a beneficiary other than
a spouse. If there is an insufficient distribution in any year, a 50% tax may
be imposed on the amount by which the minimum required to be distributed
exceeds the amount actually distributed. The penalty tax may be waived by the
Secretary of the Treasury in certain limited circumstances. Failure to have
distributions made as the Code and Treasury regulations require may result in
disqualification of your IRA. See "Tax Penalty for Insufficient
Distributions" below.
Except as described in the next sentence, if the individual dies after
distribution in the form of an annuity has begun, or after the Required
Beginning Date, payment of the remaining interest must be made at least as
rapidly as under the method used prior to the individual's death. (The IRS
has indicated that an exception to the rule that payment of the remaining
interest must be made at least as rapidly as under the method used prior to
the individual's death applies if the beneficiary of the IRA is the surviving
spouse. In some circumstances, the surviving spouse may elect to "make the
IRA his or her own" and halt distributions until he or she reaches age 70 1/2).
If an individual dies before the Required Beginning Date and before
distributions in the form of an annuity begin, distributions of the
individual's entire interest under the Certificate must be completed within
five years after death, unless payments to a designated beneficiary begin
within one year of the individual's death and are made over the beneficiary's
life or over a period certain which does not extend beyond the beneficiary's
life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay
the commencement of such payments up until the individual would have attained
70 1/2. In the alternative, a surviving spouse may elect to roll over the
inherited IRA into the surviving spouse's own IRA.
TAXATION OF DEATH BENEFITS
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if distribution had been made to
the individual.
If you elect to have your spouse be the sole primary beneficiary and to be
the successor Annuitant and Certificate Owner, then your surviving spouse
automatically becomes both the successor Certificate Owner and Annuitant, and
no death benefit is payable until the surviving spouse's death.
GUARANTEED MINIMUM DEATH BENEFIT
The Code provides that no part of an individual retirement account may be
invested in life insurance contracts. Treasury Regulations provide that an
individual retirement account may be invested in an
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annuity contract which provides a death benefit of the greater of premiums
paid or the contract's cash value. Your Certificate provides a minimum death
benefit guarantee that in certain circumstances may be greater than either of
contributions made or the Annuity Account Value. Although there is no ruling
regarding the type of minimum death benefit guarantee provided by the
Certificate, Equitable Life believes that the Certificate's minimum death
benefit guarantee should not adversely affect the qualification of the
Certificate as an IRA. Nevertheless, it is possible that the IRS could
disagree, or take the position that some portion of the charge in the
Certificate for the minimum death benefit guarantee should be treated for
Federal income tax purposes as a taxable partial withdrawal from the
Certificate. If this were so, such a deemed withdrawal would also be subject
to tax penalty for Certificate Owners under age 59 1/2.
Prohibited Transaction
An IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the tax year in which
the event occurred. If this happens, the individual must include in Federal
gross income for that year an amount equal to the fair market value of the
IRA Certificate as of the first day of that tax year, less the amount of any
nondeductible contributions not previously withdrawn. Also, the early
distribution penalty tax of 10% will apply if the individual has not reached
age 59 1/2 before the first day of that tax year. See "Penalty Tax on Early
Distributions" below.
PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of IRA distributions will be subject to a 10% penalty tax
unless the distribution is made (1) on or after your death, (2) because you
have become disabled, (3) on or after the date when you reach age 59 1/2, or
(4) in accordance with the exception outlined below if you are under 59 1/2.
Also not subject to penalty tax are IRA distributions used to pay certain
extraordinary medical expenses or medical insurance premiums for defined
unemployed individuals.
A payout over your life or life expectancy (or joint and survivor lives or
life expectancies), which is part of a series of substantially equal periodic
payments made at least annually, is also not subject to penalty tax. To
permit you to meet this exception, Equitable Life has two options:
Substantially Equal Payment Withdrawals and the Income Manager (Life Annuity
with a Period Certain), both of which are described in Part 5. The version of
the Income Manager which would meet this exception must provide level
payments for life, with no deferral of the payment start date. If you are an
IRA Certificate Owner who will be under age 59 1/2 as of the date the first
payment is expected to be received and you choose either option, Equitable
Life will calculate the substantially equal annual payments under a method we
will select based on guidelines issued by the IRS (currently contained in IRS
Notice 89-25, Question and Answer 12). Although Substantially Equal Payment
Withdrawals and Income Manager payments are not subject to the 10% penalty
tax, they are taxable as discussed in "Distributions from IRA Certificates,"
above. Once Substantially Equal Payment Withdrawals or Income Manager
payments begin, the distributions should not be stopped or changed until the
later of your attaining age 59 1/2 or five years after the date of the first
distribution, or the penalty tax, including an interest charge for the prior
penalty avoidance, may apply to all withdrawals. Also, it is possible that
the IRS could view any additional withdrawal or payment you take from your
Certificate as changing your pattern of Substantially Equal Payment
Withdrawals or Income Manager payments for purposes of determining whether
the penalty applies.
Where a taxpayer under age 59 1/2 purchases an individual retirement annuity
contract calling for substantially equal periodic payments during a fixed
period, continuing afterwards under a joint life contingent annuity with a
reduced payment to the survivor (e.g., a joint and 50% to survivor), the
question might be raised whether payments will not be substantially equal for
the joint lives of the taxpayer and survivor, as the payments will be reduced
at some point. In issuing our information returns, we code the substantially
equal periodic payments from such a contract as eligible for an exception
from the early distribution penalty. We believe that any change in payments
to the survivor would come within the statutory provision covering change of
payments on account of death. As there is no direct authority on this point,
however, if you are under age 59 1/2, you should discuss this item with your
own tax adviser when electing a reduced survivorship option.
TAX PENALTY FOR INSUFFICIENT DISTRIBUTIONS
Failure to make required distributions discussed above in "Required Minimum
Distributions" may cause the disqualification of the IRA. Disqualification
may result in current taxation of your entire benefit. In addition a 50%
penalty tax may be imposed on the difference between the required
distribution amount and the amount actually distributed, if any.
39
<PAGE>
We do not automatically make distributions from a Certificate before the
Annuity Commencement Date unless a request has been made. It is your
responsibility to comply with the minimum distribution rules. We will notify
you when our records show that your age 70 1/2 is approaching. If you do not
select a method, we will assume you are taking your minimum distribution from
another IRA that you maintain. You should consult with your tax adviser
concerning these rules and their proper application to your situation.
TAX PENALTY FOR EXCESS DISTRIBUTIONS OR
ACCUMULATION
A 15% excise tax is imposed on an individual's aggregate excess distributions
from all tax-favored retirement plans. The excise tax is in addition to the
ordinary income tax due, but is reduced by the amount (if any) of the early
distribution penalty tax imposed by the Code. This tax is temporarily
suspended for distributions to the individual for the years 1997, 1998 and
1999. However, the excise tax continues to apply for estate tax purposes. In
certain cases the estate tax imposed on a deceased individual's estate will
be increased if the accumulated value of the individual's interest in
tax-favored retirement plans is excessive. The aggregate accumulations will
be subject to excise tax in 1997 if they exceed the present value of a
hypothetical life annuity paying $160,000 a year.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax from IRA
distributions and the taxable portion of annuity payments, unless the
recipient elects not to be subject to income tax withholding. The rate of
withholding will depend on the type of distribution and, in certain cases,
the amount of the distribution. Special withholding rules apply to foreign
recipients and United States citizens residing outside the United States. If
a recipient does not have sufficient income tax withheld or does not make
sufficient estimated income tax payments, however, the recipient may incur
penalties under the estimated income tax rules. Recipients should consult
their tax advisers to determine whether they should elect out of withholding.
Requests not to withhold Federal income tax must be made in writing prior to
receiving benefits under the Certificate. Our Processing Office will provide
forms for this purpose. No election out of withholding is valid unless the
recipient provides us with the correct taxpayer identification number and a
United States residence address.
Certain states have indicated that income tax withholding will apply to
payments from the Certificates made to residents. In some states, a recipient
may elect out of state withholding. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. If
you need more information concerning a particular state or any required
forms, call our Processing Office at the toll-free number and consult your
tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1997, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,400
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemption. A
withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than the Certificate Owner, a Federal generation skipping
tax may be payable with respect to the benefit at rates similar to the
maximum estate tax rate in effect at the time. The generation skipping tax
provisions generally apply to transfers which would also be subject to the
gift and estate tax rules. Individuals are generally allowed an aggregate
generation skipping tax exemption of $1 million. Because these rules are
complex, you should consult
40
<PAGE>
with your tax adviser for specific information, especially where benefits are
passing to younger generations, as opposed to a spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account
for taxes. Equitable Life can set up reserves for such taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers among the Investment Funds or between the Guaranteed Period Account
and one or more Investment Funds are not taxable.
41
<PAGE>
PART 8: INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life at December 31, 1996 and 1995 and for each of the
three years in the period ended December 31, 1996 included in Equitable
Life's Annual Report on Form 10-K, incorporated by reference in the
prospectus, have been examined by Price Waterhouse LLP, independent
accountants, whose reports thereon are incorporated herein by reference. Such
consolidated financial statements and consolidated financial statement
schedules have been incorporated herein by reference in reliance upon the
reports of Price Waterhouse LLP given upon their authority as experts in
accounting and auditing.
42
<PAGE>
PART 9: INVESTMENT PERFORMANCE
This Part presents performance data for each of the Investment Funds included
in the tables below. The performance data were calculated by two methods. The
first method presented in the tables under "Standardized Performance Data,"
reflects all applicable fees and charges, including the optional benefit
charge, but not the charges for any applicable taxes such as premium taxes.
The second method presented in the tables under "Rate of Return Data for
Investment Funds," also reflects all applicable fees and charges, but does
not reflect the withdrawal charge, the optional benefit charge, or the charge
for tax such as premium taxes. These additional charges would effectively
reduce the rates of return credited to a particular Certificate.
HR Trust Portfolios
The performance data shown for the Investment Funds investing in Class IB
shares of HR Trust Portfolios (other than the Alliance Small Cap Growth
Portfolio which commenced operations on May 1, 1997) are based on the actual
investment results of the Portfolios, and have been adjusted for the fees and
charges applicable under the Certificates. However, the investment results
prior to October 1996, when Class IB shares were not available, do not
reflect 12b-1 fees, which would effectively reduce such investment
performance.
The performance data for the Alliance Money Market and Alliance Common Stock
Investment Funds that invest in corresponding HR Trust Portfolios, for
periods prior to March 22, 1985, reflect the investment results of two
open-end management separate accounts (the "predecessor separate accounts")
which were reorganized in unit investment trust form. The "Since Inception"
figures for these Investment Funds are based on the date of inception of the
predecessor separate accounts. These performance data have been adjusted to
reflect the maximum investment advisory fee payable for the corresponding
Portfolio of HR Trust, as well as an assumed charge of 0.06% for direct
operating expenses.
EQ Trust Portfolios
The Investment Funds of the Separate Account that invest in Class IB shares
of Portfolios of EQ Trust have only recently been established and no
Certificates funded by those Investment Funds have been issued as of the date
of this Prospectus. EQ Trust commenced operations on May 1, 1997. Therefore,
no actual historical performance data for any of these Portfolios are
available. In this connection, see the discussion immediately following the
tables below.
See "Part 3: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
STANDARDIZED PERFORMANCE DATA
The standardized performance data in the following tables illustrate the
average annual total return of the Investment Funds over the periods shown,
assuming a single initial contribution of $1,000 and the surrender of a
Certificate, at the end of each period. These tables (which reflect the first
calculation method described above) are prepared in a manner prescribed by
the SEC for use when we advertise the performance of the Separate Account. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
Each calculation assumes that the $1,000 contribution was allocated to only
one Investment Fund, no transfers or subsequent contributions were made and
no amounts were allocated to any other Investment Option under the
Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of
a Certificate which is surrendered on December 31, 1996 by the $1,000
contribution made at the beginning of each period illustrated. The result of
that calculation is the total growth rate for the period. Then we annualize
that growth rate to obtain the average annual percentage increase (decrease)
during the period shown. When we "annualize," we assume that a single rate of
return applied each year during the period will produce the ending value,
taking into account the effect of compounding.
43
<PAGE>
STANDARDIZED PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
-------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
HR TRUST
- -------------------------
Alliance Money Market -3.16% 1.79% 2.08% 4.17% 5.37%
Alliance High Yield 14.14 9.58 12.48 -- 9.61
Alliance Common Stock 15.51 14.12 13.53 14.02 13.44
Alliance Aggressive Stock 13.46 12.54 9.62 16.78 18.21
</TABLE>
- ------------
* See footnotes below
The table below illustrates the growth of an assumed investment of $1,000,
with fees and charges deducted on the standardized basis described above for
the first method of calculation.
STANDARDIZED PERFORMANCE DATA
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
---------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ------------------------- ------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
HR TRUST
- -------------------------
Alliance Money Market 968 1,055 1,108 1,504 2,309
Alliance High Yield 1,141 1,316 1,800 -- 2,504
Alliance Common Stock 1,155 1,486 1,886 3,713 14,130
Alliance Aggressive Stock 1,135 1,425 1,583 4,716 6,298
</TABLE>
- ------------
* The tables reflect the withdrawal charge and the optional benefit charge.
** The "Since Inception" dates for the Portfolios of the HR Trust are as
follows: Alliance Money Market (July 13, 1981); Alliance High Yield
(January 2, 1987); Alliance Common Stock (January 13, 1976); Alliance
Aggressive Stock (January 27, 1986).
Additional investment performance information appears in the attached HR
Trust and EQ Trust prospectuses.
The Alliance Small Cap Growth Portfolio of HR Trust commenced operations on
May 1, 1997. Therefore, no actual historical performance data are available.
However, historical performance of a composite of six other advisory accounts
managed by Alliance is described in the attached HR Trust prospectus.
According to that prospectus, these accounts have substantially the same
investment objectives and policies, and are managed in accordance with
essentially the same investment strategies and techniques, as those of the
Alliance Small Cap Growth Portfolio. It should be noted that these accounts
are not subject to certain of the requirements and restrictions to which the
Alliance Small Cap Growth Portfolio is subject and that they are managed for
tax exempt clients of Alliance, who may have different investment goals. The
investment performance information included in the HR Trust prospectus for
all Portfolios other than the Alliance Small Cap Portfolio is based on actual
historical performance.
The investment performance data for HR Trust's Alliance Small Cap Portfolio
and for each of the Portfolios of EQ Trust, contained in the HR Trust and the
EQ Trust prospectuses, are provided by those prospectuses to illustrate the
past performance of each respective Portfolio adviser in managing
substantially similar investment vehicles as measured against specified
market indices and do not represent the past or future performance of any
Portfolio. None of the performance data contained in the HR Trust and EQ
Trust prospectuses reflects fees and charges imposed under your Certificate,
which fees and charges would reduce such performance figures. Therefore, the
performance data for each of the Portfolios described in the EQ Trust
prospectus
44
<PAGE>
and for the Alliance Small Cap Portfolio in the HR Trust prospectus may be of
limited use and are not intended to be a substitute for actual performance of
the corresponding Portfolios, nor are such results an estimate or guarantee
of future performance for these Portfolios.
RATE OF RETURN DATA FOR INVESTMENT FUNDS
The following tables (which reflect the second calculation method described
above) provide you with information on rates of return on an annualized,
cumulative and year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of
return reflect performance over a stated period of time. Annualized rates of
return represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality
and expense risks charge, administration charge, or any withdrawal or
optional benefit charge, under the Certificates. Comparisons with these
benchmarks, therefore, are of limited use. We include them because they are
widely known and may help you to understand the universe of securities from
which each Portfolio is likely to select its holdings. Benchmark data reflect
the reinvestment of dividend income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
ALLIANCE MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill
Index.
ALLIANCE HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master Index.
ALLIANCE COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
ALLIANCE AGGRESSIVE STOCK: January 27, 1986; 50% Standard & Poor's Mid-Cap
Total Return Index and 50% Russell 2000 Small Stock Index.
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity products,
including managed separate accounts of insurance companies. According to
Lipper Analytical Services, Inc., the data are presented net of investment
management fees, direct operating expenses and asset-based charges applicable
under annuity contracts. Lipper data provide a more accurate picture than
market benchmarks of the Equitable Accumulator performance relative to other
variable annuity products.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
HR TRUST
ALLIANCE MONEY MARKET 3.84% 3.59% 2.90% 4.46% 5.66% -- 5.85%
Lipper Money Market 3.82 3.60 2.93 4.52 5.72 -- 5.89
Benchmark 5.25 5.07 4.37 5.67 6.72 -- 6.97
ALLIANCE HIGH YIELD 21.14 11.18 13.09 -- -- -- 9.90
Lipper High Yield 12.46 7.93 11.47 -- -- -- 9.13
Benchmark 11.06 9.59 12.76 -- -- -- 11.24
ALLIANCE COMMON STOCK 22.51 15.62 14.15 14.25 14.93 13.93% 13.67
Lipper Growth 18.78 14.80 12.39 13.08 14.04 13.60 13.42
Benchmark 22.96 19.66 15.20 15.28 16.79 14.55 14.63
ALLIANCE AGGRESSIVE STOCK 20.46 14.08 10.31 16.99 -- -- 18.55
Lipper Small Company
Growth 16.55 12.70 17.53 16.29 -- -- 16.47
Benchmark 17.85 14.14 14.80 14.29 -- -- 13.98
</TABLE>
- ------------
* See footnote on next page.
45
<PAGE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
HR TRUST
ALLIANCE MONEY MARKET 3.84% 11.16% 15.35% 54.77% 128.30% -- 141.10%
Lipper Money Market 3.82 11.18 15.58 55.73 130.46 -- 141.99
Benchmark 5.25 16.99 23.86 73.61 165.31 -- 184.26
ALLIANCE HIGH YIELD 21.14 37.44 85.00 -- -- -- 156.96
Lipper High Yield 12.46 25.77 72.39 -- -- -- 142.30
Benchmark 11.06 31.63 82.29 -- -- -- 190.43
ALLIANCE COMMON STOCK 22.51 54.54 93.78 279.01 706.25 1,257.82% 1,366.24
Lipper Growth 18.78 51.65 80.51 243.70 627.03 1,185.21% 1,298.19
Benchmark 22.96 71.39 102.85 314.34 925.25 1,416.26 1,655.74
ALLIANCE AGGRESSIVE STOCK 20.46 48.45 63.33 380.33 -- -- 541.64
Lipper Small Company
Growth 16.55 43.42 142.70 352.31 -- -- 428.32
Benchmark 17.85 48.69 99.38 280.32 -- -- 318.19
</TABLE>
- ------------
* See footnote on next page.
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HR TRUST
ALLIANCE MONEY
MARKET** 9.37% 7.01% 5.17% 5.19% 5.87% 7.72% 6.77% 4.75% 2.16% 1.57% 2.62% 4.32% 3.84%
ALLIANCE HIGH
YIELD -- -- -- 3.29 8.26 3.72 (2.46) 22.79 10.79 21.49 (4.09) 18.30 21.14
ALLIANCE
COMMON
STOCK** (3.29) 31.63 15.79 5.99 20.79 23.90 (9.36) 36.03 1.82 23.14 (3.46) 30.67 22.51
ALLIANCE
AGGRESSIVE
STOCK -- -- 33.58 5.85 (0.23) 41.57 6.70 84.35 (4.47) 15.17 (5.11) 29.87 20.46
</TABLE>
- ------------
* Returns do not reflect the baseBUILDER Combined Guaranteed Minimum
Income Benefit and Guaranteed Minimum Death Benefit Charge, and any
charge for tax such as premium taxes.
** Prior to 1984 the Year-by-Year Rates of Return were:
<TABLE>
<CAPTION>
1976 1977 1978 1979 1980 1981 1982 1983
------- ---------- ------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE COMMON STOCK 7.98% (10.47)% 6.77% 28.09% xx.xx% 48.10% (7.13)% 15.99%
ALLIANCE MONEY MARKET -- -- -- -- -- 5.61 11.50 7.48
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may
describe general economic and market conditions affecting the Separate
Account and each respective trust and may present the performance of the
Investment Funds or compare it (1) that of other insurance company separate
accounts or mutual funds included in the rankings prepared by Lipper
Analytical Services, Inc., Morningstar, Inc., VARDS 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 which are shown under "Benchmarks" and
"Portfolio Inception Dates and Comparative Benchmarks" in this Part 9, or (3)
data developed by us derived from such indices or averages. The Morningstar
Variable Annuity/Life Report consists of nearly 700 variable life and annuity
funds, all of which report their data net of investment management fees,
direct operating expenses and separate account charges. VARDS is a monthly
reporting service that monitors approximately 760 variable life and variable
annuity funds on performance and account information. Advertisements or other
communications furnished to present or prospective Certificate Owners may
also include evaluations of an Investment Fund or Portfolio by financial
publications that are nationally recognized such
46
<PAGE>
as Barron's, Morningstar's Variable Annuity Sourcebook, Business Week,
Chicago Tribune, Forbes, Fortune, Institutional Investor, Investment Adviser,
Investment Dealer's Digest, Investment Management Weekly, Los Angeles Times,
Money, Money Management Letter, Kiplinger's Personal Finance, Financial
Planning, National Underwriter, Pension & Investments, USA Today, Investor's
Daily, The New York Times, and The Wall Street Journal.
ALLIANCE MONEY MARKET FUND YIELD INFORMATION
The current yield and effective yield of the Alliance Money Market Fund may
appear in reports and promotional material to current or prospective
Certificate Owners.
Current yield for the Alliance Money Market Fund will be based on net changes
in a hypothetical investment over a given seven-day period, exclusive of
capital changes, and then "annualized" (assuming that the same seven-day
result would occur each week for 52 weeks). "Effective yield" is calculated
in a manner similar to that used to calculate current yield, but when
annualized, any income earned by the investment is assumed to be reinvested.
The "effective yield" will be slightly higher than the "current yield"
because any earnings are compounded weekly. Alliance Money Market Fund yields
and effective yields assume the deduction of all Certificate charges and
expenses other than the withdrawal charge, the baseBUILDER Combined
Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit Charge
and any charge for tax such as premium tax. The yields and effective yields
for the Alliance Money Market Fund when used for the Special Dollar Cost
Averaging program, assume that no Certificate charges are deducted. See "Part
5: Alliance Money Market Fund Yield Information" in the SAI.
47
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- -----------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1998 to a Guarantee Period with an Expiration Date
of February 15, 2007 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2002.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2002
---------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2002 (Before Withdrawal)
- ------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value.................. $144,048 $119,487
(2) Guaranteed Period Amount............... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ...... 12,968 (11,593)
On February 15, 2002 (After Withdrawal)
- ------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000/(1)] .. $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)]........... 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ..... 85,581 76,229
(7) Maturity Value......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value.................. 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
48
<PAGE>
APPENDIX II: QUALIFIED PLAN CERTIFICATES--NQ CERTIFICATE
- -----------------------------------------------------------------------------
CONTRIBUTIONS
When issued with the appropriate endorsement, NQ Certificates may be used as
an investment vehicle for a defined contribution plan maintained by an
employer and which is a tax qualified plan within the meaning of Section
401(a) of the Code.
When issued in connection with such a qualified plan, we will only accept
employer contributions from a trust under a plan qualified under Section
401(a) of the Code. If the plan contains a cash or deferred arrangement
within the meaning of Section 401(k) of the Code, contributions may include
employee pre-tax and employer matching or other employer contributions, but
not employee after-tax contributions to the plan.
CERTIFICATE OWNER, ANNUITANT AND BENEFICIARY
The Certificate Owner must be the trustee of a trust for a qualified plan
maintained by the employer. The Annuitant must be the participant/employee
and the beneficiary under the Certificate must be the Certificate Owner.
PURCHASE CONSIDERATIONS
Any trustee considering a purchase of an NQ Certificate should discuss with
its tax adviser whether this is an appropriate investment vehicle for the
employer's plan. The form of Certificate and this prospectus should be
reviewed in full, and the following factors, among others, should be noted.
This Certificate accepts transfer contributions only and not regular, ongoing
payroll contributions. For 401(k) plans, no employee after-tax contributions
are accepted. Further, Equitable will not perform or provide any plan record
keeping services with respect to this Certificate. The plan's administrator
will be solely responsible for performing or providing for all such services.
There is no loan feature offered under the Certificates, so if the plan
provides for loans and a participant takes a loan from the plan, other plan
assets must be used as the source of the loan and any loan repayments must be
credited to other investment vehicles and/or accounts available under the
plan.
Finally, because the method of purchasing the Certificates and the features
of the Certificates may appeal more to plan participants who are older and
tend to be highly paid, and because certain features of the Certificates are
available only to plan participants who meet certain minimum and/or maximum
age requirements, plan trustees should discuss with their advisers whether
the purchase of the Certificates would cause the plan to engage in prohibited
discrimination in contributions, benefits or otherwise.
49
<PAGE>
APPENDIX III: GUARANTEED MINIMUM DEATH BENEFIT EXAMPLE
- -----------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the Annuity Account
Value, or, if greater, the Guaranteed Minimum Death Benefit (see "Guaranteed
Minimum Death Benefit" in Part 4);
The following is an example illustrating the calculation of the Guaranteed
Minimum Death Benefit. Assuming $100,000 is allocated to the Investment Funds
(with no allocation to the Money Market Fund or the Guarantee Periods), no
subsequent contributions, no transfers and no withdrawals, the Guaranteed
Minimum Death Benefit for an Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
6% TO AGE 80 ANNUAL
ROLL UP RATCHET TO
GUARANTEED AGE 80
END OF MINIMUM GUARANTEED
CONTRACT ANNUITY DEATH MINIMUM
YEAR ACCOUNT VALUE BENEFIT(1) DEATH BENEFIT
- ---------- --------------- -------------- --------------
<S> <C> <C> <C>
1 $105,000 $106,000 $105,000(2)
2 $115,500 $112,360 $115,500(2)
3 $132,825 $119,102 $132,825(2)
4 $106,260 $126,248 $132,825(3)
5 $116,886 $133,823 $132,825(3)
6 $140,263 $141,852 $140,263(2)
7 $140,263 $150,363 $140,263(3)
</TABLE>
The Annuity Account Values for Contract Years 1 through 7 are determined
based on hypothetical rates of return of 5.00%, 10.00%, 15.00%, (20.00)%,
10.00%, 20.00% and 0.00%, respectively.
6% TO AGE 80 ROLL UP
(1) For Contract Years 1 through 7, the Guaranteed Minimum Death Benefit
equals the initial contribution increased by 6%.
ANNUAL RATCHET TO AGE 80
(2) At the end of Contract Years 1, 2 and 3, and again at the end of
Contract Year 6, the Guaranteed Minimum Death Benefit is equal to the
current Annuity Account Value.
(3) At the end of Contract Years 4, 5 and 7, the Guaranteed Minimum Death
Benefit is equal to the Guaranteed Minimum Death Benefit at the end of
the prior year since it is higher than or equal to the current Annuity
Account Value.
50
<PAGE>
APPENDIX IV: IRS CHART--ESTIMATED DEDUCTION TABLE
- -----------------------------------------------------------------------------
If your Maximum Permissible Dollar Deduction is $2,000, use this table to
estimate the amount of your contribution which will be deductible.
<TABLE>
<CAPTION>
EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION
- ----------- ---------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 ...... $2,000 $2,550 $1,490 $5,050 $990 $ 7,550 $490
50 ...... 1,990 2,600 1,480 5,100 980 7,600 480
100 ...... 1,980 2,650 1,470 5,150 970 7,650 470
150 ...... 1,970 2,700 1,460 5,200 960 7,700 460
200 ...... 1,960 2,750 1,450 5,250 950 7,750 450
250 ...... 1,950 2,800 1,440 5,300 940 7,800 440
300 ...... 1,940 2,850 1,430 5,350 930 7,850 430
350 ...... 1,930 2,900 1,420 5,400 920 7,900 420
400 ...... 1,920 2,950 1,410 5,450 910 7,950 410
450 ...... 1,910 3,000 1,400 5,500 900 8,000 400
500 ...... 1,900 3,050 1,390 5,550 890 8,050 390
550 ...... 1,890 3,100 1,380 5,600 880 8,100 380
600 ...... 1,880 3,150 1,370 5,650 870 8,150 370
650 ...... 1,870 3,200 1,360 5,700 860 8,200 360
700 ...... 1,860 3,250 1,350 5,750 850 8,250 350
750 ...... 1,850 3,300 1,340 5,800 840 8,300 340
800 ...... 1,840 3,350 1,330 5,850 830 8,350 330
850 ...... 1,830 3,400 1,320 5,900 820 8,400 320
900 ...... 1,820 3,450 1,310 5,950 810 8,450 310
950 ...... 1,810 3,500 1,300 6,000 800 8,500 300
1,000 ...... 1,800 3,550 1,290 6,050 790 8,550 290
1,050 ...... 1,790 3,600 1,280 6,100 780 8,600 280
1,100 ...... 1,780 3,650 1,270 6,150 770 8,650 270
1,150 ...... 1,770 3,700 1,260 6,200 760 8,700 260
1,200 ...... 1,760 3,750 1,250 6,250 750 8,750 250
1,250 ...... 1,750 3,800 1,240 6,300 740 8,800 240
1,300 ...... 1,740 3,850 1,230 6,350 730 8,850 230
1,350 ...... 1,730 3,900 1,220 6,400 720 8,900 220
1,400 ...... 1,720 3,950 1,210 6,450 710 8,950 210
1,450 ...... 1,710 4,000 1,200 6,500 700 9,000 200
1,500 ...... 1,700 4,050 1,190 6,550 690 9,050 200
1,550 ...... 1,690 4,100 1,180 6,600 680 9,100 200
1,600 ...... 1,680 4,150 1,170 6,650 670 9,150 200
1,650 ...... 1,670 4,200 1,160 6,700 660 9,200 200
1,700 ...... 1,660 4,250 1,150 6,750 650 9,250 200
1,750 ...... 1,650 4,300 1,140 6,800 640 9,300 200
1,800 ...... 1,640 4,350 1,130 6,850 630 9,350 200
1,850 ...... 1,630 4,400 1,120 6,900 620 9,400 200
1,900 ...... 1,620 4,450 1,110 6,950 610 9,450 200
1,950 ...... 1,610 4,500 1,100 7,000 600 9,500 200
2,000 ...... 1,600 4,550 1,090 7,050 590 9,550 200
2,050 ...... 1,590 4,600 1,080 7,100 580 9,600 200
2,100 ...... 1,580 4,650 1,070 7,150 570 9,650 200
2,150 ...... 1,570 4,700 1,060 7,200 560 9,700 200
2,200 ...... 1,560 4,750 1,050 7,250 550 9,750 200
2,250 ...... 1,550 4,800 1,040 7,300 540 9,800 200
2,300 ...... 1,540 4,850 1,030 7,350 530 9,850 200
2,350 ...... 1,530 4,900 1,020 7,400 520 9,900 200
2,400 ...... 1,520 4,950 1,010 7,450 510 9,950 200
2,450 ...... 1,510 5,000 1,000 7,500 500 10,000 0
2,500 ...... 1,500
</TABLE>
Excess AGI = Your AGI minus your Threshold Level:
If you are single, your Threshold Level is $25,000.
If you are married, your Threshold Level is $40,000.
If you are married and file a separate tax return, your Excess AGI = your
AGI.
51
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
--------
Part 1: Minimum Distribution Withdrawals--IRA 2
Certificates
Part 2: Accumulation Unit Values 2
Part 3: Annuity Unit Values 2
Part 4: Custodian and Independent Accountants 3
Part 5: Alliance Money Market Fund Yield Information 3
Part 6: Long-Term Market Trends 4
Part 7: Key Factors In Retirement Planning 5
Part 8: Financial Statements 9
</TABLE>
HOW TO OBTAIN A ROLLOVER IRA AND EQUITABLE ACCUMULATOR
STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me a Rollover IRA SAI:
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
52
<PAGE>
SUPPLEMENT DATED MAY 1, 1997 TO ROLLOVER IRA AND
CHOICE INCOME PLAN PROSPECTUS, DATED OCTOBER 16, 1996
- -----------------------------------------------------------------------------
This supplement dated May 1, 1997, updates certain information in the
Rollover IRA and Choice Income Plan prospectus of The Equitable Life
Assurance Society of the United States (EQUITABLE LIFE), dated October 16,
1996. You should read this supplement in conjunction with the prospectus. You
should keep the supplement and the prospectus for future reference. We have
filed with the Securities and Exchange Commission (SEC) our statement of
additional information (SAI) dated May 1, 1997. If you have previously
received, but do not presently have, a copy of the prospectus, you may obtain
an additional copy of the prospectus, as well as a copy of the SAI, from us,
free of charge, if you write to Equitable Life, Income Management Group, P.O.
Box 1547, Secaucus, NJ 07096-1547, call (800) 789-7771 or if you only need a
copy of the SAI, you may mail in the SAI request form located at the end of
the supplement. The SAI has been incorporated by reference into this
supplement.
In the supplement, each section of the prospectus in which a change has been
made is identified and the number of each prospectus page on which a change
occurs is also noted. Special terms used in the prospectus have the same
meaning in the supplement unless otherwise noted.
ON THE COVER PAGE OF THE PROSPECTUS THE THIRD (INCLUDING THE CHART OF
INVESTMENT OPTIONS) AND FOURTH PARAGRAPHS ARE REPLACED BY THE FOLLOWING
PARAGRAPHS:
The Certificates offer investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 12
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in
the GUARANTEED PERIOD ACCOUNT.
We invest each Investment Fund in Class IB shares of a corresponding
portfolio (PORTFOLIO) of The Hudson River Trust (HR TRUST) and EQ Advisors
Trust (EQ TRUST), mutual funds whose shares are purchased by separate
accounts of insurance companies. The prospectuses for HR Trust and EQ
Trust, both of which accompany this supplement, describe the investment
objectives, policies and risks of the Portfolios.
THE INVESTMENT FUNDS INVESTING IN CORRESPONDING PORTFOLIOS OF EQ TRUST ARE:
EQ/Putnam Growth & Income Value, EQ/Putnam Investors Growth, EQ/Putnam
International Equity, MFS Research and MFS Emerging Growth Companies.
THE INVESTMENT FUNDS INVESTING IN CORRESPONDING PORTFOLIOS OF HR TRUST ARE:
Alliance Money Market, Alliance High Yield, Alliance Common Stock, Alliance
Aggressive Stock, Alliance Growth Investors, Alliance Global and Alliance
Small Cap Growth.
THE FOLLOWING SENTENCE IS ADDED AT THE END OF THE FIFTH PARAGRAPH:
The Guarantee Periods currently available have Expiration Dates of February
15 in years 1998 through 2007 under the Rollover IRA and 1998 through 2012
under the Choice Income Plan.
THROUGHOUT THE PROSPECTUS ANY REFERENCE TO THE INVESTMENT FUNDS AND GUARANTEE
PERIODS REFER TO THE INVESTMENT FUNDS AND GUARANTEE PERIODS SET FORTH ABOVE.
- -----------------------------------------------------------------------------
Copyright 1997
The Equitable Life Assurance Society of the
United States, New York, New York 10104.
All rights reserved.
<PAGE>
THROUGHOUT THE PROSPECTUS (EXCEPT WHERE OTHERWISE NOTED) THE REFERENCE TO
"TRUST" IS REPLACED BY "HR TRUST AND EQ TRUST."
ON PAGE 2, UNDER THE HEADING "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" REPLACE THE ENTIRE SECTION WITH THE FOLLOWING SECTION:
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (EXCHANGE ACT) after the date hereof and prior to the termination
of the offering of the securities offered hereby shall be deemed to be
incorporated by reference in the prospectus and the supplement and to be a
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of the
prospectus and the supplement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified and superseded, to constitute a part of the
prospectus and the supplement. Equitable Life files its Exchange Act
documents and reports, including its annual and quarterly reports on Form
10-K and Form 10-Q, electronically pursuant to EDGAR under CIK No.
0000727920. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the SEC. The address of the site is
http://www.sec.gov.
Equitable Life will provide without charge to each person to whom a
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
ON PAGE 4, UNDER THE HEADING "GENERAL TERMS"
ADD THE FOLLOWING DEFINITIONS:
EQ TRUST--EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants,
Inc. (EQ Financial) is the manager of EQ Trust and has appointed advisers
for each of the Portfolios.
HR TRUST--The Hudson River Trust, a mutual fund in which the assets of
separate accounts of insurance companies are invested. Alliance Capital
Management L.P. (Alliance) is the adviser to HR Trust.
DELETE THE DEFINITION FOR "TRUST."
2
<PAGE>
ON PAGES 6 AND 7, REPLACE THE "FEE TABLE" SECTION WITH THE FOLLOWING SECTION:
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them with other similar products. The table reflects
both the charges of the Separate Account and the expenses of HR Trust and EQ
Trust. Charges for applicable taxes such as state or local premium taxes may
also apply. For a complete description of the charges under the Certificate,
see "Part 7: Deductions and Charges." For a complete description of each
trust's charges and expenses, see the prospectuses for the HR Trust and EQ
Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
<TABLE>
<CAPTION>
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
CONTRACT
YEAR
--------
<S> <C>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS
(percentage deducted upon surrender or for certain 1 ... 7.00%
withdrawals. The applicable withdrawal charge percentage 2 ... 6.00
is determined by the Contract Year in which the withdrawal 3 ... 5.00
is made or the Certificate is surrendered beginning with 4 ... 4.00
"Contract Year 1" with respect to each contribution 5 ... 3.00
withdrawn or surrendered. For each contribution, the 6 ... 2.00
Contract Year in which we receive that contribution is 7 ... 1.00
"Contract Year 1")(1) 8+ .. 0.00
</TABLE>
<TABLE>
<CAPTION>
Combined
GMDB/GMIB GMDB Only
Benefit Benefit
--------- ---------
<S> <C> <C>
GMDB/GMIB CHARGES (percentage deducted annually
on each Processing Date as a percentage of the
gauranteed minimum death benefit then in effect)(2)... 0.45% 0.20%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE
OF ASSETS IN EACH INVESTMENT FUND)
- -------------------------------------------------
MORTALITY AND EXPENSE RISK CHARGE............................ 0.90%
ASSET BASED ADMINISTRATIVE CHARGE(3)......................... 0.30%
----
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES...................... 1.20%
====
</TABLE>
3
<PAGE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH
PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT TOTAL
MANAGEMENT & OTHER ANNUAL
PORTFOLIOS ADVISORY FEES 12B-1 FEE(4) EXPENSES EXPENSES
- ---------------------------------- ------------- ------------ -------- --------
<S> <C> <C> <C> <C>
EQ TRUST
EQ/Putnam Growth & Income Value(5) 0.55% 0.25% 0.05% 0.85%
EQ/Putnam Investors Growth(5) 0.55% 0.25% 0.05% 0.85%
EQ/Putnam International Equity(5) 0.70% 0.25% 0.25% 1.20%
MFS Research(5) 0.55% 0.25% 0.05% 0.85%
MFS Emerging Growth Companies(5) 0.55% 0.25% 0.05% 0.85%
HR TRUST
Alliance Money Market(6) 0.35% 0.25% 0.04% 0.64%
Alliance High Yield(6) 0.60% 0.25% 0.06% 0.91%
Alliance Common Stock(6) 0.38% 0.25% 0.03% 0.66%
Alliance Aggressive Stock(6) 0.55% 0.25% 0.03% 0.83%
Alliance Growth Investors(6) 0.53% 0.25% 0.06% 0.84%
Alliance Global(6) 0.65% 0.25% 0.08% 0.98%
Alliance Small Cap Growth(6) 0.90% 0.25% 0.10% 1.25%
</TABLE>
- ------------
Notes:
(1) Deducted upon a withdrawal with respect to amounts in excess of the
15% (10% under the IRA Assured Payment Option and IRA APO Plus) free
corridor amount, and upon a surrender. See "Part 7: Deductions and
Charges," "Withdrawal Charge." We reserve the right to impose an
administrative charge of the lesser of $25 and 2.0% of the amount
withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. See "Withdrawal Processing Charge" also in Part 7.
(2) The guaranteed minimum death benefit (GMDB) is described under
"Death Benefit," "GMDB" and the guaranteed minimum income benefit
(GMIB) is described under "GMIB" both of which are in Part 5. The
0.45% charge covers a 6% to Age 80 Benefit or, if a combined 6% to
Age 70 Benefit is elected, the charge is 0.30%. See "Part 7:
Deductions and Charges," "Charges for Combined GMDB/GMIB Benefit"
and "Charges for GMDB Only Benefit."
(3) We reserve the right to increase this charge to an annual rate of
0.35%, the maximum permitted under the Certificates.
(4) The Class IB shares of HR Trust and EQ Trust are subject to fees
imposed under distribution plans (herein, the "Rule 12b-1 Plans")
adopted by EQ Trust pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended. The Rule 12b-1 Plans provide that
HR Trust and EQ Trust, on behalf of each Portfolio, may pay annually
up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities
primarily intended to result in the sale of the Class IB shares. The
12b-1 fee may be increased only by action of the Board of Trustees
of HR Trust EQ Trust up to a maximum of 0.50% per annum.
(5) "Other Expenses" shown are based on estimated amounts (after expense
waiver or limitation) for the current fiscal year, as EQ Trust
commenced operations on May 1, 1997. The maximum investment advisory
fees cannot be increased without a vote of that Portfolio's
shareholders. The other direct operating expenses will fluctuate
from year to year depending on actual expenses, but pursuant to
agreement, cannot together with other fees specified exceed the
total annual expenses specified. See "EQ Trust Charges to
Portfolios" in Part 7.
(6) The amounts shown for the Portfolios of HR Trust (other than
Alliance Small Cap Growth) have been restated to reflect advisory
fees which went into effect as of May 1, 1997. "Other Expenses" are
based on the average daily net assets in each Portfolio for the year
ended December 31, 1996. The amounts shown for the Alliance Small
Cap Growth Portfolio are estimated for the current fiscal year as
this Portfolio commenced operations on May 1, 1997. The investment
advisory fee for each Portfolio may vary from year to year depending
upon the average daily net assets of the respective Portfolio of HR
Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. See "HR Trust Charges to Portfolios"
in Part 7.
4
<PAGE>
EXAMPLES
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined GMDB/GMIB Benefit with a 6% to Age 80 Benefit
and under the GMDB Only Benefit in the two situations noted below assuming a
$1,000 contribution invested in one of the Investment Funds listed, and a 5%
annual return on assets.(1)
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
COMBINED GMDB/GMIB BENEFIT ELECTION
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END IF YOU DO NOT SURRENDER YOUR
OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: CERTIFICATE AT THE END OF EACH
PERIOD SHOWN, THE EXPENSES
WOULD BE:
1 YEAR 3 YEARS 1 YEAR 3 YEARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
EQ TRUST
- --------
EQ/Putnam Growth & Income
Value $90.75 $123.59 $25.52 $78.95
EQ/Putnam Investors
Growth 90.75 123.59 25.52 78.95
EQ/Putnam International
Equity 94.23 134.03 29.00 89.39
MFS Research 90.75 123.59 25.52 78.95
MFS Emerging Growth
Companies 90.75 123.59 25.52 78.95
HR TRUST
- --------
Alliance Money Market 88.66 117.29 23.43 72.65
Alliance High Yield 91.35 125.39 26.12 80.75
Alliance Common Stock 88.86 117.89 23.63 73.26
Alliance Aggressive Stock 90.55 122.99 25.32 78.35
Alliance Growth Investors 90.65 123.29 25.42 78.65
Alliance Global 92.04 127.48 26.81 82.83
Alliance Small Cap Growth 94.73 135.52 29.50 90.87
</TABLE>
- ------------
* See footnote on next page.
5
<PAGE>
GMDB ONLY BENEFIT ELECTION
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END IF YOU DO NOT SURRENDER YOUR
OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: CERTIFICATE AT THE END OF EACH
PERIOD SHOWN, THE EXPENSES
WOULD BE:
1 YEAR 3 YEARS 1 YEAR 3 YEARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
EQ TRUST
- --------
EQ/Putnam Growth & Income
Value $90.75 $118.31 $22.87 $70.68
EQ/Putnam Investors
Growth 90.75 118.31 22.87 70.68
EQ/Putnam International
Equity 94.23 128.77 26.35 81.15
MFS Research 90.75 118.31 22.87 70.68
MFS Emerging Growth
Companies 90.75 118.31 22.87 70.68
HR TRUST
- --------
Alliance Money Market 88.66 111.98 20.78 64.37
Alliance High Yield 91.35 120.11 23.47 72.48
Alliance Common Stock 88.86 112.59 20.98 64.97
Alliance Aggressive Stock 90.55 117.70 22.67 70.08
Alliance Growth Investors 90.65 118.01 22.77 70.38
Alliance Global 92.04 122.20 24.16 74.57
Alliance Small Cap Growth 94.73 130.26 26.85 82.64
</TABLE>
- ------------
Notes:
(1) The amount accumulated from the $1,000 contribution could not be paid
in the form of an annuity at the end of any of the periods shown in the
examples. If the amount applied to purchase an annuity is less than
$2,000, or the initial payment is less than $20 we may pay the amount
to the payee in a single sum instead of as payments under an annuity
form. See "Income Annuity Options" in Part 6. The examples do not
reflect charges for applicable taxes such as state or local premium
taxes that may also be deducted in certain jurisdictions.
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on October 16,
1996. The following table shows the Accumulation Unit Values, as of October
16, 1996 and the last Business Day for the periods shown. There are no
Accumulation Unit Values for Alliance Small Cap Growth and the Investment
Funds investing in Class IB shares of EQ Trust Portfolios as such
Investment Funds were not available prior to the date of this supplement.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
------------------------------------------------
OCTOBER 16, 1996 DECEMBER 1996 MARCH 1997
---------------- ------------- ----------
<S> <C> <C> <C>
Alliance Money Market 24.472785 24.675315 24.891695
Alliance High Yield 25.466366 26.090042 26.137191
Alliance Common Stock 143.741180 151.232750 145.273200
Alliance Aggressive Stock 65.166142 65.534670 63.837949
Alliance Growth Investors 25.496401 26.148649 25.584199
Alliance Global 24.381648 25.118937 24.218751
</TABLE>
6
<PAGE>
ON PAGE 8, UNDER THE HEADING "TRANSFERS," DELETE THE SECOND SENTENCE.
ON PAGE 9, UNDER THE HEADING "IRA ASSURED PAYMENT OPTION," DELETE THE THIRD
PARAGRAPH.
ON PAGE 12, UNDER THE HEADING "EQUITABLE LIFE,"
REPLACE THE THIRD SENTENCE OF THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Our home office is located at 1290 Avenue of the Americas, New York, New
York 10104.
REPLACE THE SECOND AND THIRD PARAGRAPHS WITH THE FOLLOWING PARAGRAPHS:
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996, AXA beneficially owned
63.8% of the outstanding shares of common stock of the Holding Company
(assuming conversion of convertible preferred stock held by AXA). Under its
investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $239.8 billion of assets as of December 31, 1996.
ON PAGES 12 AND 13, IN THE HEADINGS "THE TRUST" AND "THE TRUST'S INVESTMENT
ADVISER" REPLACE "THE TRUST" WITH "HR TRUST."
ON PAGE 13, UNDER THE HEADING "THE TRUST'S INVESTMENT ADVISOR" REPLACE THE
THIRD SENTENCE OF THE FIRST PARAGRAPH WITH THE FOLLOWING SENTENCE:
On December 31, 1996, Alliance was managing approximately $182.8 billion in
assets.
DELETE THE SECOND PARAGRAPH.
ON PAGE 13, INSERT THE FOLLOWING SECTIONS AFTER THE LAST PARAGRAPH:
EQ TRUST
EQ Trust is an open-end management investment company. As a "series type"
of mutual fund, EQ Trust issues different series of stock, each of which
relates to a different Portfolio of EQ Trust. EQ Trust commenced operations
on May 1, 1997. EQ Trust does not impose a sales charge or "load" for
buying and selling it shares. All dividend distributions to EQ Trust are
reinvested in full and fractional shares of the Portfolio to which they
relate. Investment Funds that invest in Portfolios of EQ Trust purchase
Class IB shares of a corresponding Portfolio of EQ Trust. More detailed
information about EQ Trust, its investment objectives, policies and
restrictions, risks, expenses, the Rule 12b-1 Plan relating to the Class IB
shares, and all other aspects of its operations appears in its prospectus
which accompanies this supplement and in its statement of additional
information.
EQ TRUST'S MANAGER AND ADVISERS
EQ Trust is managed by EQ Financial Consultants, Inc. (EQ Financial) which,
subject to supervision and direction of the Trustees of EQ Trust, has
overall responsibility for the general management of EQ Trust. EQ Financial
is an investment adviser registered under the 1940 Act, and a broker-dealer
registered under the Exchange Act. EQ Financial is a Delaware corporation
and an indirect, wholly-owned subsidiary of Equitable Life.
EQ Financial's main office is located at 1290 Avenue of the Americas, New
York, NY 10104.
EQ Financial has entered into investment advisory agreements with Putnam
Investments and Massachusetts Financial Services Company, each of which
serve as advisers to EQ/Putnam and MFS Portfolios, respectively, of EQ
Trust.
7
<PAGE>
ON PAGE 14, UNDER THE HEADING "INVESTMENT POLICIES AND OBJECTIVES OF THE
TRUST'S PORTFOLIOS"
ADD THE FOLLOWING SENTENCES TO THE END OF THE FIRST PARAGRAPH:
Set forth below is a summary of the investment policies and objectives of
each Portfolio. This summary is qualified in its entirely by reference to
the prospectus for HR Trust and EQ Trust both of which accompany this
supplement. Please read the prospectuses for each of the trusts carefully
before investing.
DELETE THE DESCRIPTION OF "AGGRESSIVE STOCK" AND INSERT THE FOLLOWING
DESCRIPTIONS:
<TABLE>
<CAPTION>
<S> <C> <C>
Alliance Aggressive Primarily common stocks and other equity-type Long-term growth of
Stock securities issued by quality small and intermediate capital
sized companies with strong growth prospects and in
covered options on those securities.
Alliance Small Cap Primarily U.S. common stocks and other equity type Long-term growth of
Growth securities issued by smaller companies with favorable capital
growth prospects.
</TABLE>
INSERT THE FOLLOWING DESCRIPTIONS AFTER THE DESCRIPTION OF "MONEY MARKET:"
<TABLE>
<CAPTION>
<S> <C> <C>
EQ/Putnam Growth & Primarily common stocks that offer potential for capital Capital growth and,
Income Value growth, consistent with the Portfolios' investment secondarily, current
objective, common stocks that offer potential for current income
income.
EQ/Putnam Investors Primarily common stocks in view of the Portfolio adviser's Long-term growth of
Growth belief that equity ownership affords the best opportunity capital and any
for capital growth over the long term. increased income that
results from this growth
EQ/Putnam Primarily a diversified portfolio of equity securities of Capital appreciation
International companies organized under the laws of a country other than
Equity the United States.
MFS Research A substantial portion of assets invested in common stock Long-term growth of
or securities convertible into common stock of companies capital and future
believed by the Portfolio adviser to possess better than income
average prospects for long-term growth.
MFS Emerging Growth Primarily (i.e., at lest 80% of its assets uder normal Long-term growth of
Companies circumstances) in common stocks of emerging growth capital
companies that the Portfolio adviser believes are early in
their life cycle but which have the potential to become
major enterprises.
</TABLE>
8
<PAGE>
ON PAGE 15, REPLACE THE FIRST AND SECOND PARAGRAPHS WITH THE FOLLOWING
PARAGRAPHS:
This Part presents performance data for each of the Investment Funds
included in the tables below. The performance data were calculated by two
methods. The first method presented in the tables under "SEC Standardized
Performance Data," reflects all applicable fees and charges, including the
Combined GMDB/GMIB Benefit charge, but not the charges for any applicable
taxes such as premium taxes.
The second method presented in the tables under "Rate of Return Data for
Investment Funds," also reflects all applicable fees and charges, but does
not reflect the withdrawal charge, the Combined GMDB/GMIB Benefit charge or
the charge for tax such as premium taxes. These additional charges would
effectively reduce the rates of return credited to a particular
Certificate.
HR Trust Portfolios
The performance data shown for the Investment Funds investing in Class IB
shares of HR Trust Portfolios (other than the Alliance Small Cap Growth
Portfolio which commenced operations on May 1, 1997) are based on the
actual investment results of the Portfolios, and have been adjusted for the
fees and charges applicable under the Certificates. However, the investment
results prior to October 1996, when Class IB shares were not available, do
not reflect 12b-1 fees, which would effectively reduce such investment
performance.
The performance data for the Alliance Money Market and Alliance Common
Stock Investment Funds that invest in corresponding HR Trust Portfolios,
for periods prior to March 22, 1985, reflect the investment results of two
open-end management separate accounts (the "predecessor separate accounts")
which were reorganized in unit investment trust form. The "Since inception"
figures for these Investment Funds are based on the date of inception of
the predecessor separate accounts. These performance data have been
adjusted to reflect the maximum investment advisory fee payable for the
corresponding Portfolio of HR Trust, as well as an assumed charge of 0.06%
for direct operating expenses.
EQ Trust Portfolios
The Investment Funds of the Separate Account that invest in Class IB shares
of Portfolios of EQ Trust have only recently been established and no
Certificates funded by those Investment Funds have been issued as of the
date of this supplement. EQ Trust commenced operations on May 1, 1997.
Therefore, no actual historical performance data for any of these
Portfolios are available. In this connection, see the discussion
immediately following the tables, below.
REPLACE THE HEADING "PERFORMANCE DATA FOR A CERTIFICATE" WITH "STANDARDIZED
PERFORMANCE DATA."
IN THE FIRST SENTENCE OF THE THIRD PARAGRAPH UNDER THIS HEADING CHANGE THE
DATE FROM "DECEMBER 31, 1995" TO "DECEMBER 31, 1996."
9
<PAGE>
ON PAGES 15 AND 16, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING
TABLES AND FOOTNOTES:
STANDARDIZED PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ------------------------ --------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market (3.00)% 1.84% 2.10% 4.18% 5.38%
Alliance High Yield 14.33 9.63 12.53 -- 9.64
Alliance Common Stock 15.70 14.18 13.58 14.08 13.51
Alliance Aggressive
Stock 13.65 12.60 9.64 16.85 18.30
Alliance Growth
Investors 4.18 8.18 8.59 -- 12.39
Alliance Global 6.15 9.67 11.37 -- 9.20
</TABLE>
STANDARDIZED PERFORMANCE DATA
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ------------------------ ------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market $ 970 $1,056 $1,110 $1,506 $ 2,313
Alliance High Yield 1,143 1,318 1,804 -- 2,509
Alliance Common Stock 1,157 1,489 1,890 3,732 14,324
Alliance Aggressive
Stock 1,137 1,428 1,585 4,745 6,352
Alliance Growth
Investors 1,042 1,266 1,510 -- 2,546
Alliance Global 1,062 1,319 1,713 -- 2,412
</TABLE>
- ------------
* The tables reflect charges under a Certificate with the 0.45% GMDB/GMIB
charge.
** The "Since Inception" dates for the Portfolios of HR Trust are as
follows: Alliance Money Market (July 13, 1981); Alliance High Yield
(January 2, 1987); Alliance Common Stock (January 13, 1976); Alliance
Aggressive Stock (January 27, 1986); Alliance Growth & Income (October 1,
1993); Alliance Global (August 27, 1987); and Alliance Small Cap Growth
(May 1, 1997).
ON PAGE 16, INSERT THE FOLLOWING PARAGRAPHS BEFORE THE "RATE OF RETURN DATA
FOR INVESTMENT FUNDS" SECTION:
Additional investment performance information appears in the attached HR
Trust and EQ Trust prospectuses.
The Alliance Small Cap Growth Portfolio of HR Trust commenced operations
on May 1, 1997. Therefore, no actual historical performance data are
available. However, historical performance of six other advisory accounts
managed by Alliance is described in the attached HR Trust prospectus.
According to that prospectus, these accounts have substantially the same
investment objectives and policies, and are managed in accordance with
essentially the same investment strategies and techniques, as those of the
Alliance Small Cap Growth Portfolio. It should be noted that these
accounts are not subject to certain of the requirements and restrictions
to which the Alliance Small Cap Growth Portfolio is subject and that they
are managed for tax exempt clients of Alliance, who may have different
investment goals. The investment performance information included in the
HR Trust prospectus for all Portfolios other than the Alliance Small Cap
Portfolio is based on actual historical performance.
<PAGE>
The investment performance data for HR Trust's Alliance Small Cap
Portfolio and for each of the Portfolios of EQ Trust, contained in the HR
Trust and the EQ Trust prospectuses, are provided by those prospectuses to
illustrate the past performance of each respective Portfolio adviser in
managing a substantially similar investment vehicles as measured against
specified market indices and do not represent the past or future
performance of any Portfolio. None of the performance data contained in
the HR Trust and EQ Trust prospectuses reflects fees and charges imposed
under your Certificate, which fees and charges would reduce such
performance figures. Therefore, the performance data for each of the
Portfolios described in the EQ Trust prospectus and for the Alliance Small
Cap Portfolio in the HR Trust prospectus may be of limited use and are not
intended to be a substitute for actual performance of the corresponding
Portfolios, nor are such results an estimate or guarantee of future
performance for these Portfolios.
10
<PAGE>
ON PAGES 17 AND 18, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING
TABLES AND FOOTNOTES:
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 4.00% 3.75% 3.05% 4.62% 5.82% 6.02%
Lipper Money Market 3.82 3.60 2.93 4.52 5.72 -- 5.89
Benchmark 5.25 5.07 4.37 5.67 6.72 -- 6.97
ALLIANCE HIGH YIELD 21.33 11.35 13.27 -- -- -- 10.07
Lipper High Yield 12.46 7.93 11.47 -- -- -- 9.13
Benchmark 11.06 9.59 12.76 -- -- -- 11.24
ALLIANCE COMMON STOCK 22.70 15.79 14.32 14.43 15.10 14.10% 13.84
Lipper Growth 18.78 14.80 12.39 13.08 14.04 13.60 13.42
Benchmark 22.96 19.66 15.20 15.28 16.79 14.55 14.63
ALLIANCE AGGRESSIVE STOCK 20.65 14.25 10.48 17.17 -- -- 18.73
Lipper Small Company
Growth 16.55 12.70 17.53 16.29 -- -- 16.47
Benchmark 17.85 14.14 14.80 14.29 -- -- 13.98
ALLIANCE GROWTH
INVESTORS 11.18 9.93 9.41 -- -- -- 14.16
Lipper Flexible Portfolio 12.51 9.26 9.30 -- -- -- 9.99
Benchmark 16.94 15.84 13.02 -- -- -- 12.73
ALLIANCE GLOBAL 13.15 11.36 12.12 -- -- -- 10.37
Lipper Global 17.89 8.49 10.29 -- -- -- 3.65
Benchmark 13.48 12.91 10.82 -- -- -- 7.44
</TABLE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 4.00% 11.67% 16.23% 57.14% 133.56% -- 146.83%
Lipper Money Market 3.82 11.18 15.58 55.73 130.46 -- 141.99
Benchmark 5.25 15.99 23.86 73.61 165.31 184.26
ALLIANCE HIGH YIELD 21.33 38.08 86.42 -- -- -- 160.90
Lipper High Yield 12.46 25.77 72.39 -- -- -- 142.30
Benchmark 11.06 31.63 82.29 -- -- -- 190.43
ALLIANCE COMMON STOCK 22.70 55.25 95.27 284.82 724.81 1,299.61% 1,413.57
Lipper Growth 18.78 51.65 80.51 243.70 627.03 1,185.21 1,298.19
Benchmark 22.96 71.34 102.85 314.34 925.25 1.416.26 1,655.74
ALLIANCE AGGRESSIVE STOCK 20.65 49.13 64.58 387.69 -- -- 552.40
Lipper Small Company
Growth 16.55 43.42 142.70 352.31 -- -- 428.32
Benchmark 17.85 48.69 99.38 280.32 -- -- 318.19
ALLIANCE GROWTH
INVESTORS 11.18 32.83 56.79 -- -- -- 161.06
Lipper Flexible Portfolio 12.51 30.84 56.65 -- -- -- 100.79
Benchmark 16.94 55.46 84.42 -- -- -- 138.49
ALLIANCE GLOBAL 13.15 38.11 77.21 -- -- -- 151.34
Lipper Global 17.89 28.45 63.87 -- -- -- 39.73
Benchmark 13.48 43.95 67.12 - -- -- 95.62
</TABLE>
11
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
-------- ------- ------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY
MARKET** 9.53% 7.17% 5.33% 5.35% 6.03% 7.88%
ALLIANCE HIGH
YIELD -- -- -- 3.44 8.42 3.88
ALLIANCE COMMON
STOCK** (3.14) 31.83 15.96 6.15 20.97 24.09
ALLIANCE
AGGRESSIVE
STOCK -- -- 33.77 6.01 (0.08) 41.79
ALLIANCE GROWTH
INVESTORS -- -- -- -- -- 3.52
ALLIANCE GLOBAL -- -- -- (13.63) 9.55 25.22
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
-------- ------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY
MARKET** 6.93% 4.91% 2.32% 1.73% 2.77% 4.48% 4.00%
ALLIANCE HIGH
YIELD (2.31) 22.97 10.96 21.67 (3.95) 18.48 21.33
ALLIANCE COMMON
STOCK** (9.22) 36.23 1.98 23.33 (3.31) 30.87 22.70
ALLIANCE
AGGRESSIVE
STOCK 6.86 84.63 (4.33) 15.35 (4.97) 30.06 20.65
ALLIANCE GROWTH
INVESTORS 9.33 47.12 3.64 13.89 (4.31) 24.86 11.18
ALLIANCE GLOBAL (7.20) 28.99 (1.70) 30.54 3.97 17.39 13.15
</TABLE>
- ------------
* Returns do not reflect the withdrawal charge, the Combined GMDB/GMIB
Benefit charge and any charge for tax such as premium taxes.
** Prior to 1984 the Year-by-Year Rates of Return were:
<TABLE>
<CAPTION>
1976 1977 1978 1979 1980 1981 1982 1983
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE COMMON STOCK 8.14% (10.33)% 6.94% 28.28% 48.32% (6.99)% 16.16% 24.60%
ALLIANCE MONEY MARKET -- -- -- -- -- 5.68 11.67 7.65%
</TABLE>
ON PAGE 25, UNDER THE HEADING "TRANSFERS AMONG INVESTMENT OPTIONS," DELETE
THE FIRST BULLETED PARAGRAPH.
ON PAGE 26, UNDER THE HEADING "DOLLAR COST AVERAGING."
REPLACE THE FIRST SENTENCE IN THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE.
If you have at least $10,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage
of your Annuity Account Value transferred from the Alliance Money Market
Fund to other Investment Funds on a monthly, quarterly, or annual basis.
REPLACE THE SECOND AND THIRD SENTENCES IN THE SECOND PARAGRAPH WITH THE
FOLLOWING SENTENCES.
The minimum amount that may be transferred on each Transaction Date is
$250. The maximum amount which may be transferred is equal to the Annuity
Account Value in the Alliance Money Market Fund at the time the option is
elected, divided by the number of transfers scheduled to made each Contract
Year.
ON PAGE 29, UNDER THE HEADING, "DISTRIBUTION OF THE CERTIFICATES," REPLACE
THE FOURTH AND FIFTH SENTENCES OF THE FIRST PARAGRAPH WITH THE FOLLOWING TWO
SENTENCES.
EDI's principal business address is 1290 Avenue of the Americas, New York,
New York 10104. EDI was paid a fee of $1,204,370 for 1996 for its services
under its "Distribution Agreement" with Equitable Life and the Separate
Account.
ON PAGE 31, UNDER THE SUB-HEADING "PAYMENTS," DELETE THE SECOND PARAGRAPH.
ON PAGE 40, DELETE THE SECTION WITH THE HEADING "TRUST CHARGES TO
PORTFOLIOS," AND REPLACE WITH THE FOLLOWING SECTION.
HR TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HR Trust's assets, direct
operating expenses of HR Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of HR Trust
(such as brokerage commissions and other expenses related to the purchase
and sale of securities), are reflected in each Portfolio's daily share
price. The maximum investment advisory fees paid annually by the Portfolios
cannot be changed without a vote by shareholders. They are as follows:
12
<PAGE>
AVERAGE DAILY NET ASSETS
<TABLE>
<CAPTION>
FIRST NEXT NEXT NEXT
$750 MILLION $750 MILLION $1 BILLION $2.5 BILLION THEREAFTER
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Alliance Conservative Investors ....... 0.475% 0.425% 0.375% 0.350% 0.325%
Alliance Growth Investors.............. 0.550% 0.500% 0.450% 0.425% 0.400%
Alliance Growth & Income............... 0.550% 0.525% 0.500% 0.480% 0.470%
Alliance Common Stock.................. 0.475% 0.425% 0.375% 0.355% 0.345%*
Alliance Global........................ 0.675% 0.600% 0.550% 0.530% 0.520%
Alliance International................. 0.900% 0.825% 0.800% 0.780% 0.770%
Alliance Aggressive Stock.............. 0.625% 0.575% 0.525% 0.500% 0.475%
Alliance Small Cap Growth.............. 0.900% 0.850% 0.825% 0.800% 0.775%
Alliance Money Market.................. 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance Intermediate Govt Securities 0.500% 0.475% 0.450% 0.430% 0.420%
Alliance High Yield.................... 0.600% 0.575% 0.550% 0.530% 0.520%
</TABLE>
- ------------
* On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
Investment advisory fees are established under HR Trust's investment advisory
agreements between HR Trust and its investment adviser, Alliance. All of
these fees and expenses are described more fully in the HR Trust prospectus.
EQ TRUST CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQ Trust's assets, the 12b-1
fee, other direct operating expenses of EQ Trust (such as trustees' fees,
expenses of independent auditors and legal counsel, administrative service
fees, custodian fees, and liability insurance), and certain
investment-related expenses of EQ Trust (such as brokerage commissions and
other expenses related to the purchase and sale of securities), are reflected
in each Portfolio's daily share price. The investment management fees paid
annually by the Portfolios cannot be changed without a vote by shareholders.
They are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS
------------------------
<S> <C>
EQ/Putnam Growth & Income Value 0.55%
EQ/Putnam Investors Growth ...... 0.55%
EQ/Putnam International Equity .. 0.70%
MFS Research..................... 0.55%
MFS Emerging Growth Companies ... 0.55%
</TABLE>
Investment management fees are established under EQ Trust's Investment
Management Agreement between EQ Trust and its investment manager, EQ
Financial. EQ Financial has entered into expense limitation agreements with
EQ Trust, with respect to each Portfolio, pursuant to which EQ Financial has
agreed to waive or limit its fees and total annual operating expenses
(expressed as a percentage of the Portfolios' average daily net assets) to
0.85% each for the EQ/Putnam Growth & Income Value, EQ/Putnam Investors
Growth, MFS Research and MFS Emerging Growth Companies Portfolios; and 1.20%
for EQ/Putnam International Equity Portfolio. See the prospectus for EQ Trust
for more information.
The Rule 12b-1 Plan provides that EQ Trust, on behalf of each Portfolio, may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fees, which
may be waived in the discretion of EDI, may be increased only by action of
the Board of Trustees of EQ Trust up to a maximum of 0.50% per annum. All of
these fees and expenses are described more fully in the EQ Trust prospectus.
ON PAGE 42, UNDER THE HEADING "TRUST VOTING RIGHTS"
REPLACE THE FIRST SENTENCE OF THE SECOND PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Because HR Trust is a Massachusetts business trust and EQ Trust is a
Delaware business trust, annual meetings are not required.
ON PAGE 42, UNDER THE HEADING "VOTING RIGHTS OF OTHERS," REPLACE THE FIRST
TWO SENTENCES OF THE PARAGRAPH WITH THE FOLLOWING SENTENCES:
Currently we control each trust. EQ Trust shares currently are sold only to
our separate accounts. HR Trust shares are hold by other separate accounts
of insurance companies affiliated and unaffiliated with us.
13
<PAGE>
ON PAGE 43, UNDER THE SUB-HEADING "CONTRIBUTIONS TO IRAS," REPLACE THE SECOND
SENTENCE OF THE FOURTH PARAGRAPH WITH THE FOLLOWING SENTENCE:
If the individual's spouse does not work or elects to be treated as having
no compensation, the individual and the individual's spouse may contribute
up to $2,000 to individual retirement arrangements (but no more than $2,000
to any one individual retirement arrangement).
ON PAGE 44, REPLACE THE SECOND SENTENCE OF THE FIFTH PARAGRAPH WITH THE
FOLLOWING SENTENCE:
The deductible and nondeductible contributions to the individual's IRA (or
the nonworking spouse's IRA) may not, however, together exceed the maximum
$2,000 per person limit.
ON PAGE 44, UNDER THE SUB-HEADING "EXCESS CONTRIBUTIONS," REPLACE THE SECOND
TO LAST SENTENCE ON THIS PAGE WITH THE FOLLOWING SENTENCE:
If excess contributions are not withdrawn before the time for filing the
individual's Federal income tax return for the year (including extensions),
"regular" contributions may still be withdrawn after that time if the IRA
contribution for the tax year did not exceed $2,000 and no tax deduction
was taken for the excess contribution; in that event, the excess
contribution would not be includable in gross income and would not be
subject to the 10% penalty tax.
ON PAGE 48, UNDER THE HEADING "PENALTY TAX ON EARLY DISTRIBUTIONS," ADD THE
FOLLOWING SENTENCE AT THE END OF THE FIRST PARAGRAPH:
Also not subject to penalty tax are IRA distributions used to pay certain
extraordinary medical expenses or medical insurance premiums for defined
unemployed individuals.
ON PAGE 48, UNDER THE HEADING "TAX PENALTY FOR EXCESS DISTRIBUTIONS OR
ACCUMULATION," REPLACE THE TWO PARAGRAPHS WITH THE FOLLOWING PARAGRAPH:
A 15% excise tax is imposed on an individual's aggregate excess
distributions from all tax-favored retirement plans, including IRAs. The
excise tax is in addition to the ordinary income tax due, but is reduced by
the amount (if any) of the early distribution penalty tax imposed by the
Code. This tax is temporarily suspended for distributions to the individual
for the years 1997, 1998 and 1999. However, the excise tax continues to
apply for estate tax purposes. In certain cases the estate tax imposed on a
deceased individual's estate will be increased if the accumulated value of
the individual's interest in tax-favored retirement plans is excessive. The
aggregate accumulations will be subject to excise tax in 1997 if they
exceed the present value of a hypothetical life annuity paying $160,000 a
year.
ON PAGE 48, UNDER THE HEADING "FEDERAL AND STATE INCOME TAX WITHHOLDING,"
REPLACE THE FOURTH SENTENCE OF THE THIRD PARAGRAPH WITH THE FOLLOWING
SENTENCE:
For 1997, a recipient of periodic payments (e.g., monthly or annual
payments) which total less than a $14,400 taxable amount will generally be
exempt from Federal income tax withholding, unless the recipient specifies
a different choice of withholding exemptions.
14
<PAGE>
- ------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
--------
<S> <C> <C>
Part 1: Minimum Distribution Withdrawals
Part 2: Accumulation Unit Values 2
Part 3: Annuity Unit Values 2
Part 4: Custodian and Independent Accountants 3
Part 5: Alliance Money Market Fund Yield Information 3
Part 6: Long-Term Market Trends 4
Part 7: Financial Statements 6
</TABLE>
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me a Rollover IRA SAI:
(Supplement dated May 1, 1997 to Rollover IRA and Choice
Income Plan Prospectus, dated October 16, 1996)
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
<PAGE>
PROSPECTUS FOR ROLLOVER IRA
AND CHOICE INCOME PLAN
DATED OCTOBER 16, 1996
--------------------
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- -------------------------------------------------------------------------------
This prospectus describes individual retirement annuity (IRA) certificates The
Equitable Life Assurance Society of the United States (EQUITABLE LIFE, WE, OUR
and US) offers under a combination variable and fixed deferred annuity contract
(ROLLOVER IRA) issued on a group basis or as individual contracts. Enrollment
under a group contract will be evidenced by issuance of a certificate.
Certificates and individual contracts each will be referred to as
"Certificates." Under the Rollover IRA we will accept only initial
contributions that are rollover contributions or that are direct transfers from
other individual retirement arrangements, as described in this prospectus. A
minimum initial contribution of $5,000 is required to put a Certificate into
effect.
The Rollover IRA is designed to provide retirement income. Contributions
accumulate on a tax-deferred basis and can be distributed under a number of
different methods which are designed to be responsive to the owner's
(CERTIFICATE OWNER, YOU and YOUR) objectives. The distribution methods include
the Choice Income Plan featuring the IRA ASSURED PAYMENT OPTION, IRA Assured
Payment Option Plus (IRA APO PLUS), and a variety of payout options, including
variable annuities and fixed annuities. The IRA Assured Payment Option and IRA
APO Plus are also available for election in the application if you are
interested in receiving distributions rather than accumulating funds.
The Rollover IRA offers investment options (INVESTMENT OPTIONS) that permit you
to create your own strategies. These Investment Options include 6 variable
investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the GUARANTEED
PERIOD ACCOUNT.
<TABLE>
<CAPTION>
Guarantee Periods
Investment Funds: Expiration Dates:
- ------------------------------------------------------------------ ----------------------
<S> <C> <C> <C>
o Aggressive Stock o Growth Investors o High Yield February 15,
o Common Stock o Global o Money Market o 1997 through 2007
o 1997 through 2011
</TABLE>
We invest each Investment Fund in Class IB shares of a corresponding portfolio
(PORTFOLIO) of The Hudson River Trust (TRUST), a mutual fund whose shares are
purchased by separate accounts of insurance companies. The prospectus for the
Trust, which accompanies this prospectus, describes the investment objectives,
policies and risks of the Portfolios.
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). Each Guarantee Period has its own
Guaranteed Rates.
This prospectus provides information about the Rollover IRA that prospective
investors should know before investing. You should read it carefully and retain
it for future reference. The prospectus is not valid unless accompanied by a
current prospectus for the Trust, which you should also read carefully.
Registration statements relating to Separate Account No. 49 (SEPARATE ACCOUNT)
and interests under the Guarantee Periods have been filed with the Securities
and Exchange Commission (SEC). The statement of additional information (SAI),
dated October 16, 1996, which is part of the registration statement for the
Separate Account, is available free of charge upon request by writing to our
Processing Office or calling 1-800-789-7771, our toll-free number. The SAI has
been incorporated by reference into this prospectus. The Table of Contents for
the SAI appears at the back of this prospectus.
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- -------------------------------------------------------------------------------
Copyright 1996
The Equitable Life Assurance Society of the United States,
New York, New York 10019.
All rights reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December 31,
1995 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE ACT) after
the date hereof and prior to the termination of the offering of the securities
offered hereby shall be deemed to be incorporated by reference in this
prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes
of this prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified and
superseded, to constitute a part of this prospectus. Equitable Life files its
Exchange Act documents and reports, including its annual and quarterly reports
on Form 10-K and Form 10-Q, electronically pursuant to EDGAR under CIK No.
0000727920.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(other than exhibits not specifically incorporated by reference into the text
of such documents). Requests for such documents should be directed to The
Equitable Life Assurance Society of the United States, 787 Seventh Avenue, New
York, New York 10019. Attention: Corporate Secretary (telephone: (212)
554-1234).
2
<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
FEE TABLE PAGE 6
PART 1: SUMMARY PAGE 8
What is the Rollover IRA? 8
Investment Options 8
Contributions 8
Transfers 8
Free Look Period 8
Services We Provide 8
Death Benefits 9
Guaranteed Minimum Income Benefit (GMIB) 9
Surrendering the Certificates 9
Distribution Methods 9
Taxes 10
Deductions from Annuity
Account Value 10
Deductions from Investment Funds 11
Trust Charges to Portfolios 11
PART 2: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE
INVESTMENT FUNDS PAGE 12
Equitable Life 12
Separate Account No. 49 12
The Trust 12
The Trust's Investment Adviser 13
Investment Policies and Objectives of
the Trust's Portfolios 14
PART 3: INVESTMENT PERFORMANCE PAGE 15
Performance Data for a Certificate 15
Rate of Return Data for Investment
Funds 16
Communicating Performance Data 18
Money Market Fund Yield Information 18
PART 4: THE GUARANTEED PERIOD
ACCOUNT PAGE 19
Guarantee Periods 19
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 20
Modal Payment Portion 21
Death Benefit Amount 21
Investments 21
PART 5: PROVISIONS OF THE
CERTIFICATES AND SERVICES
WE PROVIDE PAGE 23
Availability of the Certificates 23
Contributions Under the Certificates 23
Methods of Payment 23
Allocation of Contributions 24
Free Look Period 24
Annuity Account Value 25
Transfers Among Investment Options 25
Dollar Cost Averaging 26
Death Benefit 26
GMIB 27
Cash Value 28
Surrendering the Certificates to
Receive the Cash Value 29
When Payments are Made 29
Assignment 29
Distribution of the Certificates 29
PART 6: DISTRIBUTION METHODS UNDER THE
CERTIFICATES PAGE 30
IRA Assured Payment Option 30
IRA APO Plus 33
Withdrawal Options 35
Income Annuity Options 37
PART 7: DEDUCTIONS AND CHARGES PAGE 39
Charges Deducted from the Annuity
Account Value 39
Charges Deducted from the Investment
Funds 40
Trust Charges to Portfolios 40
Sponsored Arrangements 40
Other Distribution Arrangements 41
PART 8: VOTING RIGHTS PAGE 42
Trust Voting Rights 42
Voting Rights of Others 42
Separate Account Voting Rights 42
Changes in Applicable Law 42
PART 9: TAX ASPECTS OF THE CERTIFICATES PAGE 43
Tax-Qualified Individual Retirement
Annuities (IRAs) 43
Penalty Tax on Early Distributions 48
Tax Penalty for Insufficient
Distributions 48
Tax Penalty for Excess Distributions or
Accumulation 48
Federal and State Income Tax
Withholding 48
Other Withholding 49
Impact of Taxes to Equitable Life 49
Transfers Among Investment Options 49
Tax Changes 49
PART 10: INDEPENDENT ACCOUNTANTS PAGE 50
APPENDIX I: MARKET VALUE
ADJUSTMENT EXAMPLE PAGE 51
APPENDIX II: GUARANTEED MINIMUM
DEATH BENEFIT (GMDB) EXAMPLE PAGE 52
APPENDIX III: GMIB EXAMPLES PAGE 53
APPENDIX IV: EXAMPLE OF PAYMENTS
UNDER THE IRA ASSURED PAYMENT
OPTION AND IRA APO PLUS PAGE 54
APPENDIX V: IRS TAX DEDUCTION TABLE PAGE 55
STATEMENT OF ADDITIONAL
INFORMATION TABLE OF CONTENTS PAGE 56
</TABLE>
3
<PAGE>
- -------------------------------------------------------------------------------
GENERAL TERMS
- -------------------------------------------------------------------------------
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE--The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT--The individual who is the measuring life for determining annuity
benefits.
ANNUITY ACCOUNT VALUE--The sum of the amounts in the Investment Options under
the Certificate. See "Annuity Account Value" in Part 5.
ANNUITY COMMENCEMENT DATE--The date on which amounts will be applied under an
income annuity option.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our Business
Day ends at 4:00 p.m. Eastern Time or the closing of the New York Stock
Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity contract
and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns a Rollover IRA Certificate and has the
right to exercise all rights under the Certificate. The Certificate Owner
must also be the Annuitant.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The date on which you are enrolled under the group annuity
contract, or the effective date of the individual contract. This is usually the
Business Day we receive the initial contribution at our Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date that
are available for investment under the Certificates.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods and
the Modal Payment Portion of such Account.
GUARANTEED RATE--The annual interest rate established for each allocation to a
Guarantee Period.
INVESTMENT FUNDS--The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS--The choices for investment: the Investment Funds and each
available Guarantee Period.
IRA--An individual retirement annuity, as defined in Section 408(b) of the
Code.
IRA ASSURED PAYMENT OPTION--A distribution option which provides guaranteed
lifetime income. The IRA Assured Payment Option may be elected in the
application or elected as a distribution option at a later date. Under this
option amounts are allocated to the Guaranteed Period Account and the Life
Contingent Annuity. No amounts may be allocated to the Investment Funds.
IRA APO PLUS--A distribution option which provides guaranteed lifetime income.
IRA APO Plus may be elected in the application or as a distribution option at a
later date. Under this option amounts are allocated to the Guaranteed Period
Account, the Life Contingent Annuity and to the Investment Funds. The amount in
the Investment Funds is then systematically converted to increase the
guaranteed lifetime income.
LIFE CONTINGENT ANNUITY--Provides guaranteed lifetime income beginning at a
future date. Amounts may only be applied under the Life Contingent Annuity
through election of the IRA Assured Payment Option and IRA APO Plus.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
MODAL PAYMENT PORTION--Under the IRA Assured Payment Option and IRA APO Plus,
the portion of the Guaranteed Period Account from which payments, other than
payments due on an Expiration Date, are made.
PORTFOLIOS--The portfolios of the Trust that correspond to the Investment Funds
of the Separate Account.
4
<PAGE>
PROCESSING DATE--The day when we deduct certain charges from the Annuity
Account Value. If the Processing Date is not a Business Day, it will be on the
next succeeding Business Day. The Processing Date will be once each year on
each anniversary of the Contract Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 1.
SAI--The statement of additional information for the Separate Account under the
Rollover IRA.
SEPARATE ACCOUNT--Equitable Life's Separate Account No. 49.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If your
contribution or request reaches our Processing Office on a non-Business Day, or
after the close of the Business Day, the Transaction Date will be the next
following Business Day. Transaction requests must be made in a form acceptable
to us.
TRUST--The Hudson River Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested.
VALUATION PERIOD--Each Business Day together with any preceding non-business
days.
5
<PAGE>
- -------------------------------------------------------------------------------
FEE TABLE
- -------------------------------------------------------------------------------
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate so
that you may compare them with other similar products. The table reflects both
the charges of the Separate Account and the expenses of the Trust. Charges for
applicable taxes such as state or local premium taxes may also apply. For a
complete description of the charges under the Certificate, see "Part 7:
Deductions and Charges." For a complete description of the Trust's charges and
expenses, see the prospectus for the Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
- ----------------------------------------------------------------
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (percentage deducted upon
surrender or for certain withdrawals. The applicable withdrawal charge
percentage is determined by the Contract Year in which the withdrawal is
made or the Certificate is surrendered beginning with "Contract Year 1"
with respect to each contribution withdrawn or surrendered. For each
contribution, the Contract Year in which we receive that contribution is
"Contract Year 1")(1)
CONTRACT
YEAR
--------
1 .................... 7.00%
2 .................... 6.00
3 .................... 5.00
4 .................... 4.00
5 .................... 3.00
6 .................... 2.00
7 .................... 1.00
8+ ................... 0.00
<TABLE>
<CAPTION>
Combined
GMDB/GMIB GMDB Only
Benefit Benefit
--------- ---------
<S> <C> <C>
GMDB/GMIB Charges (percentage deducted annually on each Processing Date
as a percentage of the guaranteed minimum death benefit then in effect)(2) .... 0.45% 0.20%
</TABLE>
<TABLE>
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH INVESTMENT FUND)
- ------------------------------------------------------------------------------------
<S> <C>
Mortality and Expense Risk Charge ........................................................ 0.90%
Asset Based Administrative Charge(3) .................................................... 0.30%
Total Separate Account Annual Expenses ................................................. 1.20%
</TABLE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS IN EACH PORTFOLIO)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
----------------------------------------------------------------
AGGRESSIVE COMMON GROWTH HIGH MONEY
STOCK STOCK INVESTORS GLOBAL YIELD MARKET
------------ -------- ----------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.46% 0.35% 0.52% 0.53% 0.55% 0.40%
Rule 12b-1 Plan Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.03% 0.03% 0.04% 0.08% 0.05% 0.04%
------------ -------- ----------- -------- ------- --------
TOTAL TRUST ANNUAL EXPENSES(5) 0.74% 0.63% 0.81% 0.86% 0.85% 0.69%
============ ======== =========== ======== ======= ========
</TABLE>
- ------------
Notes:
(1) Deducted upon a withdrawal with respect to amounts in excess of the 15%
(10% under the IRA Assured Payment Option and IRA APO Plus) free
corridor amount, and upon a surrender. See "Part 7: Deductions and
Charges," "Withdrawal Charge." We reserve the right to impose an
administrative charge of the lesser of $25 and 2.0% of the amount
withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. See "Withdrawal Processing Charge" also in Part 7.
(2) The guaranteed minimum death benefit (GMDB) is described under "Death
Benefit," "GMDB" and the guaranteed minimum income benefit (GMIB) is
described under "GMIB" both of which are in Part 5. The 0.45% charge
covers a 6% to Age 80 Benefit or, if a combined 6% to Age 70 Benefit is
elected, the charge is 0.30%. See "Part 7: Deductions and Charges,"
"Charges for Combined GMDB/GMIB Benefit" and "Charges for GMDB Only
Benefit."
(3) We reserve the right to increase this charge to an annual rate of 0.35%,
the maximum permitted under the Certificates.
6
<PAGE>
(4) The Class IB shares of the Trust are subject to fees imposed under a
distribution plan (herein, the "Rule 12b-1 Plan") adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Rule 12b-1 Plan provides that the Trust, on behalf of each Portfolio,
may pay annually up to 0.25% of the average daily net assets of a
Portfolio attributable to its Class IB shares in respect of activities
primarily intended to result in the sale of the Class IB shares. The
Rule 12b-1 Plan fee, which may be waived in the discretion of Equitable
Distributors, Inc., may be increased only by action of the Board of
Trustees of the Trust up to a maximum of 0.50% per annum.
(5) Expenses shown for all Portfolios are estimated. The investment advisory
fee for each Portfolio may vary from year to year depending upon the
average daily net assets of the respective Portfolio of the Trust. The
maximum investment advisory fees, however, cannot be increased without a
vote of that Portfolio's shareholders. The other direct operating
expenses will also fluctuate from year to year depending on actual
expenses. See "Trust Charges to Portfolios" in Part 7.
EXAMPLES
- --------
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined GMDB/GMIB Benefit with a 6% to Age 80 Benefit and
under the GMDB Only Benefit in the two situations noted below assuming a $1,000
contribution invested in one of the Investment Funds listed, and a 5% annual
return on assets.(1)
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be greater
or less than those shown. Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
COMBINED GMDB/GMIB BENEFIT ELECTION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE END
OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS
-------- ---------
<S> <C> <C>
Aggressive Stock $89.66 $120.30
Common Stock 88.56 116.99
Growth Investors 90.35 122.39
Global 90.85 123.89
High Yield 90.75 123.59
Money Market 89.16 118.79
</TABLE>
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE
END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS
-------- ---------
<S> <C>
$24.43 $75.66
23.33 72.35
25.12 77.75
25.62 79.25
25.52 78.95
23.93 74.16
</TABLE>
GMDB ONLY BENEFIT ELECTION
- -------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CERTIFICATE AT THE END
OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS
-------- ---------
Aggressive Stock $89.66 $115.01
Common Stock 88.56 111.68
Growth Investors 90.35 117.10
Global 90.85 118.61
High Yield 90.75 118.31
Money Market 89.16 113.49
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE
END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE:
1 YEAR 3 YEARS
-------- ---------
$21.78 $67.38
20.68 64.07
22.47 69.48
22.97 70.98
22.87 70.68
21.28 65.88
- ------------
Notes:
(1) The amount accumulated could not be paid in the form of an annuity at the
end of any of the periods shown in the examples. If the amount applied to
purchase an annuity is less than $2,000, or the initial payment is less
than $20 we may pay the amount to the payee in a single sum instead of as
payments under an annuity form. See "Income Annuity Options" in Part 6.
The examples do not reflect charges for applicable taxes such as state or
local premium taxes that may also be deducted in certain jurisdictions.
7
<PAGE>
- -------------------------------------------------------------------------------
PART 1: SUMMARY
- -------------------------------------------------------------------------------
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE ROLLOVER IRA?
The Rollover Individual Retirement Annuity (IRA) is designed to provide for
retirement income through the investment of rollover contributions, direct
transfers from other individual retirement arrangements and additional IRA
contributions. The Rollover IRA features a combination of Investment Options,
consisting of Investment Funds providing variable returns and Guarantee Periods
providing guaranteed interest. The Rollover IRA also makes available
distribution methods under the Choice Income Plan which includes the IRA
Assured Payment Option and IRA APO Plus (which can be applied for in the
application or at a later date). Withdrawal options and fixed and variable
income annuity options are also available.
The Rollover IRA and/or the IRA Assured Payment Option and IRA APO Plus may not
be available in all states. These Certificates are not available in Puerto
Rico.
INVESTMENT OPTIONS
The Rollover IRA offers the following Investment Options which permit you to
create your own strategy for retirement savings. All available Investment
Options may be selected under a Certificate.
INVESTMENT FUNDS
o Aggressive Stock
o Common Stock
o Growth Investors
o Global
o High Yield
o Money Market
GUARANTEE PERIODS
o Guarantee Periods (may not be available in all states) maturing in each
of calendar years 1997 through 2007.
o Guarantee Periods maturing in 1997 through 2011 under the IRA Assured
Payment Option and IRA APO Plus.
CONTRIBUTIONS
o To put a Certificate into effect, you must contribute at least $5,000 in
the form of either a rollover contribution or a direct
custodian-to-custodian transfer from one or more other individual
retirement arrangements.
o Subsequent contributions may be made in an amount of at least $1,000.
Subsequent contributions must not exceed $2,000 for any taxable year,
except for additional rollover contributions or direct transfers, both of
which are unlimited.
TRANSFERS
Under the Rollover IRA, you may make an unlimited number of transfers among the
Investment Funds. However, there are restrictions for transfers to and from the
Guaranteed Period Account and among the Guarantee Periods. Transfers from a
Guarantee Period may result in a market value adjustment. Transfers among
Investment Options are free of charge. Transfers among the Investment Options
are not taxable.
FREE LOOK PERIOD
You have the right to examine the Rollover IRA Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You may cancel
it by sending it to our Processing Office. Your refund will equal the Annuity
Account Value, reflecting any investment gain or loss, and any positive or
negative market value adjustment, through the date we receive your Certificate
at our Processing Office.
SERVICES WE PROVIDE
o REGULAR REPORTS
o Statement of your Certificate values as of the last day of the calendar
year;
o Three additional reports of your Certificate values each year;
o Annual and semi-annual statements of the Trust; and
o Written confirmation of financial transactions.
8
<PAGE>
o TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values
and Guaranteed Rates applicable to the Guarantee Periods. Also call
during our regular business hours to speak to one of our customer
service representatives.
o PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
DEATH BENEFITS
If you die before the Annuity Commencement Date, the Rollover IRA provides a
death benefit. The beneficiary will be paid the greater of the Annuity Account
Value in the Investment Funds and the guaranteed minimum death benefit (GMDB),
plus any death benefit provided with respect to the Guaranteed Period Account.
There are two plans available under the Certificates for providing guaranteed
benefits, a Combined GMDB/GMIB Benefit and a GMDB Only Benefit.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
The GMIB (available under the Combined GMDB/ GMIB Benefit) may not currently be
available in all states.
When you elect the IRA Assured Payment Option, the GMIB provides a minimum
guaranteed lifetime income under such option with respect to amounts applied
from the Investment Funds. Any amounts in the Guaranteed Period Account will be
applied to increase the payments provided under the GMIB. A market value
adjustment may apply.
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time before
the Annuity Commencement Date while the Annuitant is living. Withdrawal charges
and a market value adjustment may apply. A surrender may also be subject to
income tax and tax penalty.
DISTRIBUTION METHODS
IRA ASSURED PAYMENT OPTION
The IRA Assured Payment Option (which requires a minimum amount applied of
$10,000) provides guaranteed lifetime income. You may elect to receive payments
on a monthly, quarterly or annual basis during a fixed period. Payments during
the fixed period represent distributions of the Maturity Values of serially
maturing Guarantee Periods on their Expiration Dates or, distributions from
amounts in the Modal Payment Portion of the Guaranteed Period Account. During
the fixed period you can take withdrawals from your Annuity Account Value.
After the fixed period ends, payments are made out of the Life Contingent
Annuity.
The Life Contingent Annuity does not have a Cash Value or an Annuity Account
Value. There is no death benefit under the Life Contingent Annuity and income
is paid only if you (or a joint Annuitant) are living at the date annuity
benefits begin.
A $2.50 charge will be deducted from each payment made on a monthly or
quarterly basis.
IRA APO PLUS
IRA APO Plus is a variation of the IRA Assured Payment Option. IRA APO Plus
enables you to keep a portion of your Annuity Account Value in the Investment
Funds while periodically converting such Annuity Account Value to increase the
guaranteed lifetime income under the IRA Assured Payment Option. When you elect
IRA APO Plus, a portion of your initial contribution or Annuity Account Value,
as applicable, is allocated to the IRA Assured Payment Option to provide a
minimum guaranteed lifetime income, and the remaining contribution or Annuity
Account Value is allocated to the Invest-
9
<PAGE>
ment Funds. Every three years during the fixed period, a portion of the
remaining Annuity Account Value in the Investment Funds is applied to increase
the guaranteed payments under the IRA Assured Payment Option.
WITHDRAWAL OPTIONS
o Lump Sum Withdrawals--Before the Annuity Commencement Date while the
Certificate is in effect, you may take Lump Sum Withdrawals from your
Certificate at any time. The minimum withdrawal amount is $1,000.
o Substantially Equal Payment Withdrawals--If you are below age 59 1/2,
this withdrawal option is designed to allow you to withdraw funds
annually and not have a 10% penalty tax apply. This is accomplished by
distribution of substantially equal periodic payments over your life
expectancy or over the joint life expectancies of you and your spouse.
If you change or stop such distributions before the later of age 59 1/2
or five years from the date of the first distribution, the 10% penalty
tax may apply on all prior distributions.
o Systematic Withdrawals--You may also withdraw funds under our Systematic
Withdrawal option, where the minimum withdrawal amount is $250. These
withdrawals are available if you are age 59 1/2 to 70 1/2.
o Minimum Distribution Withdrawals--You may also withdraw funds annually
under our Minimum Distribution Withdrawals option, which is designed to
meet the minimum distribution requirements set forth in the Code. The
minimum withdrawal amount is $250.
Withdrawals may be subject to a withdrawal charge and withdrawals from
Guarantee Periods prior to their Expiration Date will result in a market value
adjustment. Withdrawals may be subject to income tax and tax penalty.
INCOME ANNUITY OPTIONS
The Certificates also provide income annuity options to which amounts may be
applied at the Annuity Commencement Date. The income annuity options are
offered on a fixed and variable basis.
TAXES
Generally, any earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject to
tax penalty.
DEDUCTIONS FROM ANNUITY
ACCOUNT VALUE
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of the initial and each
subsequent contribution if (i) a Lump Sum Withdrawal or cumulative withdrawals
during a Contract Year exceed the free corridor amount, or (ii) the Certificate
is surrendered. The free corridor amount is 15% under the Rollover IRA and 10%
under the IRA Assured Payment Option and IRA APO Plus. We determine the
withdrawal charge separately for each contribution in accordance with the table
below.
CONTRACT YEAR
1 2 3 4 5 6 7 8+
-------------------------------------------------------------
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
The applicable withdrawal charge percentage is determined by the Contract Year
in which the withdrawal is made or the Certificate is surrendered, beginning
with "Contract Year 1" with respect to each contribution withdrawn or
surrendered. For purposes of the table, for each contribution the Contract Year
in which we receive that contribution is "Contract Year 1."
Withdrawal Processing Charge
We reserve the right to impose an administrative charge of the lesser of $25
and 2.0% of the amount withdrawn for each Lump Sum Withdrawal after the fifth
in a Contract Year.
Charges for Combined GMDB/GMIB Benefit
We deduct a charge annually on each Processing Date for providing the Combined
GMDB/GMIB Benefit. The charge is equal to a percentage of the GMDB in effect on
the Processing Date. The percentage is equal to 0.45% for a 6% to Age 80
Benefit and 0.30% for a 6% to Age 70 Benefit.
Charges for GMDB Only Benefit
We deduct a charge annually on each Processing Date for providing the GMDB Only
Benefit. The charge is equal to a percentage of the GMDB in effect on the
Processing Date. The percentage is equal to 0.20%.
Charges for State Premium and Other
Applicable Taxes
Generally, we deduct a charge for premium and other applicable taxes from the
Annuity Account Value on the Annuity Commencement Date. The current tax charge
that might be imposed varies by state and ranges from 0 to 2.25%.
10
<PAGE>
DEDUCTIONS FROM INVESTMENT FUNDS
Mortality and Expense Risk Charge
We charge each Investment Fund a daily asset based charge for mortality and
expense risks equivalent to an annual rate of 0.90%.
Asset Based Administrative Charge
We charge each Investment Fund a daily asset based charge to cover the
administrative expenses under the Certificate equivalent to an annual rate of
0.30%. We reserve the right to increase this charge to an annual rate of 0.35%,
the maximum permitted under the Certificates.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees and other expenses of the Trust are charged daily
against the Trust's assets. These are reflected in the Portfolio's daily share
price and in the daily Accumulation Unit Value for the Investment Funds.
The Trust Class IB shares held in the Investment Funds are subject to a
distribution fee under a Rule 12b-1 Plan. The Rule 12b-1 Plan fee is imposed
against the assets of each Portfolio at the annual rate of 0.25%. The fee,
which may be waived in the discretion of Equitable Distributors, Inc., may be
increased only by action of the Board of Trustees of the Trust up to a maximum
of 0.50% per annum. We offer other deferred variable annuities that invest in
Trust shares that are not subject to the Rule 12b-1 Plan fee and that bear
different charges and expenses. For more information about the Plan, and the
address for any inquiries about the Plan, see "The Trust" in the accompanying
Trust prospectus.
11
<PAGE>
- -------------------------------------------------------------------------------
PART 2: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
- -------------------------------------------------------------------------------
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been selling
annuities since the turn of the century. Our home office is located at 787
Seventh Avenue, New York, New York 10019. We are authorized to sell life
insurance and annuities in all fifty states, the District of Columbia, Puerto
Rico and the Virgin Islands. We maintain local offices throughout the United
States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding common stock
of the Holding Company plus convertible preferred stock. Under its investment
arrangements with Equitable Life 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 Life. AXA, a French
company, is the holding company for an international group of insurance and
related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $217.6 billion of assets as of June 30, 1996.
SEPARATE ACCOUNT NO. 49
Separate Account No. 49 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment Company
Act of 1940 (1940 Act). This registration does not involve any supervision by
the SEC of the management or investment policies of the Separate Account. The
Separate Account has several Investment Funds, each of which invests in shares
of a corresponding Portfolio of the Trust. Because amounts allocated to the
Investment Funds are invested in a mutual fund, investment return and principal
will fluctuate and the Certificate Owner's Accumulation Units may be worth more
or less than the original cost when redeemed.
Under the New York Insurance Law, the portion of the Separate Account's assets
equal to the reserves and other liabilities relating to the Certificates are
not chargeable with liabilities arising out of any other business we may
conduct. Income, gains or losses, whether or not realized, from assets of the
Separate Account are credited to or charged against the Separate Account
without regard to our other income gains or losses. We are the issuer of the
Certificates, and the obligations set forth in the Certificates (other than
those of Annuitants or Certificate Owners) are our obligations.
In addition to contributions made under the Rollover IRA Certificates, we may
allocate to the Separate Account monies received under other contracts,
certificates, or agreements. Owners of all such contracts, certificates or
agreements will participate in the Separate Account in proportion to the
amounts they have in the Investment Funds that relate to their contracts,
certificates or agreements. We may retain in the Separate Account assets that
are in excess of the reserves and other liabilities relating to the Rollover
IRA Certificates or to other contracts, certificates or agreements, or we may
transfer the excess to our General Account.
We reserve the right, subject to compliance with applicable law; (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove Investment
Funds (or sub-funds) from, the Separate Account, or to add other separate
accounts; (2) to combine any two or more Investment Funds or sub-funds thereof;
(3) to transfer the assets we determine to be the share of the class of
contracts to which the Certificate belongs from any Investment Fund to another
Investment Fund; (4) to operate the Separate Account or any Investment Fund as
a management investment company under the 1940 Act, in which case charges and
expenses that otherwise would be assessed against an underlying mutual fund
would be assessed against the Separate Account; (5) to deregister the Separate
Account under the 1940 Act, provided that such action conforms with the
requirements of applicable law; (6) to restrict or eliminate any voting rights
as to the Separate Account; and (7) to cause one or more Investment Funds to
invest some or all of their assets in one or more other trusts or investment
companies. If any changes are made that result in a material change in the
underlying investment policy of an Investment Fund, you will be notified as
required by law.
THE TRUST
The Trust is an open-end diversified management investment company, more
commonly called a mu-
12
<PAGE>
tual fund. As a "series" type of mutual fund, it issues several different
series of stock, each of which relates to a different Portfolio of the Trust.
The Trust commenced operations in January 1976 with a predecessor of its Common
Stock Portfolio. The Trust does not impose a sales charge or "load" for buying
and selling its shares. All dividend distributions to the Trust are reinvested
in full and fractional shares of the Portfolio to which they relate. Each
Investment Fund invests in Class IB shares of a corresponding Portfolio of the
Trust. More detailed information about the Trust, its investment objectives,
policies, restrictions, risks, expenses, the Rule 12b-1 Plan relating to the
Class IB shares, and all other aspects of its operations appears in its
prospectus which accompanies this prospectus or in its statement of additional
information.
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Alliance Capital Management L.P. (Alliance), which is
registered with the SEC as an investment adviser under the Investment Advisers
Act of 1940. Alliance, a publicly-traded limited partnership, is indirectly
majority-owned by Equitable Life. On June 30, 1996, Alliance was managing over
$168 billion in assets. Alliance acts as an investment adviser to various
separate accounts and general accounts of Equitable Life and other affiliated
insurance companies. Alliance also provides management and consulting services
to mutual funds, endowment funds, insurance companies, foreign entities,
qualified and non-tax qualified corporate funds, public and private pension and
profit-sharing plans, foundations and tax-exempt organizations.
Alliance's record as an investment manager is based, in part, on its ability to
provide a diversity of investment services to domestic, international and
global markets. Alliance prides itself on its ability to attract and retain a
quality, professional work force. Alliance employs more than 188 investment
professionals, including 74 research analysts. Portfolio managers have an
average investment experience of more than 14 years.
Alliance's main office is located at 1345 Avenue of the Americas, New York, New
York 10105.
13
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF THE TRUST'S PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of each
Portfolio will affect its return and its risks. There is no guarantee that
these objectives will be achieved.
The policies and objectives of the Trust's Portfolios are as follows:
<TABLE>
<CAPTION>
Portfolio Investment Policy Objective
- -------- ----------------- ---------
<S> <C> <C>
Aggressive Stock Primarily common stocks and other equity-type Long-term growth of
securities issued by medium and other smaller capital
sized companies with strong growth potential.
Common Stock Primarily common stock and other equity-type Long-term growth of
instruments. capital and increasing
income
Growth Investors Diversified mix of publicly-traded, High total return
fixed-income and equity securities; asset mix consistent with the
and security selection based upon factors adviser's determination
expected to increase possibility of high of reasonable risk
long-term return. The Portfolio is generally
expected to hold approximately 70% of its
assets in equity securities and 30% in fixed
income securities.
Global Primarily equity securities of non-United Long-term growth of
States as well as United States companies. capital
High Yield Primarily a diversified mix of high yield, High return by
fixed-income securities involving greater maximizing current
volatility of price and risk of principal and income and, to the extent
income than high quality fixed-income consistent with that
securities. The medium and lower quality debt objective, capital
securities in which the Portfolio may invest appreciation
are known as "junk bonds."
Money Market Primarily high quality short-term money High level of current
market instruments. income while preserving
assets and maintaining
liquidity
</TABLE>
14
<PAGE>
- -------------------------------------------------------------------------------
PART 3: INVESTMENT PERFORMANCE
- -------------------------------------------------------------------------------
This Part presents performance data for each of the Investment Funds calculated
by two methods. The first method, used in calculating values for the two tables
in "Performance Data for a Certificate," reflects all applicable fees and
charges other than the charge for tax such as premium taxes. The second method,
used in preparing rates of return for the three tables in "Rate of Return Data
for Investment Funds," reflects all fees and charges other than the withdrawal
charge, the GMDB/GMIB charge and the charge for tax such as premium taxes.
These additional charges would effectively reduce the rates of return credited
to a particular Certificate.
The Separate Account was recently established and has had no prior operations,
and no Certificates have been issued prior to the date of this prospectus. The
calculations of investment performance shown below are based on the actual
investment results of the Portfolios of the Trust, from which certain fees and
charges applicable under the Rollover IRA have been deducted. The investment
results of the Portfolios of the Trust have not been adjusted to reflect the
Rule 12b-1 Plan fee relating to the Class IB shares, which were not available
for purchase prior to the date of this prospectus. The Rule 12b-1 Plan fee
would effectively reduce the investment performance shown. The results shown
are not an estimate or guarantee of future investment performance, and do not
reflect the actual experience of amounts invested under a particular
Certificate.
See "Part 4: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
PERFORMANCE DATA FOR A CERTIFICATE
The standardized performance data in the following tables illustrate the
average annual total return of the Investment Funds over the periods shown,
assuming a single initial contribution of $1,000 and the surrender of the
Certificate at the end of each period. These tables (which reflect the first
calculation method described above) are prepared in a manner prescribed by the
SEC for use when we advertise the performance of the Separate Account. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
Each calculation assumes that the $1,000 contribution was allocated to only one
Investment Fund, no transfers or subsequent contributions were made and no
amounts were allocated to any other Investment Option under the Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of a
Certificate which is surrendered on December 31, 1995 by the $1,000
contribution made at the beginning of each period illustrated. The result of
that calculation is the total growth rate for the period. Then we annualize
that growth rate to obtain the average annual percentage increase (decrease)
during the period shown. When we "annualize," we assume that a single rate of
return applied each year during the period will produce the ending value,
taking into account the effect of compounding.
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995*
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION**
- ---------------- -------- -------- -------- -------- -------------
Aggressive Stock $1,231 $1,363 $2,461 -- $ 5,280
Common Stock 1,239 1,498 2,108 $3,530 11,689
Growth Investors 1,179 1,299 2,018 -- 2,286
Global 1,104 1,531 1,961 -- 2,139
High Yield 1,115 1,323 1,832 -- 2,076
Money Market 975 1,032 1,120 1,525 2,235
- ------------
* See footnotes on next page.
15
<PAGE>
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1995*
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION**
- ---------------- -------- -------- -------- -------- -------------
Aggressive Stock 23.06% 10.88% 19.73% -- 18.10%
Common Stock 23.87 14.42 16.09 13.44% 13.08
Growth Investors 17.86 9.10 15.07 -- 12.54
Global 10.39 15.27 14.42 -- 8.82
High Yield 11.48 9.78 12.87 -- 8.45
Money Market (2.52) 1.05 2.29 4.31 5.51
- ------------
* The tables reflect charges under a Certificate with the 0.45% GMDB/GMIB
charge.
** The "Since Inception" dates are as follows: Aggressive Stock (January 27,
1986); Common Stock (January 13, 1976); Growth Investors (October 2,
1989); Global (August 27, 1987); High Yield (January 2, 1987); and Money
Market (July 13, 1981).
RATE OF RETURN DATA FOR INVESTMENT FUNDS
The following tables (which reflect the second calculation method described
above) provide you with information on rates of return on an annualized,
cumulative and year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of return
reflect performance over a stated period of time. Annualized rates of return
represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
Performance data of the Money Market and Common Stock Funds for the periods
prior to March 22, 1985, reflect the investment results of two open-end
management separate accounts (the "predecessor separate accounts") which were
reorganized in unit investment trust form. The "Since Inception" figures for
these Funds are based on the date of inception of the predecessor separate
accounts. This performance data has been adjusted to reflect the maximum
investment advisory fee payable for the corresponding Portfolio of the Trust,
as well as an assumed charge of 0.06% for direct operating expenses.
Performance data for the remaining Investment Funds reflect (i) the investment
results of the corresponding Portfolios of the Trust from the date of inception
of those Portfolios and (ii) the actual investment advisory fee, and direct
operating expenses of the relevant Portfolio.
The performance data for all periods has also been adjusted to reflect the
Separate Account mortality and expense risk charge, and the asset based
administrative charge equal to a total of 1.20% relating to the Certificates,
as well as the Trust's expenses.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality and
expense risk charge and the asset based administrative charge under the
Certificates. Comparisons with these benchmarks, therefore, are of limited use.
We include them because they are widely known and may help you to understand
the universe of securities from which each Portfolio is likely to select its
holdings. Benchmark data reflect the reinvestment of dividend income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
AGGRESSIVE STOCK: January 27, 1986; 50% Stan dard & Poor's Mid-Cap Total
Return Index and 50% Russell 2000 Small Stock Index.
COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond Index
and 70% Standard & Poor's 500 Index.
GLOBAL: August 27, 1987; Morgan Stanley Capital International World Index.
HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master Index.
16
<PAGE>
MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill Index.
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity products,
including managed separate accounts of insurance companies. According to Lipper
Analytical Services, Inc., the data are presented net of investment management
fees, direct operating expenses and asset-based charges applicable under
annuity contracts. Lipper data provide a more accurate picture than market
benchmarks of the Rollover IRA performance relative to other variable annuity
products.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
AGGRESSIVE STOCK 30.06% 12.55% 20.29% -- -- 18.53%
Lipper Small Company Growth 28.19 15.26 25.72 -- -- 16.06
Benchmark 29.69 13.67 20.16 -- -- 13.58
COMMON STOCK 30.87 15.99 16.74 13.78% 13.00% 13.41
Lipper Growth 31.08 12.09 15.53 12.05 12.26 12.25
Benchmark 37.54 15.30 16.57 14.87 14.79 14.24
GROWTH INVESTORS 24.86 10.81 15.72 -- -- 14.64
Lipper Flexible Portfolio 21.58 9.32 11.43 -- -- 9.44
Benchmark 32.05 13.35 14.70 -- -- 11.97
GLOBAL 17.39 16.80 15.10 -- -- 10.04
Lipper Global 13.87 13.45 9.10 -- -- 2.52
Benchmark 20.72 15.83 11.74 -- -- 6.75
HIGH YIELD 18.48 11.46 13.57 -- -- 8.89
Lipper High Yield 17.36 9.80 15.79 -- -- 8.87
Benchmark 19.91 11.57 17.17 -- -- 11.28
MONEY MARKET 4.48 2.99 3.23 4.76 -- 6.16
Lipper Money Market 4.35 2.88 3.10 4.71 -- 6.27
Benchmark 5.74 4.34 4.47 5.77 -- 7.09
</TABLE>
- ------------
* See footnotes on next page.
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
AGGRESSIVE STOCK 30.06% 42.58% 151.85% -- -- 440.73%
Lipper Small Company
Growth 28.19 55.24 268.67 -- -- 337.96
Benchmark 29.69 46.89 150.49 -- -- 254.09
COMMON STOCK 30.87 56.05 116.80 263.70% 525.22% 1,133.55
Lipper Growth 31.08 41.29 107.30 215.49 483.45 920.87
Benchmark 37.54 53.30 115.25 300.11 692.18 1,327.94
GROWTH INVESTORS 24.86 36.07 107.47 -- -- 134.80
Lipper Flexible Portfolio 21.58 30.92 72.73 -- -- 76.92
Benchmark 32.05 45.64 98.56 -- -- 102.72
GLOBAL 17.39 59.33 102.02 -- -- 122.13
Lipper Global 13.87 46.36 55.44 -- -- 23.09
Benchmark 20.72 55.39 74.20 -- -- 72.38
HIGH YIELD 18.48 38.47 88.94 -- -- 115.04
Lipper High Yield 17.36 32.45 108.96 -- -- 117.28
Benchmark 19.91 38.89 120.85 -- -- 161.50
MONEY MARKET 4.48 9.23 17.25 59.16 -- 137.35
Lipper Money Market 4.35 8.87 16.48 58.55 -- 140.42
Benchmark 5.74 13.58 24.45 75.23 -- 170.07
</TABLE>
- ------------
* See footnotes on next page.
17
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1983 1984 1985 1986
<S> <C> <C> <C> <C>
AGGRESSIVE STOCK -- -- -- 33.77%
COMMON STOCK** 24.60% (3.14)% 31.83% 15.96
GROWTH INVESTORS -- -- -- --
GLOBAL -- -- -- --
HIGH YIELD -- -- -- --
MONEY MARKET** 7.65 9.53 7.17 5.33
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AGGRESSIVE STOCK 6.01% (0.08)% 41.79% 6.86% 84.63% (4.33)% 15.35% (4.97)% 30.06%
COMMON STOCK** 6.15 20.97 24.09 (9.22) 36.23 1.98 23.33 (3.31) 30.87
GROWTH INVESTORS -- -- 3.52 9.33 47.12 3.64 13.89 (4.31) 24.86
GLOBAL (13.63) 9.55 25.22 (7.20) 28.99 (1.70) 30.54 3.97 17.39
HIGH YIELD 3.44 8.42 3.88 (2.31) 22.97 10.96 21.67 (3.95) 18.48
MONEY MARKET** 5.35 6.03 7.88 6.93 4.91 2.32 1.73 2.77 4.48
</TABLE>
- ------------
* Returns do not reflect the withdrawal charge, the GMDB/GMIB charge, and
any charge for tax such as premium taxes.
<TABLE>
<CAPTION>
** Prior to 1982 the Year-by-Year Rates of Return were: 1976 1977 1978 1979 1980 1981 1982
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCK 8.14% (10.33)% 6.94% 28.28% 48.32% (6.99)% 16.16%
MONEY MARKET -- -- -- -- -- 5.68 11.67
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may describe
general economic and market conditions affecting the Separate Account and the
Trust and may compare the performance of the Investment Funds with (1) that of
other insurance company separate accounts or mutual funds included in the
rankings prepared by Lipper Analytical Services, Inc., Morningstar, Inc., VARDS
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 which are shown
under "Benchmarks" and "Fund Inception Dates and Comparative Benchmarks" in
this Part 3, or (3) data developed by us derived from such indices or averages.
The Morningstar Variable Annuity/Life Report consists of nearly 700 variable
life and annuity funds, all of which report their data net of investment
management fees, direct operating expenses and separate account charges. VARDS
is a monthly reporting service that monitors approximately 760 variable life
and variable annuity funds on performance and account information.
Advertisements or other communications furnished to present or prospective
Certificate Owners may also include evaluations of an Investment Fund or
Portfolio by financial publications that are nationally recognized such as
Barron's, Morningstar's Variable Annuity Sourcebook, Business Week, Chicago
Tribune, Forbes, Fortune, Institutional Investor, Investment Adviser,
Investment Dealer's Digest, Investment Management Weekly, Los Angeles Times,
Money, Money Management Letter, Kiplinger's Personal Finance, Financial
Planning, National Underwriter, Pension & Investments, USA Today, Investor's
Daily, The New York Times, and The Wall Street Journal.
MONEY MARKET FUND YIELD INFORMATION
The current yield and effective yield of the Money Market Fund may appear in
reports and promotional material to current or prospective Certificate Owners.
Current yield for the Money Market Fund will be based on net changes in a
hypothetical investment over a given seven-day period, exclusive of capital
changes, and then "annualized" (assuming that the same seven-day result would
occur each week for 52 weeks). "Effective yield" is calculated in a manner
similar to that used to calculate current yield, but when annualized, any
income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings
are compounded weekly. Money Market Fund yields and effective yields assume the
deduction of all Certificate charges and expenses other than the withdrawal
charge, GMDB/ GMIB charge and any charge for tax such as premium tax. See "Part
5: Money Market Fund Yield Information" in the SAI.
18
<PAGE>
- -------------------------------------------------------------------------------
PART 4: THE GUARANTEED PERIOD ACCOUNT
- -------------------------------------------------------------------------------
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's Expiration
Date accumulates interest at a Guaranteed Rate. The Guaranteed Rate for each
allocation is the annual interest rate applicable to new allocations to that
Guarantee Period, which was in effect on the Transaction Date for the
allocation. We may establish different Guaranteed Rates under different classes
of Certificates. We use the term GUARANTEED PERIOD AMOUNT to refer to the
amount allocated to and accumulated in each Guarantee Period. The Guaranteed
Period Amount is reduced or increased by any market value adjustment as a
result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you have
allocated Annuity Account Value. On the Expiration Date of a Guarantee Period,
its Guaranteed Period Amount and its value in the Guaranteed Period Account are
equal. We call the Guaranteed Period Amount on an Expiration Date the Guarantee
Period's Maturity Value. We report the Annuity Account Value in your Guaranteed
Period Account to reflect any market value adjustment that would apply if all
Guaranteed Period Amounts were withdrawn as of the calculation date. The
Annuity Account Value in the Guaranteed Period Account with respect to the
Guarantee Periods on any Business Day, therefore, will be the sum of the
present value of the Maturity Value in each Guarantee Period, using the
Guaranteed Rate in effect for new allocations to such Guarantee Period on such
date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1997 through 2007.
Not all of these Guarantee Periods will be available for ages 76 and above. See
"Allocation of Contributions" in Part 5. Also, the Guarantee Periods may not be
available for investment in all states. As Guarantee Periods expire we expect
to add maturity years so that generally 10 are available at any time.
Under the IRA Assured Payment Option and IRA APO Plus, in addition to the
Guarantee Periods above, Guarantee Periods ending on February 15th for each of
the maturity years 2008 through 2011 are also available.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period fall
within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount required
to be allocated to a Guarantee Period in order to produce a target Maturity
Value (assuming no transfers or withdrawals are made and no charges are
allocated to the Guarantee Period). The required amount is the present value of
that Maturity Value at the Guaranteed Rate on the Transaction Date for the
contribution, which may also be expressed as the price per $100 of Maturity
Value on such Transaction Date.
Guaranteed Rates for new allocations as of October 1, 1996 and the related
price per $100 of Maturity Value for each currently available Guarantee Period
were as follows:
GUARANTEE
PERIODS WITH GUARANTEED
EXPIRATION DATE RATE AS OF PRICE PER $100
FEBRUARY 15TH OF OCTOBER 1, OF MATURITY
MATURITY YEAR 1996 VALUE
- ---------------- ------------ --------------
1997 4.21% $98.46
1998 4.80 93.76
1999 5.10 88.86
2000 5.29 84.03
2001 5.41 79.40
2002 5.52 74.90
2003 5.65 70.43
2004 5.66 66.62
2005 5.80 62.34
2006 5.92 58.30
2007 6.03 54.45
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Available under the IRA Assured Payment Option and IRA APO Plus
2008 5.95% $51.80
2009 5.95 48.88
2010 5.95 46.14
2011 5.95 43.55
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create a
series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of years
1997 through 2001, then according to the above table the lump sum contribution
you would have to make as of October 1, 1996 would be $444.51 (i.e., the sum of
the price per $100 of Maturity Value for each maturity year from 1997 through
2001).
The above table is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted or withdrawals or transfers from Guarantee Periods. Actual
calculations will also be based on Guaranteed Rates on each actual Transaction
Date, which may differ.
Options at Expiration Date
Under the Rollover IRA, we will notify you on or before December 31st prior to
the Expiration Date of each Guarantee Period in which you have any Guaranteed
Period Amount. You may elect one of the following options to be effective at
the Expiration Date, subject to the restrictions set forth on the prior page
and under "Allocation of Contributions" in Part 5:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges
which may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR TRANSFERS, WITHDRAWALS OR SURRENDER PRIOR TO THE
EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a Guarantee
Period prior to its Expiration Date will cause any remaining Guaranteed Period
Amount for that Guarantee Period to be increased or decreased by a market value
adjustment. The amount of the adjustment will depend on two factors: (a) the
difference between the Guaranteed Rate applicable to the amount being withdrawn
and the Guaranteed Rate on the Transaction Date for new allocations to a
Guarantee Period with the same Expiration Date, and (b) the length of time
remaining until the Expiration Date. In general, if interest rates have risen
between the time when an amount was originally allocated to a Guarantee Period
and the time it is withdrawn, the market value adjustment will be negative, and
vice versa; and the longer the period of time remaining until the Expiration
Date, the greater the impact of the interest rate difference. Therefore, it is
possible that a significant rise in interest rates could result in a
substantial reduction in your Annuity Account Value in the Guaranteed Period
Account related to longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a withdrawal
of all funds from a Guarantee Period will be determined for each contribution
allocated to that Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on the
Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount payable
at the Expiration Date, using the period determined in (b) and the
rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a withdrawal
of a portion of the amount in a Guarantee Period will be a percentage of the
market value adjustment that would be ap-
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plicable upon a withdrawal of all funds from a Guarantee Period. This
percentage is determined by (i) dividing the amount of the withdrawal or
transfer from the Guarantee Period by (ii) the Annuity Account Value in such
Guarantee Period prior to the withdrawal or transfer. See Appendix I for an
example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate in
(1)(c) above.
MODAL PAYMENT PORTION
Under the IRA Assured Payment Option and IRA APO Plus, a portion of your
contributions or Annuity Account Value is allocated to the Modal Payment
Portion of the Guaranteed Period Account for payments to be made prior to the
Expiration Date of the earliest Guarantee Period we then offer. Such amount
will accumulate interest beginning on the Transaction Date at an interest rate
we set. Interest will be credited daily. Such rate will not be less than 3%.
Upon the expiration of a Guarantee Period, the Guaranteed Period Amount will be
held in the Modal Payment Portion of the Guaranteed Period Account. Amounts
from an expired Guarantee Period held in the Modal Payment Portion of the
Guaranteed Period Account will be credited with interest at a rate equal to the
Guaranteed Rate applicable to the expired Guarantee Period, beginning on the
Expiration Date of such Guarantee Period.
There is no market value adjustment with respect to amounts held in the Modal
Payment Portion of the Guaranteed Period Account.
DEATH BENEFIT AMOUNT
The death benefit provided with respect to the Guaranteed Period Account is
equal to the Annuity Account Value in the Guaranteed Period Account or, if
greater, the sum of the Guaranteed Period Amounts in each Guarantee Period,
plus any amounts in the Modal Payment Portion of the Guaranteed Period Account.
See "Annuity Account Value" in Part 5.
INVESTMENTS
Amounts allocated to Guarantee Periods or the Modal Payment Portion of the
Guaranteed Period Account will be held in a "nonunitized" separate account
established by Equitable Life under the laws of New York. This separate account
provides an additional measure of assurance that full payment of amounts due
under the Guarantee Periods and the Modal Payment Portion of the Guaranteed
Period Account will be made. Under the New York Insurance Law, the portion of
the separate account's assets equal to the reserves and other contract
liabilities relating to the Certificates are not chargeable with liabilities
arising out of any other business we may conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on the
assets held in the separate account accrues solely to Equitable Life's benefit.
Certificate Owners do not participate in the performance of the assets held in
this separate account. Equitable Life may, subject to applicable state law,
transfer all assets allocated to the separate account to its general account.
Regardless of whether assets supporting Guaranteed Period Accounts are held in
a separate account or our general account, all benefits relating to the Annuity
Account Value in the Guaranteed Period Account are guaranteed by Equitable
Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations, including
corporate bonds, mortgage backed and asset backed securities and government and
agency issues having durations in the aggregate consistent with those of the
Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for investing
the assets supporting Equitable Life's obligations under the fixed portion of
the Certificates, Equitable Life is not obligated to invest those assets
according to any particular plan except as may be required by state insurance
laws, nor will the Guaranteed Rates Equitable Life establishes be determined by
the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to
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the Guaranteed Period Account, as well as our general obligations. Amounts
applied under the Life Contingent Annuity become part of the general account.
See "IRA Assured Payment Option," "Life Contingent Annuity," in Part 6.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933 (1933 Act),
nor is the general account an investment company under the 1940 Act.
Accordingly, neither the general account nor the Life Contingent Annuity is
subject to regulation under the 1933 Act or the 1940 Act. However, the market
value adjustment interests under the Certificates are registered under the 1933
Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in the prospectus for your information that relates
to the general account (other than market value adjustment interests) and the
Life Contingent Annuity. The disclosure, however, may be subject to certain
generally applicable provisions of the Federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
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- -------------------------------------------------------------------------------
PART 5: PROVISIONS OF THE CERTIFICATES AND SERVICES
WE PROVIDE
- -------------------------------------------------------------------------------
THE PROVISIONS DISCUSSED IN THIS PART 5 APPLY WHEN YOUR CERTIFICATE IS
OPERATING PRIMARILY TO ACCUMULATE ANNUITY ACCOUNT VALUE. DIFFERENT RULES MAY
APPLY WHEN YOU ELECT THE IRA ASSURED PAYMENT OPTION OR IRA APO PLUS IN THE
APPLICATION OR AS LATER ELECTED AS A DISTRIBUTION OPTION UNDER YOUR ROLLOVER
IRA AS DISCUSSED IN PART 6. THE PROVISIONS OF YOUR CERTIFICATE MAY BE
RESTRICTED BY APPLICABLE LAWS OR REGULATIONS.
AVAILABILITY OF THE CERTIFICATES
The Rollover IRA Certificates are available for issue ages 20 through 78. These
Certificates may not be available in all states. These Certificates are not
available in Puerto Rico.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your initial contribution must be at least $5,000. We will only accept
initial contributions which are either rollover contributions under Sections
402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code, or direct
custodian-to-custodian transfers from other individual retirement
arrangements. See "Part 9: Tax Aspects of the Certificates."
You may make subsequent contributions in an amount of at least $1,000.
Subsequent contributions may be "regular" IRA contributions (limited to a
maximum of $2,000 a year), rollover contributions as described above, or direct
transfers as described above. Rollover contributions and direct transfers are
not subject to the $2,000 annual limit.
We may refuse to accept any contribution if the sum of all contributions under
all accumulation Certificates with the same Annuitant would then total more
than $1,000,000. We reserve the right to limit aggregate contributions made
after the first Contract Year to 150% of first year contributions. We may also
refuse to accept any contribution if the sum of all contributions under all
Equitable Life annuity accumulation certificates/contracts that you own would
then total more than $2,500,000.
"Regular" IRA contributions may no longer be made for the taxable year in which
you attain age 70 1/2 and thereafter. Rollover and direct transfer
contributions may be made until you attain age 84. However, any amount
contributed after you attain age 70 1/2 must be net of your required minimum
distribution for the year in which the rollover or direct transfer contribution
is made. See "Part 9: Tax Aspects of the Certificates." For the consequences of
making a "regular" IRA contribution to your Certificate, also see Part 9.
Contributions are credited as of the Transaction Date.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check. All
contributions made by check must be drawn on a bank or credit union in the
U.S., in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. All contributions should be sent to Equitable
Life at our Processing Office address designated for contributions.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will be invested at the value next
determined following receipt for contributions allocated to the Investment
Funds. Contributions allocated to the Guaranteed Period Account will receive
the Guaranteed Rate(s) in effect for the applicable Guarantee Period(s) on the
date contributions are received. Wire orders not accompanied by complete
information, may be retained for a period not exceeding five Business Days
while an attempt is made to obtain the required information. If the required
information cannot be obtained within those five Business Days, the Processing
Office will inform the broker-dealer, on behalf of the applicant, of the
reasons for the delay and return the contribution immediately to the applicant,
unless the applicant specifically consents to our retaining the contribution
until the required information is received by the Processing Office.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate generally will not be issued until the
receipt and acceptance of a properly completed ap-
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plication. In certain cases we may issue a Certificate based on information
forwarded electronically. In these cases, you must sign our Acknowledgment of
Receipt form.
Where a signed application is required, no financial transactions will be
permitted until such time as we receive such signed application and have issued
the Certificate. Where an Acknowledgment of Receipt is required, financial
transactions will only be permitted if requested in writing, signed by the
Certificate Owner and signature guaranteed until we receive such signed
Acknowledgment of Receipt.
After your Certificate has been issued, subsequent contributions may be
transmitted by wire.
ALLOCATION OF CONTRIBUTIONS
You have two options from which to choose for allocation of your
contributions: Self-Directed Allocation and Principal Assurance.
Self-Directed Allocation
You design your own investment program by allocating your contributions among
the Investment Options in any way you choose. Your contributions may be
allocated to one or up to all of the available Investment Options at any time.
We allocate contributions among the Investment Options according to your
allocation percentages. Allocations must be in whole percentages. Allocation
percentages can be changed at any time by writing to our Processing Office, or
by telephone. The change will be effective on the Transaction Date and will
remain in effect for future contributions unless another change is requested.
Allocation of the initial contribution is subject to the provisions for the
free look period. See "Free Look Period" below. Allocation of any contribution
to the Guaranteed Period Account is subject to the following restrictions:
o No more than 60% of any contribution may be allocated to the
Guaranteed Period Account.
o At ages 76 and above, allocations may be made only to Guarantee Periods
with maturities of five years or less; however, in no event may
allocations be made to Guarantee Periods with maturities beyond the
February 15th immediately following the Annuity Commencement Date.
Principal Assurance
This option (available for issue ages 20 through 75) is designed to assure that
your Maturity Value in a specified Guarantee Period equals your initial
contribution while at the same time allowing you to invest in the Investment
Funds. The maturity year you select for such specified Guarantee Period
generally may not be later than 10 years nor earlier than seven years. Before
you select a maturity year that would extend beyond the year in which you will
attain age 70 1/2, you should consider your ability to take minimum
distributions from other IRA funds that you may have or from the Investment
Funds to the extent possible. See "Required Minimum Distributions" in Part 9.
In order to accomplish this strategy, we will allocate a portion (equal to the
present value) of your initial contribution to a Guarantee Period based on the
year you select. See "Guaranteed Rates and Price Per $100 of Maturity Value" in
Part 4. You may allocate the balance of your contribution to the Investment
Funds in any way you choose. Such allocations to the Investment Funds must be
in whole percentages. Allocation of the portion of your initial contribution to
the Investment Funds is subject to the provisions for the free look period. See
"Free Look Period" below.
Principal Assurance may only be elected at issue of your Certificate and
assumes no withdrawals or transfers of the amount allocated to the specified
Guarantee Period.
Subsequent contributions must be allocated under "Self-Directed Allocation"
described above.
Allocations to the Investment Funds
A contribution allocated to an Investment Fund purchases Accumulation Units in
that Investment Fund based on the Accumulation Unit Value for that Investment
Fund computed on the Transaction Date.
Allocations to the Guaranteed Period Account
Contributions allocated to the Guaranteed Period Account will have the
Guaranteed Rate for the specified Guarantee Period offered on the Transaction
Date.
FREE LOOK PERIOD
You have the right to examine the Rollover IRA Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You cancel it
by sending it to our Processing Office. The free look is extended if your state
requires a refund period of longer than 10 days.
Your refund will equal the Annuity Account Value reflecting any investment gain
or loss, and any positive or negative market value adjustment, through the date
we receive your Certificate at our Processing Office. Some states or Federal
income tax regulations may require that we calculate the refund differently. In
those states that require that we
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calculate the refund differently, we may require that any portion of your
initial contribution that you request to have allocated to the Investment
Funds, be allocated to the Money Market Fund until the end of the free look
period.
If the IRA Assured Payment Option or IRA APO Plus is elected in the application
for the Certificate, your refund will include any amount applied under the Life
Contingent Annuity. See "IRA Assured Payment Option," "Life Contingent Annuity"
in Part 6.
We follow these same procedures if you change your mind before a Certificate
has been issued, but after a contribution has been made. See "Part 9: Tax
Aspects of the Certificates" for possible consequences of canceling your
Certificate during the free look period.
If you cancel your Certificate during the free look period, we may require that
you wait six months before you may apply for a Certificate with us again.
ANNUITY ACCOUNT VALUE
The Annuity Account Value is the sum of the Annuity Account Values in the
Investment Funds and the Guaranteed Period Account.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal to
the number of Accumulation Units in that Investment Fund times the Accumulation
Unit Value for the Investment Fund for that date. The number of Accumulation
Units in an Investment Fund at any time is equal to the sum of Accumulation
Units purchased by contributions and transfers less the sum of Accumulation
Units redeemed for withdrawals, transfers or deductions for charges.
The number of Accumulation Units purchased or sold in any Investment Fund
equals the dollar amount of the transaction divided by the Accumulation Unit
Value for that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the correspond-ing Portfolios of the Trust, which in
turn reflects the investment income and realized and unrealized capital gains
and losses of the Portfolios, as well as the Trust fees and expenses. The
Accumulation Unit Value is also stated after deduction of the Separate Account
asset charges relating to the Certificates. A description of the computation of
the Accumulation Unit Value is found in the SAI.
Annuity Account Value in Guaranteed Period
Account
The Annuity Account Value in the Guaranteed Period Account on any Business Day
will be the sum of the present value of the Maturity Value in each Guarantee
Period, using the Guaranteed Rate in effect for new allocations to such
Guarantee Period on such date. (This is equivalent to the Guaranteed Period
Amount increased or decreased by the full market value adjustment.) The Annuity
Account Value, therefore, may be higher or lower than the contributions (less
withdrawals) accumulated at the Guaranteed Rate. At the Expiration Date the
Annuity Account Value in the Guaranteed Period Account will equal the Maturity
Value. While the IRA Assured Payment Option or IRA APO Plus is in effect, the
Annuity Account Value will include any amount in the Modal Payment Portion of
the Guaranteed Period Account. However, amounts held in the Modal Payment
Portion of the Guaranteed Period Account are not subject to a market value
adjustment. See "Part 4: The Guaranteed Period Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject to
the following restrictions.
o Transfers are permitted to or from a Guarantee Period once per quarter
during each Contract Year. Such transfers may be made at any time
during each quarter.
o Transfers out of a Guarantee Period other than at the Expiration Date
will result in a market value adjustment. See "Part 4: The Guaranteed
Period Account."
o Transfers to Guarantee Periods are subject to the restrictions set
forth under "Guarantee Periods and Expiration Dates" in Part 4 and
are limited based on your age. See "Allocation of Contributions"
above.
Transfer requests must be made directly to our Processing Office. Your request
for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which the
amounts are to be transferred. Your transfer request may be in writing or by
telephone.
For telephone transfer requests, procedures have been established by Equitable
Life that are considered to be reasonable and are designed to confirm that
instructions communicated by telephone are genuine. Such procedures include
requiring certain personal identification information prior to acting on
telephone instructions and providing written confir-
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<PAGE>
mation. In light of the procedures established, Equitable Life will not be
liable for following telephone instructions that it reasonably believes to be
genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must
be on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer
to or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in
writing.
DOLLAR COST AVERAGING
If you have at least $5,000 of Annuity Account Value in the Money Market Fund,
you may choose to have a specified dollar amount transferred from the Money
Market Fund to other Investment Funds on a monthly basis. The main objective of
dollar cost averaging is to attempt to shield your investment from short term
price fluctuations. Since the same dollar amount is transferred to other
Investment Funds each month, more Accumulation Units are purchased in an
Investment Fund if the value per Accumulation Unit is low and fewer
Accumulation Units are purchased if the value per Accumulation Unit is high.
Therefore, a lower average value per Accumulation Unit may be achieved over the
long term. This plan of investing allows you to take advantage of market
fluctuations but does not assure a profit or protect against a loss in
declining markets.
The dollar cost averaging option may be elected at the time you apply for the
Certificate or at a later date. The minimum amount that may be transferred each
month is $250. The maximum amount which may be transferred is equal to the
Annuity Account Value in the Money Market Fund at the time the option is
elected, divided by 12.
The transfer date will be the same calendar day each month as the Contract
Date. If, on any transfer date, the Annuity Account Value in the Money Market
Fund is equal to or less than the amount you have elected to have transferred,
the entire amount will be transferred and the dollar cost averaging option will
end. You may change the transfer amount once each Contract Year, or cancel this
option by sending us satisfactory notice to our Processing Office at least
seven calendar days before the next transfer date.
DEATH BENEFIT
Generally, upon receipt of proof satisfactory to us of your death prior to the
Annuity Commencement Date, we will pay the death benefit to the beneficiary
named in your Certificate. You designate the beneficiary at the time you apply
for the Certificate. While the Certificate is in effect, you may change your
beneficiary by writing to our Processing Office. The change will be effective
on the date the written submission was signed. The death benefit payable will
be determined as of the date we receive such proof of death and any required
instructions as to the method of payment.
The death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB defined below; and
(2) the death benefit provided with respect to the Guaranteed Period
Account. See "Part 4: The Guaranteed Period Account."
There are two plans available under the Certificates for providing guaranteed
benefits, a Combined GMDB/GMIB Benefit (available for Annuitant issue ages 20
through 75), and a GMDB Only Benefit, which has a lower charge. The GMDB and
the GMIB are discussed below.
For Annuitant issue ages 20 through 75, you must elect either the Combined
GMDB/GMIB Benefit or the GMDB Only Benefit in the application. Once elected,
the plan may not be changed. For Annuitant issue ages 76 through 78, for
Certificates issued in New York and in states where the GMIB is not currently
available, the GMDB Only Benefit will apply.
For the specific charges, see "Part 7: Deductions and Charges."
GMDB
Applicable to Certificates issued in all states except New York
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to (a) the GMDB determined on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. In addition, interest (see below) is credited to and becomes part of the
GMDB on each Processing Date.
o 6% to Age 80 Benefit --interest will be credited at the effective annual
GMDB interest rate of 6% (3% for amounts in the Money Market Fund)
through age 80, and 0% thereafter. Contributions, transfers and
withdrawals during the Contract Year will be taken into account.
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Applicable to Certificates issued in New York for Annuitant issue ages 20
through 78
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to (a) the GMDB calculated on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. Additionally, on each Processing Date the GMDB is reset at the greater
of the current GMDB and the current Annuity Account Value in the Investment
Funds, not to exceed a cap as described below. The cap does not apply on the
seventh Processing Date. This cap is equal to (a) the portion of the initial
contribution allocated to the Investment Funds, plus (b) any subsequent
contributions and transfers into the Investment Funds, less (c) any transfers
and withdrawals from such Funds, plus (d) interest (see below) that is credited
on each Processing Date, plus (e) any amount by which the GMDB is increased
because the cap did not apply on the seventh Processing Date.
o 6% to Age 80 Cap --interest will be credited at the effective annual GMDB
interest rate of 6% (3% for amounts in the Money Market Fund) through age
80, and 0% thereafter.
See Appendix II for an example of the calculation of the GMDB.
How Withdrawals and Transfers Affect the GMDB
Withdrawals and transfers out of the Investment Funds will generally cause a
reduction in the GMDB on a dollar-for-dollar basis. However, if on any
Transaction Date, (i) the GMDB exceeds the Annuity Account Value and (ii) the
sum of withdrawals and transfers out of the Investment Funds is greater than 6%
of the beginning of year GMDB, the GMDB will be reduced on a pro rata basis on
the Transaction Date. The amount of the reduction will be determined by
dividing the amount of the withdrawal by the Annuity Account Value on the
Transaction Date and multiplying this percentage by the current GMDB.
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your GMDB.
For example, assuming a beginning of year GMDB of $100,000 and a withdrawal of
$5,000, which represents 5% of the beginning of year GMDB ($5,000/$100,0000),
such withdrawal would cause the current GMDB to be reduced by $5,000. If a
withdrawal in the amount of $10,000, which represents 10% of the beginning of
year GMDB ($10,000/ $100,000) were to be made, assuming a current Annuity
Account Value of $50,000 the current GMDB would be reduced by 20%
($10,000/$50,000), or $20,000 ($100,000 x .20).
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the income
annuity option you have chosen under your Certificate. If no income annuity
option has been chosen at the time of your death, the beneficiary will receive
the death benefit in a lump sum. However, subject to Equitable Life's rules
then in effect and any other applicable requirements under the Code, the
beneficiary may elect to apply the death benefit amount to one or more income
annuity options offered by Equitable Life. See "Income Annuity Options" in Part
6.
If you elect to have your spouse be both the sole primary beneficiary and the
successor Annuitant/ Certificate Owner, then no death benefit is payable until
your surviving spouse's death.
On the Processing Date following your death, if the successor
Annuitant/Certificate Owner election was elected at issue of the Certificate
and is in effect at your death, the GMDB will be reset at the greater of the
current GMDB and the current Annuity Account Value in the Investment Funds. The
GMDB interest rate will subsequently be credited based on the age (as of the
Processing Date) of the successor Annuitant/Certificate Owner. For such
Certificates, if the Combined GMDB/GMIB Benefit was elected, the GMIB
(discussed below) will continue to be available on Contract Date anniversaries
seven and later based on the Contract Date, provided the GMIB is exercised as
specified under GMIB below, based on the age of the successor Annuitant/
Certificate Owner.
GMIB
The GMIB (available under the Combined GMDB/ GMIB Benefit) may not currently be
available in your state. When it becomes available it will be added to your
Certificate if you then elect the Combined GMDB/GMIB Benefit. State
availability information may be obtained from your registered representative.
When you elect the IRA Assured Payment Option (discussed in Part 6), the GMIB
provides a minimum amount of guaranteed lifetime income under such option. On
the Transaction Date the amount of the periodic lifetime income to be provided
will be based on the greater of (i) the Annuity Account Value in the Investment
Funds and (ii) an amount equal to the GMDB described above, reduced by any
remaining
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withdrawal charges; each divided by "guaranteed maximum annuity purchase rates"
under the Certificate. The guaranteed maximum annuity purchase rates are based
on (i) interest at 2.5% if the GMIB is exercised within 30 days following a
Contract Date anniversary in years 7 through 9 and at 3.0% if exercised within
30 days following the 10th or later Contract Date anniversary and (ii)
mortality based on the 1983 Individual Annuity Mortality Table "a" projected
with modified Scale G. The mortality table used in determining such annuity
purchase rates assumes that mortality will improve in the future and is more
conservative than the basis underlying current annuity purchase rates. Your
Annuity Account Value in the Investment Funds will depend on the performance of
such Funds. The amount equal to the GMDB (as discussed above) does not have an
Annuity Account Value or a Cash Value and is used solely for purposes of
calculating the GMIB.
If you have any Annuity Account Value in the Guaranteed Period Account as of
the Transaction Date that you exercise the GMIB, such Annuity Account Value
will also be applied (at current annuity purchase rates) toward providing
payments under the IRA Assured Payment Option. Such Annuity Account Value will
increase the payments provided by the GMIB. A market value adjustment may
apply.
When you exercise the GMIB, we automatically determine whether the application
of your Annuity Account Value in the Investment Funds at current purchase rates
under the IRA Assured Payment Option (with a fixed period as specified below)
would produce higher lifetime income, and if so, the higher income will be
provided.
In addition, you can elect any of our income annuity options. See "Income
Annuity Options" in Part 6.
The GMIB applies only if your election of the IRA Assured Payment Option meets
the following conditions:
o The IRA Assured Payment Option is elected within 30 days following the
7th or later Contract Date anniversary; provided it is not elected
earlier than your age 60, nor later than age 83.
o The fixed period you select is as indicated below, based on your age at
the time of election and the type of payments selected:
LEVEL PAYMENTS
--------------
AGE FIXED PERIOD
--- ------------
60 through 75 10 years
76 through 78 85 less your age
79 through 83 7 years
INCREASING PAYMENTS
-------------------
AGE FIXED PERIOD
--- ------------
60 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
o Payments start one payment mode after the IRA Assured Payment Option
goes into effect.
Each year on your Contract Date anniversary, if you are eligible to exercise
the GMIB, we will send you a notice of how much income could be provided under
such option on the Contract Date anniversary. You may then notify us within 30
days following the Contract Date anniversary if you want to exercise the GMIB
by submitting the proper form. The income to be provided under the IRA Assured
Payment Option will be determined on the Transaction Date that we receive your
request and, therefore, may differ from the notice. It will be based on the
GMIB as of such Transaction Date.
The GMDB, which relates to the Investment Funds, will no longer be in effect if
you elect the IRA Assured Payment Option. If you subsequently terminate the IRA
Assured Payment Option and have your Certificate operate under the Rollover IRA
rules, then the GMDB will go back into effect based on your Annuity Account
Value in the Investment Funds as of the Transaction Date that the Rollover IRA
goes into effect.
See Appendix III for examples on the GMIB.
Alternate Combined GMDB/GMIB Benefit available for issue ages 20 through 65
- --------------------------------------------------------------------------
In addition to a Combined GMDB/GMIB benefit where GMDB interest is credited
through age 80 (6% to Age 80 Benefit), there is a lower cost benefit where GMDB
interest is credited through age 70 (6% to Age 70 Benefit). If you wish to
elect this alternate benefit, you must do so in the application; otherwise the
6% to Age 80 Benefit will apply. Once elected, the benefit may not be changed.
This alternate benefit is not available for election if you elect IRA APO Plus
(discussed in Part 6) in the application.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Invest-
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ment Funds you have selected and reflects any upward or downward market value
adjustment. See "Part 4: The Guaranteed Period Account." We do not guarantee
any minimum Cash Value except for amounts in a Guarantee Period held to the
Expiration Date. On any date before the Annuity Commencement Date while the
Certificate is in effect, the Cash Value is equal to the Annuity Account
Value, less any withdrawal charge. The free corridor amount will not apply
when calculating the withdrawal charge applicable upon a surrender. See "Part
7: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while you
are living and before the Annuity Commencement Date.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on the
Transaction Date. All benefits under the Certificate will be terminated as of
that date.
You may receive the Cash Value in a single sum payment or apply it under one or
more of the income annuity options. See "Income Annuity Options" in Part 6. We
will usually pay the Cash Value within seven calendar days, but we may delay
payment as described in "When Payments are Made" below.
For the tax consequences of surrenders, see "Part 9: Tax Aspects of the
Certificates."
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds, payment
of any portion of the Annuity Account Value (less any applicable withdrawal
charge) from the Investment Funds, and, upon surrender, payment of the Cash
Value from the Investment Funds will be made within seven calendar days after
the Transaction Date. Payments or application of proceeds from the Investment
Funds can be deferred for any period during which (1) the New York Stock
Exchange is closed or trading on it is restricted, (2) sales of securities or
determination of the fair value of an Investment Fund's assets is not
reasonably practicable because of an emergency, or (3) the SEC, by order,
permits us to defer payment in order to protect persons with interest in the
Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account for up to six months while you are living. We may
also defer payments for any amount attributable to a contribution made in the
form of a check for a reasonable amount of time (not to exceed 15 days) to
permit the check to clear.
ASSIGNMENT
The Certificates are not assignable or transferrable except through surrender
to us. They may not be borrowed against or used as collateral for a loan or
other obligation.
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI), an
indirect wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI is
registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's principal
business address is 787 Seventh Avenue, New York, New York 10019.
The Certificates will be sold by registered representatives of EDI, as well as
by unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation will generally not exceed six
percent of total contributions made under a Certificate. EDI may also receive
compensation and reimbursement for its marketing services under the terms of
its distribution agreement with Equitable Life. Broker-dealers receiving sales
compensation will generally pay a portion thereof to their registered
representatives as commissions related to sales of the Certificates. The
offering of the Certificates is intended to be continuous.
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- -------------------------------------------------------------------------------
PART 6: DISTRIBUTION METHODS UNDER THE CERTIFICATES
- -------------------------------------------------------------------------------
THE PROVISIONS DISCUSSED IN THIS PART 6 APPLY WHEN YOU ELECT THE IRA ASSURED
PAYMENT OPTION OR IRA APO PLUS IN THE APPLICATION OR AS A DISTRIBUTION OPTION
AT A LATER DATE, AS WELL AS TO OTHER DISTRIBUTION METHODS UNDER YOUR
CERTIFICATE.
The Rollover IRA Certificates offer several distribution methods specifically
designed to provide retirement income. The Choice Income Plan which includes
the IRA Assured Payment Option and IRA APO Plus, may be elected in the
application or as a distribution option at a later date. In addition, the
Certificates provide for Lump Sum Withdrawals, Substantially Equal Payment
Withdrawals, Systematic Withdrawals and Minimum Distribution Withdrawals. Fixed
and variable income annuity options are also available for amounts to be
applied at the Annuity Commencement Date. The IRA Assured Payment Option and
IRA APO Plus may not be available in all states.
The Certificates are subject to the Code's minimum distribution requirements.
Generally, distributions from these Certificates must commence by April 1 of
the calendar year following the calendar year in which you attain age 70 1/2.
Subsequent distributions must be made by December 31st of each calendar year.
If you do not commence minimum distributions in the calendar year in which you
attain age 70 1/2, and wait until the three month period (January 1 to April 1)
in the next calendar year to commence minimum distributions, then you must take
two required minimum distributions in that calendar year. If the required
minimum distribution is not made, a penalty tax in an amount equal to 50% of
the difference between the amount required to be withdrawn and the amount
actually withdrawn may apply. See "Part 9: Tax Aspects of the Certificates" for
a discussion of various special rules concerning the minimum distribution
requirements.
For IRA retirement benefits subject to minimum distribution requirements, we
will send a form outlining the distribution options available before you reach
age 70 1/2 (if you have not annuitized before that time).
IRA ASSURED PAYMENT OPTION
The IRA Assured Payment Option is designed to provide you with guaranteed
payments for your life (SINGLE LIFE) or for the lifetime of you and a joint
Annuitant you designate (JOINT AND SURVIVOR) through a series of distributions
from the Annuity Account Value that are followed by Life Contingent Annuity
payments. Payments you receive during the fixed period are designed to pay out
the entire Annuity Account Value by the end of the fixed period and to meet or
exceed minimum distribution requirements, if applicable. See "Minimum
Distribution Withdrawals" below. The fixed period ends with the distribution of
the Maturity Value of the last Guarantee Period, or distribution of the final
amount in the Modal Payment Portion of the Guaranteed Period Account. The fixed
period may also be referred to as the "liquidity period" as during this period,
you have access to the Cash Value through Lump Sum Withdrawals or surrender of
the Certificate, with lifetime income continuing in reduced amounts.
After the fixed period, the payments are made under the Life Contingent Annuity
described below.
You may elect the IRA Assured Payment Option at any time if your initial
contribution or Annuity Account Value is at least $10,000 at the time of
election, by submitting a written request satisfactory to us. The IRA Assured
Payment Option may be elected at ages 59 1/2 through 83. If you are over age 70
1/2, the availability of this option may be restricted under certain limited
circumstances. See "Tax Considerations for the IRA Assured Payment Option and
IRA APO Plus" in Part 9. The IRA Assured Payment Option with level payments
(described below) may be elected at ages as young as 45. However, there are tax
considerations that should be taken into account before electing level payments
under the IRA Assured Payment Option if you are under age 59 1/2. See "Penalty
Tax on Early Distributions" in Part 9. The IRA Assured Payment Option with
increasing payments (described below) may be elected at ages as young 53 1/2
provided payments do not start before you attain age 59 1/2.
Once the IRA Assured Payment Option is elected, all amounts currently held
under your Rollover IRA must be allocated to the Guarantee Periods, the Modal
Payment Portion of the Guaranteed Period Account, if applicable, and the Life
Contingent Annuity. See "Allocation of Contributions or Annuity Account Value"
below. Subsequent contributions may be made according to the rules set forth
below and in "Tax-Free Transfers and Rollovers" in Part 9.
Subsequent Contributions under the IRA Assured
Payment Option
Subsequent "regular" IRA contributions may no longer be made for the taxable
year in which you attain age 70 1/2 and thereafter. Subsequent rollover and
direct transfer contributions may be made at any time until the earlier of (i)
when you attain age 84 and (ii) when the Certificate is within seven years of
the end of the fixed period while the IRA Assured Payment Option is in effect.
However, any amount
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contributed after you attain age 70 1/2 must be net of your required minimum
distribution for the year in which the rollover or direct transfer contribution
is made.
Payments
You may elect to receive monthly, quarterly or annual payments. However, all
payments are made on the 15th of the month. Payments to be made on an
Expiration Date during the fixed period represent distributions of the
Maturity Values of serially maturing Guarantee Periods on their Expiration
Dates. Payments to be made monthly, quarterly or annually on dates other than
an Expiration Date represent distributions from amounts in the Modal Payment
Portion of the Guaranteed Period Account. See "Part 4: The Guaranteed Period
Account."
A $2.50 charge will be deducted from each payment made on a monthly or
quarterly basis under the IRA Assured Payment Option.
You have a choice of receiving level payments during the fixed period and then
under the Life Contingent Annuity. Or, you may elect to receive payments that
increase. During the fixed period, payments are designed to increase by 10%
every three years on each third anniversary of the payment start date. After
the end of the fixed period, your first payment under the Life Contingent
Annuity will be 10% greater than the final payment made under the fixed period.
Thereafter, payments will increase annually on each anniversary of the payment
start date under the Life Contingent Annuity based on the annual increase, if
any, in the Consumer Price Index, but in no event greater than 3% per year.
Payments will generally start one payment mode from the date the IRA Assured
Payment Option goes into effect. Or you may choose to defer the date payments
will start generally for a period of up to 60 months. Deferral of the payment
start date permits you to lock in rates at a time when you may consider current
rates to be high, while permitting you to delay receiving payments if you have
no immediate need to receive income under your Certificate. In making this
decision, you should consider that the amount of income you purchase is based
on the rates applicable on the Transaction Date, so if rates rise during the
interim, your payments may be less than they would have been if you had elected
the IRA Assured Payment Option at a later date. Deferral of the payment start
date is not available above age 80. Before you elect to defer the date your
payments will start, you should consider the consequences of this decision on
the requirement under the Code that you take minimum distributions each
calendar year with respect to the value of your IRA. See "Required Minimum
Distributions" in Part 9. The ability to defer the payment start date may not
be available in all states. Also, if amounts are applied to the IRA Assured
Payment Option as a result of the GMIB (discussed in Part 5), deferral of the
payment start date is not permitted.
Required minimum distributions will be calculated based on the Annuity Account
Value in each Guarantee Period and the deemed value of the Life Contingent
Annuity for tax purposes. If at any time your payment under the IRA Assured
Payment Option would be less than the minimum amount required to be distributed
under minimum distribution rules, we will notify you of the difference. You
will have the option to have an additional amount withdrawn under your
Certificate and such withdrawal will be treated as a Lump Sum Withdrawal;
however, no withdrawal charge will apply. An adjustment will be made to future
scheduled payments. Or, you may take the amount from other IRA funds you may
have. See "Lump Sum Withdrawals" below and "Required Minimum Distributions" in
Part 9.
See Appendix IV for an example of payments purchased under an IRA Assured
Payment Option.
Fixed Period
If you elect level payments, you may select a fixed period of not less than
seven years nor more than 15 years. The maximum fixed period available based on
your age at issue of the Certificate (or age at the time of election if the IRA
Assured Payment Option is elected after issue) is as follows:
AGE* MAXIMUM FIXED PERIOD
---- --------------------
45 through 70 15 years
71 through 78 85 less your age
79 through 83 7 years
The minimum and maximum fixed period will be reduced by each year you defer the
date payments will start.
If you elect increasing payments, you do not have a choice as to the fixed
period. Based on your age at issue of the Certificate (or age at the time of
election if the IRA Assured Payment Option is elected after issue), your fixed
period will be as follows:
AGE* FIXED PERIOD
---- ------------
59 1/2 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
If you elect increasing payments and defer the date payments will start, your
fixed period will be as follows:
FIXED PERIOD BASED ON
DEFERRAL PERIOD
---------------------------
AGE* 1-36 37-60
MONTHS MONTHS
---- ------ ------
53 1/2 through 70 12 years 9 years
71 through 75 9 years 9 years
76 through 80 6 years 6 years
81 through 83 N/A N/A
* For joint and survivor, the fixed period is based on the age of the younger
Annuitant.
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If amounts are applied to the IRA Assured Payment Option as a result of the
GMIB, the fixed periods will be as discussed under "GMIB" in Part 5.
Allocation of Contributions or Annuity Account Value
If the IRA Assured Payment Option is elected in the application, then based on
the amount of your initial contribution, your age and sex (and the age and sex
of the joint Annuitant, if applicable), the mode of payment, the form of
payments and the fixed period you select, your entire contribution will be
allocated by us. A portion of the initial contribution will be allocated among
the Guarantee Periods and the Modal Payment Portion of the Guaranteed Period
Account, if applicable, to provide fixed period payments and a portion will be
applied under the Life Contingent Annuity in order to provide the payments for
life. For initial contributions of $500,000 or more, amounts allocated to the
Life Contingent Annuity may also be based on your under writing classification.
In general, underwriting classification is based on your medical history and
smoker status and may result in a smaller allocation of amounts to the Life
Contingent Annuity if your classification is lower than our standard class. If
the IRA Assured Payment Option is elected any time after issue of the Rollover
IRA Certificate or if you cancel IRA APO Plus (discussed below) and elect the
IRA Assured Payment Option, then based on your Annuity Account Value and the
information you provide as described above, your entire Annuity Account Value,
including any amounts currently invested in the Investment Funds, will be
allocated by us among the Guarantee Periods, the Modal Payment Portion of the
Guaranteed Period Account, if applicable, and applied under the Life Contingent
Annuity. While the IRA Assured Payment Option is in effect, no amounts may be
allocated to the Investment Funds. If amounts in the Guarantee Periods are
transferred, a market value adjustment may apply.
If you elect the IRA Assured Payment Option in the application and your initial
contribution will come from multiple sources, your application must also
indicate that contributions are to be allocated to the Money Market Fund under
the Rollover IRA described in Part 5. Election of the IRA Assured Payment
Option must include your instructions to apply your Annuity Account Value, on
the date the last such contribution is received, under the IRA Assured Payment
Option as described above.
Any subsequent contributions made while the IRA Assured Payment Option is in
effect must be allocated to the Guarantee Periods and applied to the Life
Contingent Annuity. We will determine the allocation of such contributions,
such that your payments will be increased and the fixed period and date that
payments are to start under the Life Contingent Annuity will remain the same.
Life Contingent Annuity
The Life Contingent Annuity provides lifetime payments starting after the end
of the fixed period. The portion of your contributions or Annuity Account Value
applied under the Life Contingent Annuity does not have a Cash Value or an
Annuity Account Value and, therefore, does not provide for transfers or
withdrawals. Once the fixed period has ended and payments have begun under the
Life Contingent Annuity, subsequent amounts may no longer be applied under the
Life Contingent Annuity.
THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND
ANNUITY INCOME IS PAID ONLY IF YOU (OR A JOINT ANNUITANT) ARE LIVING AT THE
DATE ANNUITY BENEFITS BEGIN. BENEFITS ARE ONLY PAID DURING YOUR LIFETIME AND,
IF APPLICABLE, THE LIFETIME OF A JOINT ANNUITANT. CONSEQUENTLY, YOU SHOULD
CONSIDER THE POSSIBILITY THAT NO AMOUNTS WILL BE PAID UNDER THE LIFE CONTINGENT
ANNUITY IF YOU (OR A JOINT ANNUITANT) DO NOT SURVIVE TO THE DATE PAYMENTS ARE
TO START UNDER SUCH ANNUITY.
You may elect to have the Life Contingent Annuity provide level or increasing
payments on a Single Life or a Joint and 100% to Survivor basis. If you elect
increasing payments, the payments will increase annually based on the increase,
if any, in the Consumer Price Index, but in no event greater than 3% per year.
The Life Contingent Annuity may also provide payments on a Joint and one-half
to Survivor or a Joint and two-thirds to Survivor basis.
Payments under the Life Contingent Annuity will be made to you during your
lifetime (and the lifetime of the joint Annuitant, if applicable) on the same
payment mode and date as the payments that were made during the fixed period.
Election Restrictions under Joint and
Survivor
Election of the IRA Assured Payment Option with a Joint and Survivor form of
the Life Contingent Annuity is subject to the following restrictions: (i) the
joint Annuitant must be your spouse; (ii) neither you nor the joint Annuitant
can be over age 83; (iii) under level payments if you elect the Joint and 100%
to Survivor form, only the longest fixed period is permitted; and (iv) the
fixed period may be limited by the minimum distribution rules. See "Required
Minimum Distributions" in Part 9.
Withdrawals under the IRA Assured
Payment Option
While the IRA Assured Payment Option is in effect, if you take a Lump Sum
Withdrawal as described under "Lump Sum Withdrawals" below (or if a Lump Sum
Withdrawal is made to satisfy minimum distribution requirements under the
Certificate), such
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<PAGE>
withdrawals will be taken from all remaining Guarantee Periods to which your
Annuity Account Value is allocated and the Modal Payment Portion of the
Guaranteed Period Account, if applicable, such that the amount of the payments
and the length of the fixed period will be reduced, and the date payments are
to start under the Life Contingent Annuity will be accelerated. Additional
amounts above the amount of the requested withdrawal will be withdrawn from the
Guaranteed Period Account and applied to the Life Contingent Annuity to the
extent necessary to achieve this result. As a result, the same pattern of
payments will continue in reduced amounts for your life, and if applicable, the
life of your joint Annuitant. If you have elected increasing payments, the
first reduction in your payments will take place no later than the date of the
next planned increase.
Substantially Equal Payment Withdrawals, Systematic Withdrawals and Minimum
Distribution Withdrawals may not be elected while the IRA Assured Payment
Option is in effect. See "Substantially Equal Payment Withdrawals," "Systematic
Withdrawals" and "Minimum Distribution Withdrawals," below.
Death Benefit
Once you have elected the IRA Assured Payment Option, if a death benefit
becomes payable during the fixed period we will pay the death benefit amount,
as described under "Death Benefit" in Part 5, to the designated beneficiary.
Unless you have elected a Joint and Survivor form under the Life Contingent
Annuity, no payment will be made under the Life Contingent Annuity. The death
benefit payable relates only to the Guarantee Periods under the Certificate; a
death benefit is never payable under the Life Contingent Annuity.
If you have elected a Joint and Survivor form of annuity under the Life
Contingent Annuity, payments will be made to you or the joint Annuitant, if
living on the date payments are to start. The designated beneficiary and the
joint Annuitant must be your spouse.
Termination of the IRA Assured
Payment Option
The IRA Assured Payment Option will be terminated if: (i) you cancel such
option at any time by sending a written request satisfactory to us; (ii) you
submit a subsequent contribution and you do not want it applied under the IRA
Assured Payment Option; (iii) you request a transfer of your Annuity Account
Value as described under "Transfers Among Investment Options" in Part 5, while
the IRA Assured Payment Option is in effect; or (iv) you request a change in
the date the payments are to start under the Life Contingent Annuity. Once the
IRA Assured Payment Option is terminated, in order to receive distributions
from your Annuity Account Value you must utilize the withdrawal options
described under "Withdrawal Options" below. Although the Life Contingent
Annuity will continue in effect and payments will be made if you or your joint
Annuitant, if applicable, are living on the date payments are to start,
additional Life Contingent Annuity payments may not be purchased. You may elect
to start the IRA Assured Payment Option again by submitting a written request
satisfactory to us, but no sooner than three years after the Option was
terminated. If you elected the IRA Assured Payment Option at age 70 1/2 or
older and subsequently terminate this Option, required minimum distributions
must continue to be made with respect to your Certificate.
Before terminating the IRA Assured Payment Option, you should consider the
implications this may have under the minimum distribution requirements. See
"Tax Considerations for the IRA Assured Payment Option and IRA APO Plus" in
Part 9.
Income Annuity Options and Surrendering
the Certificates
If you elect an annuity benefit as described under "Income Annuity Options"
below, or surrender the Certificate for its Cash Value as described under
"Surrendering the Certificates to Receive the Cash Value" in Part 5, once we
receive your returned Certificate, your Certificate will be returned to you
with a notation that the Life Contingent Annuity is still in effect.
Thereafter, no subsequent contributions will be accepted under the Certificate
and no amounts may be applied under the Life Contingent Annuity.
Withdrawal Charge
While the IRA Assured Payment Option is in effect, withdrawal charges will not
apply to the level or increasing payments made during the fixed period. Except
as necessary to meet minimum distribution requirements under the Certificate,
Lump Sum Withdrawals will be subject to a withdrawal charge and will have a 10%
free corridor available. Upon termination of the IRA Assured Payment Option,
the free corridor will apply as described under "Withdrawal Charge" in Part 7.
IRA APO PLUS
IRA APO Plus is a variation of the IRA Assured Payment Option. IRA APO Plus is
available at ages 59 1/2 through 83. It may also be elected at ages as young as
53 1/2 provided payments under IRA APO Plus do not start before you attain age
59 1/2. Except as indicated below, all provisions of the IRA Assured Payment
Option apply to IRA APO Plus. IRA APO
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<PAGE>
Plus enables you to keep a portion of your Annuity Account Value in the
Investment Funds while periodically converting such Annuity Account Value to
increase the guaranteed lifetime income under the IRA Assured Payment Option.
When you elect IRA APO Plus, a portion of your initial contribution or Annuity
Account Value as applicable is allocated by us to the IRA Assured Payment
Option to provide a minimum guaranteed lifetime income through allocation of
amounts to the Guarantee Periods and the Modal Payment Portion of the
Guaranteed Period Account, if applicable, and application of amounts to the
Life Contingent Annuity. The remaining Annuity Account Value remains in the
Investment Funds. Periodically during the fixed period (as described below), a
portion of the remaining Annuity Account Value in the Investment Funds is
applied to increase the guaranteed level payments under the IRA Assured Payment
Option.
IRA APO Plus allows you to remain invested in the Investment Funds for longer
than would be possible if you applied your entire Annuity Account Value all at
once to the IRA Assured Payment Option or to an income annuity option, while
utilizing an "exit strategy" to provide retirement income.
If IRA APO Plus is elected in the application, we may require that the portion
of the initial contribution to be allocated to the Investment Funds, be
allocated to the Money Market Fund until the end of the free look period.
See "Free Look Period" in Part 5.
The fixed period under IRA APO Plus will be based on your age (or the age of
the younger Annuitant if Joint and Survivor is elected) at issue of the
Certificate (or age at the time of election if IRA APO Plus is elected after
issue) and will be the same as the periods indicated for increasing payments
under "IRA Assured Payment Option" above.
You may elect to defer the payment start date as described in "Payments" under
"IRA Assured Payment Option," above. The fixed period will also be as indicated
for deferral of the payment start date for increasing payments under the IRA
Assured Payment Option.
You elect IRA APO Plus in the application or at a later date by submitting the
proper form. IRA APO Plus may not be elected if the IRA Assured Payment Option
is already in effect.
The amount applied under IRA APO Plus is either the initial contribution if IRA
APO Plus is elected at issue of the Certificate, or the Annuity Account Value
if IRA APO Plus is elected after issue of the Certificate. Out of a portion of
the amount applied, level payments are provided under the IRA Assured Payment
Option equal to the initial payment that would have been provided on the
Transaction Date by the allocation of the entire amount to increasing payments
as described in "Payments" under "IRA Assured Payment Option," above. The
difference between the amount required for level payments and the amount
required for increasing payments is allocated to the Investment Funds in
accordance with your instructions. If you have Annuity Account Value in the
Guaranteed Period Account at the time this option is elected, a market value
adjustment may apply as a result of such amounts being transferred to effect
the IRA Assured Payment Option.
On the third February 15th following the date the first payment is made (if
payments are to be made on February 15th, the date of the first payment will be
counted as the first February 15th) during the fixed period while you are
living, a portion of the Annuity Account Value in the Investment Funds is taken
pro rata from the Annuity Account Value in each Investment Fund and is applied
to increase the level payments under the IRA Assured Payment Option. If a
deferral period of three years or more is elected, a portion of the Annuity
Account Value in the Investment Funds will be applied on the February 15th
prior to the date the first payment is made, to increase the initial level
payments. If payments are to be made on February 15th, the date of the first
payment will be counted as the first February 15th.
The amount applied is the amount which provides for level payments equal to the
initial payment that would have been provided by the allocation of the entire
Annuity Account Value to increasing payments, as described in the preceding
paragraph. This process is repeated each third year during the fixed period.
The first increased payment will be reflected in the payment made following
three full years of payments and then every three years thereafter. On the
Transaction Date immediately following the last payment during the fixed
period, the remaining Annuity Account Value in the Investment Funds is first
applied to the Life Contingent Annuity to change the level payments previously
purchased to increasing payments. If there is any Annuity Account Value
remaining after the increasing payments are purchased, this balance is applied
to the Life Contingent Annuity to further increase such increasing payments. If
the Annuity Account Value in the Investment Funds is insufficient to purchase
the increasing payments, then the level payments previously purchased will be
increased to the extent possible.
While IRA APO Plus provides a minimum guaranteed lifetime payment under the IRA
Assured Payment Option, the total amount of income that can be provided over
time will depend on the investment
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performance of the Investment Funds in which you have Annuity Account Value, as
well as the current Guaranteed Rates and the cost of the Life Contingent
Annuity, which may vary. Consequently, the aggregate amount of guaranteed
lifetime income under IRA APO Plus may be more or less than the amount that
could have been purchased by application at the outset of the entire initial
contribution or Annuity Account Value to the IRA Assured Payment Option.
See Appendix IV for an example of the payments purchased under IRA Assured
Payment Option and IRA APO Plus.
In calculating your required minimum distributions your Annuity Account Value
in the Investment Funds, the Annuity Account Value in each Guarantee Period,
any amount in the Modal Payment Portion of the Guaranteed Period Account, and
the deemed value of the Life Contingent Annuity for tax purposes will be taken
into account as described in "Payments" under "IRA Assured Payment Option,"
above. Also see "Required Minimum Distributions" in Part 9.
Allocation of Subsequent Contributions under IRA APO Plus
Any subsequent contributions you make may only be allocated to the Investment
Funds, where it is later applied by us under the IRA Assured Payment Option.
Subsequent contributions will be allocated among the Investment Funds according
to your allocation percentages. Allocation percentages can be changed at any
time by writing to our Processing Office. Subsequent contributions may no
longer be made after the end of the fixed period.
Transfers Among Investment Options under IRA APO Plus
While IRA APO Plus is in effect, you may transfer all or a portion of your
Annuity Account Value in the Investment Funds, among the Investment Funds in
any way you choose. However, you may not transfer Annuity Account Value from
the Investment Funds to the Guaranteed Period Account.
Withdrawals under IRA APO Plus
While IRA APO Plus is in effect, if you take a Lump Sum Withdrawal as described
under "Lump Sum Withdrawals" below (or if a Lump Sum Withdrawal is made to
satisfy minimum distribution requirements under the Certificate), such
withdrawals will be taken on a pro rata basis from your Annuity Account Value
in the Investment Funds unless you specify otherwise. If there is insufficient
value in the Investment Funds the excess will be taken from the Guarantee
Periods and the Modal Payment Portion of the Guaranteed Period Account, if
applicable, as described under "Withdrawals under the IRA Assured Payment
Option" above.
A Lump Sum Withdrawal taken to satisfy minimum distribution requirements under
the Certificate will not be subject to a withdrawal charge.
Death Benefit
Once you have elected IRA APO Plus, if a death benefit becomes payable during
the fixed period we will pay the death benefit amount as described under "Death
Benefit" in Part 5, to the designated beneficiary. Unless you have elected
Joint and Survivor under the Life Contingent Annuity, no payment will be made
under the Life Contingent Annuity. The death benefit relates only to the
Investment Funds and the Guarantee Periods under the Certificate; a death
benefit is never payable under the Life Contingent Annuity.
Termination of IRA APO Plus
You may terminate IRA APO Plus at any time by submitting a request satisfactory
to us. In connection with the termination, you may either (i) elect to
terminate IRA APO Plus at any time and have your Certificate operate under the
Rollover IRA rules (see "Part 5: Provisions of the Certificates and Services We
Provide") or (ii) elect the IRA Assured Payment Option (GMIB, discussed in Part
5 may apply) with level or increasing payments. In the latter case your
remaining Annuity Account Value in the Investment Funds will be allocated to
the Guaranteed Period Account and applied under the Life Contingent Annuity. A
market value adjustment may apply for any amounts allocated from a Guarantee
Period. At least 45 days prior to the end of each three year period, we will
send you a quote indicating how much future income could be provided under the
IRA Assured Payment Option. The quote would be based on your current Annuity
Account Value, current Guaranteed Rates for the Guarantee Periods and current
purchase rates under the Life Contingent Annuity as of the date of the quote.
The actual amount of future income would depend on the rates in effect on the
Transaction Date.
WITHDRAWAL OPTIONS
The Rollover IRA is an annuity contract, even though you may elect to receive
your benefits in a non-annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while you are alive.
Four withdrawal options are available: Lump Sum Withdrawals, Substantially
Equal Payment Withdrawals, Systematic Withdrawals and Minimum Distribution
Withdrawals. Withdrawals may result in withdrawal charges. See
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"Part 7: Deductions and Charges." Special withdrawal rules may apply under the
IRA Assured Payment Option and IRA APO Plus.
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration
Date" in Part 4. Withdrawals may be taxable and subject to tax penalty. See
"Part 9: Tax Aspects of the Certificates."
As a deterrent to early withdrawal (generally prior to age 59 1/2) the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 9: Tax Aspects
of the Certificates."
LUMP SUM WITHDRAWALS
You may take Lump Sum Withdrawals at any time subject to a minimum withdrawal
amount of $1,000. A request to withdraw more than 90% of the Cash Value as of
the Transaction Date will result in the termination of the Certificate and will
be treated as a surrender of the Certificate for its Cash Value. See
"Surrendering the Certificates to Receive the Cash Value," in Part 5.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal will
be taken. If we have received the information we require, the requested
withdrawal will become effective on the Transaction Date and proceeds will
usually be mailed within seven calendar days thereafter, but we may delay
payment as described in "When Payments Are Made" in Part 5. If we receive only
partially completed information, our Processing Office will contact you for
specific instructions before your request can be processed.
Lump Sum Withdrawals in excess of the 15% free corridor amount may be subject
to a withdrawal charge. While either the IRA Assured Payment Option or IRA APO
Plus is in effect, Lump Sum Withdrawals that exceed the 10% free corridor
amount may be subject to a withdrawal charge. See "Withdrawal Charge" in Part
7.
SUBSTANTIALLY EQUAL PAYMENT WITHDRAWALS
Substantially Equal Payment Withdrawals provide distributions from the Annuity
Account Value of the amounts necessary so that the 10% penalty tax, normally
applicable to distributions made prior to age 59 1/2, does not apply. See
"Penalty Tax on Early Distributions," in Part 9. Once distributions begin, they
should not be changed or stopped until the later of age 59 1/2 or five years
from the date of the first distribution. If you change or stop the
distributions or take a Lump Sum Withdrawal, you may be liable for the 10%
penalty tax that would have otherwise been due on all prior distributions made
under this option and for any interest thereon.
Substantially Equal Payment Withdrawals may be elected at any time if you are
below age 59 1/2. You can elect this option by submitting the proper form. You
select the day and the month when the first withdrawal will be made, but it may
not be sooner than 28 days after the issue of the Certificate. In no event may
you elect to receive the first payment in the same Contract Year in which a
Lump Sum Withdrawal was taken. We will calculate the amount of the distribution
under a method we select and payments will be made monthly, quarterly or
annually as you select. These payments will continue to be made until we
receive written notice from you to cancel this option. Such notice must be
received at our Processing Office at least seven calendar days prior to the
next scheduled withdrawal date. A Lump Sum Withdrawal taken while Substantially
Equal Payment Withdrawals are in effect will cancel such withdrawals. You may
elect to start receiving Substantially Equal Payment Withdrawals again, but in
no event can the payments start in the same Contract Year in which a Lump Sum
Withdrawal was taken. We will calculate a new distribution amount.
Unless you specify otherwise, Substantially Equal Payment Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the Investment
Funds. If there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal or the total amount of the withdrawal, as
applicable, will be withdrawn from the Guarantee Periods in order of the
earliest Expiration Date(s) first.
Substantially Equal Payment Withdrawals are not subject to a withdrawal charge.
SYSTEMATIC WITHDRAWALS
This option may be elected if you are age 59 1/2 to 70 1/2. Systematic
Withdrawals provide level percentage or level amount payouts. You may choose to
receive Systematic Withdrawals on a monthly, quarterly or annual frequency. You
select a dollar amount or percentage of the Annuity Account Value to be
withdrawn, subject to a maximum of 1.2% monthly, 3.6% quarterly and 15.0%
annually, but in no event may any payment be less than $250. If at the time a
Systematic Withdrawal is to be made, the withdrawal amount would be less than
$250, no payment will be made and your Systematic Withdrawal election will
terminate.
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You select the date of the month when the withdrawals will be made, but you may
not choose a date later than the 28th day of the month. If no date is selected,
withdrawals will be made on the same calendar day of the month as the Contract
Date. The commencement of payments under the Systematic Withdrawal option may
not be elected to start sooner than 28 days after issue of the Certificate.
You may elect Systematic Withdrawals at any time by completing the proper form
and sending it to our Processing Office. You may change the payment frequency
of your Systematic Withdrawals once each Contract Year or cancel this
withdrawal option at any time by sending notice in a form satisfactory to us.
The notice must be received at our Processing Office at least seven calendar
days prior to the next scheduled withdrawal date. You may also change the
amount or percentage of your Systematic Withdrawals once in each Contract Year.
However, you may not change the amount or percentage in any Contract Year where
you have previously taken another withdrawal under the Lump Sum Withdrawal
option described above.
Unless you specify otherwise, Systematic Withdrawals will be withdrawn on a pro
rata basis from your Annuity Account Value in the Investment Funds. If there is
insufficient value or no value in the Investment Funds, any additional amount
of the withdrawal required or the total amount of the withdrawal, as
applicable, will be withdrawn from the Guarantee Periods in order of the
earliest Expiration Date(s) first.
Systematic Withdrawals are not subject to a withdrawal charge, except to the
extent that, when added to a Lump Sum Withdrawal previously taken in the same
Contract Year, the Systematic Withdrawal exceeds the 15% free corridor amount.
See "Withdrawal Charge" in Part 7.
MINIMUM DISTRIBUTION WITHDRAWALS
Minimum Distribution Withdrawals provide distributions from the Annuity Account
Value of the amounts necessary to meet minimum distribution requirements set
forth in the Code.
This option may be elected in the year in which you attain age 70 1/2. You can
elect Minimum Distribution Withdrawals by submitting the proper election form.
The minimum amount we will pay out is $250.
You may elect Minimum Distribution Withdrawals for each Certificate you own,
subject to our rules then in effect. Currently, Minimum Distribution
Withdrawal payments will be made annually.
Unless you specify otherwise, Minimum Distributions Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the Investment
Funds. If there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal required or the total amount of the
withdrawal, as applicable, will be withdrawn from the Guarantee Periods in
order of the earliest Expiration Date(s) first.
Minimum Distribution Withdrawals are not subject to a withdrawal charge, except
to the extent that, when added to a Lump Sum Withdrawal previously taken in the
same Contract Year, the Minimum Distribution Withdrawal exceeds the 15% free
corridor amount. See "Withdrawal Charge" in Part 7.
Example
- -------
The chart below illustrates the pattern of payments, under Minimum Distribution
Withdrawals for a male who purchases the Rollover IRA at age 70 with a single
contribution of $100,000, with payments commencing at the end of the first
Contract Year.
PATTERN OF MINIMUM DISTRIBUTION WITHDRAWALS
$100,000 SINGLE CONTRIBUTION FOR A
SINGLE LIFE-MALE AGE 70
[THE FOLLOWING TABLE WAS REPRESENTED
AS AN AREA GRAPH IN THE PROSPECTUS]
Assumes 6.0% Rate of Return
Amount
Age Withdrawn
--- ---------
70 $6,250
75 7,653
80 8,667
85 8,770
90 6,931
95 3,727
100 1,179
[END OF GRAPHICALLY REPRESENTED DATA]
Payments are calculated each year based on the Annuity Account Value at the end
of each year, using the recalculation method of determining payments. (See
"Part 1--Minimum Distribution Withdrawals" in the SAI.) Payments are made
annually, and it is further assumed that no Lump Sum Withdrawals are taken.
This example assumes an annual rate of return of 6.0% compounded annually for
both the Investment Funds and the Guaranteed Period Account. This rate of
return is for illustrative purposes only and is not intended to represent an
expected or guaranteed rate of return. Your investment results will vary. In
addition, this example does not reflect any charges that may be applicable
under the Rollover IRA. Such charges would effectively reduce the actual
return.
INCOME ANNUITY OPTIONS
Income annuity options provide periodic payments over a specified period of
time which may be fixed or may be based on your life. Annuity forms of
payment are calculated as of the Annuity Commencement Date, which is on file
with our Processing Office. You
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can change the Annuity Commencement Date by writing to our Processing Office
any time before the Annuity Commencement Date. However, you may not choose a
date later than the 28th day of any month. Also, no Annuity Commencement Date
will be later than the Processing Date which follows your 90th birthday (may be
different in some states).
Before the Annuity Commencement Date, we will send you a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay you a
fixed annuity benefit on the "normal form" indicated for your Certificate as of
your Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or (2)
the Cash Value for any period certain only annuity form except that if the
period certain is more than five years, the amount applied will be no less than
95% of the Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an income annuity option
prior to an Expiration Date will result in a market value adjustment. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
ANNUITY FORMS
o Life Annuity: An annuity which guarantees payments for the rest of your
life. Payments end with the last monthly payment before your death.
Because there is no death benefit associated with this annuity form, it
provides the highest monthly payment of any of the life income annuity
options, so long as you are living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of your life. In addition, if you die before a specific
period of time (the "certain period") has ended, payments will continue
to your beneficiary for the balance of the certain period. Certain
periods may be 5, 10, 15 or 20 years. A life annuity with a certain
period of 10 years is the normal form of annuity under the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to you
for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments will
continue to your beneficiary until that amount has been recovered. This
option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The income annuity options outlined above are available in both fixed and
variable form, unless otherwise indicated. Fixed annuity payments are
guaranteed by us and will be based either on the tables of guaranteed annuity
payments in your Certificate or on our then current annuity rates, whichever is
more favorable for you. Variable income annuities may be funded through the
Common Stock Fund through the purchase of annuity units. The amount of each
variable annuity payment may fluctuate, depending upon the performance of the
Common Stock Fund. That is because the annuity unit value rises and falls
depending on whether the actual rate of net investment return (after deduction
of charges) is higher or lower than the assumed base rate. See "Annuity Unit
Values" in the SAI. Variable income annuities may also be available by separate
prospectus through the Common Stock or other Funds of other separate accounts
we offer.
For all Annuitants, the normal form of annuity provides for fixed payments. We
may offer other forms not outlined here. Your registered representative can
provide details.
For each income annuity option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
income annuity option, your age (or your and the joint Annuitant's ages) and in
certain instances, the sex of the Annuitant(s). Once an income annuity option
is chosen and payments have commenced, no change can be made.
If, at the time you elect an income annuity option, the amount to be applied is
less than $2,000 or the initial payment under the option elected is less than
$20 monthly, we reserve the right to pay the Annuity Account Value in a single
sum rather than as payments under the annuity form chosen.
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PART 7: DEDUCTIONS AND CHARGES
- -------------------------------------------------------------------------------
CHARGES DEDUCTED FROM THE
ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options
you select, subject to certain restrictions. We then periodically deduct
certain amounts from your Annuity Account Value. Unless otherwise indicated,
the charges described below and under "Charges Deducted from the Investment
Funds" below will not be increased by us for the life of the Certificates. We
may reduce certain charges under sponsored arrangements. See "Sponsored
Arrangements" below. Charges are deducted proportionately from all the
Investment Funds in which your Annuity Account Value is invested on a pro rata
basis, except as noted below.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that (i) a Lump Sum Withdrawal or cumulative withdrawals during a
Contract Year exceed the free corridor amount, or (ii) if the Certificate is
surrendered to receive its Cash Value. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
CONTRACT YEAR
1 2 3 4 5 6 7 8+
-------------------------------------------------------------
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
If the IRA Assured Payment Option or IRA APO Plus is in effect, the withdrawal
charge will be imposed as a percentage of contributions (less withdrawals),
less the amount applied under the Life Contingent Annuity.
The applicable withdrawal charge percentage is determined by the Contract Year
in which the excess withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn or
surrendered. For purposes of the table, for each contribution, the Contract
Year in which we receive that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the
beginning of the Contract Year, minus any amount previously withdrawn
during that Contract Year.
While either the IRA Assured Payment Option or IRA APO Plus is in effect,
the free corridor amount is 10% of the Annuity Account Value at the
beginning of the Contract Year.
There is no withdrawal charge if a Lump Sum Withdrawal is taken to satisfy
minimum distribution requirements under the Certificate. A free corridor amount
is not applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn up
to the free corridor amount are not considered a withdrawal of any
contributions.
The withdrawal charge is to help cover sales expenses.
Withdrawal Processing Charge
We reserve the right to impose a charge of the lesser of $25 and 2.0% of the
amount withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. This charge, if made, is to cover our administrative expenses in
processing Lump Sum Withdrawals. See "Asset Based Administrative Charge" below.
Charges for Combined GMDB/GMIB Benefit
We deduct a charge annually on each Processing Date for providing the Combined
GMDB/GMIB Benefit. The charge is equal to a percentage of the GMDB in effect on
the Processing Date. The percentage is equal to 0.45% for the 6% to Age 80
Benefit and 0.30% for the 6% to Age 70 Benefit.
Charges for GMDB Only Benefit
We deduct a charge annually on each Processing Date for providing the GMDB Only
Benefit. The charge is equal to a percentage of the GMDB in effect on the
Processing Date. The percentage is equal to 0.20%.
If the amount collected from this charge exceeds the cost of providing the
benefits, it will be to our profit, and may be used to pay distribution
expenses not recovered from sales charges under the Certificates.
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Charges for State Premium and Other
Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium taxes,
that might be imposed in your state. Generally we deduct this charge from the
amount applied to provide an income annuity option. In certain states, however,
we may deduct the charge for taxes from contributions. The current tax charge
that might be imposed varies by state and ranges from 0% to 2.25%.
CHARGES DEDUCTED FROM THE
INVESTMENT FUNDS
Mortality and Expense Risk Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for mortality and expense risks. The daily charge is at the rate
of 0.002477%, which is equivalent to an annual rate of 0.90%, on the assets in
each Investment Fund. Approximately 0.60% of this annual charge is allocated to
the mortality risk and 0.30% is allocated to the expense risk.
We will realize a gain from this charge to the extent it is not needed to
provide for benefits and expenses under the Certificate. We will use any gain
for any lawful purpose including payment of distribution expenses not recovered
from sales charges under the Certificate.
The mortality risk assumed is the risk that Annuitants as a group will live for
a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables, shown
in each Certificate, will differ from actual mortality experience. Lastly, we
assume a mortality risk to the extent that the guaranteed minimum death benefit
charge is insufficient to pay any amount by which such death benefit exceeds
the Cash Value of the Certificate.
The expense risk assumed is the risk that it will cost us more to issue and
administer the Certificates than we expect.
Asset Based Administrative Charge
We will deduct a daily charge from the assets in each Investment Fund, to
compensate us for administrative expenses under the Certificates. The daily
charge is at a rate of 0.000831% (equivalent to an annual rate of 0.30%) on the
assets in each Investment Fund. We reserve the right to increase this charge to
an annual rate of 0.35%, the maximum permitted under the Certificates. The
withdrawal processing charge and the asset based administrative charge are not
designed to produce a profit for Equitable Life.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against the Trust's assets, the Rule
12b-1 Plan fee, direct operating expenses of the Trust (such as trustees' fees,
expenses of independent auditors and legal counsel, bank and custodian charges
and liability insurance), and certain investment-related expenses of the Trust
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
maximum investment advisory fees paid annually by the Portfolios cannot be
changed without a vote by shareholders. They are as follows:
DAILY AVERAGE NET ASSETS
-------------------------------
FIRST NEXT OVER
$350 $400 $750
MILLION MILLION MILLION
--------- --------- ---------
Aggressive Stock ........ .500% .475% .450%
Common Stock and Money
Market .................. .400% .375% .350%
Growth Investors, Global
and High Yield ......... .550% .525% .500%
Investment advisory fees are established under the Trust's investment advisory
agreements between the Trust and its investment adviser, Alliance.
The Rule 12b-1 Plan provides that the Trust, on behalf of each Portfolio may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily intended
to result in the sale of the Class IB shares. The Rule 12b-1 Plan fee, which
may be waived in the discretion of EDI, may be increased only by action of the
Board of Trustees of the Trust up to a maximum of 0.50% per annum.
All of these fees and expenses are described more fully in the Trust
prospectus.
SPONSORED ARRANGEMENTS
For certain sponsored arrangements, we may reduce the withdrawal charge or
change the minimum initial contribution requirements. Under the IRA Assured
Payment Option and IRA APO Plus, we may increase Guaranteed Rates and reduce
purchase rates under the Life Contingent Annuity. We may also change the
guaranteed minimum death benefit and the guaranteed minimum income benefit.
Sponsored arrangements include those in which an employer allows us to sell
Certificates to its employees or retirees on an individual basis.
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Our costs for sales, administration, and mortality generally vary with the size
and stability of the sponsoring organization among other factors. We take all
these factors into account when reducing charges. To qualify for reduced
charges, a sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in existence. Sponsored arrangements
that have been set up solely to buy Certificates or that have been in existence
less than six months will not qualify for reduced charges.
We may also establish different Guaranteed Rates for the Guarantee Periods
under different classes of Certificates for sponsored arrangements.
We will make these and any similar reductions according to our rules in effect
when a Certificate is approved for issue. We may change these rules from time
to time. Any variation in the withdrawal charge will reflect differences in
costs or services and will not be unfairly discriminatory.
Sponsored arrangements may be governed by the Code, the Employee Retirement
Income Security Act of 1974 (ERISA), or both. We make no representations as to
the impact of those and other applicable laws on such programs. WE RECOMMEND
THAT EMPLOYERS PURCHASING OR MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER A
SPONSORED ARRANGEMENT SEEK THE ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The withdrawal charge may be reduced or eliminated when sales are made in a
manner that results in savings of sales and administrative expenses, such as
sales through persons who are compensated by clients for recommending
investments and receive no commission or reduced commissions in connection with
the sale of the Certificates. In no event will a reduction or elimination of
the withdrawal charge be permitted where it would be unfairly discriminatory.
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PART 8: VOTING RIGHTS
- -------------------------------------------------------------------------------
TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of the Trust. Since we own
the assets of the Separate Account, we are the legal owner of the shares and,
as such, have the right to vote on certain matters. Among other things, we may
vote:
o to elect the Trust's Board of Trustees,
o to ratify the selection of independent auditors for the Trust, and
o on any other matters described in the Trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because the Trust is a Massachusetts business trust, annual meetings are not
required. Whenever a shareholder vote is taken, we will give Certificate Owners
the opportunity to instruct us how to vote the number of shares attributable to
their Certificates. If we do not receive instructions in time from all
Certificate Owners, we will vote the shares of a Portfolio for which no
instructions have been received in the same proportion as we vote shares of
that Portfolio for which we have received instructions. We will also vote any
shares that we are entitled to vote directly because of amounts we have in an
Investment Fund in the same proportions that Certificate Owners vote.
Each Trust share is entitled to one vote. Fractional shares will be counted.
Voting generally is on a Portfolio-by-Portfolio basis except that shares will
be voted on an aggregate basis when universal matters, such as election of
Trustees and ratification of independent auditors, are voted upon. However, if
the Trustees determine that shareholders in a Portfolio are not affected by a
particular matter, then such shareholders generally would not be entitled to
vote on that matter.
VOTING RIGHTS 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 and
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 the Rollover IRA Certificate Owners, we
currently do not foresee any disadvantages 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 Certificate Owners, we will see
to it that appropriate action is taken to protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner approval,
Certificate Owners will be entitled to one vote for each Accumulation Unit they
have in the Investment Funds. Each Certificate Owner who has elected a variable
annuity payout may cast the number of votes equal to the dollar amount of
reserves we are holding for that annuity in the Common Stock Fund divided by
the Accumulation Unit Value for the Common Stock Fund. We will cast votes
attributable to any amounts we have in the Investment Funds in the same
proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
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PART 9: TAX ASPECTS OF THE CERTIFICATES
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TAX-QUALIFIED INDIVIDUAL RETIREMENT ANNUITIES (IRAS)
Introduction
The Rollover IRA Certificate is designed to qualify as an IRA under Section
408(b) of the Code. Your rights under the Rollover IRA cannot be forfeited.
This prospectus contains the information which the Internal Revenue Service
(IRS) requires to be disclosed to an individual before he or she purchases an
IRA.
This Part covers some of the special tax rules that apply to individual
retirement arrangements. You should be aware that an IRA is subject to certain
restrictions in order to qualify for its special treatment under the Federal
tax law.
This prospectus provides our general understanding of applicable Federal income
tax rules, but does not provide detailed tax information and does not address
issues such as state income and other taxes or Federal gift and estate taxes.
Please consult a tax adviser when considering the tax aspects of the Rollover
IRA Certificates.
Further information on IRA tax matters can be obtained from any IRS district
office. Additional information regarding IRAs, including a discussion of
required distributions, can be found in IRS Publication 590, entitled
"Individual Retirement Arrangements (IRAs)," which is generally updated
annually.
The Rollover IRA Certificate has been approved by the IRS as to form for use as
an IRA. This IRS approval is a determination only as to the form of the annuity
and does not represent a determination of the merits of the annuity as an
investment.
Cancelation
You can cancel a Certificate issued as an IRA by following the directions in
Part 5 under "Free Look Period." Since there may be adverse tax consequences if
a Certificate is canceled (and because we are required to report to the IRS
certain distributions from canceled IRAs), you should consult with a tax
adviser before making any such decision. If you cancel this Certificate, you
may establish a new individual retirement arrangement if at the time you meet
the requirements for establishing an individual retirement arrangement.
Contributions to IRAs
Individuals may make three different types of contributions to purchase an IRA,
or as later additions to an existing IRA: "regular" contributions out of
earnings, tax-free "rollover" contributions from tax-qualified plans, or direct
custodian-to-custodian transfers from other individual retirement arrangements
("direct transfers").
The initial contribution to the Certificate must be either a rollover or a
direct custodian-to-custodian transfer. See "Tax-Free Transfers and Rollovers,"
discussed below. Any subsequent contributions you make may be any of rollovers,
direct transfers or "regular" IRA contributions. See "Contributions Under the
Certificates" in Part 5. The immediately following discussion relates to
"regular" IRA contributions. For the reasons noted in "Tax-Free Transfers and
Rollovers" below, you should consult with your tax adviser before making any
subsequent contributions to an IRA which is intended to serve as a "conduit"
IRA.
Generally, $2,000 is the maximum amount of deductible and nondeductible
contributions which may be made to all IRAs by an individual in any taxable
year. The above limit may be less when the individual's earnings are below
$2,000. This limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into an IRA.
The amount of IRA contributions for a tax year that an individual can deduct
depends on whether the individual (or the individual's spouse, if a joint
return is filed) is covered by an employer-sponsored tax-favored retirement
plan. If the individual's spouse does not work or elects to be treated as
having no compensation, the individual and the individual's spouse may
contribute up to $2,250 to individual retirement arrangements (but no more than
$2,000 to any one individual retirement arrangement). The non-working spouse
owns his or her individual retirement arrangements, even if the working spouse
makes contributions to purchase the spousal individual retirement arrangements.
If neither the individual nor the individual's spouse is covered during any
part of the taxable year by an employer-sponsored tax-favored retirement plan
(including a qualified plan, a tax sheltered account or annuity under Section
403(b) of the Code (TSA) or a simplified employee pension plan), then
regardless of adjusted gross income (AGI), each working spouse may make
deductible contributions to an IRA for each tax year (MAXIMUM PERMISSIBLE
DOLLAR DEDUCTION) up to the lesser of $2,000 or 100% of compensation. In
certain cases, individuals covered by a tax-favored retirement plan include
persons eligible to participate in the plan although not actually
participating. Whether or not a person is covered by a retirement plan will be
reported on an employee's Form W-2.
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If the individual is single and covered by a retirement plan during any part of
the taxable year, the deduction for IRA contributions phases out with AGI
between $25,000 and $35,000. If the individual is married and files a joint
return, and either the individual or the spouse is covered by a tax-favored
retirement plan during any part of the taxable year, the deduction for IRA
contributions phases out with AGI between $40,000 and $50,000. If the
individual is married, files a separate return and is covered by a tax-favored
retirement plan during any part of the taxable year, the deduction for IRA
contributions phases out with AGI between $0 and $10,000. Married individuals
filing separate returns must take into account the retirement plan coverage of
the other spouse, unless the couple has lived apart for the entire taxable
year. If AGI is below the phase-out range, an individual is entitled to the
Maximum Permissible Dollar Deduction. In computing the partial deduction for
IRA contributions the individual must round the amount of the deduction to the
nearest $10. The permissible deduction for IRA contributions is a minimum of
$200 if AGI is less than the amount at which the deduction entirely phases out.
If the individual (or the individual's spouse, unless the couple has lived
apart the entire taxable year and their filing status is married, filing
separately) is covered by a tax-favored retirement plan, the deduction for IRA
contributions must be computed using one of two methods. Under the first
method, the individual determines AGI and subtracts $25,000 if the individual
is a single person, $40,000 if the individual is married and files a joint
return with the spouse, or $0 if the individual is married and files a separate
return. The resulting amount is the individual's Excess AGI. The individual
then determines the limit on the deduction for IRA contributions using the
following formula:
Maximum Adjusted
$10,000-Excess AGI Permissible Dollar
- ------------------ X Dollar = Deduction
$10,000 Deduction Limit
Under the second method, the individual determines his or her Excess AGI and
then refers to the table in Appendix V originally prepared by the IRS to
determine the deduction.
Contributions may be made for a tax year until the deadline for filing a
Federal income tax return for that tax year (without extensions). No
contributions are allowed for the tax year in which an individual attains age
70 1/2 or any tax year after that. A working spouse age 70 1/2 or over,
however, can contribute up to the lesser of $2,000 or 100% of "earned income"
to a spousal individual retirement arrangement for a non-working spouse until
the year in which the non-working spouse reaches age 70 1/2.
An individual not eligible to deduct part or all of the IRA contribution may
still make nondeductible contributions on which earnings will accumulate on a
tax-deferred basis. The deductible and nondeductible contributions may not,
however, together exceed the lesser of the $2,000 limit (or $2,250 spousal
limit) or 100% of compensation for each tax year. See "Excess Contributions"
below. Individuals must keep their own records of deductible and nondeductible
contributions in order to prevent double taxation on the distribution of
previously taxed amounts. See "Distributions from IRA Certificates" below.
An individual making nondeductible contributions in any taxable year, or
receiving amounts from any IRA to which he or she has made nondeductible
contributions, must file the required information with the IRS. Moreover,
individuals making nondeductible IRA contributions must retain all income tax
returns and records pertaining to such contributions until interest in such
IRAs are fully distributed.
Excess Contributions
Excess contributions to an IRA are subject to a 6% excise tax for the year in
which made and for each year thereafter until withdrawn. In the case of
"regular" IRA contributions any contribution in excess of the lesser of $2,000
or 100% of compensation or earned income is an "excess contribution," (without
regard to the deductibility or nondeductibility of IRA contributions under this
limit). Also, any "regular" contributions made after you reach age 70 1/2 are
excess contributions. In the case of rollover IRA contributions, excess
contributions are amounts which are not eligible to be rolled over (for
example, after tax contributions to a qualified plan or minimum distributions
required to be made after age 70 1/2). An excess contribution (rollover or
"regular") which is withdrawn, however, before the time for filing the
individual's Federal income tax return for the tax year (including extensions)
is not includable in income and therefore is not subject to the 10% penalty tax
on early distributions (discussed below under "Penalty Tax on Early
Distributions"), provided any earnings attributable to the excess contribution
are also withdrawn and no tax deduction is taken for the excess contribution.
The withdrawn earnings on the excess contribution, however, would be includable
in the individual's gross income and would be subject to the 10% penalty tax.
If excess contributions are not withdrawn before the time for filing the
individual's Federal income tax return for the year (including extensions),
"regular" contributions may still be withdrawn after that time if the IRA
contribution for the tax year did not exceed $2,250 and no tax deduction was
taken for the excess contribution; in that event, the excess contribution would
not be includable in gross income and would not be subject to the 10% penalty
tax. Lastly, excess "regular" contributions may also be removed by
underutilizing the allowable contribution limits for a later year.
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If excess rollover contributions are not withdrawn before the time for filing
the individual's Federal tax return for the year (including extensions) and the
excess contribution occurred as a result of incorrect information provided by
the plan, any such excess amount can be withdrawn if no tax deduction was taken
for the excess contribution. As above, excess rollover contributions withdrawn
under those circumstances would not be includable in gross income and would not
be subject to the 10% penalty tax.
Tax-Free Transfers and Rollovers
Rollover contributions may be made to an IRA from these sources: (i) qualified
plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii) other
individual retirement arrangements.
The rollover amount must be transferred to the Certificate either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within
60 days of the date the proceeds from another individual retirement arrangement
or an eligible rollover distribution from a qualified plan or TSA were
received. Generally the taxable portion of any distribution from a qualified
plan or TSA is an eligible rollover distribution and may be rolled over
tax-free to an IRA unless the distribution is (i) a required minimum
distribution under Section 401(a)(9) of the Code; or (ii) one of a series of
substantially equal periodic payments made (not less frequently than annually)
(a) for the life (or life expectancy) of the plan participant or the joint
lives (or joint life expectancies) of the plan participant and his or her
designated beneficiary, or (b) for a specified period of ten years or more.
Under some circumstances, amounts from a Certificate may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" IRA treatment, the
source of funds used to establish the IRA must be a rollover contribution from
the qualified plan and the entire amount received from the IRA (including any
earnings on the rollover contribution) must be rolled over into another
qualified plan within 60 days of the date received. Similar rules apply in the
case of a TSA. If you make a contribution to the Certificate which is from an
eligible rollover distribution and you commingle such contribution with other
contributions, you may not be able to roll over these eligible rollover
distribution contributions and earnings to another qualified plan (or TSA, as
the case may be) at a future date, unless the Code permits.
Under the conditions and limitations of the Code, an individual may elect for
each IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers and
can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Certificate
and rolled over into other individual retirement arrangements unless the
distribution was received under an inherited IRA. Tax-free rollovers are also
available to the surviving spouse beneficiary of a deceased individual, or a
spousal alternate payee of a qualified domestic relations order applicable to a
qualified plan. In some cases, IRAs can be transferred on a tax-free basis
between spouses or former spouses incidental to a judicial decree of divorce or
separation.
Distributions from IRA Certificates
Income or gains on contributions under IRAs are not subject to Federal income
tax until benefits are distributed to the individual. Distributions include
withdrawals from your Certificate, surrender of your Certificate and annuity
payments from your Certificate. Death benefits are also distributions. Except
as discussed below, the amount of any distribution from an IRA is fully
includable as ordinary income by the individual in gross income.
If the individual makes non-deductible IRA contributions, those contributions
are recovered tax-free when distributions are received. The individual must
keep records of all nondeductible contributions. At the end of each tax year in
which the individual has received a distribution, the individual determines a
ratio of the total nondeductible IRA contributions (less any amounts previously
withdrawn tax-free) to the total account balances of all IRAs held by the
individual at the end of the tax year (including rollover IRAs) plus all IRA
distributions made during such tax year. The resulting ratio is then multiplied
by all distributions from the IRA during that tax year to determine the
nontaxable portion of each distribution.
In addition, a distribution (other than a required minimum distribution
received after age 70 1/2) is not taxable if (1) the amount received is a
return of excess contributions which are withdrawn, as described under "Excess
Contributions" above, (2) the entire amount received is rolled over to another
individual retirement arrangement (see "Tax-Free Transfers and Rollovers"
above) or (3) in certain limited circumstances, where the IRA acts as a
"conduit," the entire amount is paid into a qualified plan or TSA that permits
rollover contributions.
Distributions from an IRA are not entitled to the special favorable five-year
averaging method (or, in certain cases, favorable ten-year averaging and
long-term capital gain treatment) available in certain cases to distributions
from qualified plans.
Required Minimum Distributions
The minimum distribution rules require IRA owners to start taking annual
distributions from their retirement plans by age 70 1/2. The distribution
requirements are designed to provide for distribution of the
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owner's interest in the IRA over the owner's life expectancy. Whether the
correct amount has been distributed is calculated on a year by year basis;
there are no provisions in the Code to allow amounts taken in excess of the
required amount to be carried over or carried back and credited to other years.
Generally, an individual must take the first required minimum distribution with
respect to the calendar year in which the individual turns age 70 1/2. The
individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2, or to delay taking it
until the three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date," which
is the April 1st of the calendar year following the calendar year in which the
individual turns age 70 1/2.) If the individual chooses to delay taking the
first annual minimum distribution, then the individual will have to take two
minimum distributions in that year--the delayed one for the first year and the
one actually for that year. Once minimum distributions begin, they must be made
at some time every year.
There are two approaches to taking minimum distributions--"account based" or
"annuity based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
An account based minimum distribution approach may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. An annuity based approach involves application of
the Annuity Account Value to an annuity for the life of the individual or the
joint lives of the individual and a designated beneficiary, or for a period
certain not extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options are
best for your own personal situation. Individuals who are participants in more
than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Your required minimum distribution for any taxable year is calculated by taking
into account the required minimum distribution from each of your individual
retirement arrangements. The IRS, however, does not require that you make the
required distribution from each individual retirement arrangement that you
maintain. As long as the total amount distributed annually satisfies your
overall minimum distribution requirement, you may choose to take your annual
required distribution from any one or more individual retirement arrangements
that you maintain.
An individual may recompute his or her minimum distribution amount each year
based on the individual's current life expectancy as well as that of the
spouse. No recomputation is permitted, however, for a beneficiary other than a
spouse. If there is an insufficient distribution in any year, a 50% tax may be
imposed on the amount by which the minimum required to be distributed exceeds
the amount actually distributed. The penalty tax may be waived by the Secretary
of the Treasury in certain limited circumstances. Failure to have distributions
made as the Code and Treasury regulations require may result in
disqualification of your IRA. See "Tax Penalty for Insufficient Distributions"
below.
Except as described in the next sentence, if the individual dies after
distribution in the form of an annuity has begun, or after the Required
Beginning Date, payment of the remaining interest must be made at least as
rapidly as under the method used prior to the individual's death. (The IRS has
indicated that an exception to the rule that payment of the remaining interest
must be made at least as rapidly as under the method used prior to the
individual's death applies if the beneficiary of the IRA is the surviving
spouse. In some circumstances, the surviving spouse may elect to "make the IRA
his or her own" and halt distributions until he or she reaches age 70 1/2).
If an individual dies before the Required Beginning Date and before
distributions in the form of an annuity begin, distributions of the
individual's entire interest under the Certificate must be completed within
five years after death, unless payments to a designated beneficiary begin
within one year of the individual's death and are made over the beneficiary's
life or over a period certain which does not extend beyond the beneficiary's
life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay the
commencement of such payments up until the individual would have attained 70
1/2. In the alternative, a surviving spouse may elect to roll over the
inherited IRA into the surviving spouse's own IRA.
Taxation of Death Benefits
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if distribution had been made to
the individual.
If you elect to have your spouse be the sole primary beneficiary and to be
the successor Annuitant and
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Certificate Owner, then your surviving spouse automatically becomes both the
successor Certificate Owner and Annuitant, and no death benefit is payable
until the surviving spouse's death.
Guaranteed Minimum Death Benefit
The Code provides that no part of an individual retirement account may be
invested in life insurance contracts. Treasury Regulations provide that an
individual retirement account may be invested in an annuity contract which
provides a death benefit of the greater of premiums paid or the contract's cash
value. Your Certificate provides a minimum death benefit guarantee that in
certain circumstances may be greater than either of contributions made or the
Annuity Account Value. Although there is no ruling regarding the type of
minimum death benefit guarantee provided by the Certificate, Equitable Life
believes that the Certificate's minimum death benefit guarantee should not
adversely affect the qualification of the Certificate as an IRA. Nevertheless,
it is possible that the IRS could disagree, or take the position that some
portion of the charge in the Certificate for the minimum death benefit
guarantee should be treated for Federal income tax purposes as a taxable
partial withdrawal from the Certificate. If this were so, such a deemed
withdrawal would also be subject to tax penalty for Certificate Owners under
age 59 1/2.
Tax Considerations for the IRA Assured Payment Option and IRA APO Plus
Although the Life Contingent Annuity does not have a Cash Value, it will be
assigned a value for tax purposes which will generally change each year. This
value must be taken into account when determining the amount of required
minimum distributions from your IRA even though the Life Contingent Annuity may
not be providing a source of funds to satisfy such required minimum
distribution. Accordingly, before you apply any IRA funds under the IRA Assured
Payment Option or IRA APO Plus or terminate such Options, you should be aware
of the tax considerations discussed below. Consult with your tax adviser to
determine the impact of electing the IRA Assured Payment Option and IRA APO
Plus in view of your own particular situation.
When funds have been allocated to the Life Contingent Annuity, you will
generally be required to determine your required minimum distribution by
annually recalculating your life expectancy. The IRA Assured Payment Option and
IRA APO Plus will not be available if you have previously made a different
election. Recalculation is no longer required once the only payments you or
your spouse receive are under the Life Contingent Annuity.
If prior to the date payments are to start under the Life Contingent Annuity,
you surrender your Certificate, or withdraw any remaining Annuity Account
Value, it may be necessary for you to satisfy your required minimum
distribution by accelerating the start date of payments for your Life
Contingent Annuity, or to the extent available, take distributions from other
IRA funds you may have. Alternatively you may convert your IRA Life Contingent
Annuity under the IRA Rollover to a non-qualifed Life Contingent Annuity. This
would be viewed as a distribution of the value of the Life Contingent Annuity
from the IRA, and therefore, would be a taxable event. However, since the Life
Contingent Annuity would no longer be part of an IRA, its value would not have
to be taken into account in determining future required minimum distributions.
If you have elected a Joint and Survivor form of the Life Contingent Annuity,
the joint Annuitant must be your spouse. You must determine your required
minimum distribution by annually recalculating both your life expectancy and
your spouse's life expectancy. The IRA Assured Payment Option and IRA APO Plus
will not be available if you have previously made a different election.
Recalculation is no longer required once the only payments you or your spouse
receive are under the Life Contingent Annuity. The value of such an annuity
will change in the event of your death or the death of your spouse. For this
reason, it is important that we be informed if you or your spouse dies before
the Life Contingent Annuity has started payments so that a lower valuation can
be made. Otherwise a higher tax value may result in an overstatement of the
amount that would be necessary to satisfy your required minimum distribution
amount.
Allocations of funds to the Life Contingent Annuity may prevent the
Certificate from later receiving "conduit" IRA treatment. See "Tax-Free
Transfers and Rollovers" above.
Prohibited Transaction
An IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the tax year in which
the event occurred. If this happens, the individual must include in Federal
gross income for that year an amount equal to the fair market value of the IRA
Certificate as of the first day of that tax year, less the amount of any
nondeductible contributions not previously withdrawn. Also, the early
distribution penalty tax of 10% will apply if the individual has not reached
age 59 1/2 before the first day of that tax year. See "Penalty Tax on Early
Distributions" below.
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PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of IRA distributions will be subject to a 10% penalty tax
unless the distribution is made (1) on or after your death, (2) because you
have become disabled, (3) on or after the date when you reach age 59 1/2, or
(4) in accordance with the exception outlined below if you are under 59 1/2.
A payout over your life or life expectancy (or joint and survivor lives or life
expectancies), which is part of a series of substantially equal periodic
payments made at least annually, is also not subject to penalty tax. To permit
you to meet this exception, Equitable Life has two options: Substantially Equal
Payment Withdrawals and the IRA Assured Payment Option with level payments,
both of which are described in Part 6. If you are a Rollover IRA Certificate
Owner who will be under age 59 1/2 as of the date the first payment is expected
to be received and you choose either option, Equitable Life will calculate the
substantially equal annual payments under a method we will select based on
guidelines issued by the IRS (currently contained in IRS Notice 89-25, Question
and Answer 12). Although Substantially Equal Payment Withdrawals and IRA
Assured Payment Option level payments are not subject to the 10% penalty tax,
they are taxable as discussed in "Distributions from IRA Certificates," above.
Once Substantially Equal Payment Withdrawals or IRA Assured Payment Option
level payments begin, the distributions should not be stopped or changed until
the later of your attaining age 59 1/2 or five years after the date of the
first distribution, or the penalty tax, including an interest charge for the
prior penalty avoidance, may apply to all withdrawals. Also, it is possible
that the IRS could view any additional withdrawal or payment you take from your
Certificate as changing your pattern of Substantially Equal Payment Withdrawals
or IRA Assured Payment Option payments for purposes of determining whether the
penalty applies.
Where a taxpayer under age 59 1/2 purchases an individual retirement annuity
contract calling for substantially equal periodic payments during a fixed
period, continuing afterwards under a joint life contingent annuity with a
reduced payment to the survivor (e.g., a joint and 50% to survivor), the
question might be raised whether payments will not be substantially equal for
the joint lives of the taxpayer and survivor, as the payments will be reduced
at some point. In issuing our information returns, we code the substantially
equal periodic payments from such a contract as eligible for an exception from
the early distribution penalty. We believe that any change in payments to the
survivor would come within the statutory provision covering change of payments
on account of death. As there is no direct authority on this point, however, if
you are under age 59 1/2, you should discuss this item with your own tax
adviser when electing a reduced survivorship option.
TAX PENALTY FOR INSUFFICIENT
DISTRIBUTIONS
Failure to make required distributions discussed above in "Required Minimum
Distributions" may cause the disqualification of the IRA. Disqualification may
result in current taxation of your entire benefit. In addition a 50% penalty
tax may be imposed on the difference between the required distribution amount
and the amount actually distributed, if any.
We do not automatically make distributions from a Certificate before the
Annuity Commencement Date unless a request has been made. It is your
responsibility to comply with the minimum distribution rules. We will notify
you when our records show that your age 70 1/2 is approaching. If you do not
select a method, we will assume you are taking your minimum distribution from
another IRA that you maintain. You should consult with your tax adviser
concerning these rules and their proper application to your situation.
TAX PENALTY FOR EXCESS DISTRIBUTIONS OR ACCUMULATION
A 15% excise tax applies to an individual's aggregate excess distributions from
all tax-favored retirement plans (including IRAs). The excise tax is in
addition to the ordinary income tax due but is reduced by the amount (if any)
of the early distribution penalty tax imposed by the Code. The aggregate
distributions in any year will be subject to excise tax if they exceed an
indexed amount ($155,000 in 1996).
In addition, in certain cases the estate tax imposed on a deceased individual's
estate will be increased if the accumulated value of the individual's interest
in qualified annuities and tax favored retirement plans is excessive.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax from IRA
distributions, unless the recipient elects not to be subject to income tax
withholding. The rate of withholding will depend on the type of distribution
and, in certain cases, the amount of the distribution. Special withholding
rules apply to foreign recipients and United States citizens residing outside
the United States. If a recipient does not
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have sufficient income tax withheld or does not make sufficient estimated
income tax payments, however, the recipient may incur penalties under the
estimated income tax rules. Recipients should consult their tax advisers to
determine whether they should elect out of withholding. Requests not to
withhold Federal income tax must be made in writing prior to receiving benefits
under the Certificate. Our Processing Office will provide forms for this
purpose. No election out of withholding is valid unless the recipient provides
us with the correct taxpayer identification number and a United States
residence address.
Certain states have indicated that income tax withholding will apply to
payments made from the Certificate to residents. In some states, a recipient
may elect out of state withholding. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. If
you need more information concerning a particular state or any required forms,
call our Processing Office at the toll-free number and consult your tax
adviser.
Periodic payments are generally subject to wage-bracket type withholding (as if
such payments were payments of wages by an employer to an employee) unless the
recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and claiming
three withholding exemptions. There is an annual threshold of taxable income
from periodic annuity payments which is exempt from withholding based on this
assumption. For 1996, a recipient of periodic payments (e.g., monthly or annual
payments) which total less than a $14,075 taxable amount will generally be
exempt from Federal income tax withholding, unless the recipient specifies a
different choice of withholding exemptions. A withholding election may be
revoked at any time and remains effective until revoked. If a recipient fails
to provide a correct taxpayer identification number, withholding is made as if
the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally be
subject to withholding at a flat 10% rate. A recipient who provides a United
States residence address and a correct taxpayer identification number will
generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make withholding
elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than the Certificate Owner, a Federal generation skipping
tax may be payable with respect to the benefit at rates similar to the maximum
estate tax rate in effect at the time. The generation skipping tax provisions
generally apply to transfers which would also be subject to the gift and estate
tax rules. Individuals are generally allowed an aggregate generation skipping
tax exemption of $1 million. Because these rules are complex, you should
consult with your tax adviser for specific information, especially where
benefits are passing to younger generations, as opposed to a spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account
for taxes. Equitable Life can set up reserves for such taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers among the Investment Funds or between the Guaranteed Period Account
and one or more Investment Funds are not taxable.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities and individual retirement arrangements. In addition, the
Treasury Department may amend existing regulations, issue new regulations, or
adopt new interpretations of existing laws. State tax laws or, if you are not a
United States resident, foreign tax laws, may affect the tax consequences to
you or the beneficiary. These laws may change from time to time without notice
and, as a result, the tax consequences may be altered. There is no way of
predicting whether, when or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
49
<PAGE>
- -------------------------------------------------------------------------------
PART 10: INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life at December 31, 1995 and 1994 and for each of the
three years in the period ended December 31, 1995 included in Equitable Life's
Annual Report on Form 10-K, incorporated by reference in the prospectus, have
been examined by Price Waterhouse LLP, independent accountants, whose reports
thereon are incorporated herein by reference. Such consolidated financial
statements and consolidated financial statement schedules have been
incorporated herein by reference in reliance upon the reports of Price
Waterhouse LLP given upon their authority as experts in accounting and
auditing.
50
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- -------------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined and
how it would be applied to a withdrawal, assuming that $100,000 were allocated
on February 15, 1997 to a Guarantee Period with an Expiration Date of February
15, 2006 at a Guaranteed Rate of 7.00% resulting in a Maturity Value at the
Expiration Date of $183,846, and further assuming that a withdrawal of $50,000
were made on February 15, 2001.
ASSUMED
GUARANTEED RATE ON FEBRUARY 15, 2001
------------------------------------
5.00% 9.00%
---------- ----------
As of February 15, 2001 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value .................. $144,048 $119,487
(2) Guaranteed Period Amount ............... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ...... 12,968 (11,593)
On February 15, 2001 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000 / (1)] $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)] ........... 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ..... 85,581 76,229
(7) Maturity Value ......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value .................. 94,048 69,487
You should note that under this example if a withdrawal is made when rates have
increased (from 7.00% to 9.00% in the example), a portion of a negative market
value adjustment is realized. On the other hand, if a withdrawal is made when
rates have decreased (from 7.00% to 5.00% in the example), a portion of a
positive market value adjustment is realized.
51
<PAGE>
APPENDIX II: GUARANTEED MINIMUM DEATH BENEFIT (GMDB) EXAMPLE
- -----------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB (see "GMDB" in Part 5); and
(2) the death benefit provided with respect to the Guaranteed Period
Account (see "Death Benefit Amount" in Part 4).
The following is an example illustrating the calculation of the GMDB. Assuming
$100,000 is allocated to the Investment Funds (with no allocation to the Money
Market Fund), no subsequent contributions, no transfers and no withdrawals, the
GMDB for an Annuitant age 45 would be calculated as follows:
END OF
CONTRACT ANNUITY NON-NEW YORK NEW YORK
YEAR ACCOUNT VALUE GMDB(1) GMDB
---- --------------- ------- ----
1 $105,000 $106,000 $105,000(2)
2 $108,675 $112,360 $108,675(2)
3 $124,976 $119,102 $119,102(3)
4 $135,912 $126,248 $126,248(3)
5 $149,503 $133,823 $133,823(3)
6 $149,503 $141,852 $141,852(3)
7 $161,463 $150,363 $161,463(3)
8 $161,463 $159,385 $161,463(2)
The Annuity Account Values for Contract Years 1 through 8 are determined based
on hypothetical rates of return of 5.00%, 3.50%, 15.00%, 8.75%, 10.00%, 0.00%,
8.00% and 0.00%, respectively.
NON-NEW YORK
(1) For Contract Years 1 through 8, the GMDB equals the initial contribution
increased by 6%.
NEW YORK
(2) At the end of Contract Years 1 and 2, and again at the end of Contract
Year 8, the GMDB is equal to the Annuity Account Value.
(3) At the end of Contract Years 3 through 6, the GMDB is equal to the
contribution increased by 6% instead of the Annuity Account Value, since
the GMDB cannot be greater than this amount. However, at the end of the
seventh Contract Year the GMDB is equal to the Annuity Account Value of
$161,463 even though it is greater than the contribution increased at 6%
($150,363) because the cap does not apply on the seventh Processing Date.
52
<PAGE>
APPENDIX III: GMIB EXAMPLES
- -----------------------------------------------------------------------------
The GMIB is equal to:
(A) the greater of
(i) the Annuity Account Value in the Investment Funds, and
(ii) an amount equal to the GMDB (reduced by any remaining withdrawal
charges); divided by
(B) the guaranteed maximum annuity purchase rates.
The examples below assume a male age 60 has purchased the Rollover IRA with an
initial contribution of $100,000 that is allocated 100% to the Investment Funds
(excluding the Money Market Fund). The GMDB in the 10th Contract Year is
$179,085 at 6% interest. Assuming hypothetical rates of return (after deduction
of charges) in the Investment Funds of 0% in Example 1 and 8% in Example 2
during the 10 Contract Years, the GMIB in the 10th Contract Year (assuming
level payment under the IRA Assured Payment Option) would be as follows:
EXAMPLE 1 EXAMPLE 2
----------- -----------
(1) Hypothetical Rate of Return ....... 0% 8%
(2) Annuity Account Value as of the
Contract Date ...................... $100,000 $100,000
(3) The greater of (i) the GMDB and
(ii) the Annuity Account Value as
of the 10th Contract Date
anniversary ........................ $ 79,085 $215,892
(4) Guaranteed Maximum Annuity Purchase
Rates for level payments under the
IRA Assured Payment Option ......... $ 14.73 $ 14.73
(5) GMIB as of 10th Contract Date
anniversary ((3) / (4)) ............ $ 12,160 $ 14,659
In Example 1, the GMDB which is higher than the Annuity Account Value would
provide a GMIB of $12,160. In Example 2, the Annuity Account Value, which at
this point is higher than the GMDB, would provide a GMIB of $14,659.
The rates of return discussed above are for illustrative purposes only and are
not intended to represent an expected or guaranteed rate of return. Your
investment results will vary. The level of GMIB under the IRA Assured Payment
Option will also depend on the guaranteed maximum annuity purchase rates as of
the Transaction Date and the type of payments selected. The examples assume no
transfers or withdrawals, which would affect the GMDB and, thus, the GMIB.
53
<PAGE>
APPENDIX IV: EXAMPLE OF PAYMENTS UNDER THE IRA ASSURED PAYMENT
OPTION AND IRA APO PLUS
- -------------------------------------------------------------------------------
The second column in the chart below illustrates the payments for a male age 70
who purchased the IRA Assured Payment Option on October 1, 1996 with a single
contribution of $100,000, with increasing annual payments. The payments are to
commence on February 15, 1997. It assumes that the fixed period is 15 years and
that the Life Contingent Annuity will provide payments on a Single Life basis.
Based on Guaranteed Rates for the Guarantee Periods and the current purchase
rate for the Life Contingent Annuity, on October 1, 1996, the initial payment
would be $7,048.32 and would increase in each three year period to a final
payment of $10,319.45. The first payment under the Life Contingent Annuity
would be $11,351.39.
Alternatively as shown in the third and fourth columns, this individual could
purchase IRA APO Plus with the same $100,000 contribution, with the same fixed
period and the Life Contingent Annuity on a Single Life basis. Based on
Guaranteed Rates for the Guarantee Periods and the current purchase rate for
the Life Contingent Annuity, on October 1, 1996, the same initial payment of
$7,048.32 would be purchased under IRA APO Plus. However, unlike the payment
under the IRA Assured Payment Option that will increase every three years, this
initial payment under IRA APO Plus is not guaranteed to increase. Therefore,
only $79,640.09 is needed to purchase the initial payment stream, and the
remaining $20,359.91 is invested in the Investment Funds according to the
Certificate Owner's instructions. Any future increase in payments under IRA APO
Plus will depend on the investment performance in the Investment Funds.
Assuming hypothetical average annual rates of return of 0% and 8% (after
deduction of charges) for the Investment Funds, the Annuity Account Value in
the Investment Funds would grow to $20,359.91 and $25,647.63 respectively after
three years. A portion of this amount is used to purchase the increase in the
payments at the beginning of the fourth year. The remainder will stay in the
Investment Funds to be drawn upon for the purchase of increases in payments at
the end of each third year thereafter during the fixed period and at the end of
the fixed period under the Life Contingent Annuity. Based on Guaranteed Rates
for the Guarantee Periods and purchase rates for the Life Contingent Annuity as
of October 1, 1996, the third and fourth columns illustrate the increasing
payments that would be purchased under IRA APO Plus assuming 0% and 8% rates of
return respectively.
Under both options, while the Certificate Owner is living payments increase
annually after the 16th year under the Life Contingent Annuity based on the
increase, if any, in the Consumer Price Index, but in no event greater than 3%
per year.
ANNUAL PAYMENTS
ILLUSTRATIVE ILLUSTRATIVE
GUARANTEED INCREASING PAYMENTS PAYMENTS PAYMENTS
UNDER THE UNDER UNDER
YEARS IRA ASSURED PAYMENT OPTION IRA APO PLUS AT 0% IRA APO PLUS AT 8%
- ------- ------------------------------ ------------------ ------------------
1-3 $ 7,048.32 $7,048.32 $ 7,048.32
4-6 7,753.15 8,336.74 8,800.85
7-9 8,528.47 8,336.74 8,817.96
10-12 9,381.31 8,529.34 9,791.83
13-15 10,319.45 8,529.34 9,791.83
16 11,351.39 8,723.31 10,919.35
As described above, a portion of the illustrated contribution is applied to the
Life Contingent Annuity. This amount will generally be larger under the IRA
Assured Payment Option than under IRA APO Plus, and conversely a smaller
portion of the contribution will be allocated to Guarantee Periods under the
former than the latter. In this illustration, $82,069.88 is allocated under the
IRA Assured Payment Option to the Guarantee Periods and under IRA APO Plus,
$89,906.43 is allocated to the Guarantee Periods and the Investment Funds. The
balance of the $100,000 ($17,930.12 and $10,093.57, respectively) is applied to
the Life Contingent Annuity.
The rates of return of 0% and 8% are for illustrative purposes only and are not
intended to represent an expected or guaranteed rate of return. Your investment
results will vary. Payments will also depend on the Guaranteed Rates and Life
Contingent Annuity purchase rates in effect as of the Transaction Date. It is
assumed that no Lump Sum Withdrawals are taken.
54
<PAGE>
APPENDIX V: IRS TAX DEDUCTION TABLE
- -------------------------------------------------------------------------------
If your Maximum Permissible Dollar Deduction is $2,000, use this table to
estimate the amount of your contribution which will be deductible.
<TABLE>
<CAPTION>
EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION
- ------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 $2,000 $2,550 $1,490 $5,050 $990 $ 7,550 $490
50 1,990 2,600 1,480 5,100 980 7,600 480
100 1,980 2,650 1,470 5,150 970 7,650 470
150 1,970 2,700 1,460 5,200 960 7,700 460
200 1,960 2,750 1,450 5,250 950 7,750 450
250 1,950 2,800 1,440 5,300 940 7,800 440
300 1,940 2,850 1,430 5,350 930 7,850 430
350 1,930 2,900 1,420 5,400 920 7,900 420
400 1,920 2,950 1,410 5,450 910 7,950 410
450 1,910 3,000 1,400 5,500 900 8,000 400
500 1,900 3,050 1,390 5,550 890 8,050 390
550 1,890 3,100 1,380 5,600 880 8,100 380
600 1,880 3,150 1,370 5,650 870 8,150 370
650 1,870 3,200 1,360 5,700 860 8,200 360
700 1,860 3,250 1,350 5,750 850 8,250 350
750 1,850 3,300 1,340 5,800 840 8,300 340
800 1,840 3,350 1,330 5,850 830 8,350 330
850 1,830 3,400 1,320 5,900 820 8,400 320
900 1,820 3,450 1,310 5,950 810 8,450 310
950 1,810 3,500 1,300 6,000 800 8,500 300
1,000 1,800 3,550 1,290 6,050 790 8,550 290
1,050 1,790 3,600 1,280 6,100 780 8,600 280
1,100 1,780 3,650 1,270 6,150 770 8,650 270
1,150 1,770 3,700 1,260 6,200 760 8,700 260
1,200 1,760 3,750 1,250 6,250 750 8,750 250
1,250 1,750 3,800 1,240 6,300 740 8,800 240
1,300 1,740 3,850 1,230 6,350 730 8,850 230
1,350 1,730 3,900 1,220 6,400 720 8,900 220
1,400 1,720 3,950 1,210 6,450 710 8,950 210
1,450 1,710 4,000 1,200 6,500 700 9,000 200
1,500 1,700 4,050 1,190 6,550 690 9,050 200
1,550 1,690 4,100 1,180 6,600 680 9,100 200
1,600 1,680 4,150 1,170 6,650 670 9,150 200
1,650 1,670 4,200 1,160 6,700 660 9,200 200
1,700 1,660 4,250 1,150 6,750 650 9,250 200
1,750 1,650 4,300 1,140 6,800 640 9,300 200
1,800 1,640 4,350 1,130 6,850 630 9,350 200
1,850 1,630 4,400 1,120 6,900 620 9,400 200
1,900 1,620 4,450 1,110 6,950 610 9,450 200
1,950 1,610 4,500 1,100 7,000 600 9,500 200
2,000 1,600 4,550 1,090 7,050 590 9,550 200
2,050 1,590 4,600 1,080 7,100 580 9,600 200
2,100 1,580 4,650 1,070 7,150 570 9,650 200
2,150 1,570 4,700 1,060 7,200 560 9,700 200
2,200 1,560 4,750 1,050 7,250 550 9,750 200
2,250 1,550 4,800 1,040 7,300 540 9,800 200
2,300 1,540 4,850 1,030 7,350 530 9,850 200
2,350 1,530 4,900 1,020 7,400 520 9,900 200
2,400 1,520 4,950 1,010 7,450 510 9,950 200
2,450 1,510 5,000 1,000 7,500 500 10,000 0
2,500 1,500
</TABLE>
- ------------
Excess AGI = Your AGI minus your THRESHOLD LEVEL:
If you are single, your Threshold Level is $25,000.
If you are married, your Threshold Level is $40,000.
If you are married and file a separate tax return, your Excess
AGI = your AGI.
55
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
PAGE
----
Part 1: Minimum Distribution Withdrawals 2
Part 2: Accumulation Unit Values 2
Part 3: Annuity Unit Values 2
Part 4: Custodian and Independent Accountants 3
Part 5: Money Market Fund Yield Information 3
Part 6: Long-Term Market Trends 4
Part 7: Financial Statements 6
HOW TO OBTAIN A ROLLOVER IRA STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me a Rollover IRA SAI:
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
56
<PAGE>
SUPPLEMENT DATED MAY 1, 1997 TO
ACCUMULATOR PROSPECTUS, DATED OCTOBER 16, 1996
- -----------------------------------------------------------------------------
This supplement dated May 1, 1997, updates certain information in the
Accumulator prospectus of the Equitable Life Assurance Society of the United
States (EQUITABLE LIFE), dated October 16, 1996. You should read this
supplement in conjunction with the prospectus. You should keep the supplement
and the prospectus for future reference. We have filed with the Securities and
Exchange Commission (SEC) our statement of additional information (SAI) dated
May 1, 1997. If you have previously received, but do not presently have, a copy
of the prospectus, you may obtain an additional copy of the prospectus, as well
as a copy of the SAI, from us, free of charge, if you write to Equitable Life,
Income Management Group, P.O. Box 1547, Secaucus, NJ 07096-1547, call (800)
789-7771 or if you only need a copy of the SAI, you may mail in the SAI request
form located at the end of the supplement. The SAI has been incorporated by
reference into this supplement.
In the supplement, each section of the prospectus in which a change has been
made is identified and the number of each prospectus page on which a change
occurs is also noted. Special terms used in the prospectus have the same
meaning in the supplement unless otherwise noted.
ON THE COVER PAGE OF THE PROSPECTUS, THE THIRD (INCLUDING THE CHART OF
INVESTMENT OPTIONS) AND FOURTH PARAGRAPHS ARE REPLACED BY THE FOLLOWING
PARAGRAPHS:
The Certificates offer investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 12
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the
GUARANTEED PERIOD ACCOUNT.
We invest each Investment Fund in Class IB shares of a corresponding
portfolio (PORTFOLIO) of The Hudson River Trust (HR TRUST) and EQ Advisors
Trust (EQ TRUST), mutual funds whose shares are purchased by separate
accounts of insurance companies. The prospectuses for HR Trust and EQ Trust,
both of which accompany this supplement, describe the investment objectives,
policies and risks of the Portfolios.
THE INVESTMENT FUNDS INVESTING IN CORRESPONDING PORTFOLIOS OF EQ TRUST ARE:
EQ/Putnam Growth & Income Value, EQ/Putnam Investors Growth, EQ/Putnam
International Equity, MFS Research and MFS Emerging Growth Companies.
THE INVESTMENT FUNDS INVESTING IN CORRESPONDING PORTFOLIOS OF HR TRUST
ARE: Alliance Money Market, Alliance High Yield, Alliance Common Stock,
Alliance Aggressive Stock, Alliance Growth Investors, Alliance Global and
Alliance Small Cap Growth.
THE FOLLOWING SENTENCE IS ADDED AT THE END OF THE FIFTH PARAGRAPH.
The Guarantee Periods currently available have Expiration Dates of February
15 in years 1998 through 2007.
THROUGHOUT THE PROSPECTUS ANY REFERENCE TO THE INVESTMENT FUNDS AND GUARANTEE
PERIODS REFER TO THE INVESTMENT FUNDS AND GUARANTEE PERIODS SET FORTH ABOVE.
- -----------------------------------------------------------------------------
Copyright 1997
The Equitable Life Assurance Society of the
United States, New York, New York 10104.
All rights reserved.
<PAGE>
THROUGHOUT THE PROSPECTUS (EXCEPT WHERE OTHERWISE NOTED) THE REFERENCE TO
"TRUST" IS REPLACED BY "HR TRUST AND EQ TRUST."
ON PAGE 2, UNDER THE HEADING "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE"
REPLACE THE ENTIRE SECTION WITH THE FOLLOWING SECTION:
Equitable Life's Annual Report on Form 10-K for the year ended December 31,
1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(EXCHANGE ACT) after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated
by reference in the prospectus and the supplement and to be a part hereof
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated herein by reference shall
be deemed to be modified or superseded for purposes of the prospectus and the
supplement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified and
superseded, to constitute a part of the prospectus and the supplement.
Equitable Life files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically
pursuant to EDGAR under CIK No. 0000727920. The SEC maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. The address of
the site is http://www.sec.gov.
Equitable Life will provide without charge to each person to whom a
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
ON PAGE 4, UNDER THE HEADING "GENERAL TERMS"
ADD THE FOLLOWING DEFINITIONS:
EQ TRUST--EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants, Inc.
(EQ Financial) is the manager of EQ Trust and has appointed advisers for each
of the Portfolios.
HR TRUST--The Hudson River Trust, a mutual fund in which the assets of
separate accounts of insurance companies are invested. Alliance Capital
Management L.P. (Alliance) is the adviser to HR Trust.
DELETE THE DEFINITION FOR "TRUST."
2
<PAGE>
ON PAGES 5 AND 6, REPLACE THE "FEE TABLE" SECTION WITH THE FOLLOWING SECTION:
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate so
that you may compare them on the same basis with other similar products. The
table reflects both the charges of the Separate Account and the expenses of HR
Trust and EQ Trust. Charges for applicable taxes such as state or local premium
taxes may also apply. For a complete description of the charges under the
Certificate, see "Part 6: Deductions and Charges." For a complete description
of each trust's charges and expenses, see the prospectuses for the HR Trust and
EQ Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
<TABLE>
<CAPTION>
CONTRACT
YEAR
<S> <C> <C>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted upon surrender or 1 ........ 7.00%
for certain withdrawals. The applicable withdrawal charge percentage is 2 ........ 6.00
determined by the Contract Year in which the withdrawal is made or the 3 ........ 5.00
Certificate is surrendered beginning with "Contract Year 1" with respect to each 4 ........ 4.00
contribution withdrawal or surrendered. For each contribution, the Contract Year 5 ........ 3.00
in which we receive that contribution is "Contract Year 1")(1) 6 ........ 2.00
7 ........ 1.00
8+........ 0.00
</TABLE>
<TABLE>
<CAPTION>
COMBINED
GMDB/GMIB GMDB ONLY
BENEFIT BENEFIT
----------- -----------
<S> <C> <C>
GMDB/GMIB CHARGES (percentage deducted annually on each Processing Date
as a percentage of the guaranteed minimum death benefit then in
effect)(2)............................................................... 0.45% 0.20%
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH
INVESTMENT FUND)
<TABLE>
<CAPTION>
<S> <C>
MORTALITY AND EXPENSE RISK CHARGE ...... 0.90%
ASSET BASED ADMINISTRATIVE CHARGE(3) ... 0.30%
-------
TOTAL SEPARATE ACCOUNT ANNUAL
EXPENSES............................... 1.20%
=======
</TABLE>
3
<PAGE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH
PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT TOTAL
MANAGEMENT & OTHER ANNUAL
PORTFOLIOS ADVISORY FEES 12B-1 FEE(4) EXPENSES EXPENSES
- --------------------------------- --------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
EQ TRUST
- --------
EQ/Putnam Growth & Income
Value(5) 0.55% 0.25% 0.05% 0.85%
EQ/Putnam Investors Growth(5) 0.55% 0.25% 0.05% 0.85%
EQ/Putnam International Equity(5) 0.70% 0.25% 0.25% 1.20%
MFS Research(5) 0.55% 0.25% 0.05% 0.85%
MFS Emerging Growth Companies(5) 0.55% 0.25% 0.05% 0.85%
HR TRUST
- --------
Alliance Money Market(6) 0.35% 0.25% 0.04% 0.64%
Alliance High Yield(6) 0.60% 0.25% 0.06% 0.91%
Alliance Common Stock(6) 0.38% 0.25% 0.03% 0.66%
Alliance Aggressive Stock(6) 0.55% 0.25% 0.03% 0.83%
Alliance Growth Investors(6) 0.53% 0.25% 0.06% 0.84%
Alliance Global(6) 0.65% 0.25% 0.08% 0.98%
Alliance Small Cap Growth(6) 0.90% 0.25% 0.10% 1.25%
</TABLE>
Notes:
(1) Deducted upon a withdrawal with respect to amounts in excess of the
15% free corridor amount, and upon a surrender. See "Part 6:
Deductions and Charges," "Withdrawal Charge." We reserve the right to
impose an administrative charge of the lesser of $25 and 2.0% of the
amount withdrawn for each Lump Sum Withdrawal after the fifth in a
Contract Year. See "Withdrawal Processing Charge" also in Part 6.
(2) The guaranteed minimum death benefit (GMDB) is described under
"Death Benefit," "GMDB" and the guaranteed minimum income benefit
(GMIB) is described under "GMIB" both of which are in Part 5. See
"Part 6: Deductions and Charges," "Charges for Combined GMDB/GMIB
Benefit" and "Charges for GMDB Only Benefit."
(3) We reserve the right to increase this charge to an annual rate of
0.35%, the maximum permitted under the Certificates.
(4) The Class IB shares of HR Trust and EQ Trust are subject to fees
imposed under distribution plans (herein, the "Rule 12b-1 Plans")
adopted by HR Trust and EQ Trust pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended. The Rule 12b-1 Plans
provide that HR Trust and EQ Trust, on behalf of each Portfolio, may
pay annually up to 0.25% of the average daily net assets of a
Portfolio attributable to its Class IB shares in respect of activities
primarily intended to result in the sale of the Class IB shares. The
12b-1 fee may be increased only by action of the Board of Trustees of
HR Trust and EQ Trust up to a maximum of 0.50% per annum.
(5) "Other Expenses" shown are based on estimated amounts (after expense
waiver or limitation) for the current fiscal year, as EQ Trust
commenced operations on May 1, 1997. The maximum investment advisory
fees cannot be increased without a vote of that Portfolio's
shareholders. The other direct operating expenses will fluctuate from
year to year depending on actual expenses, but pursuant to agreement,
cannot together with other fees specified exceed the total annual
expenses specified. See "EQ Trust Charges to Portfolios" in Part 6.
(6) The amounts shown for the Portfolios of HR Trust (other than Alliance
Small Cap Growth) have been restated to reflect advisory fees which
went into effect as of May 1, 1997. "Other Expenses" are based on the
average daily net assets in each Portfolio for the year ended December
31, 1996. The amounts shown for the Alliance Small Cap Growth
Portfolio are estimated for the current fiscal year as this Portfolio
commenced operations on May 1, 1997. The investment advisory fee for
each Portfolio may vary from year to year depending upon the average
daily net assets of the respective Portfolio of HR Trust. The maximum
investment advisory fees, however, cannot be increased without a vote
of that Portfolio shareholders. The other direct operating expenses
will also fluctuate from year to year depending on actual expenses.
See "HR Trust Charges to Portfolios" in Part 6.
4
<PAGE>
EXAMPLES
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined GMDB/GMIB Benefit and under the GMDB Only Benefit
in the two situations noted below assuming a $1,000 contribution invested in
one of the Investment Funds listed, and a 5% annual return on assets.(1)
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be greater
or less than those shown. Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
COMBINED GMDB/GMIB BENEFIT ELECTION
<TABLE>
<CAPTION>
IF YOU DO NOT
SURRENDER YOUR
CERTIFICATE AT THE
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF END OF EACH PERIOD
EACH PERIOD SHOWN, THE EXPENSES WOULD BE: SHOWN, THE
EXPENSES WOULD BE:
3
1 YEAR 3 YEARS 1 YEAR YEARS
----- ------ ----- ------
<S> <C> <C> <C> <C>
EQ TRUST
- --------
EQ/Putnam Growth & Income Value $90.75 $123.59 $25.52 $78.95
EQ/Putnam Investors Growth 90.75 123.59 25.52 78.95
EQ/Putnam International Equity 94.23 134.03 29.00 89.39
MFS Research 90.75 123.59 25.52 78.95
MFS Emerging Growth Companies 90.75 123.59 25.52 78.95
HR TRUST
- --------
Alliance Money Market $88.66 $117.29 $23.43 $72.65
Alliance High Yield 91.35 125.39 26.12 80.75
Alliance Common Stock 88.86 117.89 23.63 73.26
Alliance Aggressive Stock 90.55 122.99 25.32 78.35
Alliance Growth Investors 90.65 123.29 25.42 78.65
Alliance Global 92.04 127.48 26.81 82.83
Alliance Small Cap Growth 94.73 135.52 29.50 90.87
</TABLE>
- ------------
* See footnote on next page.
5
<PAGE>
GMDB ONLY BENEFIT ELECTION
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF AT THE END OF EACH PERIOD SHOWN, THE
EACH PERIOD SHOWN, THE EXPENSES WOULD BE: EXPENSES WOULD BE:
1 YEAR 3 YEARS 1 YEAR 3 YEARS
<S> <C> <C> <C> <C>
-------- --------- -------- ---------
EQ TRUST
- --------
EQ/Putnam Growth & Income
Value $90.75 $118.31 $22.87 $70.68
EQ/Putnam Investors Growth 90.75 118.31 22.87 70.68
EQ/Putnam International Equity 94.23 128.77 26.35 81.15
MFS Research 90.75 118.31 22.87 70.68
MFS Emerging Growth Companies 90.75 118.31 22.87 70.68
HR TRUST
- --------
Alliance Money Market $88.66 $111.98 $20.78 $64.37
Alliance High Yield 91.35 120.11 23.47 72.48
Alliance Common Stock 88.86 112.59 20.98 64.97
Alliance Aggressive Stock 90.55 117.70 22.67 70.08
Alliance Growth Investors 90.65 118.01 22.77 70.38
Alliance Global 92.04 122.20 24.16 74.57
Alliance Small Cap Growth 94.73 130.26 26.85 82.64
</TABLE>
- ------------
Notes:
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity at the end of any of the periods shown in the
examples. If the amount applied to purchase an annuity is less than $2,000,
or the initial payment is less than $20 we may pay the amount to the payee
in a single sum instead of as payments under an annuity form. See "Income
Annuity Options" in Part 5. The examples do not reflect charges for
applicable taxes such as state or local premium taxes that may also be
deducted in certain jurisdictions.
6
<PAGE>
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
Equitable Life commenced the offering of the Certificates on October 16,
1996. The following table shows the Accumulation Unit Values, as of October
16, 1996 and the last Business Day for the periods shown. There are no
Accumulation Unit Values for Alliance Small Cap Growth, and the Investment
Funds investing in Class IB shares of EQ Trust Portfolios as such Investment
Funds were not available prior to the date of this supplement.
<TABLE>
<CAPTION>
LAST BUSINESS DAY OF
---------------------------------
OCTOBER 16, 1996 DECEMBER 1996 MARCH 1997
----------------- --------------- ------------
<S> <C> <C> <C>
Alliance Money Market 24.472785 24.675315 24.891695
Alliance High Yield 25.466366 26.090042 26.137191
Alliance Common Stock 143.741180 151.232750 145.273200
Alliance Aggressive Stock 65.166142 65.534670 63.837949
Alliance Growth Investors 25.496401 26.148649 25.584199
Alliance Global 24.381648 25.118937 24.218751
</TABLE>
ON PAGE 7, UNDER THE HEADING "TRANSFERS," DELETE THE SECOND SENTENCE.
ON PAGE 10 UNDER THE HEADING "EQUITABLE LIFE."
REPLACE THE THIRD SENTENCE OF THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Our home office is located at 1290 Avenue of the Americas, New York, New York
10104.
REPLACE THE SECOND AND THIRD PARAGRAPHS WITH THE FOLLOWING PARAGRAPHS:
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996, AXA beneficially owned
63.8% of the outstanding shares of common stock of the Holding Company
(assuming conversion of convertible preferred stock held by AXA). Under its
investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $239.8 billion of assets as of December 31, 1996.
ON PAGES 10 AND 11 IN THE HEADINGS "THE TRUST" AND "THE TRUST'S INVESTMENT
ADVISOR" REPLACE "THE TRUST" WITH "HR TRUST."
ON PAGE 11, UNDER THE HEADING "THE TRUST'S INVESTMENT ADVISOR" REPLACE THE
THIRD SENTENCE OF THE FIRST PARAGRAPH WITH THE FOLLOWING SENTENCE:
On December 31, 1996, Alliance was managing approximately $182.8 billion in
assets.
DELETE THE SECOND PARAGRAPH.
ON PAGE 11, INSERT THE FOLLOWING SECTIONS AFTER THE LAST PARAGRAPH:
EQ TRUST
EQ Trust is an open-end management investment company. As a "series type" of
mutual fund, EQ Trust issues different series of stock, each of which relates
to a different Portfolio of EQ Trust. EQ Trust commenced operations on May 1,
1997. EQ Trust does not impose a sales charge or "load" for buying and
selling it shares. All dividend distributions to EQ Trust are reinvested in
full and fractional shares of the
7
<PAGE>
Portfolio to which they relate. Investment Funds that invest in Portfolios of
EQ Trust purchase Class IB shares of a corresponding Portfolio of EQ Trust.
More detailed information about EQ Trust, its investment objectives, policies
and restrictions, risks, expenses, the Rule 12b-1 Plan relating to the Class
IB shares, and all other aspects of its operations appears in its prospectus
which accompanies this supplement and in its statement of additional
information.
EQ TRUST'S MANAGER AND ADVISERS
EQ Trust is managed by EQ Financial Consultants, Inc. (EQ Financial) which,
subject to supervision and direction of the Trustees of EQ Trust, has overall
responsibility for the general management of EQ Trust. EQ Financial is an
investment adviser registered under the 1940 Act, and a broker-dealer
registered under the Exchange Act. EQ Financial is a Delaware corporation and
an indirect, wholly-owned subsidiary of Equitable Life.
EQ Financial's main office is located at 1290 Avenue of the Americas, New
York, New York 10104.
EQ Financial has entered into investment advisory agreements with Putnam
Investments and Massachusetts Financial Services Company, each of which serve
as advisers to EQ/Putnam and MFS Portfolios, respectively, of EQ Trust.
ON PAGE 12, UNDER THE HEADING "INVESTMENT POLICIES AND OBJECTIVES OF THE
TRUST'S PORTFOLIOS"
ADD THE FOLLOWING SENTENCES TO THE END OF THE FIRST PARAGRAPH:
Set forth below is a summary of the investment policies and objectives of
each Portfolio. This summary is qualified in its entirely by reference to the
prospectus for HR Trust and EQ Trust both of which accompany this supplement.
Please read the prospectuses for each of the trusts carefully before
investing.
DELETE THE DESCRIPTION OF "AGGRESSIVE STOCK" AND INSERT THE FOLLOWING
DESCRIPTIONS:
<TABLE>
<CAPTION>
<S> <C> <C>
Alliance Aggressive Primarily common stocks and other equity-type Long-term growth of
Stock securities issued by quality small and intermediate capital
sized companies with strong growth prospects and in
covered options on those securities.
Alliance Small Cap Primarily U.S. common stocks and other equity type Long-term growth of
Growth securities issued by smaller companies with favorable capital
growth prospects.
</TABLE>
INSERT THE FOLLOWING DESCRIPTIONS AFTER THE DESCRIPTION OF "MONEY MARKET:"
<TABLE>
<CAPTION>
<S> <C> <C>
EQ/Putnam Growth & Primarily common stocks that offer potential for capital Capital growth and,
Income Value growth, consistent with the Portfolios' investment secondarily, current
objective, common stocks that offer potential for current income
income.
EQ/Putnam Investors Primarily common stocks in view of the Portfolio Long-term growth
Investors adviser's belief that equity ownership affords the best of capital and any
Growth opportunity for capital growth over the long term. increased income
that results from
this growth
EQ/Putnam Primarily a diversified portfolio of equity securities of Capital appreciation
International companies organized under the laws of a country other
Equity than the United States.
MFS Research A substantial portion of assets invested in common stock Long-term growth
or securities convertible into common stock of companies of capital and
believed by the Portfolio adviser to possess better than future income
average prospects for long-term growth.
8
<PAGE>
MFS Emerging Growth Primarily (i.e., at lest 80% of its assets uder normal Long-term growth of
Companies circumstances) in common stocks of emerging growth capital
companies that the Portfolio adviser believes are early
in their life cycle but which have the potential to
become major enterprises.
</TABLE>
ON PAGE 13, REPLACE THE FIRST AND SECOND PARAGRAPHS WITH THE FOLLOWING
PARAGRAPHS:
This Part presents performance data for each of the Investment Funds included
in the tables below. The performance data were calculated by two methods. The
first method presented in the tables under "SEC Standardized Performance
Data," reflects all applicable fees and charges, including the Combined
GMDB/GMIB Benefit charge, but not the charges for any applicable taxes such
as premium taxes.
The second method presented in the tables under "Rate of Return Data for
Investment Funds," also reflects all applicable fees and charges, but does
not reflect the withdrawal charge, the Combined GMDB/GMIB Benefit charge or
the charge for tax such as premium taxes. These additional charges would
effectively reduce the rates of return credited to a particular Certificate.
HR Trust Portfolios
The performance data shown for the Investment Funds investing in Class IB
shares of HR Trust Portfolios (other than the Alliance Small Cap Growth
Portfolio which commenced operations on May 1, 1997) are based on the actual
investment results of the Portfolios, and have been adjusted for the fees and
charges applicable under the Certificates. However, the investment results
prior to October 1996, when Class IB Shares were not available, do not
reflect 12b-1 fees, which would effectively reduce such investment
performance.
The performance data for the Alliance Money Market and Alliance Common Stock
Investment Funds that invest in corresponding HR Trust Portfolios, for
periods prior to March 22, 1985, reflect the investment results of two
open-end management separate accounts (the "predecessor separate accounts")
which were reorganized in unit investment trust form. The "Since inception"
figures for these Investment Funds are based on the date of inception of the
predecessor separate accounts. These performance data have been adjusted to
reflect the maximum investment advisory fee payable for the corresponding
Portfolio of HR Trust, as well as an assumed charge of 0.06% for direct
operating expenses.
EQ Trust Portfolios
The Investment Funds of the Separate Account that invest in Class IB shares
of Portfolios of EQ Trust have only recently been established and no
Certificates funded by those Investment Funds have been issued as of the date
of this Supplement. EQ Trust commenced operations on May 1, 1997. Therefore,
no actual historical performance data for any of these Portfolios are
available. In this connection, see the discussion immediately following the
tables below.
ON PAGE 13, REPLACE THE HEADING "PERFORMANCE DATA FOR A CERTIFICATE" WITH
"STANDARDIZED PERFORMANCE DATA."
IN THE FIRST SENTENCE OF THE THIRD PARAGRAPH UNDER THIS HEADING CHANGE THE
DATE FROM "DECEMBER 31, 1995" TO "DECEMBER 31, 1996."
9
<PAGE>
ON PAGES 13 AND 14, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING TABLES
AND FOOTNOTES:
STANDARDIZED PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ------------------------ --------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market (3.00)% 1.84% 2.10% 4.18% 5.38%
Alliance High Yield 14.33 9.63 12.53 -- 9.64
Alliance Common Stock 15.70 14.18 13.58 14.08 13.51
Alliance Aggressive
Stock 13.65 12.60 9.64 16.85 18.30
Alliance Growth
Investors 4.18 8.18 8.59 -- 12.39
Alliance Global 6.15 9.67 11.37 -- 9.20
</TABLE>
STANDARDIZED PERFORMANCE DATA
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1996*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION**
- ------------------------ ------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market $ 970 $1,056 $1,110 $1,506 $ 2,313
Alliance High Yield 1.143 1,318 1,804 -- 2,509
Alliance Common Stock 1,157 1,489 1,890 3,732 14,324
Alliance Aggressive
Stock 1,137 1,428 1,585 4,745 6,352
Alliance Growth
Investors 1,042 1,266 1,510 -- 2,546
Alliance Global 1,062 1,319 1,713 -- 2,412
</TABLE>
- ------------
* The tables reflect charges under a Certificate with the 0.45% GMDB/GMIB
charge.
** The "Since Inception" dates for the Portfolios of HR Trust are as follows:
Alliance Money Market (July 13, 1981); Alliance High Yield (January 2,
1987); Alliance Common Stock (January 13, 1976); Alliance Aggressive Stock
(January 27, 1986); Alliance Growth & Income (October 1, 1993); Alliance
Global (August 27, 1987); and Alliance Small Cap Growth
(May 1, 1997).
ON PAGE 14, INSERT THE FOLLOWING PARAGRAPHS BEFORE THE "RATE OF RETURN DATA FOR
INVESTMENT FUNDS" SECTION:
Additional investment performance information appears in the attached HR
Trust and EQ Trust prospectuses.
The Alliance Small Cap Growth Portfolio of HR Trust commenced operations on
May 1, 1997. Therefore, no actual historical performance data are available.
However, historical performance of a composite of six other advisory accounts
managed by Alliance is described in the attached HR Trust prospectus.
According to that prospectus, these accounts have substantially the same
investment objectives and policies, and are managed in accordance with
essentially the same investment strategies and techniques, as those of the
Alliance Small Cap Growth Portfolio. It should be noted that these accounts
are not subject to certain of the requirements and restrictions to which the
Alliance Small Cap Growth Portfolio is subject and that they are managed for
tax exempt clients of Alliance, who may have different investment goals. The
investment performance information included in the HR Trust prospectus for
all Portfolios other than the Alliance Small Cap Portfolio is based on actual
historical performance.
The investment performance data for HR Trust's Alliance Small Cap Portfolio
and for each of the Portfolios of EQ Trust, contained in the HR Trust and the
EQ Trust prospectuses, are provided by those prospectuses to illustrate the
past performance of each respective Portfolio adviser in managing a
substantially similar investment vehicles as measured against specified
market indices and do not represent the past or future performance of any
Portfolio. None of the performance data contained in the HR Trust and EQ
Trust prospectuses reflects fees and charges imposed under your Certificate,
which fees and charges would reduce such performance figures. Therefore, the
performance data for each of the Portfolios described in the EQ Trust
10
<PAGE>
prospectus and for the Alliance Small Cap Portfolio in the HR Trust
prospectus may be of limited use and are not intended to be a substitute for
actual performance of the corresponding Portfolios, nor are such results an
estimate or guarantee of future performance for these Portfolios.
ON PAGES 15 AND 16, REPLACE THE TABLES AND FOOTNOTES WITH THE FOLLOWING TABLES
AND FOOTNOTES:
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 4.00% 3.75% 3.05% 4.62% 5.82% 6.02%
Lipper Money Market 3.82 3.60 2.93 4.52 5.72 -- 5.89
Benchmark 5.25 5.07 4.37 5.67 6.72 -- 6.97
ALLIANCE HIGH YIELD 21.33 11.35 13.27 -- -- -- 10.07
Lipper High Yield 12.46 7.93 11.47 -- -- -- 9.13
Benchmark 11.06 9.59 12.76 -- -- -- 11.24
ALLIANCE COMMON STOCK 22.70 15.79 14.32 14.43 15.10 14.10% 13.84
Lipper Growth 18.78 14.80 12.39 13.08 14.04 13.60 13.42
Benchmark 22.96 19.66 15.20 15.28 16.79 14.55 14.63
ALLIANCE AGGRESSIVE STOCK 20.65 14.25 10.48 17.17 -- -- 18.73
Lipper Small Company
Growth 16.55 12.70 17.53 16.29 -- -- 16.47
Benchmark 17.85 14.14 14.80 14.29 -- -- 13.98
ALLIANCE GROWTH
INVESTORS 11.18 9.93 9.41 -- -- -- 14.16
Lipper Flexible Portfolio 12.51 9.26 9.30 -- -- -- 9.99
Benchmark 16.94 15.84 13.02 -- -- -- 12.73
ALLIANCE GLOBAL 13.15 11.36 12.12 -- -- -- 10.37
Lipper Global 17.89 8.49 10.29 -- -- -- 3.65
Benchmark 13.48 12.91 10.82 -- -- -- 7.44
</TABLE>
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1996:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-------- --------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 4.00% 11.67% 16.23% 57.14% 133.56% -- 146.83%
Lipper Money Market 3.82 11.18 15.58 55.73 130.46 -- 141.99
Benchmark 5.25 15.99 23.86 73.61 165.31 184.26
ALLIANCE HIGH YIELD 21.33 38.08 86.42 -- -- -- 160.90
Lipper High Yield 12.46 25.77 72.39 -- -- -- 142.30
Benchmark 11.06 31.63 82.29 -- -- -- 190.43
ALLIANCE COMMON STOCK 22.70 55.25 95.27 284.82 724.81 1,299.61% 1,413.57
Lipper Growth 18.78 51.65 80.51 243.70 627.03 1,185.21 1,298.19
Benchmark 22.96 71.34 102.85 314.34 925.25 1.416.26 1,655.74
ALLIANCE AGGRESSIVE STOCK 20.65 49.13 64.58 387.69 -- -- 552.40
Lipper Small Company
Growth 16.55 43.42 142.70 352.31 -- -- 428.32
Benchmark 17.85 48.69 99.38 280.32 -- -- 318.19
ALLIANCE GROWTH
INVESTORS 11.18 32.83 56.79 -- -- -- 161.06
Lipper Flexible Portfolio 12.51 30.84 56.65 -- -- -- 100.79
Benchmark 16.94 55.46 84.42 -- -- -- 138.49
ALLIANCE GLOBAL 13.15 38.11 77.21 -- -- -- 151.34
Lipper Global 17.89 28.45 63.87 -- -- -- 39.73
Benchmark 13.48 43.95 67.12 - -- -- 95.62
</TABLE>
11
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
-------- ------- ------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY
MARKET** 9.53% 7.17% 5.33% 5.35% 6.03% 7.88%
ALLIANCE HIGH
YIELD -- -- -- 3.44 8.42 3.88
ALLIANCE COMMON
STOCK** (3.14) 31.83 15.96 6.15 20.97 24.09
ALLIANCE
AGGRESSIVE
STOCK -- -- 33.77 6.01 (0.08) 41.79
ALLIANCE GROWTH
INVESTORS -- -- -- -- -- 3.52
ALLIANCE GLOBAL -- -- -- (13.63) 9.55 25.22
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
-------- ------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY
MARKET** 6.93% 4.91% 2.32% 1.73% 2.77% 4.48% 4.00%
ALLIANCE HIGH
YIELD (2.31) 22.97 10.96 21.67 (3.95) 18.48 21.33
ALLIANCE COMMON
STOCK** (9.22) 36.23 1.98 23.33 (3.31) 30.87 22.70
ALLIANCE
AGGRESSIVE
STOCK 6.86 84.63 (4.33) 15.35 (4.97) 30.06 20.65
ALLIANCE GROWTH
INVESTORS 9.33 47.12 3.64 13.89 (4.31) 24.86 11.18
ALLIANCE GLOBAL (7.20) 28.99 (1.70) 30.54 3.97 17.39 13.15
</TABLE>
- ------------
* Returns do not reflect the withdrawal charge, the Combined GMDB/GMIB
Benefit charge and any charge for tax such as premium taxes.
** Prior to 1984 the Year-by-Year Rates of Return were:
1976 1977 1978 1979 1980 1981 1982 1983
----- ----- ----- ----- ------ ----- ------ ----
ALLIANCE COMMON
STOCK 8.14% (10.33)% 6.94% 28.28% 48.32% (6.99)% 16.16% 24.60%
ALLIANCE MONEY
MARKET -- -- -- -- -- 5.68 11.67 7.65%
ON PAGE 22, UNDER THE HEADING "TRANSFERS AMONG INVESTMENT OPTIONS," DELETE THE
FIRST BULLETED PARAGRAPH.
ON PAGE 22, UNDER THE HEADING "DOLLAR COST AVERAGING."
<PAGE>
REPLACE THE FIRST SENTENCE IN THE FIRST PARAGRAPH WITH THE FOLLOWING
SENTENCE.
If you have at least $5,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage
of your Annuity Account Value transferred from the Alliance Money Market Fund
to other Investment Funds on a monthly, quarterly, or annual basis.
REPLACE THE SECOND AND THIRD SENTENCES IN THE SECOND PARAGRAPH WITH THE
FOLLOWING SENTENCES.
The minimum amount that may be transferred on each Transaction Date is $250.
The maximum amount which may be transferred is equal to the Annuity Account
Value in the Alliance Money Market Fund at the time the option is elected,
divided by the number of transfers scheduled to made each Contract Year.
ON PAGE 28, UNDER THE HEADING, "DISTRIBUTION OF THE CERTIFICATES," REPLACE
THE FOURTH AND FIFTH SENTENCES OF THE FIRST PARAGRAPH WITH THE FOLLOWING TWO
SENTENCES.
EDI's principal business address is 1290 Avenue of the Americas, New York,
New York 10104. EDI was paid a fee of $1,204,370 for 1996 for its services
under its "Distribution Agreement" with Equitable Life and the Separate
Account.
ON PAGE 30, DELETE THE SECTION WITH THE HEADING "TRUST CHARGES TO PORTFOLIOS,"
AND REPLACE WITH THE FOLLOWING SECTIONS.
EQ TRUST CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQ Trust's assets, the 12b-1
fee, other direct operating expenses of EQ Trust (such as trustees' fees,
expenses of independent auditors and legal counsel, administrative service
fees, custodian fees, and liability insurance), and certain
investment-related expenses of EQ Trust (such as brokerage commissions and
other expenses related to the purchase and sale
12
<PAGE>
of securities), are reflected in each Portfolio's daily share price. The
investment management fees paid annually by the Portfolios cannot be changed
without a vote by shareholders. They are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET
ASSETS
-----------------------
<S> <C>
EQ/Putnam Growth & Income
Value.......................... 0.55%
EQ/Putnam Investors Growth ..... 0.55%
EQ/Putnam International Equity . 0.70%
MFS Research.................... 0.55%
MFS Emerging Growth Companies . 0.55%
</TABLE>
Investment management fees are established under EQ Trust's Investment
Management Agreement between EQ Trust and its investment manager, EQ
Financial. EQ Financial has entered into expense limitation agreements with
EQ Trust, with respect to each Portfolio, pursuant to which EQ Financial has
agreed to waive or limit its fees and total annual operating expenses
(expressed as a percentage of the Portfolios' average daily net assets) to
0.85% each for the EQ/Putnam Growth & Income Value, EQ/Putnam Investors
Growth, MFS Research, MFS Emerging Growth Companies Portfolios; and 1.20% for
EQ/Putnam International Equity Portfolio. See the prospectus for EQ Trust for
more information.
The Rule 12b-1 Plan provides that EQ Trust, on behalf of each Portfolio, may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fees, which
may be waived in the discretion of EDI, may be increased only by action of
the Board of Trustees of EQ Trust up to a maximum of 0.50% per annum. All of
these fees and expenses are described more fully in the EQ Trust prospectus.
HR TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HR Trust's assets, direct
operating expenses of HR Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of HR Trust
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
maximum investment advisory fees paid annually by the Portfolios cannot be
changed without a vote by shareholders. They are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS
FIRST NEXT NEXT NEXT
$750 MILLION $750 MILLION $1 BILLION $2.5 BILLION THEREAFTER
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market .... 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance High Yield....... 0.600% 0.575% 0.550% 0.530% 0.520%
Alliance Common Stock .... 0.475% 0.425% 0.375% 0.355% 0.345%*
Alliance Aggressive
Stock.................... 0.625% 0.575% 0.525% 0.500% 0.475%
Alliance Growth
Investors................ 0.550% 0.500% 0.450% 0.425% 0.400%
Alliance Global........... 0.675% 0.600% 0.550% 0.530% 0.520%
Alliance Global........... 0.675% 0.600% 0.550% 0.530% 0.520%
Alliance Small Cap
Growth................... 0.900% 0.850% 0.825% 0.800% 0.775%
</TABLE>
- ------------
* On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
Investment advisory fees are established under HR Trust's investment advisory
agreements between HR Trust and its investment adviser, Alliance. All of
these fees and expenses are described more fully in the HR Trust prospectus.
13
<PAGE>
ON PAGE 32, UNDER THE HEADING "TRUST VOTING RIGHTS"
REPLACE THE FIRST SENTENCE OF THE SECOND PARAGRAPH WITH THE FOLLOWING
SENTENCE:
Because HR Trust is a Massachusetts business trust and EQ Trust is a Delaware
business trust, annual meetings are not required.
ON PAGE 32, UNDER THE HEADING "VOTING RIGHTS OF OTHERS," REPLACE THE FIRST TWO
SENTENCES OF THE PARAGRAPH WITH THE FOLLOWING SENTENCES:
Currently we control each trust. EQ Trust shares currently are sold only to
our separate accounts. HR Trust shares are held by other separate accounts of
ours and by separate accounts of insurance companies affiliated and
unaffiliated with us.
ON PAGE 34, UNDER THE HEADING "FEDERAL AND STATE INCOME TAX WITHHOLDING,"
REPLACE THE FOURTH SENTENCE OF THE THIRD PARAGRAPH WITH THE FOLLOWING
SENTENCE:
For 1997, a recipient of periodic payments (e.g., monthly or annual payments)
which total less than a $14,400 taxable amount will generally be exempt from
federal income tax withholding, unless the recipient specifies a different
choice of withholding exemption.
14
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
--------
Part 1: Accumulation Unit Values 2
Part 2: Annuity Unit Values 2
Part 3: Custodian and Independent Accountants 3
Part 4: Alliance Money Market Fund Yield Information 3
Part 5: Long-Term Market Trends 4
Part 6: Financial Statements 6
</TABLE>
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Accumulator SAI:
(Supplement dated May 1, 1997 to Accumulator Prospectus,
dated October 16, 1996)
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
<PAGE>
ACCUMULATOR PROSPECTUS
DATED OCTOBER 16, 1996
--------------------
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- ------------------------------------------------------------------------------
This prospectus describes certificates The Equitable Life Assurance Society
of the United States (EQUITABLE LIFE, WE, OUR and US) offers under a
combination variable and fixed deferred annuity contract (ACCUMULATOR) issued
on a group basis or as individual contracts. Enrollment under a group
contract will be evidenced by issuance of a certificate. Certificates and
individual contracts each will be referred to as "Certificates." Accumulator
Certificates are used for after-tax contributions to a non-qualified annuity.
A minimum initial contribution of $5,000 is required to put the Certificate
into effect.
The Accumulator is designed to provide retirement income at a future date.
Contributions accumulate on a tax-deferred basis and can be later distributed
under a number of different methods which are designed to be responsive to
the owner's (CERTIFICATE OWNER, YOU and YOUR) objectives.
The Accumulator offers investment options (INVESTMENT OPTIONS) that permit
you to create your own strategies. These Investment Options include 6
variable investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the
GUARANTEED PERIOD ACCOUNT.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Guarantee Periods
Investment Funds: Expiration Dates:
- ------------------------------------------------------------------ ----------------------
o Aggressive Stock o Growth Investors o High Yield February 15,
o Common Stock o Global o Money Market o 1997 through 2007
</TABLE>
We invest each Investment Fund in Class IB shares of a corresponding
portfolio (PORTFOLIO) of The Hudson River Trust (TRUST), a
mutual fund whose shares are purchased by separate accounts
of insurance companies. The prospectus for the Trust, which
accompanies this prospectus, describes the investment objectives, policies
and risks of the Portfolios.
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). Each Guarantee Period has its
own Guaranteed Rates.
You may choose from a variety of payout options, including variable annuities
and fixed annuities.
This prospectus provides information about the Accumulator that prospective
investors should know before investing. You should read it carefully and
retain it for future reference. The prospectus is not valid unless
accompanied by a current prospectus for the Trust, which you should also read
carefully.
Registration statements relating to Separate Account No. 49 (SEPARATE
ACCOUNT) and interests under the Guarantee Periods have been filed with the
Securities and Exchange Commission (SEC). The statement of additional
information (SAI), dated October 16, 1996, which is part of the registration
statement for the Separate Account, is available free of charge upon request
by writing to our Processing Office or calling 1-800-789-7771, our toll-free
number. The SAI has been incorporated by reference into this prospectus. The
Table of Contents for the SAI appears at the back of this prospectus.
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- -------------------------------------------------------------------------------
Copyright 1996
The Equitable Life Assurance Society of the United States, New York, New York
10019.
All rights reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1995 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE
ACT) after the date hereof and prior to the termination of the offering of
the securities offered hereby shall be deemed to be incorporated by reference
in this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this prospectus.
Equitable Life files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically
pursuant to EDGAR under CIK No. 0000727920.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 787
Seventh Avenue, New York, New York 10019. Attention: Corporate Secretary
(telephone: (212) 554-1234).
2
<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
FEE TABLE PAGE 5
PART 1: SUMMARY PAGE 7
What is the Accumulator? 7
Investment Options 7
Contributions 7
Transfers 7
Free Look Period 7
Services We Provide 7
Withdrawal Options 8
Death Benefits 8
Guaranteed Minimum Income Benefit (GMIB) 8
Surrendering the Certificates 8
Income Annuity Options 8
Taxes 8
Deductions from Annuity
Account Value 8
Deductions from Investment
Funds 9
Trust Charges to Portfolios 9
PART 2: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE
INVESTMENT FUNDS PAGE 10
Equitable Life 10
Separate Account No. 49 10
The Trust 10
The Trust's Investment Adviser 11
Investment Policies and Objectives of the
Trust's Portfolios 12
PART 3: INVESTMENT PERFORMANCE PAGE 13
Performance Data for a Certificate 13
Rate of Return Data for Investment
Funds 14
Communicating Performance Data 16
Money Market Fund Yield Information 16
PART 4: THE GUARANTEED PERIOD ACCOUNT PAGE 17
Guarantee Periods 17
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 18
Death Benefit Amount 19
Investments 19
PART 5: PROVISIONS OF THE CERTIFICATES
AND SERVICES WE PROVIDE PAGE 20
Availability of the Certificates 20
Contributions Under the Certificates 20
Methods of Payment 20
Allocation of Contributions 20
Free Look Period 21
Annuity Account Value 21
Transfers Among Investment Options 22
Dollar Cost Averaging 22
Withdrawal Options 23
Death Benefit 23
When the Certificate Owner Dies
Before the Annuitant 25
GMIB 25
Cash Value 26
Surrendering the Certificates to
Receive the Cash Value 26
Income Annuity Options 26
Assured Payment Plan 27
When Payments are Made 28
Assignment 28
Distribution of the Certificates 28
PART 6: DEDUCTIONS AND CHARGES PAGE 29
Charges Deducted from the Annuity
Account Value 29
Charges Deducted from the Investment
Funds 30
Trust Charges to Portfolios 30
Group or Sponsored Arrangements 30
Other Distribution Arrangements 31
PART 7: VOTING RIGHTS PAGE 32
Trust Voting Rights 32
Voting Rights of Others 32
Separate Account Voting Rights 32
Changes in Applicable Law 32
PART 8: TAX ASPECTS OF THE CERTIFICATES PAGE 33
Tax Changes 33
Taxation of Non-Qualified Annuities 33
Federal and State Income Tax
Withholding 34
Other Withholding 34
Special Rules for Certificates Issued in
Puerto Rico 35
Impact of Taxes to Equitable Life 35
Transfers Among Investment Options 35
PART 9: KEY FACTORS IN RETIREMENT PLANNING PAGE 36
Introduction 36
Inflation 36
Starting Early 37
Tax-Deferral 37
Investment Options 38
The Benefit of Annuitization 39
PART 10: INDEPENDENT ACCOUNTANTS PAGE 40
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE PAGE 41
APPENDIX II: GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
EXAMPLE PAGE 42
APPENDIX III: GMIB EXAMPLES PAGE 43
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS PAGE 44
</TABLE>
3
<PAGE>
- -------------------------------------------------------------------------------
GENERAL TERMS
- -------------------------------------------------------------------------------
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE--The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT--The individual who is the measuring life for determining annuity
benefits.
ANNUITY ACCOUNT VALUE--The sum of the amounts in the Investment Options under
the Accumulator Certificate. See "Annuity Account Value" in Part 5.
ANNUITY COMMENCEMENT DATE--The date on which amounts are applied to provide
an annuity benefit.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns an Accumulator Certificate and has the
right to exercise all rights under the Certificate.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The date on which the Annuitant is enrolled under the group
annuity contract, or the effective date of the individual contract. This is
usually the Business Day we receive the initial contribution at our
Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificates.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
INVESTMENT FUNDS--The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS--The choices for investment: the Investment Funds and each
available Guarantee Period.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
PORTFOLIOS--The portfolios of the Trust that correspond to the Investment
Funds of the Separate Account.
PROCESSING DATE--The day when we deduct certain charges from the Annuity
Account Value. If the Processing Date is not a Business Day, it will be on
the next succeeding Business Day. The Processing Date will be once each year
on each anniversary of the Contract Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 1.
SAI--The statement of additional information for the Separate Account under
the Accumulator.
SEPARATE ACCOUNT--Equitable Life's Separate Account No. 49.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
TRUST--The Hudson River Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested.
VALUATION PERIOD--Each Business Day together with any preceding non-business
days.
4
<PAGE>
- ------------------------------------------------------------------------------
FEE TABLE
- ------------------------------------------------------------------------------
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificate
so that you may compare them on the same basis with other similar products.
The table reflects both the charges of the Separate Account and the expenses
of the Trust. Charges for applicable taxes such as state or local premium
taxes may also apply. For a complete description of the charges under the
Certificate, see "Part 6: Deductions and Charges." For a complete description
of the Trust's charges and expenses, see the prospectus for the Trust.
As explained in Part 4, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge
shown in the Table which will be deducted from amounts allocated to the
Guarantee Periods is the withdrawal charge. A market value adjustment (either
positive or negative) also may be applicable as a result of a withdrawal,
transfer or surrender of amounts from a Guarantee Period. See "Part 4: The
Guaranteed Period Account."
<TABLE>
<CAPTION>
Contract
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE) Year
- --------------------------------------------------------------- --------
<S> <C> <C>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted upon surrender 1 ............... 7.00%
or for certain withdrawals. The applicable withdrawal charge percentage is 2 ............... 6.00
determined by the Contract Year in which the withdrawal is made or the 3 ............... 5.00
Certificate is surrendered beginning with "Contract Year 1" with respect 4 ............... 4.00
to each contribution withdrawn or surrendered. For each contribution, the 5 ............... 3.00
Contract Year in which we receive that contribution is "Contract Year 6 ............... 2.00
1")(1) 7 ............... 1.00
8+............... 0.00
</TABLE>
<TABLE>
<CAPTION>
Combined
GMDB/GMIB GMDB Only
Benefit Benefit
--------- ---------
<S> <C> <C>
GMDB/GMIB Charges (percentage deducted annually on each Processing Date
as a percentage of the guaranteed minimum death benefit then in effect)(2) . 0.45% 0.20%
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF ASSETS IN EACH INVESTMENT FUND)
- --------------------------------------------- ..............................................
Mortality and Expense Risk Charge ............................................ 0.90%
Asset Based Administrative Charge(3) ......................................... 0.30%
----------------------------
Total Separate Account Annual Expenses ...................................... 1.20%
============================
</TABLE>
TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS IN EACH PORTFOLIO)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
----------------------------------------------------------------------------------
AGGRESSIVE COMMON GROWTH HIGH MONEY
STOCK STOCK INVESTORS GLOBAL YIELD MARKET
- ------------------------------- ------------ -------- ----------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fee 0.46% 0.35% 0.52% 0.53% 0.55% 0.40%
Rule 12b-1 Plan Fee(4) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.03% 0.03% 0.04% 0.08% 0.05% 0.04%
------------ -------- ----------- -------- ------- ---------
TOTAL TRUST ANNUAL EXPENSES(5) 0.74% 0.63% 0.81% 0.86% 0.85% 0.69%
============ ======== =========== ======== ======= =========
</TABLE>
- ------------
Notes:
(1) Deducted upon a withdrawal with respect to amounts in excess of the 15%
free corridor amount, and upon a surrender. See "Part 6: Deductions and
Charges," "Withdrawal Charge." We reserve the right to impose an
administrative charge of the lesser of $25 and 2.0% of the amount
withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. See "Withdrawal Processing Charge" also in Part 6.
(2) The guaranteed minimum death benefit (GMDB) is described under "Death
Benefit," "GMDB" and the guaranteed minimum income benefit (GMIB) is
described under "GMIB" both of which are in Part 5. See "Part 6:
Deductions and Charges," "Charges for Combined GMDB/GMIB Benefit" and
"Charges for GMDB Only Benefit."
(3) We reserve the right to increase this charge to an annual rate of 0.35%,
the maximum permitted under the Certificates.
(4) The Class IB shares of the Trust are subject to fees imposed under a
distribution plan (herein, the "Rule 12b-1 Plan") adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Rule 12b-1 Plan provides that the Trust, on behalf of each Portfolio,
may pay annually up to 0.25% of the average daily net assets of a
Portfolio attributable to its Class IB shares in respect of activities
primarily intended to result in the sale of the Class IB shares. The
Rule 12b-1 Plan fee, which may be waived in the discretion of Equitable
Distributors, Inc., may be increased only by action of the Board of
Trustees of the Trust up to a maximum of 0.50% per annum.
(5) Expenses shown for all Portfolios are estimated. The investment advisory
fee for each Portfolio may vary from year to year depending upon the
average daily net assets of the respective Portfolio of the Trust. The
maximum investment advisory fees, however, cannot be increased without a
vote of that Portfolio's shareholders. The other direct operating
expenses will also fluctuate from year to year depending on actual
expenses. See "Trust Charges to Portfolios" in Part 6.
5
<PAGE>
EXAMPLES
- --------
The examples below show the expenses that a hypothetical Certificate Owner
would pay under the Combined GMDB/GMIB Benefit and under the GMDB Only
Benefit in the two situations noted below assuming a $1,000 contribution
invested in one of the Investment Funds listed, and a 5% annual return on
assets.(1)
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
COMBINED GMDB/GMIB BENEFIT ELECTION
- -----------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER YOUR
CERTIFICATE AT THE END OF CERTIFICATE AT THE END OF EACH
EACH PERIOD SHOWN, THE PERIOD SHOWN, THE EXPENSES
EXPENSES WOULD BE: WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 1 YEAR 3 YEARS
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Aggressive Stock $89.66 $120.30 $24.43 $75.66
Common Stock 88.56 116.99 23.33 72.35
Growth Investors 90.35 122.39 25.12 77.75
Global 90.85 123.89 25.62 79.25
High Yield 90.75 123.59 25.52 78.95
MoneyMarket 89.16 118.79 23.93 74.16
</TABLE>
GMDB ONLY BENEFIT ELECTION
- -----------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER YOUR
CERTIFICATE AT THE END OF CERTIFICATE AT THE END OF EACH
EACH PERIOD SHOWN, THE PERIOD SHOWN, THE EXPENSES
EXPENSES WOULD BE: WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 1 YEAR 3 YEARS
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Aggressive Stock $89.66 $115.01 $21.78 $67.38
Common Stock 88.56 111.68 20.68 64.07
Growth Investors 90.35 117.10 22.47 69.48
Global 90.85 118.61 22.97 70.98
High Yield 90.75 118.31 22.87 70.68
MoneyMarket 89.16 113.49 21.28 65.88
</TABLE>
- ------------
Notes:
(1) The amount accumulated could not be paid in the form of an annuity at
the end of any of the periods shown in the examples. If the amount
applied to purchase an annuity is less than $2,000, or the initial
payment is less than $20 we may pay the amount to the payee in a single
sum instead of as payments under an annuity form. See "Income Annuity
Options" in Part 5. The examples do not reflect charges for applicable
taxes such as state or local premium taxes that may also be deducted in
certain jurisdictions.
6
<PAGE>
- ------------------------------------------------------------------------------
PART 1: SUMMARY
- ------------------------------------------------------------------------------
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE ACCUMULATOR?
The Accumulator is a non-qualified deferred annuity designed to provide
retirement income at a future date through the investment of funds on an
after-tax basis. Generally, earnings will accumulate without being subject to
annual income tax, until withdrawn. The Accumulator features a combination of
Investment Options, consisting of Investment Funds providing variable returns
and Guarantee Periods providing guaranteed interest. Fixed and variable
income annuities are also available. The Accumulator may not be available in
all states.
INVESTMENT OPTIONS
The Accumulator offers the following Investment Options which permit you to
create your own strategy for retirement savings. All available Investment
Options may be selected under a Certificate.
INVESTMENT FUNDS
o Aggressive Stock
o Common Stock
o Growth Investors
o Global
o High Yield
o Money Market
GUARANTEE PERIODS
o Guarantee Periods (may not be available in all states) maturing in each
of calendar years 1997 through 2007.
CONTRIBUTIONS
o To put a Certificate into effect, you must make an initial contribution
of at least $5,000.
o Subsequent contributions may be made in an amount of at least $1,000.
TRANSFERS
You may make an unlimited number of transfers among the Investment Funds.
However, there are restrictions for transfers to and from the Guarantee
Periods. Transfers from a Guarantee Period may result in a market value
adjustment. Transfers among Investment Options are free of charge. Transfers
among the Investment Options are not taxable.
FREE LOOK PERIOD
You have the right to examine the Accumulator Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You may
cancel it by sending it to our Processing Office. Your refund will equal the
Annuity Account Value, reflecting any investment gain or loss, and any
positive or negative market value adjustment, through the date we receive
your Certificate at our Processing Office.
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the calendar
year;
o Three additional reports of your Certificate values each year;
o Annual and semi-annual statements of the Trust; and
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values and
Guaranteed Rates applicable to the Guarantee Periods. Also call during our
regular business hours to speak to one of our customer service
representatives.
O PROCESSING OFFICE
o For contributions sent by Regular Mail:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
7
<PAGE>
O FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
O FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
O FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
WITHDRAWAL OPTIONS
o Lump Sum Withdrawals--Before the Annuity Commencement Date while the
Certificate is in effect, you may take Lump Sum Withdrawals from your
Certificate at any time. The minimum withdrawal amount is $1,000.
o Systematic Withdrawals--You may also withdraw funds under our Systematic
Withdrawal option, where the minimum withdrawal amount is $250.
Withdrawals may be subject to a withdrawal charge and withdrawals from
Guarantee Periods prior to their Expiration Dates will result in a market
value adjustment. Withdrawals may be subject to income tax and tax penalty.
DEATH BENEFITS
If the Annuitant and successor Annuitant, if any, die before the Annuity
Commencement Date, the Accumulator provides a death benefit. The beneficiary
will be paid the greater of the Annuity Account Value in the Investment Funds
and the guaranteed minimum death benefit (GMDB), plus any death benefit
provided with respect to the Guaranteed Period Account.
There are two plans available under the Certificates for providing guaranteed
benefits, a Combined GMDB/GMIB Benefit and a GMDB Only Benefit.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
The GMIB (available under the Combined GMDB/ GMIB Benefit) may not currently
be available in all states.
The GMIB provides a minimum guaranteed lifetime income from application of
the Annuity Account Value in the Investment Funds to purchase the Assured
Payment Plan (Life Annuity with a Period Certain). Any amounts in the
Guaranteed Period Account will be applied to increase the payments provided
under GMIB. A market value adjustment may apply.
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time before
the Annuity Commencement Date while the Annuitant is living. Withdrawal
charges and a market value adjustment may apply. A surrender may also be
subject to income tax and tax penalty.
INCOME ANNUITY OPTIONS
The Certificates provide income annuity options to which amounts may be
applied at the Annuity Commencement Date. The income annuity options are
offered on a fixed and variable basis.
TAXES
Generally, earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject
to tax penalty.
DEDUCTIONS FROM ANNUITY
ACCOUNT VALUE
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of the initial and each
subsequent contribution if a withdrawal exceeds the 15% free corridor amount
or if the Certificate is surrendered. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
8
<PAGE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For each contribution the Contract Year in which we receive
that contribution is "Contract Year 1."
Withdrawal Processing Charge
We reserve the right to impose an administrative charge of the lesser of $25
and 2.0% of the amount withdrawn for each Lump Sum Withdrawal after the fifth
in a Contract Year.
Charges for Combined GMDB/GMIB Benefit
We deduct a charge annually on each Processing Date for providing the
Combined GMDB/GMIB Benefit. The charge is equal to a percentage of the GMDB
in effect on the Processing Date. The percentage is equal to 0.45%.
Charges for GMDB Only Benefit
We deduct a charge annually on each Processing Date for providing the GMDB
Only Benefit. The charge is equal to a percentage of the GMDB in effect on
the Processing Date. The percentage is equal to 0.20%.
Charges for State Premium and Other Applicable Taxes
Generally, we deduct a charge for premium or other applicable taxes from the
Annuity Account Value on the Annuity Commencement Date. The current tax
charge that might be imposed varies by state and ranges from 0 to 3.5% (the
rate is 1% in Puerto Rico and 5% in the Virgin Islands).
DEDUCTIONS FROM INVESTMENT FUNDS
Mortality and Expense Risk Charge
We charge each Investment Fund a daily asset based charge for mortality and
expense risks equivalent to an annual rate of 0.90%.
Asset Based Administrative Charge
We charge each Investment Fund a daily asset based charge to cover
administrative expenses under the Certificate equivalent to an annual rate of
0.30%. We reserve the right to increase this charge to an annual rate of
0.35%, the maximum permitted under the Certificates.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees and other expenses of the Trust are charged daily
against the Trust's assets. These are reflected in the Portfolio's daily
share price and in the daily Accumulation Unit Value for the Investment
Funds.
The Trust Class IB shares held in the Investment Funds are subject to a
distribution fee under a Rule 12b-1 Plan. The Rule 12b-1 Plan fee is imposed
against the assets of each Portfolio at the annual rate of 0.25%. The fee,
which may be waived in the discretion of Equitable Distributors, Inc., may be
increased only by action of the Board of Trustees of the Trust up to a
maximum of 0.50% per annum. We offer other deferred variable annuities that
invest in Trust shares that are not subject to the Rule 12b-1 Plan fee and
that bear different charges and expenses. For more information about the
Plan, and the address for any inquiries about the Plan, see "The Trust" in
the accompanying Trust prospectus.
9
<PAGE>
- ------------------------------------------------------------------------------
PART 2: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
- ------------------------------------------------------------------------------
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our home office is located
at 787 Seventh Avenue, New York, New York 10019. We are authorized to sell
life insurance and annuities in all fifty states, the District of Columbia,
Puerto Rico and the Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding shares of
common stock of the Holding Company plus convertible preferred stock. Under
its investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $217.6 billion of assets as of June 30, 1996.
SEPARATE ACCOUNT NO. 49
Separate Account No. 49 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment
Company Act of 1940 (1940 Act). This registration does not involve any
supervision by the SEC of the management or investment policies of the
Separate Account. The Separate Account has several Investment Funds, each of
which invests in shares of a corresponding Portfolio of the Trust. Because
amounts allocated to the Investment Funds are invested in a mutual fund,
investment return and principal will fluctuate and the Certificate Owner's
Accumulation Units may be worth more or less than the original cost when
redeemed.
Under the New York Insurance Law, the portion of the Separate Account's
assets equal to the reserves and other liabilities relating to the
Certificates are not chargeable with liabilities arising out of any other
business we may conduct. Income, gains or losses, whether or not realized,
from assets of the Separate Account are credited to or charged against the
Separate Account without regard to our other income gains or losses. We are
the issuer of the Certificates, and the obligations set forth in the
Certificates (other than those of Annuitants or Certificate Owners) are our
obligations.
In addition to contributions made under the Accumulator Certificates, we may
allocate to the Separate Account monies received under other contracts,
certificates, or agreements. Owners of all such contracts, certificates or
agreements will participate in the Separate Account in proportion to the
amounts they have in the Investment Funds that relate to their contracts,
certificates or agreements. We may retain in the Separate Account assets that
are in excess of the reserves and other liabilities relating to the
Accumulator Certificates or to other contracts, certificates or agreements,
or we may transfer the excess to our General Account.
We reserve the right, subject to compliance with applicable law; (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove
Investment Funds (or sub-funds) from, the Separate Account, or to add other
separate accounts; (2) to combine any two or more Investment Funds or
sub-funds thereof; (3) to transfer the assets we determine to be the share of
the class of contracts to which the Certificate belongs from any Investment
Fund to another Investment Fund; (4) to operate the Separate Account or any
Investment Fund as a management investment company under the 1940 Act, in
which case charges and expenses that otherwise would be assessed against an
underlying mutual fund would be assessed against the Separate Account; (5) to
deregister the Separate Account under the 1940 Act, provided that such action
conforms with the requirements of applicable law; (6) to restrict or
eliminate any voting rights as to the Separate Account; and (7) to cause one
or more Investment Funds to invest some or all of their assets in one or more
other trusts or investment companies. If any changes are made that result in
a material change in the underlying investment policy of an Investment Fund,
you will be notified as required by law.
THE TRUST
The Trust is an open-end diversified management investment company, more
commonly called a mu-
10
<PAGE>
tual fund. As a "series" type of mutual fund, it issues several different
series of stock, each of which relates to a different Portfolio of the Trust.
The Trust commenced operations in January 1976 with a predecessor of its
Common Stock Portfolio. The Trust does not impose a sales charge or "load"
for buying and selling its shares. All dividend distributions to the Trust
are reinvested in full and fractional shares of the Portfolio to which they
relate. Each Investment Fund invests in Class IB shares of a corresponding
Portfolio of the Trust. More detailed information about the Trust, its
investment objectives, policies, restrictions, risks, expenses, the Rule
12b-1 Plan relating to the Class IB shares, and all other aspects of its
operations appears in its prospectus which accompanies this prospectus or in
its statement of additional information.
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Alliance Capital Management L.P. (Alliance), which is
registered with the SEC as an investment adviser under the Investment
Advisers Act of 1940. Alliance, a publicly-traded limited partnership, is
indirectly majority-owned by Equitable Life. On June 30, 1996, Alliance was
managing over $168 billion in assets. Alliance acts as an investment adviser
to various separate accounts and general accounts of Equitable Life and other
affiliated insurance companies. Alliance also provides management and
consulting services to mutual funds, endowment funds, insurance companies,
foreign entities, qualified and non-tax qualified corporate funds, public and
private pension and profit-sharing plans, foundations and tax-exempt
organizations.
Alliance's record as an investment manager is based, in part, on its ability
to provide a diversity of investment services to domestic, international and
global markets. Alliance prides itself on its ability to attract and retain a
quality, professional work force. Alliance employs more than 188 investment
professionals, including 74 research analysts. Portfolio managers have an
average investment experience of more than 14 years.
Alliance's main office is located at 1345 Avenue of the Americas, New York,
New York 10105.
11
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF THE TRUST'S PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of
each Portfolio will affect its return and its risks. There is no guarantee
that these objectives will be achieved.
The policies and objectives of the Trust's Portfolios are as follows:
<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 other smaller sized
companies with strong growth potential.
Common Stock Primarily common stock and other equity-type Long-term growth of capital
instruments. and increasing income
Growth Investors Diversified mix of publicly-traded, fixed-income and High total return consistent
equity securities; asset mix and security selection with the adviser's
based upon factors expected to increase possibility determination of reasonable
of high long-term return. The Portfolio is generally risk
expected to hold approximately 70% of its assets in
equity securities and 30% in fixed income
securities.
Global Primarily equity securities of non-United States as Long-term growth of capital
well as United States companies.
High Yield Primarily a diversified mix of high yield, High return by maximizing
fixed-income securities involving greater volatility current income and, to the
of price and risk of principal and income than high extent consistent with that
quality fixed-income securities. The medium and objective, capital
lower quality debt securities in which the Portfolio appreciation
may invest are known as "junk bonds."
Money Market Primarily high quality short-term money market High level of current income
instruments. while preserving assets and
maintaining liquidity
</TABLE>
12
<PAGE>
- ------------------------------------------------------------------------------
PART 3: INVESTMENT PERFORMANCE
- ------------------------------------------------------------------------------
This Part presents performance data for each of the Investment Funds
calculated by two methods. The first method, used in calculating values for
the two tables in "Performance Data for a Certificate," reflects all
applicable fees and charges other than the charge for tax such as premium
taxes. The second method, used in preparing rates of return for the three
tables in "Rate of Return Data for Investment Funds," reflects all fees and
charges other than the withdrawal charge, the GMDB/GMIB charge and the charge
for tax such as premium taxes. These additional charges would effectively
reduce the rates of return credited to a particular Certificate.
The Separate Account was recently established and has had no prior
operations, and no Certificates have been issued prior to the date of this
prospectus. The calculations of investment performance shown below are based
on the actual investment results of the Portfolios of the Trust, from which
certain fees and charges applicable under the Accumulator have been deducted.
The investment results of the Portfolios of the Trust have not been adjusted
to reflect the Rule 12b-1 Plan fee relating to the Class IB shares, which
were not available for purchase prior to the date of this prospectus. The
Rule 12b-1 Plan fee would effectively reduce the investment performance
shown. The results shown are not an estimate or guarantee of future
investment performance, and do not reflect the actual experience of amounts
invested under a particular Certificate.
See "Part 4: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
PERFORMANCE DATA FOR A CERTIFICATE
The standardized performance data in the following tables illustrate the
average annual total return of the Investment Funds over the periods shown,
assuming a single initial contribution of $1,000 and the surrender of the
Certificate at the end of each period. These tables (which reflect the first
calcu lation method described above) are prepared in a manner prescribed by
the SEC for use when we advertise the performance of the Separate Account. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
Each calculation assumes that the $1,000 contribution was allocated to only
one Investment Fund, no transfers or subsequent contributions were made and
no amounts were allocated to any other Investment Option under the
Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of
a Certificate which is surrendered on December 31, 1995 by the $1,000
contribution made at the beginning of each period illustrated. The result of
that calculation is the total growth rate for the period. Then we annualize
that growth rate to obtain the average annual percentage increase (decrease)
during the period shown. When we "annualize," we assume that a single rate of
return applied each year during the period will produce the ending value,
taking into account the effect of compounding.
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1995*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION**
- ---------------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Aggressive Stock $1,231 $1,363 $2,461 -- $ 5,280
Common Stock 1,239 1,498 2,108 $3,530 11,689
Growth Investors 1,179 1,299 2,018 -- 2,286
Global 1,104 1,531 1,961 -- 2,139
High Yield 1,115 1,323 1,832 -- 2,076
Money Market 975 1,032 1,120 1,525 2,235
</TABLE>
- ------------
* See footnotes on next page.
13
<PAGE>
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1995*
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION**
- ---------------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Aggressive Stock 23.06% 10.88% 19.73% -- 18.10%
Common Stock 23.87 14.42 16.09 13.44% 13.08
Growth Investors 17.86 9.10 15.07 -- 12.54
Global 10.39 15.27 14.42 -- 8.82
High Yield 11.48 9.78 12.87 -- 8.45
Money Market (2.52) 1.05 2.29 4.31 5.51
</TABLE>
- ------------
* The tables reflect charges under a Certificate with the 0.45% GMDB/GMIB
charge.
** The "Since Inception" dates are as follows: Aggressive Stock (January
27, 1986); Common Stock (January 13, 1976); Growth Investors (October
2, 1989); Global (August 27, 1987); High Yield (January 2, 1987); and
Money Market (July 13, 1981).
RATE OF RETURN DATA FOR INVESTMENT FUNDS
The following tables (which reflect the second calculation method described
above) provide you with information on rates of return on an annualized,
cumulative and year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of
return reflect performance over a stated period of time. Annualized rates of
return represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
Performance data of the Money Market and Common Stock Funds for the periods
prior to March 22, 1985, reflect the investment results of two open-end
management separate accounts (the "predecessor separate accounts") which were
reorganized in unit investment trust form. The "Since Inception" figures for
these Funds are based on the date of inception of the predecessor separate
accounts. This performance data has been adjusted to reflect the maximum
investment advisory fee payable for the corresponding Portfolio of the Trust,
as well as an assumed charge of 0.06% for direct operating expenses.
Performance data for the remaining Investment Funds reflect (i) the
investment results of the corresponding Portfolios of the Trust from the date
of inception of those Portfolios and (ii) the actual investment advisory fee,
and direct operating expenses of the relevant Portfolio.
The performance data for all periods has also been adjusted to reflect the
Separate Account mortality and expense risk charge, and the asset based
administrative charge equal to a total of 1.20% relating to the Certificates,
as well as the Trust's expenses.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality
and expense risk charge and the asset based administrative charge under the
Certificates. Comparisons with these benchmarks, therefore, are of limited
use. We include them because they are widely known and may help you to
understand the universe of securities from which each Portfolio is likely to
select its holdings. Benchmark data reflect the reinvestment of dividend
income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
AGGRESSIVE STOCK: January 27, 1986; 50% Standard & Poor's Mid-Cap Total
Return Index and 50% Russell 2000 Small Stock Index.
COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond Index
and 70% Standard & Poor's 500 Index.
GLOBAL: August 27, 1987; Morgan Stanley Capital International World Index.
HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master Index.
MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill Index.
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity products,
including
14
<PAGE>
managed separate accounts of insurance companies. According to Lipper
Analytical Services, Inc., the data are presented net of investment
management fees, direct operating expenses and asset-based charges applicable
under annuity contracts. Lipper data provide a more accurate picture than
market benchmarks of the Accumulator performance relative to other variable
annuity products.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
AGGRESSIVE STOCK 30.06% 12.55% 20.29% -- -- 18.53%
Lipper Small Company Growth 28.19 15.26 25.72 -- -- 16.06
Benchmark 29.69 13.67 20.16 -- -- 13.58
COMMON STOCK 30.87 15.99 16.74 13.78% 13.00% 13.41
Lipper Growth 31.08 12.09 15.53 12.05 12.26 12.25
Benchmark 37.54 15.30 16.57 14.87 14.79 14.24
GROWTH INVESTORS 24.86 10.81 15.72 -- -- 14.64
Lipper Flexible Portfolio 21.58 9.32 11.43 -- -- 9.44
Benchmark 32.05 13.35 14.70 -- -- 11.97
GLOBAL 17.39 16.80 15.10 -- -- 10.04
Lipper Global 13.87 13.45 9.10 -- -- 2.52
Benchmark 20.72 15.83 11.74 -- -- 6.75
HIGH YIELD 18.48 11.46 13.57 -- -- 8.89
Lipper High Yield 17.36 9.80 15.79 -- -- 8.87
Benchmark 19.91 11.57 17.17 -- -- 11.28
MONEY MARKET 4.48 2.99 3.23 4.76 -- 6.16
Lipper Money Market 4.35 2.88 3.10 4.71 -- 6.27
Benchmark 5.74 4.34 4.47 5.77 -- 7.09
</TABLE>
- ------------
* See footnote on next page.
CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:*
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION
-------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
AGGRESSIVE STOCK 30.06% 42.58% 151.85% -- -- 440.73%
Lipper Small Company Growth 28.19 55.24 268.67 -- -- 337.96
Benchmark 29.69 46.89 150.49 -- -- 254.09
COMMON STOCK 30.87 56.05 116.80 263.70% 525.22% 1,133.55
Lipper Growth 31.08 41.29 107.30 215.49 483.45 920.87
Benchmark 37.54 53.30 115.25 300.11 692.18 1,327.94
GROWTH INVESTORS 24.86 36.07 107.47 -- -- 134.80
Lipper Flexible Portfolio 21.58 30.92 72.73 -- -- 76.92
Benchmark 32.05 45.64 98.56 -- -- 102.72
GLOBAL 17.39 59.33 102.02 -- -- 122.13
Lipper Global 13.87 46.36 55.44 -- -- 23.09
Benchmark 20.72 55.39 74.20 -- -- 72.38
HIGH YIELD 18.48 38.47 88.94 -- -- 115.04
Lipper High Yield 17.36 32.45 108.96 -- -- 117.28
Benchmark 19.91 38.89 120.85 -- -- 161.50
MONEY MARKET 4.48 9.23 17.25 59.16 -- 137.35
Lipper Money Market 4.35 8.87 16.48 58.55 -- 140.42
Benchmark 5.74 13.58 24.45 75.23 -- 170.07
</TABLE>
- ------------
* See footnote on next page.
15
<PAGE>
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988
-------- --------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
AGGRESSIVE STOCK -- -- -- 33.77% 6.01% (0.08)%
COMMON STOCK** 24.60% (3.14)% 31.83% 15.96 6.15 20.97
GROWTH INVESTORS -- -- -- -- -- --
GLOBAL -- -- -- -- (13.63) 9.55
HIGH YIELD -- -- -- -- 3.44 8.42
MONEY MARKET** 7.65 9.53 7.17 5.33 5.35 6.03
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995
-------- -------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
AGGRESSIVE STOCK 41.79% 6.86% 84.63% (4.33)% 15.35% (4.97)% 30.06%
COMMON STOCK** 24.09 (9.22) 36.23 1.98 23.33 (3.31) 30.87
GROWTH INVESTORS 3.52 9.33 47.12 3.64 13.89 (4.31) 24.86
GLOBAL 25.22 (7.20) 28.99 (1.70) 30.54 3.97 17.39
HIGH YIELD 3.88 (2.31) 22.97 10.96 21.67 (3.95) 18.48
MONEY MARKET** 7.88 6.93 4.91 2.32 1.73 2.77 4.48
<FN>
- ------------
</TABLE>
* Returns do not reflect the withdrawal charge, the GMDB/GMIB charge, and
any charge for tax such as premium taxes.
<TABLE>
<CAPTION>
** Prior to 1983 the Year-by-Year Rates of Return were: 1976 1977 1978 1979 1980 1981 1982
----- ----- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCK 8.14% (10.33)% 6.94% 28.28% 48.32% (6.99)% 16.16%
MONEY MARKET -- -- -- -- -- 5.68 11.67
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may
describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance of the Investment Funds
with (1) that of other insurance company separate accounts or mutual funds
included in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS 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 which are shown under "Benchmarks" and "Fund Inception Dates and
Comparative Benchmarks" in this Part 3, or (3) data developed by us derived
from such indices or averages. The Morningstar Variable Annuity/Life Report
consists of nearly 700 variable life and annuity funds, all of which report
their data net of investment management fees, direct operating expenses and
separate account charges. VARDS is a monthly reporting service that monitors
approximately 760 variable life and variable annuity funds on performance and
account information. Advertisements or other communications furnished to
present or prospective Certificate Owners may also include evaluations of an
Investment Fund or Portfolio by financial publications that are nationally
recognized such as Barron's, Morningstar's Variable Annuity Sourcebook,
Business Week, Chicago Tribune, Forbes, Fortune, Institutional Investor,
Investment Adviser, Investment Dealer's Digest, Investment Management Weekly,
Los Angeles Times, Money, Money Management Letter, Kiplinger's Personal
Finance, Financial Planning, National Underwriter, Pension & Investments, USA
Today, Investor's Daily, The New York Times, and The Wall Street Journal.
MONEY MARKET FUND YIELD
INFORMATION
The current yield and effective yield of the Money Market Fund may appear in
reports and promotional material to current or prospective Certificate
Owners.
Current yield for the Money Market Fund will be based on net changes in a
hypothetical investment over a given seven-day period, exclusive of capital
changes, and then "annualized" (assuming that the same seven-day result would
occur each week for 52 weeks). "Effective yield" is calculated in a manner
similar to that used to calculate current yield, but when annualized, any
income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings
are compounded weekly. Money Market Fund yields and effective yields assume
the deduction of all Certificate charges and expenses other than the
withdrawal charge, GMDB/GMIB charge and any charge for tax such as premium
tax. See "Part 4: Money Market Fund Yield Information" in the SAI.
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PART 4: THE GUARANTEED PERIOD ACCOUNT
- -------------------------------------------------------------------------------
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. The Guaranteed
Rate for each allocation is the annual interest rate applicable to new
allocations to that Guarantee Period, which was in effect on the Transaction
Date for the allocation. We may establish different Guaranteed Rates under
different classes of Certificates. We use the term GUARANTEED PERIOD AMOUNT
to refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
on any Business Day, therefore, will be the sum of the present value of the
Maturity Value in each Guarantee Period, using the Guaranteed Rate in effect
for new allocations to each such Guarantee Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1997 through 2007.
Not all Guarantee Periods will be available for Annuitant ages 76 and above.
See "Allocation of Contributions" in Part 5. Also, the Guarantee Periods may
not be available for investment in all states. As Guarantee Periods expire we
expect to add maturity years so that generally 10 are available at any time.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no transfers or withdrawals are made and no charges
are allocated to the Guarantee Period). The required amount is the present
value of that Maturity Value at the Guaranteed Rate on the Transaction Date
for the contribution, which may also be expressed as the price per $100 of
Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of October 1, 1996 and the related
price per $100 of Maturity Value for each currently available Guarantee
Period were as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH GUARANTEED
EXPIRATION DATE RATE AS OF PRICE PER $100
FEBRUARY 15TH OF OCTOBER 1, OF MATURITY
MATURITY YEAR 1996 VALUE
- ---------------- ------------ --------------
<S> <C> <C>
1997 4.21% $98.46
1998 4.80 93.76
1999 5.10 88.86
2000 5.29 84.03
2001 5.41 79.40
2002 5.52 74.90
2003 5.65 70.43
2004 5.66 66.62
2005 5.80 62.34
2006 5.92 58.30
2007 6.03 54.45
</TABLE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of
years 1997 through 2001, then according to the above table the lump sum
contribution you would have to make as of October 1, 1996 would be $444.51
(i.e., the sum of the price per $100 of Maturity Value for each maturity year
from 1997 through 2001).
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The above table is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted or withdrawals or transfers from Guarantee Periods. Actual
calculations will also be based on Guaranteed Rates on each actual
Transaction Date, which may differ.
Options at Expiration Date
We will notify you on or before December 31st prior to the Expiration Date of
each Guarantee Period in which you have any Guaranteed Period Amount. You may
elect one of the following options to be effective at the Expiration Date,
subject to the restrictions set forth on the prior page and under "Allocation
of Contributions" in Part 5:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges
which may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR
TRANSFERS, WITHDRAWALS OR SURRENDER
PRIOR TO THE EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a
Guarantee Period prior to its Expiration Date will cause any remaining
Guaranteed Period Amount for that Guarantee Period to be increased or
decreased by a market value adjustment. The amount of the adjustment will
depend on two factors: (a) the difference between the Guaranteed Rate
applicable to the amount being withdrawn and the Guaranteed Rate on the
Transaction Date for new allocations to a Guarantee Period with the same
Expiration Date, and (b) the length of time remaining until the Expiration
Date. In general, if interest rates have risen between the time when an
amount was originally allocated to a Guarantee Period and the time it is
withdrawn, the market value adjustment will be negative, and vice versa; and
the longer the period of time remaining until the Expiration Date, the
greater the impact of the interest rate difference. Therefore, it is possible
that a significant rise in interest rates could result in a substantial
reduction in your Annuity Account Value in the Guaranteed Period Account
related to longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Guarantee Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal of a portion of the amount in a Guarantee Period will be a
percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds from a Guarantee Period. This percentage is
determined by (i) dividing the amount of the withdrawal or transfer from the
Guarantee Period by (ii) the Annuity Account Value in such Guarantee Period
prior to the withdrawal or transfer. See Appendix I for an example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate
in (1)(c) above.
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DEATH BENEFIT AMOUNT
The death benefit provided with respect to the Guaranteed Period Account is
equal to the Annuity Account Value in the Guaranteed Period Account or, if
greater, the sum of the Guaranteed Period Amounts in each Guarantee Period.
See "Annuity Account Value" in Part 5.
INVESTMENTS
Amounts allocated to Guarantee Periods will be held in a "nonunitized"
separate account established by Equitable Life under the laws of New York.
This separate account provides an additional measure of assurance that full
payment of amounts due under the Guarantee Periods will be made. Under the
New York Insurance Law, the portion of the separate account's assets equal to
the reserves and other contract liabilities relating to the Certificates are
not chargeable with liabilities arising out of any other business we may
conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933 (1933 Act),
nor is the general account an investment company under the 1940 Act.
Accordingly, the general account is not subject to regulation under the 1933
Act or the 1940 Act. However, the market value adjustment interests under the
Certificates are registered under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in this prospectus for your information that
relates to the general account (other than market value adjustment
interests). The disclosure, however, may be subject to certain generally
applicable provisions of the Federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
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<PAGE>
- -------------------------------------------------------------------------------
PART 5: PROVISIONS OF THE CERTIFICATES AND SERVICES WE PROVIDE
- -------------------------------------------------------------------------------
The provisions of your Certificate may be restricted by applicable laws or
regulations.
AVAILABILITY OF THE CERTIFICATES
The Certificates are available for Annuitant issue ages 20 through 83. These
Certificates may not be available in all states.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your initial contribution must be at least $5,000.
Subsequent contributions may be made in an amount of at least $1,000 at any
time until the Annuitant attains age 84. We may refuse to accept any
contributions if the sum of all contributions under all accumulation
Certificates with the same Annuitant would then total more than $1,000,000.
We reserve the right to limit aggregrate contributions made after the first
Contract Year to 150% of first year contributions. We may also refuse to
accept any contribution if the sum of all contributions under all Equitable
Life annuity accumulation certificates/ contracts that you own would then
total more than $2,500,000.
Contributions are credited as of the Transaction Date.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check. All
contributions made by check must be drawn on a bank or credit union in the
U.S., in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. All contributions should be sent to Equitable
Life at our Processing Office address designated for contributions.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will be invested at the value next
determined following receipt for contributions allocated to the Investment
Funds. Contributions allocated to the Guaranteed Period Account will receive
the Guaranteed Rate(s) in effect for the applicable Guarantee Period(s) on
the date contributions are received. Wire orders not accompanied by complete
information, may be retained for a period not exceeding five Business Days
while an attempt is made to obtain the required information. If the required
information cannot be obtained within those five Business Days, the
Processing Office will inform the broker-dealer, on behalf of the applicant,
of the reasons for the delay and return the contribution immediately to the
applicant, unless the applicant specifically consents to our retaining the
contribution until the required information is received by the Processing
Office.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate generally will not be issued until the
receipt and acceptance of a properly completed application. In certain cases
we may issue a Certificate based on information forwarded electronically. In
these cases, you must sign our Acknowledgment of Receipt form.
Where a signed application is required, no financial transactions will be
permitted until such time as we receive such signed application and have
issued the Certificate. Where an Acknowledgment of Receipt is required,
financial transactions will only be permitted if requested in writing, signed
by the Certificate Owner and signature guaranteed until we receive such
signed Acknowledgment of Receipt.
After your Certificate has been issued, subsequent contributions may be
transmitted by wire.
ALLOCATION OF CONTRIBUTIONS
You have two options from which to choose for allocation of your
contributions: Self-Directed Allocation and Principal Assurance.
Self-Directed Allocation
You design your own investment program by allocating your contributions among
the Investment Options in any way you choose. Your contributions may be
allocated to one or up to all of the available Investment Options at any
time. We allocate contributions among the Investment Options according to
your allocation percentages. Allocations must be in whole percentages.
Allocation percentages can be changed at any time by writing to our
Processing Office, or by telephone. The change will be effective on the
Transaction Date and will remain in effect for future contributions unless
another change is requested. Allocation of the initial contribution is
subject to the provisions for the free look period. See "Free Look Period"
below. Allocation of any contribution to the Guaranteed Period Account is
subject to the following restrictions.
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<PAGE>
o No more than 60% of any contribution may be allocated to the
Guaranteed Period Account.
o For Annuitant ages 76 and above, allocations may be made only to
Guarantee Periods with maturities of five years or less; however, in
no event may allocations be made to Guarantee Periods with maturities
beyond the February 15th immediately following the Annuity
Commencement Date.
Principal Assurance
This option (available for Annuitant issue ages 20 through 75) is designed to
assure that your Maturity Value in a specified Guarantee Period equals your
initial contribution, while at the same time allowing you to invest in the
Investment Funds. The maturity year you select for such specified Guaranteed
Period generally may not be later than 10 years nor earlier than seven years.
In order to accomplish this strategy, we will allocate a portion (equal to
the present value) of your initial contribution to a Guarantee Period based
on the year you select. See "Guaranteed Rates and Price Per $100 of Maturity
Value" in Part 4. You may allocate the balance of your contribution to the
Investment Funds in any way you choose. Such allocations to the Investment
Funds must be in whole percentages. Allocation of the portion of your initial
contribution to the Investment Funds is subject to the provisions for the
free look period. See "Free Look Period" below.
Principal Assurance may only be elected at issue of your Certificate and
assumes no withdrawals or transfers of the amount allocated to the specified
Guarantee Period.
Subsequent contributions must be allocated under "Self-Directed Allocation"
described above.
Allocations to the Investment Funds
A contribution allocated to an Investment Fund purchases Accumulation Units
in that Investment Fund based on the Accumulation Unit Value for that
Investment Fund computed on the Transaction Date.
Allocations to the Guaranteed Period Account
Contributions allocated to the Guaranteed Period Account will have the
Guaranteed Rate for the specified Guarantee Period offered on the Transaction
Date.
FREE LOOK PERIOD
You have the right to examine the Accumulator Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You cancel it
by sending it to our Processing Office. The free look is extended if your
state requires a refund period of longer than 10 days. This right applies
only to the initial owner of a Certificate.
Your refund will equal the Annuity Account Value reflecting any investment
gain or loss, and any positive or negative market value adjustment, through
the date we receive your Certificate at our Processing Office. Some states
may require that we calculate the refund differently. In those states that
require that we calculate the refund differently, we may require that any
portion of your initial contribution that you request to have allocated to
the Investment Funds, be allocated to the Money Market Fund until the end of
the free look period.
We follow these same procedures if you change your mind before a Certificate
has been issued, but after a contribution has been made. See "Part 8: Tax
Aspects of the Certificates" for possible consequences of canceling your
Certificate during the free look period.
If you cancel your Certificate during the free look period, we may require
that you wait six months before you may apply for a Certificate with us
again.
ANNUITY ACCOUNT VALUE
The Annuity Account Value is the sum of the Annuity Account Values in the
Investment Funds and the Guaranteed Period Account.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal
to the number of Accumulation Units in that Investment Fund times the
Accumulation Unit Value for the Investment Fund for that date. The number of
Accumulation Units in an Investment Fund at any time is equal to the sum of
Accumulation Units purchased by contributions and transfers less the sum of
Accumulation Units redeemed for withdrawals, transfers or deductions for
charges.
The number of Accumulation Units purchased or sold in any Investment Fund
equals the dollar amount of the transaction divided by the Accumulation Unit
Value for that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the corresponding Portfolios of the Trust, which in
turn reflects the investment income and realized and unrealized capital gains
and losses of the Portfolios, as well as the Trust fees and expenses. The
Accumulation Unit
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Value is also stated after deduction of the Separate Account asset charges
relating to the Certificates. A description of the computation of the
Accumulation Unit Value is found in the SAI.
Annuity Account Value in Guaranteed Period
Account
The Annuity Account Value in the Guaranteed Period Account on any Business
Day will be the sum of the present value of the Maturity Value in each
Guarantee Period, using the Guaranteed Rate in effect for new allocations to
such Guarantee Period on such date. (This is equivalent to the Guaranteed
Period Amount increased or decreased by the full market value adjustment.)
The Annuity Account Value, therefore, may be higher or lower than the
contributions (less withdrawals) accumulated at the Guaranteed Rate. At the
Expiration Date the Annuity Account Value in the Guaranteed Period Account
will equal the Maturity Value. See "Part 4: The Guaranteed Period Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject
to the following restrictions.
Transfers are permitted to or from a Guarantee Period once per quarter o
during each Contract Year. Such transfers may be made at any time during each
quarter.
Transfers out of a Guarantee Period other than at the Expiration Date will o
result in a market value adjustment. See "Part 4: The Guaranteed Period
Account."
Transfers to Guarantee Periods are subject to the restrictions set forth o
under "Guarantee Periods and Expiration Dates" in Part 4 and are limited
based on the age of the Annuitant. See "Allocation of Contributions" above.
Transfer requests must be made directly to our Processing Office. Your
request for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which
the amounts are to be transferred. Your transfer request may be in writing or
by telephone.
For telephone transfer requests, procedures have been established by
Equitable Life that are considered to be reasonable and are designed to
confirm that instructions communicated by telephone are genuine. Such
procedures include requiring certain personal identification information
prior to acting on telephone instructions and providing written confirmation.
In light of the procedures established, Equitable Life will not be liable for
following telephone instructions that it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must
be on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer
to or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in
writing.
DOLLAR COST AVERAGING
If you have at least $5,000 of Annuity Account Value in the Money Market
Fund, you may choose to have a specified dollar amount transferred from the
Money Market Fund to other Investment Funds on a monthly basis. The main
objective of dollar cost averaging is to attempt to shield your investment
from short term price fluctuations. Since the same dollar amount is
transferred to other Investment Funds each month, more Accumulation Units are
purchased in an Investment Fund if the value per Accumulation Unit is low and
fewer Accumulation Units are purchased if the value per Accumulation Unit is
high. Therefore, a lower average value per Accumulation Unit may be achieved
over the long term. This plan of investing allows you to take advantage of
market fluctuations but does not assure a profit or protect against a loss in
declining markets.
The dollar cost averaging option may be elected at the time you apply for the
Certificate or at a later date. The minimum amount that may be transferred
each month is $250. The maximum amount which may be transferred is equal to
the Annuity Account Value in the Money Market Fund at the time the option is
elected, divided by 12.
The transfer date will be the same calendar day each month as the Contract
Date. If, on any transfer date, the Annuity Account Value in the Money Market
Fund is equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred and the dollar cost
averaging option will end. You may change the transfer amount once each
Contract Year, or cancel this option by sending us satisfactory notice to our
Processing Office at least seven calendar days before the next transfer date.
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WITHDRAWAL OPTIONS
The Accumulator is an annuity contract, even though you may elect to receive
your benefits in a non-annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while the Annuitant is
alive. Two withdrawal options are available: Lump Sum Withdrawals and
Systematic Withdrawals. Withdrawals may result in withdrawal charges. See
"Part 6: Deductions and Charges." Withdrawals may also be taxable and subject
to tax penalty. See "Part 8: Tax Aspects of the Certificates."
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration
Date" in Part 4.
As a deterrent to early withdrawal (generally prior to age 59 1/2) the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 8: Tax Aspects
of the Certificates."
o LUMP SUM WITHDRAWALS--You may take Lump Sum Withdrawals at any time
subject to a minimum withdrawal amount of $1,000. A request to withdraw
more than 90% of the Cash Value as of the date of the withdrawal will
result in the termination of the Certificate and will be treated as a
surrender of the Certificate for its Cash Value. See "Surrendering the
Certificates to Receive the Cash Value," below.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal
will be taken. If we have received the information we require, the
requested withdrawal will become effective on the Transaction Date and
proceeds will usually be mailed within seven calendar days thereafter, but
we may delay payment as described in "When Payments Are Made" below. If we
receive only partially completed information, our Processing Office will
contact you for specific instructions before your request can be processed.
o SYSTEMATIC WITHDRAWALS--Systematic Withdrawals provide level percentage
or level amount payouts. You may choose to receive Systematic
Withdrawals on a monthly, quarterly or annual frequency. You select a
dollar amount or percentage of the Annuity Account Value to be
withdrawn, subject to a maximum of 1.2% monthly, 3.6% quarterly and
15.0% annually, but in no event may any payment be less than $250. If at
the time a Systematic Withdrawal is to be made, the withdrawal amount
would be less than $250, no payment will be made and your Systematic
Withdrawal election will terminate.
You select the date of the month when the withdrawals will be made, but you
may not choose a date later than the 28th day of the month. If no date is
selected, withdrawals will be made on the same calendar day of the month as
the Contract Date. The commencement of payments under the Systematic
Withdrawal option may not be elected to start sooner than 28 days after
issue of the Certificate.
You may elect Systematic Withdrawals at any time by completing the proper
form and sending it to our Processing Office. You may change the payment
frequency of your Systematic Withdrawals once each Contract Year or cancel
this withdrawal option at any time by sending notice in a form satisfactory
to us. The notice must be received at our Processing Office at least seven
calendar days prior to the next scheduled withdrawal date. You may also
change the amount or percentage of your Systematic Withdrawals once in each
Contract Year. However, you may not change the amount or percentage in any
Contract Year where you have previously taken another withdrawal under the
Lump Sum Withdrawal option described above.
Unless you specify otherwise, Systematic Withdrawals will be withdrawn on a
pro rata basis from your Annuity Account Value in the Investment Funds. If
there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal required or the total amount of the
withdrawal, as applicable, will be withdrawn from the Guarantee Periods in
order of the earliest Expiration Date(s) first.
Withdrawal Charges
Withdrawals in excess of the 15% free corridor amount may be subject to a
withdrawal charge. See "Withdrawal Charge" in Part 6.
DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of proof satisfactory to us of the Annuitant's death,
prior to the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the
time you apply for the Certificate. While the Certificate is in effect, you
may change your beneficiary by writing to our Processing Office. The change
will be effective on the
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date the written submission was signed. The death benefit payable will be
determined as of the date we receive such proof of death and any required
instructions as to the method of payment.
The death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB defined below; and
(2) the death benefit provided with respect to the Guaranteed Period
Account. See "Part 4: The Guaranteed Period Account."
There are two plans available under the Certificates for providing guaranteed
benefits, a Combined GMDB/GMIB Benefit (available for Annuitant issue ages 20
through 75), and a GMDB Only Benefit, which has a lower charge. The GMDB and
the GMIB are discussed below.
For Annuitant issue ages 20 through 75, you must elect either the Combined
GMDB/GMIB Benefit or the GMDB Only Benefit in the application. To elect the
Combined GMDB/GMIB Benefit, you must be both the Owner and the Annuitant
under the Certificate. Once elected, the plan may not be changed. For
Annuitant issue ages 76 through 83, for Certificates issued in New York and
in states where the GMIB is not currently available, the GMDB Only Benefit
will apply.
For the specific charges, see "Part 6: Deductions and Charges."
GMDB
Applicable to Certificates issued in all states except
- -----------------------------------------------------------------------------
New York
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to (a) the GMDB determined on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. In addition, interest (see below) is credited to and becomes part of
the GMDB on each Processing Date.
o 6% to Age 80 Benefit--interest will be credited at the effective annual
GMDB interest rate of 6% (3% for amounts in the Money Market Fund) through
age 80, and 0% thereafter. Contributions, transfers and withdrawals during
the Contract Year will be taken into account.
Applicable to Certificates issued in New York for
- -----------------------------------------------------------------------------
Annuitant issue ages 20 through 79
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to (a) the GMDB calculated on the immediately
preceding Business Day, plus (b) any subsequent contributions and transfers
into the Investment Funds, less (c) any transfers and withdrawals from such
Funds. Additionally, on each Processing Date the GMDB is reset at the greater
of the current GMDB and the current Annuity Account Value in the Investment
Funds, not to exceed a cap as described below. The cap does not apply on the
seventh Processing Date. The cap is equal to (a) the portion of the initial
contribution allocated to the Investment Funds, plus (b) any subsequent
contributions and transfers into the Investment Funds, less (c) any transfers
and withdrawals from such Funds, plus (d) interest (see below) that is
credited on each Processing Date, plus (e) any amount by which the GMDB is
increased because the cap did not apply on the seventh Processing Date.
o 6% to Age 80 Cap--interest will be credited at the effective annual GMDB
interest rate of 6% (3% for amounts in the Money Market Fund) through age
80, and 0% thereafter.
Applicable to Certificates issued in New York for
- -----------------------------------------------------------------------------
Annuitant issue ages 80 through 83
The GMDB is determined daily. On the Contract Date, the GMDB is equal to the
portion of the initial contribution allocated to the Investment Funds.
Thereafter, the GMDB is equal to such portion of the initial contribution
plus (a) any subsequent contributions and transfers into the Investment
Funds, less (b) any transfers and withdrawals from such Funds.
See Appendix II for an example of the calculation of the GMDB.
How Withdrawals and Transfers Affect the GMDB
Withdrawals and transfers out of the Investment Funds will generally cause a
reduction in the GMDB on a dollar-for-dollar basis. However, if on any
Transaction Date, (i) the GMDB exceeds the Annuity Account Value and (ii) the
sum of withdrawals and transfers out of the Investment Funds is greater than
6% of the beginning of year GMDB, the GMDB will be reduced on a pro rata
basis on the Transaction Date. The amount of the reduction will be determined
by dividing the amount of the withdrawal by the Annuity Account Value on the
Transaction Date and multiplying this percentage by the then current GMDB.
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<PAGE>
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your GMDB.
For example, assuming a beginning of year GMDB of $100,000 and a withdrawal
of $5,000, which represents 5% of the beginning of year GMDB
($5,000/$100,000), such withdrawal would cause the current GMDB to be reduced
by $5,000. If a withdrawal in the amount of $10,000, which represents 10% of
the beginning of year GMDB ($10,000/ $100,000) were to be made, assuming a
current Annuity Account Value of $50,000 the current GMDB would be reduced by
20% ($10,000/$50,000), or $20,000 ($100,0000 x .20).
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the income
annuity option you have chosen under your Certificate. If no income annuity
option has been chosen at the time of the Annuitant's death, the beneficiary
will receive the death benefit in a lump sum. However, subject to certain
exceptions in the Certificate, Equitable Life's rules then in effect and any
other applicable requirements under the Code, the beneficiary may elect to
apply the death benefit to one or more income annuity options offered by
Equitable Life. See "Income Annuity Options" below. Note that if you are both
the Certificate Owner and the Annuitant, only a life annuity or an annuity
that does not extend beyond the life expectancy of the beneficiary may be
elected.
Successor Annuitant
If you are both the Certificate Owner and the Annuitant and you elect your
spouse to be both the sole primary beneficiary and the successor Annuitant/
Certificate Owner, then no death benefit is payable until your surviving
spouse's death.
On the Processing Date following your death, if the successor
Annuitant/Certificate Owner election was elected at issue of the Certificate
and is in effect at your death, the GMDB will be reset at the greater of the
current GMDB and the current Annuity Account Value in the Investment Funds.
The GMDB interest rate will subsequently be credited based on the age (as of
the Processing Date) of the successor Annuitant/Certificate Owner. For such
Certificates, if the Combined GMDB/GMIB Benefit was elected, the GMIB
(discussed below) will continue to be available on Contract Date
anniversaries seven and later based on the Contract Date of the Accumulator
Certificate, provided the GMIB is exercised as specified under GMIB below,
based on the age of the successor Annuitant/Certificate Owner.
WHEN THE CERTIFICATE OWNER DIES
BEFORE THE ANNUITANT
When you are not the Annuitant and you die before the Annuity Commencement
Date, the beneficiary named to receive the death benefit upon the Annuitant's
death will automatically succeed as Certificate Owner (unless you name a
different person as a successor Owner in a written form acceptable to us and
send it to our Processing Office). The Certificate provides that the original
Certificate Owner's entire interest in the Certificate be completely
distributed to the named beneficiary by the fifth anniversary of such Owner's
death (unless an income annuity option is elected and payments begin within
one year after the Certificate Owner's death and are made over the
beneficiary's life or over a period not to exceed the beneficiary's life
expectancy). If an income annuity option has not been elected, as described
above, on the fifth anniversary of your death, we will pay any Annuity
Account Value remaining on such date, less any applicable withdrawal charge.
If the successor Certificate Owner is your surviving spouse, no distributions
are required as long as both the surviving spouse and the Annuitant are
living.
GMIB
The GMIB (available under the Combined GMDB/ GMIB Benefit) may not currently
be available in your state. When it becomes available it will be added to
your Certificate if you then elect the Combined GMDB/GMIB Benefit. State
availability information may be obtained from your registered representative.
The GMIB provides a minimum guaranteed lifetime income upon the application
of the Annuity Account Value in the Investment Funds to purchase the Assured
Payment Plan (Life Annuity with a Period Certain). The Assured Payment Plan
provides payments during a period certain with payments continuing for life
thereafter. On the Transaction Date the amount of the periodic lifetime
income to be purchased under the Assured Payment Plan will be based on the
greater of (i) the Annuity Account Value in the Investment Funds and (ii) an
amount equal to the GMDB described above, reduced by any remaining withdrawal
charges; each divided by "guaranteed maximum annuity purchase rates" under
the Certificate. The guaranteed maximum annuity purchase rates are based on
(i) interest at 2.5% if the GMIB is exercised within 30 days following a
Contract Date anniversary in years 7 through 9 and at 3.0% if exercised
within 30 days following the 10th or later Contract Date anniversary and (ii)
mortality based on the 1983 Individual Annuity Mortality Table "a" projected
with modified Scale G. The mortality table used in determining such annuity
purchase rates assumes that mortality will improve in the future and is more
conservative than the basis underlying current annuity purchase rates. Your
Annuity Account Value in the Investment Funds will depend on the performance
of such Funds. The amount equal to the GMDB (as discussed above) does not
have an Annuity Account Value or a Cash Value and is used solely for purposes
of calculating the GMIB.
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<PAGE>
If you have any Annuity Account Value in the Guaranteed Period Account under
your Accumulator Certificate as of the Transaction Date that you exercise the
GMIB, such Annuity Account Value will also be applied (at current annuity
purchase rates) toward the purchase of payments under the Assured Payment
Plan. Such Annuity Account Value will increase the payments provided by the
GMIB. A market value adjustment may apply.
When you exercise the GMIB, we automatically determine whether the
application of your Annuity Account Value in the Investment Funds at current
purchase rates under the Assured Payment Plan (with a period certain as
specified below) would produce higher lifetime income, and if so, the higher
income will be provided.
In addition, you can elect any of our income annuity options discussed below.
The GMIB applies only if your election of the Assured Payment Plan meets the
following conditions:
o You are the Owner and Annuitant of the Accumulator Certificate.
o The Assured Payment Plan is purchased within 30 days following the 7th
or later Contract Date anniversary under your Accumulator Certificate;
provided it is not purchased earlier than your age 60, nor later than
age 83.
o The period certain you select is as indicated below, based on your
issue age for the Assured Payment Plan Certificate and the type of
payments selected;
LEVEL PAYMENTS
- -----------------------------------------
ISSUE AGE PERIOD CERTAIN
- ----------------- ----------------------
60 through 80 10years
81 through 83 90 less your issue age
INCREASING PAYMENTS
- -----------------------------------------
ISSUE AGE PERIOD CERTAIN
--------------- ----------------------
60 through 70 15years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
o Payments start one payment mode after the Contract Date of the Assured
Payment Plan Certificate.
Each year on your Contract Date anniversary, if you are eligible to exercise
the GMIB, we will send you a notice of how much income could be provided
under such option on the Contract Date anniversary. You may then notify us
within 30 days following the Contract Date anniversary if you want to
exercise the GMIB by submitting the proper form and returning your
Accumulator Certificate. The income to be provided under the Assured Payment
Plan Certificate will be determined on the Transaction Date that we receive
your request and the Certificate and, therefore, may differ from the notice.
It will be based on the GMIB as of such Transaction Date.
The Assured Payment Plan (Life Annuity with a Period Certain) is offered
through our Prospectus for the Assured Payment Plan dated May 1, 1996, which
may be obtained from your registered representative. You should read it
carefully before you decide to purchase such Plan.
See Appendix III for examples on the GMIB.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward
or downward market value adjustment. See "Part 4: The Guaranteed Period
Account." We do not guarantee any minimum Cash Value except for amounts in a
Guarantee Period held to the Expiration Date. On any date before the Annuity
Commencement Date while the Certificate is in effect, the Cash Value is equal
to the Annuity Account Value less any withdrawal charge. The free corridor
amount will not apply when calculating the withdrawal charge applicable upon
a surrender. See "Part 6: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
the Annuitant is living and before the Annuity Commencement Date.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate will be terminated
as of that date. You may receive the Cash Value in a single sum payment or
apply it under one or more of the income annuity options described below. We
will usually pay the Cash Value within seven calendar days, but we may delay
payment as described in "When Payments are Made" below.
In some cases, surrenders may have adverse tax consequences. See "Part 8: Tax
Aspects of the Certificates."
INCOME ANNUITY OPTIONS
Income annuity options provide periodic payments over a specified period of
time which may be fixed or may be based on the Annuitant's life. Annuity
forms of payment are calculated as of the Annuity Commencement Date, which is
on file with our Processing Office. You can change the Annuity Commencement
Date by writing to our Processing Office any time before the Annuity
Commencement Date. However, you may not choose a date later than the 28th day
of any month. Also, based on the issue age of the
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<PAGE>
Annuitant, the Annuity Commencement Date may not be later than the Processing
Date which follows the Annuitant's 90th birthday (may be different in some
states).
Before the Annuity Commencement Date, we will send a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay fixed
annuity benefits on the "normal form" indicated for your Certificate as of
the Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or
(2) the Cash Value for any period certain only annuity form except that if
the period certain is more than five years, the amount applied will be no
less than 95% of the Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an income annuity option
prior to an Expiration Date will result in a market value adjustment. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 4.
ANNUITY FORMS
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with
this annuity form, it provides the highest monthly payment of any of the
life income annuity options, so long as the Annuitant is living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before a specified period of time (the "certain period") has ended,
payments will continue to the beneficiary for the balance of the certain
period. Certain periods may be 5, 10, 15 or 20 years. A life annuity
with a certain period of 10 years is the normal form of annuity under
the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
This option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The income annuity options outlined above are available in both fixed and
variable form, unless otherwise indicated. Fixed annuity payments are
guaranteed by us and will be based either on the tables of guaranteed annuity
payments in your Certificate or on our then current annuity rates, whichever
is more favorable for the Annuitant. Variable income annuities may be funded
through the Common Stock Fund through the purchase of annuity units. The
amount of each variable annuity payment may fluctuate, depending upon the
performance of the Common Stock Fund. That is because the annuity unit value
rises and falls depending on whether the actual rate of net investment return
(after deduction of charges) is higher or lower than the assumed base rate.
See "Annuity Unit Values" in the SAI. Variable income annuities may also be
available by separate prospectus through the Common Stock or other Funds of
other separate accounts we offer.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here. Your registered representative
can provide details.
For each income annuity option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
income annuity option, the Annuitant's age (or the Annuitant's and joint
Annuitant's ages) and in certain instances, the sex of the Annuitant(s). Once
an income annuity option is chosen and payments have commenced, no change can
be made.
If, at the time you elect an income annuity option, the amount to be applied
is less than $2,000 or the initial payment under the option elected is less
than $20 monthly, we reserve the right to pay the Annuity Account Value in a
single sum rather than as payments under the annuity form chosen.
ASSURED PAYMENT PLAN
If you are the Owner and the Annuitant, you may apply your Annuity Account
Value, in whole or in part, and subject to any withdrawal charges to the
extent described below, to purchase the Assured Payment Plan (Life Annuity
with a Period Certain), provided you meet the issue age and payment
restrictions for the Assured Payment Plan. If you apply a part of the Annuity
Account Value, it will be considered a withdrawal and may be subject to
withdrawal charges. See "Withdrawal Options" above. The Assured Payment Plan,
is designed to
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<PAGE>
provide guaranteed level or increasing annual payments for your life or for
your life and the life of a joint Annuitant. If 100% of the Annuity Account
Value is applied from an Accumulator Certificate to purchase the Assured
Payment Plan at a time when the dollar amount of the withdrawal charge is
greater than 2% of remaining contributions (after withdrawals), such
withdrawal charge will not be deducted. However, a new withdrawal charge
schedule will apply under the Assured Payment Plan. For purposes of the
Assured Payment Plan withdrawal charge schedule, the year in which your
Annuity Account Value is applied under the Assured Payment Plan will be
"Contract Year 1." If 100% of the Annuity Account Value is applied from the
Accumulator when the dollar amount of the withdrawal charge is 2% or less,
such withdrawal charge will not be deducted and there will be no withdrawal
charge schedule under the Assured Payment Plan. You should consider the
timing of your purchase as it relates to the potential for withdrawal charges
under the Assured Payment Plan. No subsequent contributions will be permitted
under the Assured Payment Plan Certificate.
You may also apply your Annuity Account Value to purchase the Assured Payment
Plan (Period Certain) once withdrawal charges are no longer in effect. This
version of the Assured Payment Plan provides for annual payments for a
specified period. No withdrawal charges will apply under the Assured Payment
Plan Certificate.
The Assured Payment Plan (Life Annuity with a Period Certain) and Assured
Payment Plan (Period Certain) are described in our prospectus for the Assured
Payment Plan, dated May 1, 1996. Copies are available from your registered
representative.
To purchase this annuity form we also require the return of your Certificate.
An Assured Payment Plan Certificate will be issued putting this annuity form
into effect.
Depending upon your circumstances, this may be accomplished on a tax-free
basis. Consult your tax adviser.
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds,
payment of any portion of the Annuity Account Value (less any applicable
withdrawal charge) from the Investment Funds, and, upon surrender, payment of
the Cash Value from the Investment Funds will be made within seven calendar
days after the Transaction Date. Payments or application of proceeds from the
Investment Funds can be deferred for any period during which (1) the New York
Stock Exchange is closed or trading on it is restricted, (2) sales of
securities or determination of the fair value of an Investment Fund's assets
is not reasonably practicable because of an emergency, or (3) the SEC, by
order, permits us to defer payment in order to protect persons with interest
in the Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account (other than for death benefits) for up to six
months while you are living. We may also defer payments for any amount
attributable to a contribution made in the form of a check for a reasonable
amount of time (not to exceed 15 days) to permit the check to clear.
ASSIGNMENT
The Certificates may be assigned at any time before the Annuity Commencement
Date and for any purpose other than as collateral or security for a loan.
Equitable Life will not be bound by an assignment unless it is in writing and
we have received it at our Processing Office. In some cases, an assignment
may have adverse tax consequences. See "Part 8: Tax Aspects of the
Certificates."
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI),
an indirect wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI is
registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's
principal business address is 787 Seventh Avenue, New York, New York 10019.
The Certificates will be sold by registered representatives of EDI, as well
as by unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation will generally not exceed six
percent of total contributions made under a Certificate. EDI may also receive
compensation and reimbursement for its marketing services under the terms of
its distribution agreement with Equitable Life. Broker-dealers receiving
sales compensation will generally pay a portion thereof to their registered
representatives as commission related to sales of the Certificates. The
offering of the Certificates is intended to be continuous.
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- -------------------------------------------------------------------------------
PART 6: DEDUCTIONS AND CHARGES
- -------------------------------------------------------------------------------
CHARGES DEDUCTED FROM THE
ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options
you select, subject to certain restrictions. We then periodically deduct
certain amounts from your Annuity Account Value. Unless otherwise indicated,
the charges described below and under "Charges Deducted from the Investment
Funds" below will not be increased by us for the life of the Certificates. We
may reduce certain charges under group or sponsored arrangements. See "Group
or Sponsored Arrangements" below. Charges are deducted proportionately from
all the Investment Funds in which your Annuity Account Value is invested on a
pro rata basis, except as noted below.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that a withdrawal exceeds the free corridor amount, or if the
Certificate is surrendered to receive its Cash Value. We determine the
withdrawal charge separately for each contribution in accordance with the
table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For each contribution, the Contract Year in which we receive
that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the
beginning of the Contract Year minus any amount previously withdrawn
during that Contract Year.
Any withdrawal requested that exceeds the free corridor amount will be
subject to the withdrawal charge. The 15% free corridor amount is not
applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge, the Federal income tax law
treats earnings as withdrawn first. See "Part 8: Tax Aspects of the
Certificates."
The withdrawal charge is to help cover sales expenses.
Withdrawal Processing Charge
We reserve the right to impose a charge of the lesser of $25 and 2.0% of the
amount withdrawn for each Lump Sum Withdrawal after the fifth in a Contract
Year. This charge, if made, is to cover our administrative expenses in
processing Lump Sum Withdrawals. See "Asset Based Administrative Charge"
below.
Charges for Combined GMDB/GMIB Benefit
We deduct a charge annually on each Processing Date for providing the
Combined GMDB/GMIB Benefit. The charge is equal to a percentage of the GMDB
in effect on the Processing Date. The percentage is equal to 0.45%.
Charges for GMDB Only Benefit
We deduct a charge annually on each Processing Date for providing the GMDB
Only Benefit. The charge is equal to a percentage of the GMDB in effect on
the Processing Date. The percentage is equal to 0.20%.
If the amount collected from this charge exceeds the cost of providing the
benefits, it will be to our profit, and may be used to pay distribution
expenses not recovered from sales charges under the Certificates.
Charges for State Premium and Other Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium
taxes, that might be imposed in your state. Generally we deduct this charge
from the amount applied to provide an income annuity option. In certain
states, however, we may deduct the charge for taxes from contributions. The
current
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tax charge that might be imposed varies by state and ranges from 0% to 3.5%
(the rate is 1% in Puerto Rico and 5% in the Virgin Islands).
CHARGES DEDUCTED FROM THE
INVESTMENT FUNDS
Mortality and Expense Risk Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for mortality and expense risks. The daily charge is at the
rate of 0.002477%, which is equivalent to an annual rate of 0.90%, on the
assets in each Investment Fund. Approximately 0.60% of this annual charge is
allocated to the mortality risk and 0.30% is allocated to the expense risk.
We will realize a gain from this charge to the extent it is not needed to
provide for benefits and expenses under the Certificate. We will use any gain
for any lawful purpose including payment of distribution expenses not
recovered from sales charges under the Certificate.
The mortality risk assumed is the risk that Annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables,
shown in each Certificate, will differ from actual mortality experience.
Lastly, we assume a mortality risk to the extent that the guaranteed minimum
death benefit charge is insufficient to pay any amount by which such death
benefit exceeds the Cash Value of the Certificate.
The expense risk assumed is the risk that it will cost us more to issue and
administer the Certificates than we expect.
Asset Based Administrative Charge
We will deduct a daily charge from the assets in each Investment Fund, to
compensate us for administrative expenses under the Certificates. The daily
charge is at a rate of 0.000831% (equivalent to an annual rate of 0.30%) on
the assets in each Investment Fund. We reserve the right to increase this
charge to an annual rate of 0.35%, the maximum permitted under the
Certificates. The withdrawal processing charge and the asset based
administrative charge are not designed to produce a profit for Equitable
Life.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against the Trust's assets, the Rule
12b-1 Plan fee, direct operating expenses of the Trust (such as trustees'
fees, expenses of independent auditors and legal counsel, bank and custodian
charges and liability insurance), and certain investment-related expenses of
the Trust (such as brokerage commissions and other expenses related to the
purchase and sale of securities), are reflected in each Portfolio's daily
share price. The maximum investment advisory fees paid annually by the
Portfolios cannot be changed without a vote by shareholders. They are as
follows:
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
-------------------------------
FIRST
$350 NEXT $400 OVER $750
MILLION MILLION MILLION
--------- --------- ---------
<S> <C> <C> <C>
Aggressive Stock ........ .500% .475% .450%
Common Stock and Money
Market .................. .400% .375% .350%
Growth Investors, Global
and High Yield ......... .550% .525% .500%
</TABLE>
Investment advisory fees are established under the Trust's investment
advisory agreements between the Trust and its investment adviser, Alliance.
The Rule 12b-1 Plan provides that the Trust, on behalf of each Portfolio may
pay annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The Rule 12b-1 Plan
fee, which may be waived in the discretion of EDI, may be increased only by
action of the Board of Trustees of the Trust up to a maximum of 0.50% per
annum.
All of these fees and expenses are described more fully in the Trust
prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal
charge or change the minimum initial contribution requirements. We may also
change the guaranteed minimum death benefit and the guaranteed minimum income
benefit. Group arrangements include those in which a trustee or an employer,
for example, purchases contracts covering a group of individuals on a group
basis. Sponsored arrangements include those in which an employer allows us to
sell Certificates to its employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these
factors into account when reducing charges. To qualify for reduced charges, a
group or sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in exist-
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ence. Group or sponsored arrangements that have been set up solely to buy
Certificates or that have been in existence less than six months will not
qualify for reduced charges.
We may also establish different Guaranteed Rates for the Guarantee Periods
under different classes of Certificates for group or sponsored arrangements.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the withdrawal charge will reflect
differences in costs or services and will not be unfairly discriminatory.
Group and sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR
MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE
ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The withdrawal charge may be reduced or eliminated when sales are made in a
manner that results in savings of sales and administrative expenses, such as
sales through persons who are compensated by clients for recommending
investments and receive no commission or reduced commissions in connection
with the sale of the Certificates. In no event will a reduction or
elimination of the withdrawal charge be permitted where it would be unfairly
discriminatory.
31
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- ------------------------------------------------------------------------------
PART 7: VOTING RIGHTS
- ------------------------------------------------------------------------------
TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of the Trust. Since we own
the assets of the Separate Account, we are the legal owner of the shares and,
as such, have the right to vote on certain matters. Among other things, we
may vote:
o to elect the Trust's Board of Trustees,
o to ratify the selection of independent auditors for the Trust, and
o on any other matters described in the Trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because the Trust is a Massachusetts business trust, annual meetings are not
required. Whenever a shareholder vote is taken, we will give Certificate
Owners the opportunity to instruct us how to vote the number of shares
attributable to their Certificates. If we do not receive instructions in time
from all Certificate Owners, we will vote the shares of a Portfolio for which
no instructions have been received in the same proportion as we vote shares
of that Portfolio for which we have received instructions. We will also vote
any shares that we are entitled to vote directly because of amounts we have
in an Investment Fund in the same proportions that Certificate Owners vote.
Each Trust share is entitled to one vote. Fractional shares will be counted.
Voting generally is on a Portfolio-by-Portfolio basis except that shares will
be voted on an aggregate basis when universal matters, such as election of
Trustees and ratification of independent auditors, are voted upon. However,
if the Trustees determine that shareholders in a Portfolio are not affected
by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
VOTING RIGHTS 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
and 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 the Accumulator Certificate
Owners, we currently do not foresee any disadvantages 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
Certificate Owners, we will see to it that appropriate action is taken to
protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner
approval, Certificate Owners will be entitled to one vote for each
Accumulation Unit they have in the Investment Funds. Each Certificate Owner
who has elected a variable annuity payout may cast the number of votes equal
to the dollar amount of reserves we are holding for that annuity in the
Common Stock Fund divided by the Accumulation Unit Value for the Common Stock
Fund. We will cast votes attributable to any amounts we have in the
Investment Funds in the same proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
32
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- -------------------------------------------------------------------------------
PART 8: TAX ASPECTS OF THE CERTIFICATES
- -------------------------------------------------------------------------------
This prospectus generally covers our understanding of the current Federal
income tax rules that apply to an annuity purchased with after-tax dollars
(non-qualified annuity).
This prospectus does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Accumulator Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities. In addition, the Treasury Department may amend
existing regulations, issue new regulations, or adopt new interpretations of
existing laws. State tax laws or, if you are not a United States resident,
foreign tax laws, may affect the tax consequences to you or the beneficiary.
These laws may change from time to time without notice and, as a result, the
tax consequences may be altered. There is no way of predicting whether, when
or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
TAXATION OF NON-QUALIFIED ANNUITIES
Equitable Life has designed the Accumulator Certificate to qualify as an
"annuity" for purposes of Federal income tax law. Gains in the Annuity
Account Value of the Certificate generally will not be taxable to an
individual until a distribution occurs, either by a withdrawal of part or all
of its value or as a series of periodic payments. However, there are some
exceptions to this rule: (1) if a Certificate fails the investment
diversification requirements; (2) if an individual transfers a Certificate as
a gift to someone other than a spouse (or divorced spouse), any gain in its
Annuity Account Value will be taxed at the time of transfer; (3) the
assignment or pledge of any portion of the value of a Certificate will be
treated as a distribution of that portion of the Certificate; and (4) when an
insurance company (or its affiliate) issues more than one non-qualified
deferred annuity certificate or contract during any calendar year to the same
taxpayer, the certificates or contracts are required to be aggregated in
computing the taxable amount of any distribution.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Certificate
unless an exception under the Code applies.
Prior to the Annuity Commencement Date, any withdrawals which do not
terminate your total interest in the Certificate are taxable to you as
ordinary income to the extent there has been a gain in the Annuity Account
Value. The balance of the distribution is treated as a return of the
"investment" or "basis" in the Certificate and is not taxable. Generally, the
investment or basis in the Certificate equals the contributions made, less
any amounts previously withdrawn which were not taxable. Special rules may
apply if contributions made to another annuity certificate or contract prior
to August 14, 1982 are transferred to a Certificate in a tax-free exchange.
To take advantage of these rules, you should notify us prior to such an
exchange.
If you surrender or cancel the Certificate, the distribution is taxable to
the extent it exceeds the investment in the Certificate.
Once annuity payments begin, a portion of each payment is considered to be a
tax-free recovery of investment based on the ratio of the investment to the
expected return under the Certificate. The remainder of each payment will be
taxable. In the case of a variable annuity, special rules apply if the
payments received in a year are less than the amount permitted to be
recovered tax-free. In the case of a life annuity, after the total investment
has been recovered, future payments are fully taxable. If payments cease as a
result of death, a deduction for any unrecovered investment will be allowed.
The taxable portion of a distribution is treated as ordinary income and is
subject to income tax withholding. See "Federal and State Income Tax
Withholding" below. In addition, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date the taxpayer attains age 59 1/2, (2) made on or after your death, (3)
attributable to the disability of the taxpayer, (4) part of a series of
substantially equal installments as an annuity for the life (or life
expectancy) of the taxpayer or the joint lives (or joint life expectancies)
of the taxpayer and a beneficiary, or (5) with respect to income allocable to
amounts contributed to an annuity certificate or contract prior to August 14,
1982 which are transferred to the Certificate in a tax-free exchange.
33
<PAGE>
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 5, the beneficiary is generally
subject to the same tax treatment as would apply to you, had you surrendered
the Certificate (discussed above).
If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a lump sum death benefit first becomes payable and
before any benefit is actually paid. The tax computation will reflect your
investment in the Certificate.
The Certificate provides a minimum guaranteed death benefit that in certain
circumstances may be greater than either the contributions made or the
Annuity Account Value. This provision provides investment protection against
an untimely termination of a Certificate on the death of an Annuitant at a
time when the Certificate's Annuity Account Value might otherwise have
provided a lower benefit. Although we do not believe that the provision of
this benefit should have any adverse tax effect, it is possible that the IRS
could take a contrary position and could assert that some portion of the
charges for the minimum guaranteed death benefit should be treated for
Federal income tax purposes as a partial withdrawal from the Certificate. If
this were so, such a deemed withdrawal could be taxable, and for Certificate
Owners under age 59 1/2, also subject to tax penalty.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax on the taxable
portion of annuity payments, unless the recipient elects not to be subject to
income tax withholding. The rate of withholding will depend on the type of
distribution and, in certain cases, the amount of the distribution. Special
withholding rules apply to foreign recipients and United States citizens
residing outside the United States. If a recipient does not have sufficient
income tax withheld or does not make sufficient estimated income tax
payments, however, the recipient may incur penalties under the estimated
income tax rules. Recipients should consult their tax advisers to determine
whether they should elect out of withholding. Requests not to withhold
Federal income tax must be made in writing prior to receiving benefits under
the Certificate. Our Processing Office will provide forms for this purpose.
No election out of withholding is valid unless the recipient provides us with
the correct taxpayer identification number and a United States residence
address.
Certain states have indicated that income tax withholding will apply to
payments made from the Certificate to residents. In some states, a recipient
may elect out of state withholding. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. If
you need more information concerning a particular state or any required
forms, call our Processing Office at the toll-free number and consult your
tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1996, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,075
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemption. A
withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than you, a Federal generation skipping tax may be
payable with respect to the benefit at rates similar to the maximum estate
tax rate in effect at the time. The generation skipping tax provisions
generally apply to transfers which would also be subject to the gift and
estate tax rules. Individuals are generally allowed an aggregate generation
skipping tax exemption of $1 million. Because these rules are complex, you
should consult with your tax adviser for specific information, especially
where benefits are passing to younger generations, as opposed to a spouse or
child.
34
<PAGE>
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
SPECIAL RULES FOR CERTIFICATES ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from Accumulator Certificates
as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents
is excludable from U.S. taxation. Income from Accumulator Certificates is
also subject to Puerto Rico tax. The computation of the taxable portion of
amounts distributed from a Certificate may differ in the two jurisdictions.
Therefore, an individual might have to file both U.S. and Puerto Rico tax
returns, showing different amounts of income for each. Puerto Rico generally
provides a credit against Puerto Rico tax for U.S. tax paid. Depending on an
individual's personal situation and the timing of the different tax
liabilities, an individual may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account
for taxes. Equitable Life can set up reserves for such taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers among the Investment Funds or between the Guaranteed Period Account
and one or more Investment Funds are not taxable.
35
<PAGE>
- -------------------------------------------------------------------------------
PART 9: KEY FACTORS IN RETIREMENT PLANNING
- -------------------------------------------------------------------------------
INTRODUCTION
The Accumulator is available to help meet the retirement income and
investment needs of individuals. In assessing these retirement needs, some
key factors need to be addressed: (1) the impact of inflation on fixed
retirement incomes; (2) the importance of planning early for retirement; (3)
the benefits of tax-deferral; (4) the selection of an appropriate investment
strategy; and (5) the benefit of annuitization. Each of these factors is
addressed below.
Unless otherwise noted, all of the following presentations use an assumed
annual rate of return of 7.5% compounded annually. This rate of return is for
illustrative purposes only and is not intended to represent an expected or
guaranteed rate of return for any investment vehicle, including the
Accumulator. In addition, unless otherwise noted, none of the illustrations
reflect any charges that may be applied under a particular investment
vehicle, including the Accumulator. Such charges would effectively reduce the
actual return under any investment vehicle.
All earnings in these presentations are assumed to accumulate tax-deferred
unless otherwise noted. Most programs designed for retirement savings offer
tax-deferral. Monies are taxed upon withdrawal and a 10% penalty tax may
apply to premature withdrawals. Certain retirement programs prohibit early
withdrawals. See "Part 8: Tax Aspects of the Certificates." Where taxes are
taken into consideration in these presentations, a 28% tax rate is assumed.
The source of the data used by us to compile the charts which appear in this
Part 9 (other than charts 1, 2, 3, 4 and 7) is Ibbotson Associates, Inc.
Chicago. Stocks, Bonds, Bills and Inflation 1996 Yearbook (TM). All rights
reserved.
In reports or other communications or in advertising material we may make use
of these or other graphic or numerical illustrations that we prepare showing
the impact of inflation, planning early for retirement, tax-deferral,
diversification and other concepts important to retirement planning.
INFLATION
Inflation erodes purchasing power. This means that, in an inflationary
period, the dollar is worth less as time passes. Because many people live on
a fixed income during retirement, inflation is of particular concern to them.
The charts that follow illustrate the detrimental impact of inflation over an
extended period of time. Between 1965 and 1995, the average annual inflation
rate was 5.39%. As demonstrated in Chart 1, this 5.39% annual rate of
inflation would cause the purchasing power of $35,000 to decrease to only
$7,246 after 30 years.
In Chart 2, the impact of inflation is examined from another perspective.
Specifically, the chart illustrates the additional income needed to maintain
the purchasing power of $35,000 over a thirty year period. Again, the
1965-1995 historical inflation rate of 5.39% is used. In this case, an
additional $134,064 would be required to maintain the purchasing power of
$35,000 after 30 years.
CHART 1
[THE FOLLOWING TABLE WAS REPRESENTED AS A
3-D BAR GRAPH IN THE PROSPECTUS]
Today -- $35,000
10 years -- $20,705
20 years -- $12,248
30 years -- $ 7,246
[END OF GRAPHICALLY REPRESENTED DATA]
CHART 2
ANNUAL INCOME NEEDED
[THE FOLLOWING TABLE WAS REPRESENTED AS A
3-D BAR GRAPH IN THE PROSPECTUS]
Today -- $ 35,000
10 years -- $ 59,165
20 years -- $100,013
30 years -- $169,064
Increase Needed: $24,165 $65,013 $134,064
[END OF GRAPHICALLY REPRESENTED DATA]
36
<PAGE>
STARTING EARLY
The impact of inflation accentuates the need to begin a retirement program
early. The value of starting early is illustrated in the following charts.
As shown in Chart 3, if an individual makes annual contributions of $2,500 to
his or her retirement program beginning at age 30, he or she would accumulate
$414,551 by age 65 under the assumptions described earlier. If that
individual waited until age 50, he or she would only accumulate $70,193 by
age 65 under the same assumptions.
CHART 3
[THE FOLLOWING TABLE WAS REPRESENTED AS
A STACKED AREA GRAPH IN THE PROSPECTUS:]
30 ................. $414,551
40 ................. $182,691
50 ................. $ 70,193
BLACK - Age 30 GRAY - Age 40 DOTTED - Age 50
[END OF GRAPHICALLY REPRESENTED DATA]
In Table 1, the impact of starting early is demonstrated in another format.
For example, if an individual invests $300 monthly, he or she would
accumulate $387,193 in thirty years under our assumptions. In contrast, if
that individual invested the same $300 per month for 15 years, he or she
would accumulate only $97,804 under our assumptions.
TABLE 1
<TABLE>
<CAPTION>
MONTHLY
CONTRIBUTION YEAR 10 YEAR 15 YEAR 20 YEAR 25 YEAR 30
- -------------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 20 $ 3,532 $ 6,520 $ 10,811 $ 16,970 $ 25,813
50 8,829 16,301 27,027 42,425 64,532
100 17,659 32,601 54,053 84,851 129,064
200 35,317 65,202 108,107 169,701 258,129
300 52,969 97,804 162,160 254,552 387,193
</TABLE>
Chart 4 presents an additional way to demonstrate the significant impact of
starting to make contributions to a retirement program earlier rather than
later. It assumes that an individual had a goal to accumulate $250,000
(pre-tax) by age 65. If he or she starts at age 30, under our assumptions he
or she could reach the goal by making a monthly pre-tax contribution of $130
(equivalent to $93 after taxes). The total net cost for the 30 year old in
this hypothetical example would be $39,265. If the individual in this
hypothetical example waited until age 50, he or she would have to make a
monthly pre-tax contribution of $767 (equivalent to $552 after taxes) to
attain the goal, illustrating the importance of starting early.
CHART 4
GOAL: $250,000 BY AGE 65
[THE FOLLOWING TABLE WAS REPRESENTED
AS A BAR GRAPH IN THE PROSPECTUS:]
B W
$ 93 a Month ............. 30 $39,265 $210,735
$212 a Month ............. 40 $63,641 $186,359
$552 a Month ............. 50 $99,383 $150,617
BLACK - Net Cost
WHITE - Tax-Deferred Earnings at 7.5%
[END OF GRAPHICALLY REPRESENTED DATA]
TAX-DEFERRAL
Contributing to a retirement plan early is part of an effective strategy for
addressing the impact of inflation. Another part of such a strategy is to
carefully select the types of retirement programs in which to invest. In
deciding where to invest retirement contributions, there are three basic
types of programs.
The first type offers the most tax benefits, and therefore is potentially the
most beneficial for accumulating funds for retirement. Contributions are made
with pre-tax dollars or are tax-deductible and earnings grow income
tax-deferred. An example of this type of program is the deductible Individual
Retirement Annuity (IRA).
The second type of program also provides for tax deferred earnings growth;
however, contributions are made with after-tax dollars. Examples of this type
of program are non-deductible IRAs and non-qualified annuities.
The third approach to retirement savings is fully taxable. Contributions are
made with after-tax dollars and earnings are taxed each year. Examples of
this type of program include certificates of deposit, savings accounts, and
taxable stock, bond or mutual fund investments.
37
<PAGE>
Consider an example. For the type of retirement program that offers both
pre-tax contributions and tax-deferral, assume that a $2,000 annual pre-tax
contribution is made for thirty years. In this example, the retirement funds
would be $177,224 after thirty years (assuming a 7.5% rate of return, no
withdrawals and assuming the deduction of the 1.20% Separate Account daily
asset charge--but no withdrawal charge or other charges under the
Certificate, or Trust charges to Portfolios), and such funds would be
$222,309 without the effect of any charges. Assuming a lump sum withdrawal
was made in year thirty and a 28% tax bracket, these amounts would be
$127,601 and $160,062, respectively.
For the type of program that offers only tax-deferral, assume an after-tax
annual contribution of $1,440 for thirty years and the same rate of return.
The after-tax contribution is derived by taxing the $2,000 pre-tax
contribution again assuming a 28% tax bracket. In this example, the
retirement funds would be $127,601 after thirty years assuming the deduction
of charges and no withdrawals, and $160,062 without the effect of charges.
Assuming a lump sum withdrawal in year thirty, the total after-tax amount
would be $103,969 with charges deducted and $127,341 without charges as
described above.
For the fully taxable investment, assume an after-tax contribution of $1,440
for thirty years. Earnings are taxed annually. After thirty years, the amount
of this fully taxable investment is $108,046.
Keep in mind that taxable investments have fees and charges too (investment
advisory fees, administrative charges, 12b-1 fees, sales loads, brokerage
commissions, etc.). We have not attempted to apply these fees and charges to
the fully taxable amounts since this is intended merely as an example of tax
deferral.
Again, it must be emphasized that the assumed rate of return of 7.5%
compounded annually used in these examples is for illustrative purposes only
and is not intended to represent a guaranteed or expected rate of return on
any investment vehicle. Moreover, early withdrawals of tax-deferred
investments are generally subject to a 10% penalty tax.
INVESTMENT OPTIONS
Selecting an appropriate retirement program is clearly an important part of
an effective retirement planning strategy. Carefully choosing among
Investment Options is another essential component.
During the 1965-1995 period, common stock average annual returns outperformed
the average annual returns of fixed investments such as long-term government
bonds and Treasury Bills (T-Bills). See "Notes" below. Common stocks earned
an average annual return of 10.68% over this period, in contrast to 6.72% and
7.92% for the other two investment categories. Significantly, common stock
returns also outpaced inflation which grew at 5.39% over this period.
Although common stock returns have historically outpaced returns of fixed
investments, people often allocate a significant percentage of their
retirement funds to fixed return investments. Their primary concern is the
preservation of principal. Given this concern, Chart 5 illustrates the impact
of exposing only the interest generated by a fixed investment to the stock
market. In this illustration, the fixed investment is represented by a
Treasury Bill return and the stock investment is represented by the Standard
& Poor's 500 ("S&P 500").
The chart assumes that a $20,000 fixed investment was made on January 1,
1980. If the interest on that investment were to accumulate based upon the
return of the S&P 500, the total investment would have been worth $131,033 in
1995. Had the interest been reinvested in the fixed investment, the fixed
investment would have grown to $62,379. As illustrated in Chart 5,
significant opportunities for growth exist while preserving principal. See
"Notes" below.
CHART 5
$131,033 with Interest Exposed to Stock Market (S&P 500)
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PROSPECTUS]
Market Value Market Value
Month of S&P 500 If 100% in
Ending & Fixed Acct 3 Mo. T-Bill
1980 J 20,160 20,160
F 20,338 20,339
M 20,547 20,586
A 20,823 20,845
M 21,031 21,014
J 21,183 21,142
J 21,369 21,254
A 21,515 21,390
S 21,708 21,550
O 21,930 21,755
N 22,333 21,964
D 22,522 22,252
1981 J 22,619 22,483
F 22,888 22,724
M 23,239 22,999
A 23,386 23,247
M 23,637 23,514
J 23,878 23,832
J 24,129 24,127
A 24,156 24,436
S 24,196 24,739
O 24,659 25,039
N 25,079 25,306
D 25,118 25,527
1982 J 25,195 25,731
F 25,113 25,968
M 25,278 26,222
A 25,722 26,518
M 25,770 26,799
J 25,861 27,057
J 25,945 27,341
A 26,850 27,549
S 27,028 27,689
O 27,937 27,852
N 28,411 28,028
D 28,690 28,216
1983 J 29,131 28,410
F 29,492 28,587
M 29,965 28,767
A 30,862 28,971
M 30,943 29,171
J 31,495 29,366
J 31,284 29,584
A 31,627 29,808
S 31,938 30,035
O 31,930 30,263
N 32,348 30,475
D 32,418 30,698
1984 J 32,490 30,931
F 32,222 31,150
M 32,577 31,378
A 32,826 31,632
M 32,297 31,879
J 32,719 32,118
J 32,701 32,381
A 34,295 32,650
S 34,470 32,931
O 34,708 33,260
N 34,705 33,503
D 35,205 33,717
1985 J 36,503 33,936
F 36,845 34,133
M 37,000 34,345
A 37,089 34,592
M 38,272 34,820
J 38,673 35,012
J 38,748 35,229
A 38,744 35,423
S 38,262 35,635
O 39,208 35,867
N 40,706 36,086
D 41,803 36,320
1986 J 42,011 36,524
F 43,792 36,717
M 45,230 36,938
A 45,021 37,130
M 46,493 37,312
J 47,036 37,506
J 45,602 37,701
A 47,609 37,874
S 45,430 38,045
O 46,935 38,220
N 47,703 38,369
D 47,070 38,557
1987 J 50,789 38,719
F 52,147 38,885
M 53,115 39,068
A 52,912 39,240
M 53,327 39,389
J 55,086 39,578
J 56,925 39,760
A 58,441 39,947
S 57,685 40,127
O 49,695 40,367
N 47,333 40,509
D 49,428 40,667
1988 J 50,743 40,785
F 52,280 40,972
M 51,393 41,152
A 51,824 41,342
M 52,174 41,553
J 53,765 41,756
J 53,732 41,969
A 52,733 42,217
S 54,245 42,478
O 55,302 42,738
N 54,915 42,981
D 55,673 43,252
1989 J 58,362 43,490
F 57,529 43,755
M 58,548 44,048
A 60,672 44,343
M 62,465 44,694
J 62,377 45,011
J 66,323 45,326
A 67,365 45,662
S 67,310 45,958
O 66,344 46,271
N 67,446 46,590
D 68,687 46,874
1990 J 65,533 47,142
F 66,234 47,410
M 67,578 47,714
A 66,541 48,043
M 71,214 48,370
J 70,982 48,674
J 70,955 49,005
A 66,481 49,329
S 64,314 49,625
O 64,286 49,962
N 67,252 50,247
D 68,667 50,548
1991 J 70,922 50,811
F 74,664 51,055
M 76,053 51,280
A 76,316 51,552
M 78,820 51,794
J 76,216 52,011
J 78,945 52,266
A 80,422 52,507
S 79,523 52,748
O 80,405 52,970
N 78,042 53,176
D 84,752 53,378
1992 J 83,616 53,560
F 84,486 53,710
M 83,290 53,892
A 85,196 54,065
M 85,604 54,216
J 84,717 54,390
J 87,387 54,558
A 86,078 54,700
S 86,890 54,842
O 87,176 54,969
N 89,486 55,095
D 90,453 55,249
1993 J 91,013 55,376
F 92,016 55,498
M 93,614 55,637
A 91,858 55,770
M 93,843 55,893
J 94,136 56,033
J 93,836 56,167
A 96,699 56,308
S 96,183 56,454
O 97,774 56,578
N 97,093 56,720
D 98,087 56,850
1994 J 100,753 56,992
F 98,615 57,112
M 95,249 57,266
A 96,281 57,421
M 97,589 57,605
J 95,734 57,783
J 98,297 57,945
A 101,558 58,159
S 99,666 58,375
O 101,566 58,596
N 98,647 58,813
D 99,883 59,072
1995 J 102,044 59,320
F 105,307 59,557
M 107,925 59,831
A 110,571 60,095
M 114,257 60,419
J 116,566 60,703
J 119,871 60,976
A 120,235 61,263
S 124,521 61,526
O 124,249 61,816
N 128,920 62,075
D 131,033 63,379
$62,379 Without Interest Exposed to Stock Market
(S&P 500)
[END OF GRAPHICALLY REPRESENTED DATA]
Another variation of the example in Chart 5 is to gradually transfer
principal from a fixed investment into the stock market. Chart 6 assumes that
a $20,000 fixed investment was made on January 1, 1980. For the next two
years, $540 is transferred monthly into the stock market (represented by the
S&P 500). The total investment, given this strategy, would have grown to
$139,695 in 1995. In contrast, had the principal not been transferred, the
fixed investment would have grown to $62,379. See "Notes" below.
38
<PAGE>
CHART 6
$139,695 with Principal Transfer
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PROSPECTUS]
Market Value Market Value
Month of S&P 500 If 100% in
Ending & Fixed Acct 3 Mo. T-Bil
1980 J 20540 20160
F 20702 20339
M 20770 20586
A 21068 20845
M 21425 21014
J 21659 21142
J 22000 21254
A 22149 21390
S 22394 21550
O 22623 21755
N 23446 21964
D 23372 22252
1981 J 23246 22483
F 23569 22724
M 24053 22999
A 24031 23247
M 24246 23514
J 24324 23832
J 24514 24127
A 24051 24436
S 23651 24739
O 24397 25039
N 25087 25306
D 24857 25527
1982 J 24193 25731
F 23594 25968
M 23618 26222
A 24248 26518
M 23995 26799
J 23892 27057
J 23731 27341
A 25407 27549
S 25647 27689
O 27281 27852
N 28031 28028
D 28386 28216
1983 J 29041 28410
F 29568 28587
M 30282 28767
A 31737 28971
M 31721 29171
J 32549 29366
J 32000 29584
A 32424 29808
S 32790 30035
O 32616 30263
N 33176 30475
D 33142 30698
1984 J 33104 30931
F 32544 31150
M 32969 31378
A 33202 31632
M 32246 31879
J 32767 32118
J 32593 32381
A 34841 32650
S 34959 32931
O 35133 33260
N 35058 33503
D 35692 33717
1985 J 37434 33936
F 37844 34133
M 37970 34345
A 37984 34592
M 39531 34820
J 40023 35012
J 40038 35229
A 39976 35423
S 39254 35635
O 40428 35867
N 42341 36086
D 43701 36320
1986 J 43926 36524
F 46184 36717
M 47968 36938
A 47659 37130
M 49498 37312
J 50136 37506
J 48265 37701
A 50769 37874
S 47982 38045
O 49830 38220
N 50767 38369
D 49918 38557
1987 J 54519 38719
F 56165 38885
M 57317 39068
A 57035 39240
M 57525 39389
J 59630 39578
J 61849 39760
A 63662 39947
S 62711 40127
O 52932 40367
N 50090 40509
D 52585 40667
1988 J 54165 40785
F 55951 40972
M 54862 41152
A 55344 41342
M 55720 41553
J 57582 41756
J 57509 41969
A 56280 42217
S 58018 42478
O 59225 42738
N 58749 42981
D 59588 43252
1989 J 62695 43490
F 61691 43755
M 62824 44048
A 65234 44343
M 67232 44694
J 67118 45011
J 71581 45326
A 72728 45662
S 72661 45958
O 71544 46271
N 72760 46590
D 74150 46874
1990 J 70617 47142
F 71385 47410
M 72851 47714
A 71676 48043
M 76833 48370
J 76576 48674
J 76526 49005
A 71611 49329
S 69246 49625
O 69192 49962
N 72438 50247
D 73964 50548
1991 J 76420 50811
F 80470 51055
M 81977 51280
A 82241 51552
M 84947 51794
J 82165 52011
J 85076 52266
A 86666 52507
S 85709 52748
O 86662 52970
N 84157 53176
D 91300 53378
1992 J 90106 53560
F 91047 53710
M 89770 53892
A 91798 54065
M 92244 54216
J 91302 54390
J 94130 54558
A 92765 54700
S 93626 54842
O 93940 54969
N 96377 55095
D 97388 55249
1993 J 97994 55376
F 99055 55498
M 100732 55637
A 98899 55770
M 100989 55893
J 101297 56033
J 100991 56167
A 103992 56308
S 103458 56454
O 105136 56578
N 104425 56720
D 105474 56850
1994 J 108259 56992
F 106046 57112
M 102533 57266
A 103617 57421
M 104976 57605
J 103062 57783
J 105741 57945
A 109118 58159
S 107170 58375
O 109151 58596
N 106146 58813
D 107426 59072
1995 J 109681 59320
F 113071 59557
M 115775 59831
A 118526 60095
M 122319 60419
J 124733 60703
J 128155 60976
A 128547 61263
S 132973 61526
O 132710 61816
N 137525 62075
D 139695 62379
$62,379 Without Principal Transfer
[END OF GRAPHICALLY REPRESENTED DATA]
NOTES
1. Common Stocks: Standard & Poor's (S&P) Composite Index is an unmanaged
weighted index of the stock performance of 500 industrial,
transportation, utility and financial companies. Results shown assume
reinvestment of dividends. Both market value and return on common stock
will vary.
2. U.S. Government Securities: Long-term Government Bonds are measured
using a one-bond portfolio constructed each year containing a bond with
approximately a 20-year maturity and a reasonably current coupon. U.S.
Treasury Bills are 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. U.S. Government
securities are guaranteed as to principal and interest, and if held to
maturity, offer a fixed rate of return. However, market value and
return on such securities will fluctuate prior to maturity.
The Accumulator can be an effective program for diversifying ongoing
investments between various asset categories. In addition, the Accumulator
offers special features which help address the risk associated with timing
the equity markets, such as dollar cost averaging. By transferring the same
dollar amount each month from the Money Market Fund to other Investment
Funds, dollar cost averaging attempts to shield your investment from short
term price fluctuations. This, however, does not assure a profit or protect
against a loss in declining markets.
THE BENEFIT OF ANNUITIZATION
An individual may shift the risk of outliving his or her principal by
electing a lifetime income annuity. See "Income Annuity Options," in Part 5.
Chart 7 below shows the monthly income that can be generated under various
forms of life annuities, as compared to receiving level payments of interest
only or principal and interest from the investment. Calculations in the Chart
are based on the following assumption: a $100,000 contribution was made at
one of the ages shown, annuity payments begin immediately, and a 5%
annuitization interest rate is used. For purposes of this example, principal
and interest are paid out on a level basis over 15 years. In the case of the
interest only scenario, the principal is always available and may be left to
other individuals at death. Under the principal and interest scenario, a
portion of the principal will be left at death, assuming the individual dies
within the 15 year period. In contrast, under the life annuity scenarios,
there is no residual amount left.
CHART 7
MONTHLY INCOME
($100,000 CONTRIBUTION)
<TABLE>
<CAPTION>
JOINT AND SURVIVOR*
-----------------------------------
INTEREST PRINCIPAL AND
ONLY FOR INTEREST FOR SINGLE 50% TO 66.67% TO 100% TO
ANNUITANT LIFE 15 YEARS LIFE SURVIVOR SURVIVOR SURVIVOR
- ----------- ---------- -------------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Male 65 $401 $785 $ 617 $560 $544 $513
Male 70 401 785 685 609 588 549
Male 75 401 785 771 674 646 598
Male 80 401 785 888 760 726 665
Male 85 401 785 1,045 878 834 757
</TABLE>
- ------------
The numbers are based on 5% interest compounded annually and the 1983
Individual Annuity Mortality Table "a" projected with modified Scale G.
Annuity purchase rates available at annuitization may vary, depending
primarily on the annuitization interest rate, which may not be less than an
annual rate of 2.5%.
* The Joint and Survivor Annuity Forms are based on male and female
Annuitants of the same age.
39
<PAGE>
- -----------------------------------------------------------------------------
PART 10: INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------------------------------
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life at December 31, 1995 and 1994 and for each of the
three years in the period ended December 31, 1995 included in Equitable
Life's Annual Report on Form 10-K, incorporated by reference in the prospec
tus, have been examined by Price Waterhouse LLP, independent accountants,
whose reports thereon are incorporated herein by reference. Such consolidated
financial statements and consolidated financial statement schedules have been
incorporated herein by reference in reliance upon the reports of Price
Waterhouse LLP given upon their authority as experts in accounting and
auditing.
40
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- -----------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1997 to a Guarantee Period with an Expiration Date
of February 15, 2006 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2001.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2001
----------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2001 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value .................. $144,048 $119,487
(2) Guaranteed Period Amount ............... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ...... 12,968 (11,593)
February 15, 2001 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000 / (1)] $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)] ........... 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ..... 85,581 76,229
(7) Maturity Value ......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value .................. 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
41
<PAGE>
APPENDIX II: GUARANTEED MINIMUM DEATH BENEFIT (GMDB) EXAMPLE
- -----------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the sum of:
(1) the Annuity Account Value in the Investment Funds, or, if greater,
the GMDB (see "GMDB" in Part 5); and
(2) the death benefit provided with respect to the Guaranteed Period
Account (see "Death Benefit Amount" in Part 4).
The following is an example illustrating the calculation of the GMDB.
Assuming $100,000 is allocated to the Investment Funds (with no allocation to
the Money Market Fund), no subsequent contributions, no transfers and no
withdrawals, the GMDB for an Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
END OF
CONTRACT ANNUITY ACCOUNT NON-NEW YORK
YEAR VALUE GMDB(1) NEW YORK GMDB
- ---------- --------------- -------------- -------------
<S> <C> <C> <C>
1 $105,000 $106,000 $105,000(2)
2 $108,675 $112,360 $108,675(2)
3 $124,976 $119,102 $119,102(3)
4 $135,912 $126,248 $126,248(3)
5 $149,503 $133,823 $133,823(3)
6 $149,503 $141,852 $141,852(3)
7 $161,463 $150,363 $161,463(3)
8 $161,463 $159,385 $161,463(2)
</TABLE>
The Annuity Account Values for Contract Years 1 through 8 are determined
based on hypothetical rates of return of 5.00%, 3.50%, 15.00%, 8.75%, 10.00%,
0.00%, 8.00% and 0.00%, respectively.
NON-NEW YORK
(1) For Contract Years 1 through 8, the GMDB equals the initial contribution
increased by 6%.
NEW YORK
(2) At the end of Contract Years 1 and 2, and again at the end of Contract
Year 8, the GMDB is equal to the Annuity Account Value.
(3) At the end of Contract Years 3 through 6, the GMDB is equal to the
contribution increased by 6% instead of the Annuity Account Value, since
the GMDB cannot be greater than this amount. However, at the end of the
seventh Contract Year the GMDB is equal to the Annuity Account Value of
$161,463 even though it is greater than the contribution increased at 6%
($150,363) because the cap does not apply on the seventh Processing
Date.
42
<PAGE>
APPENDIX III: GMIB EXAMPLES
- -----------------------------------------------------------------------------
The GMIB is equal to:
(A) the greater of
(i) the Annuity Account Value in the Investment Funds, and
(ii) an amount equal to the GMDB (reduced by any remaining withdrawal
charges);
divided by
(B) the guaranteed maximum annuity purchase rates.
The examples below assume a male age 60 has purchased an Accumulator
Certificate with an initial contribution of $100,000 that is allocated 100%
to the Investment Funds (excluding the Money Market Fund). The GMDB in the
10th Contract Year is $179,085 at 6% interest. Assuming hypothetical rates of
return (after deduction of charges) in the Investment Funds of 0% in Example
1 and 8% in Example 2 during the 10 Contract Years, the GMIB in the 10th
Contract Year (assuming level payments under the Assured Payment Plan) would
be as follows:
<TABLE>
<CAPTION>
EXAMPLE 1 EXAMPLE 2
----------- -----------
<S> <C> <C>
(1) Hypothetical Rate of Return .... 0% 8%
(2) Annuity Account Value as of the
Contract Date ................... $100,000 $100,000
(3) The greater of (i) the GMDB and
(ii) the Annuity Account Value
as of the 10th Contract Date
anniversary ..................... $179,085 $215,892
(4) Guaranteed Maximum Annuity
Purchase Rates for level
payments under the Assured
Payment Plan .................... $ 14.73 $ 14.73
(5) GMIB as of 10th Contract Date
anniversary ((3)/(4)) ........... $ 12,160 $ 14,659
</TABLE>
In Example 1, the GMDB which is higher than the Annuity Account Value would
provide a GMIB of $12,160. In Example 2, the Annuity Account Value, which at
this point is higher than the GMDB, would provide a GMIB of $14,659.
The rates of return discussed above are for illustrative purposes only and
are not intended to represent an expected or guaranteed rate or return. Your
investment results will vary. The level of GMIB under the Assured Payment
Plan will also depend on the guaranteed maximum annuity purchase rates as of
the Transaction Date and the type of payments selected. The examples assume
no transfers or withdrawals, which would affect the GMDB and, thus, the GMIB.
43
<PAGE>
- ------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
--------
Part 1: Accumulation Unit Values 2
Part 2: Annuity Unit Values 2
Part 3: Custodian and Independent Accountants 3
Part 4: Money Market Fund Yield Information 3
Part 5: Long-Term Market Trends 3
Part 6: Financial Statements 5
</TABLE>
HOW TO OBTAIN AN ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Accumulator SAI:
---------------------------------------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
City State Zip
44
<PAGE>
MVA ANNUITY
(IRA AND NQ)
PROSPECTUS DATED MAY 1, 1997
ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- -------------------------------------------------------------------------------
This prospectus describes certificates The Equitable Life Assurance Society
of the United States (EQUITABLE LIFE, WE, OUR and US) offers under an annuity
contract (MVA ANNUITY) issued on a group basis or as individual contracts.
Enrollment under a group contract will be evidenced by issuance of a
certificate. Certificates and individual contracts each will be referred to
as "Certificates." Certificates can be issued as individual retirement
annuities (IRA) or non-qualified annuities for after-tax contributions only
(NQ). Under IRA Certificates, we will accept only initial contributions that
are rollover contributions or that are direct transfers from other individual
retirement arrangements, as described in this prospectus. A minimum single
contribution of $5,000 is required to put a Certificate into effect. No
subsequent contributions are permitted; however, you may apply for more than
one Certificate.
The Certificates are designed to provide retirement income at a future date.
The Owner (CERTIFICATE OWNER, YOU and YOUR) selects one of the available
GUARANTEE PERIODS in which amounts will accumulate interest on a tax-deferred
basis. Interest is credited at a rate we set for your class of Certificate
(GUARANTEED RATE) for the entire period. On each business day (BUSINESS DAY)
we set Guaranteed Rates for new Certificates. A market value adjustment
(positive or negative) will be made for withdrawals, surrender and certain
other transactions from a Guarantee Period before its expiration date
(EXPIRATION DATE). The market value adjustment will be based on the
difference between the Guaranteed Rate for your Certificate and the
Guaranteed Rate for the Guarantee Period having the same Expiration Date
under new Certificates. The Guarantee Periods currently available are those
maturing in calendar years 1998 through 2007.
When you are ready to start receiving income, you may choose from a variety
of payout options, including the Income Manager and other fixed annuities.
Assets supporting our obligations under the Certificates will be held in a
"nonunitized" separate account of Equitable Life, which provides an
additional measure of assurance that the full payment of the amount due will
be made. Any favorable investment performance on the assets held in the
separate account accrues solely to Equitable Life's benefit.
This prospectus provides information about the Certificates that prospective
investors should know before investing. You should read it carefully and
retain it for future reference.
A registration statement relating to interests under the Guarantee Periods
has been filed with the Securities and Exchange Commission (SEC).
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
Copyright 1997
The Equitable Life Assurance Society of the United States,
New York, New York 10104.
All Rights Reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(EXCHANGE ACT) after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated
by reference in this prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated herein by reference shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified and superseded, to constitute a part of
this prospectus. Equitable Life files its Exchange Act documents and reports,
including its annual and quarterly reports on Form 10-K and Form 10-Q,
electronically pursuant to EDGAR under CIK No. 0000727920. The SEC maintains
a web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
2
<PAGE>
PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
PART 1: SUMMARY PAGE 5
What is the MVA Annuity? 5
Guarantee Periods 5
Contributions 5
Withdrawals 5
Death Benefit 5
Withdrawal Charge 5
Free Look Period 5
Services We Provide 5
Surrendering the Certificates 6
Income Annuity Options 6
Taxes 6
Charges for State Premium and Other
Applicable Taxes 6
Equitable Life 6
PART 2: THE GUARANTEED PERIOD
ACCOUNT PAGE 7
Guarantee Periods 7
Market Value Adjustment for
Withdrawals or Surrender Prior to the
Expiration Date 7
Investments 8
PART 3:PROVISIONS OF THE
CERTIFICATES AND SERVICES
WE PROVIDE PAGE 10
Availability of the Certificates 10
Contributions Under the Certificates 10
Methods of Payment 10
Allocation of Contribution 10
Free Look Period 10
Annuity Account Value 11
Options at Expiration Date of a
Guarantee Period 11
Withdrawals 11
Death Benefit 12
When the NQ Certificate Owner Dies
Before the Annuitant 12
Cash Value 13
Surrendering the Certificates to Receive
the Cash Value 13
Income Annuity Options 13
When Payments Are Made 14
Assignment 14
Distribution of the Certificates 14
Withdrawal Charge 15
Charges for State Premium and Other
Applicable Taxes 15
Group or Sponsored Arrangements 15
Other Distribution Arrangements 15
PART 4: TAX ASPECTS OF THE CERTIFICATES PAGE 16
Tax Changes 16
Federal and State Income Tax
Withholding 16
Other Withholding 16
Transfers to a Guarantee Period 17
Taxation of Non-Qualified Annuities 17
Special Rules for NQ Certificates Issued
in Puerto Rico 18
IRA Tax Information 18
Tax-Qualified Individual Retirement
Annuities (IRAs) 18
Penalty Tax on Early Distributions 21
Tax Penalty for Insufficient
Distributions 21
Tax Penalty for Excess Distributions
or Accumulation 21
PART 5:INDEPENDENT ACCOUNTANTS PAGE 22
APPENDIX I: MARKET VALUE
ADJUSTMENT EXAMPLE PAGE 23
</TABLE>
3
<PAGE>
GENERAL TERMS
ANNUITANT--The individual who is the measuring life for determining benefits
under the Certificate. Under NQ Certificates the Annuitant can be different
from the Certificate Owner; under IRA Certificates, the Annuitant and the
Certificate Owner must be the same individual.
ANNUITY ACCOUNT VALUE--The present value of the Maturity Value. See "Annuity
Account Value" in Part 3.
ANNUITY COMMENCEMENT DATE--The date on which amounts will be applied to
provide an annuity benefit.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns a Certificate and has the right to
exercise all rights under the Certificate. Under NQ Certificates the
Certificate Owner can be different from the Annuitant. Under IRA
Certificates, the Certificate Owner must also be the Annuitant.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The date on which the Annuitant is enrolled under the group
annuity contract, or the effective date of the individual contract. This is
usually the Business Day we receive the initial contribution at our
Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificate. Guarantee Periods
may also be referred to as Guaranteed Interest Rate Options (GIROs) or
Guaranteed Fixed Interest Accounts.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods.
GUARANTEED PERIOD AMOUNT--The term used to refer to the amount accumulated in
a Guarantee Period.
GUARANTEED RATE--The annual interest rate established daily for a Guarantee
Period.
IRA--An individual retirement annuity, as defined in Section 408(b) of the
Code.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
NQ--A non-qualified annuity under which after tax dollars are contributed by
or on behalf of an individual.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., withdrawals, etc.) or other written communications must be sent. See
"Services We Provide" in Part 1.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
4
<PAGE>
PART 1: SUMMARY
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE MVA ANNUITY?
The MVA Annuity is a deferred annuity designed to provide retirement income
at a future date. Your contribution is allocated to one of a series of
Guarantee Periods providing guaranteed interest. The Certificate may not be
available in all states.
Amounts accumulate on a tax-deferred basis generally until withdrawn or
distributions become payable. You can decide when and if to apply amounts to
the Income Manager annuity or to elect a fixed income annuity option.
GUARANTEE PERIODS
Guarantee Periods maturing on February 15th in each of calendar years 1998
through 2007 are initially available.
CONTRIBUTIONS
To put a Certificate into effect, you must make a contribution of at least
$5,000. Under IRA Certificates your contribution must be in the form of
either a rollover contribution or a direct custodian-to-custodian transfer
from one or more other individual retirement arrangements. You may not make
subsequent contributions, but you may apply for more than one Certificate.
Under certain circumstances, multiple Certificates must be linked together
for federal income tax purposes. See Part 4: "Tax Aspects of the
Certificates."
WITHDRAWALS
o Lump Sum Withdrawals--After the first Contract Year, before the Annuity
Commencement Date while the Certificate is in effect, you may take a
Lump Sum Withdrawal from your Certificate once per Contract Year at any
time during such Contract Year. The minimum withdrawal amount is $1,000.
o Systematic Withdrawals--You may also withdraw funds under our Systematic
Withdrawal option, where the minimum withdrawal amount is $250.
Withdrawals may be subject to a withdrawal charge and may result in a market
value adjustment. Withdrawals may also be taxable and if you are under age
59 1/2, subject to tax penalty.
DEATH BENEFIT
If the Annuitant and successor Annuitant, if any, die before the Annuity
Commencement Date, the Certificate provides a death benefit. The beneficiary
will be paid the death benefit which is equal to the Annuity Account Value or
if greater, your contribution minus any withdrawals and withdrawal charges.
WITHDRAWAL CHARGE
A withdrawal charge is imposed as a percentage of your contribution to the
extent that a withdrawal exceeds the 10% free corridor amount, or if the
Certificate is surrendered to receive its Cash Value.
The withdrawal charge percentage initially equals the number of years to
maturity of the Guarantee Period you select. A partial year will be
considered a full year for this purpose, however, in no event will a
withdrawal charge percentage exceed 7% nor will the withdrawal charge period
exceed 7 years. The percentage is subsequently reduced by 1% on each Contract
Date anniversary.
FREE LOOK PERIOD
You have the right to examine the MVA Annuity Certificate for a period of 10
days after you receive it, and to return it to us for a refund. You may
cancel it by sending it to our Processing Office. Your refund will equal the
Annuity Account Value reflect ing any positive or negative market value
adjustment, through the date we receive your Certificate for cancellation at
our Processing Office.
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the
calendar year;
o Three additional reports of your Certificate values each year;
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Guaranteed Rates
applicable to the Guarantee Periods. Also call during our regular
business hours to speak to one of our customer service
representatives.
O PROCESSING OFFICE
O FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
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O FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G.,
REQUESTS FOR WITHDRAWALS) SENT BY
REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G.,
REQUEST FOR WITHDRAWALS) SENT BY
EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time while
the Annuitant is living and the Certificate is in effect. Withdrawal charges
and a market value adjustment may apply. A surrender may also be subject to
income tax and tax penalty.
INCOME ANNUITY OPTIONS
The Certificates provide access to the Income Manager immediate annuities and
income annuity options to which amounts may be applied at the Annuity
Commencement Date. The income annuity options, and the Income Manager, are
offered on a fixed basis. Income Manager Plan Certificates are described in
another prospectus which may be obtained from your registered representative.
TAXES
Generally, earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject
to tax penalty.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
Generally, we deduct a charge for premium or other applicable taxes from the
Annuity Account Value on the Annuity Commencement Date. The current tax
charge that might be imposed varies by state and ranges from 0% to 2.25% for
IRA Certificates and from 0 to 3.5% for NQ Certificates (the rate is 1% in
Puerto Rico and 5% in the Virgin Islands).
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Our home office is located at
1290 Avenue of the Americas, New York, New York 10104. We are authorized to
sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico and the Virgin Islands. We maintain local offices
throughout the United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996, AXA beneficially owned
approximately 63.8% of the outstanding shares of common stock of the Holding
Company assuming conversion of convertible preferred stock held by AXA. Under
its investment arrangements with Equitable Life 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
Life. AXA, a French company, is a holding company for an international group
of insurance and related financial service companies.
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PART 2: THE GUARANTEED PERIOD ACCOUNT
GUARANTEE PERIODS
Your contribution is allocated to a Guarantee Period and accumulates interest
at the Guaranteed Rate applicable to your class of Certificate, if held in
that Guarantee Period to its Expiration Date. Guaranteed Rates for new
Certificates of the same class (current Guaranteed Rate) are set daily. We
may establish different Guaranteed Rates under different classes of
Certificates. We use the term Guaranteed Period Amount to refer to the amount
accumulated in a Guarantee Period. The Guaranteed Period Amount is reduced or
increased by any market value adjustment as a result of withdrawals and
withdrawal charges (see below).
We call the Guaranteed Period Amount on an Expiration Date the Guarantee
Period's Maturity Value. We report the Annuity Account Value to reflect any
market value adjustment that would apply if the entire Guaranteed Period
Amount were withdrawn as of the calculation date. The Annuity Account Value
on any Business Day, therefore, will be the present value of the Maturity
Value, using the current Guaranteed Rate in effect on such date.
Guarantee Periods and Expiration Dates
We currently offer initial Guarantee Periods ending on February 15th for each
of the maturity years 1998 through 2007. We also currently offer a Guarantee
Period ending on May 15th, 2007. Each year we expect to add a new Guarantee
Period maturing in 10 years on the 15th of February. We also expect to
periodically add additional Guarantee Periods maturing in 10 years on the
15th in months other than February.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the earliest available
Expiration Date immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no withdrawals are made). The required amount is the
present value of that Maturity Value at the Guaranteed Rate on the
Transaction Date, which may also be expressed as the price per $100 of
Maturity Value on such Transaction Date.
Guaranteed Rates as of April 15, 1997 and the related price per $100 of
Maturity Value for each currently available Guarantee Period were as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH
EXPIRATION DATE
FEBRUARY 15TH
EXCEPT AS GUARANTEED
OTHERWISE RATE AS OF PRICE
STATED OF APRIL 15, PER $100 OF
MATURITY YEAR 1997 MATURITY VALUE
- --------------- ------------ --------------
<S> <C> <C>
1998 4.93% $96.05
1999 5.40 90.78
2000 5.64 85.58
2001 5.76 80.65
2002 5.86 75.91
2003 5.94 71.39
2004 6.03 66.99
2005 6.09 62.89
2006 6.17 58.89
May 15, 2007 6.23 55.16
</TABLE>
MARKET VALUE ADJUSTMENT FOR
WITHDRAWALS OR SURRENDER
PRIOR TO THE EXPIRATION DATE
Any withdrawal (including withdrawal charges and surrender of your
Certificate) from a Guarantee Period prior to its Expiration Date will cause
any remaining Guaranteed Period Amount for that Guarantee Period to be
increased or decreased by a market value adjustment. The amount of the
adjustment will depend on two factors: (a) the difference between the
Guaranteed Rate applicable to your Certificate and the current Guaranteed
Rate on the Transaction Date for the same Guarantee Period, and (b) the
length of time remaining until the Expiration Date. In general, if interest
rates have
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risen between the time when an amount was originally allocated to a Guarantee
Period and the time it is withdrawn, the market value adjustment will be
negative, and vice versa; and the longer the period of time remaining until
the Expiration Date, the greater the impact of the interest rate difference.
Therefore, it is possible that a significant rise in interest rates could
result in a substantial reduction in your Annuity Account Value related to
longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined as
follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal of a portion of the amount in a Guarantee Period will be a
percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds. This percentage is determined by (i) dividing the
amount of the withdrawal by (ii) the Annuity Account Value prior to the
withdrawal. See the Appendix I for an example.
The Guaranteed Rate for new Certificates of the same class is the rate we
have in effect for this purpose even if contributions to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate
in (1)(c) above.
INVESTMENTS
Amounts allocated to Guarantee Periods will be held in a "nonunitized"
separate account established by Equitable Life under the laws of New York.
This separate account provides an additional measure of assurance that the
full payment of amounts due under the Guarantee Periods will be made. Under
the New York Insurance Law, the portions of the separate account's assets
equal to the reserves and other contract liabilities relating to the
Certificates are not chargeable with liabilities arising out of any other
business we may conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
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General Account
Our general account supports all of our policy and contract guarantees
including those applicable to the Guaranteed Period Account, as well as our
general obligations.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933, as amended
(1933 Act), nor is the general account an investment company under the
Investment Company Act of 1940, as amended, (1940 Act). Accordingly, the
general account is not subject to regulation under the 1933 Act or the 1940
Act. However, the market value adjustment interests under the Certificates
are registered under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in this prospectus for your information that
relates to the general account (other than market value adjustment
interests). The disclosure, however, may be subject to certain generally
applicable provisions of the Federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
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<PAGE>
PART 3: PROVISIONS OF THE CERTIFICATES AND SERVICES WE PROVIDE
The provisions of your Certificate may be restricted by applicable laws and
regulations.
AVAILABILITY OF THE CERTIFICATES
The Certificates are available for Annuitant issue ages 20 to 80. Any amount
contributed to an IRA Certificate after you attain age 70 l/2 must be net of
your required minimum distribution for the year in which the rollover or
direct transfer contribution is made. See "Part 4: Tax Aspects of the IRA
Certificates." The Certificates may not be available in all states. IRA
Certificates are not available in Puerto Rico.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your single contribution must be at least $5,000. Under IRA Certificates, we
will accept only single contributions which are either rollover contributions
under Section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code, or
direct custodian-to-custodian transfers from other individual retirement
arrangements. See "Appendix II: IRA Tax Information."
You may not make subsequent contributions, but you may apply for more than
one Certificate. Under certain circumstances, multiple Certificates must be
linked together for federal income tax purposes. See Part 4: "Tax Aspects of
the Certificates."
We may refuse to accept any contribution if the sum of all contributions
received under Certificates with the same Annuitant would then total more
than $1,500,000. We may also refuse to accept any contribution if the sum of
all contributions under all Equitable annuity accumulation certificates/
contracts that you own would then total more than $2,500,000.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check. All
contributions made by check must be drawn on a bank or credit union in the
U.S., in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. All contributions should be sent to Equitable
Life at our Processing Office address designated for contributions.
Contributions are credited as of the Transaction Date.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will receive the Guaranteed Rate(s) in
effect for the applicable Guarantee Period(s) on the date contributions are
received. Wire orders not accompanied by complete information may be retained
for a period not exceeding five Business Days while an attempt is made to
obtain the required information. If the required information cannot be
obtained within those five Business Days, the Processing Office will inform
the broker-dealer, on behalf of the applicant, of the reasons for the delay
and return the contribution immediately to the applicant, unless the
applicant specifically consents to our retaining the contribution until the
required information is received by the Processing Office.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate will not be issued until the receipt and
acceptance of a properly completed application. During the time from receipt
of the contribution until a signed application is received from the
Certificate Owner, no other financial transactions may be requested.
If an application is not received within ten days of receipt of the
contribution via wire order, or if an incomplete application is received and
cannot be completed within ten days of receipt of the contribution, the
amount of the contribution will be returned to the applicant with immediate
notification to the broker-dealer.
ALLOCATION OF CONTRIBUTION
Your single contribution is allocated to the Guarantee Period you select.
However, in no event may you select a Guarantee Period with a maturity beyond
the earliest available Expiration Date immediately following the Annuity
Commencement Date.
FREE LOOK PERIOD
You have the right to examine a Certificate for a period of 10 days after you
receive it, and to return it to us for a refund. You cancel it by sending it
to our Processing Office. The free look is extended if your state requires a
refund period of longer than 10 days. This right applies only to the initial
owner of a Certificate.
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Your refund will equal the Annuity Account Value reflecting any positive or
negative market value adjustment, through the date we receive your
Certificate for cancellation at our Processing Office. Some states or Federal
income tax regulations may require that we calculate the refund differently.
We follow these same procedures if you change your mind before you receive
your Certificate, but after a contribution has been made. See "Part 4: Tax
Aspects of the Certificates" for possible consequences of canceling your
Certificate during the free look period.
If you cancel your Certificate during the free look period, we may require
that you wait six months before you may apply for a Certificate with us
again.
ANNUITY ACCOUNT VALUE
Your Annuity Account Value on any Business Day will be the present value of
the Maturity Value, using the current Guaranteed Rate in effect for such
Guarantee Period on such date. (This is equivalent to the Guaranteed Period
Amount increased or decreased by the full market value adjustment.) The
Annuity Account Value, therefore, may be higher or lower than the
contribution (less withdrawals) accumulated at the Guaranteed Rate. At the
Expiration Date the Annuity Account Value will equal the Maturity Value. See
"Part 2: The Guaranteed Period Account."
OPTIONS AT EXPIRATION DATE OF A
GUARANTEE PERIOD
We will notify you on or before December 31st prior to the Expiration Date of
your Guarantee Period. You may elect one of the following options to be
effective at the Expiration Date, subject to the restrictions set forth under
"Guarantee Periods and Expiration Dates" in Part 2:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering; or
(b) to withdraw the Maturity Value.
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the same duration as the expired Guarantee Period.
WITHDRAWALS
The Certificates are annuity contracts, even though you may elect to receive
your benefits in a non-annuity form. You may withdraw funds from your
Certificate before the Annuity Commencement Date and while the Annuitant is
alive. You may withdraw an amount equal to the 10% free corridor amount
without incurring a withdrawal charge.
IRA Certificates are subject to the Code's minimum distribution requirements.
Generally, distributions from these Certificates must commence by April 1 of
the calendar year following the calendar year in which you attain age 70 1/2.
Subsequent distributions must be made by December 31st of each calendar year.
If you do not commence minimum distributions in the calendar year in which
you attain age 70 1/2, and wait until the three month period (January 1 to
April 1) in the next calendar year to commence minimum distributions, then
you must take two required minimum distributions in that calendar year. If
the required minimum distribution is not made, a penalty tax in an amount
equal to 50% of the difference between the amount required to be withdrawn
and the amount actually withdrawn may apply. See "Part 4: IRA Tax
Information" for a discussion of various special rules concerning the minimum
distribution requirements.
The IRA Certificate offered under this prospectus may not be an appropriate
vehicle for minimum distributions. Before purchasing a Certificate, you
should consider your ability to meet minimum distribution requirements by
taking minimum distributions from other IRA funds that you may have.
Amounts withdrawn from a Guarantee Period, other than at the Expiration Date,
will result in a market value adjustment. See "Market Value Adjustment for
Withdrawals or Surrender Prior to the Expiration Date" in Part 2.
Withdrawals may be taxable and subject to tax penalty (as a deterrent to
early withdrawal, generally prior to age 59 1/2). We may also be required to
withhold income taxes from the amount distributed. See "Part 4: Tax Aspects
of the Certificates."
The methods for withdrawing funds under the Certificates are listed below.
o LUMP SUM WITHDRAWALS--After the first Contract Year, you may take one
Lump Sum Withdrawal per Contract Year at any time during such Contract
Year in an amount of at least $1,000.
A request to withdraw more than 90% of the Cash Value as of the
Transaction Date will result in the termination of the Certificate and
will be treated as a surrender of the Certificate for its Cash Value. See
"Surrendering the Certificates to Receive the Cash Value" below.
To make a Lump Sum Withdrawal, you must submit a request in a form
satisfactory to us. If we have received the information we require, the
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requested withdrawal will become effective on the Transaction Date and
proceeds will usually be mailed within seven calendar days thereafter,
but we may delay payment as described below in "When Payments Are Made."
If we receive only partially completed information, our Processing Office
will contact you for specific instructions before your request can be
processed.
o SYSTEMATIC WITHDRAWALS--Systematic Withdrawals provide level percentage
or level amount payouts. You may choose to receive Systematic
Withdrawals on a monthly, quarterly or annual frequency. You select a
dollar amount or percentage of the Annuity Account Value to be
withdrawn, subject to a maximum of 0.8% monthly, 2.5% quarterly and
10.0% annually, but in no event may any payment be less than $250. If at
the time a Systematic Withdrawal is to be made, the withdrawal amount
would be less than $250, no payment will be made and your Systematic
Withdrawal election will terminate.
You select the date of the month when the withdrawals will be made, but
you may not choose a date later than the 28th day of the month. If no
date is selected, withdrawals will be made on the same calendar day of
the month as the Contract Date. The commencement of payments under the
Systematic Withdrawal option may not be elected to start sooner than 28
days after issue of the Certificate.
You may elect Systematic Withdrawals at any time by completing the
proper form and sending it to our Processing Office. You may change the
payment frequency of your Systematic Withdrawals once each Contract Year
or cancel this withdrawal option at any time by sending notice in a form
satisfactory to us. The notice must be received at our Processing Office
at least seven calendar days prior to the next scheduled withdrawal
date. You may also change the amount or percentage of your Systematic
Withdrawals once in each Contract Year. However, you may not change the
amount or percentage in any Contract Year where you have previously
taken another withdrawal under the Lump Sum Withdrawals option described
above.
DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of proof satisfactory to us of the Annuitant's death
before the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the
time you apply for the Certificate. While the Certificate is in effect, you
may change your beneficiary by writing to our Processing Office. The change
will be effective on the date the written submission was signed. The death
benefit payable will be determined as of the date we receive such proof of
death and any required instructions as to the method of payment. See "How
Payment is Made" below.
The death benefit is equal to the Annuity Account Value, or if greater, your
contribution minus any withdrawals and withdrawal charges.
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the income
annuity option you have chosen under your Certificate. If no income annuity
option has been chosen at the time of the Annuitant's death, the beneficiary
will receive the death benefit in a lump sum. However, subject to certain
exceptions in the Certificate, Equitable Life's rules then in effect and any
other applicable requirements under the Code, the beneficiary may elect to
apply the death benefit to one of our Income Manager or to one or more income
annuity options offered by Equitable Life. See "Income Annuity Options"
below. Such an election when made on a timely basis, can defer otherwise
taxable income. See "Death Benefits" in Part 4. Note that if you are both the
Certificate Owner and the Annuitant, only a life annuity or an annuity that
does not extend beyond the life expectancy of the beneficiary may be elected.
Successor Annuitant
If you are both the Certificate Owner and the Annuitant and you elect your
spouse to be the sole primary beneficiary and to be the successor
Annuitant/Certificate Owner, then no death benefit is payable until your
surviving spouse's death.
WHEN THE NQ CERTIFICATE OWNER DIES
BEFORE THE ANNUITANT
If you are the Certificate Owner under an NQ Certificate but not the
Annuitant and you die before the Annuity Commencement Date, the beneficiary
named to receive the death benefit upon the Annuitant's death will
automatically succeed as Certificate Owner (unless you name a different
person as successor Owner in a written form acceptable to us and send it to
our Processing Office). The NQ Certificate provides that the original
Certificate Owner's entire interest in the Certificate be completely
distributed to the named beneficiary by the fifth anniversary of such Owner's
death (unless an income annuity option is elected and payments begin within
one year after the Certificate Owner's death and are made over the
beneficiary's life or over a
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period not to exceed the beneficiary's life expectancy). If an income annuity
option has not been elected, as described above, on the fifth anniversary of
your death we will pay any Annuity Account Value remaining on such date, less
any applicable withdrawal charge. If the successor Certificate Owner is your
surviving spouse, no distributions are required as long as both the surviving
spouse and the Annuitant are living.
CASH VALUE
The Cash Value under the Certificate reflects any upward or downward market
value adjustment. See "Part 2: The Guaranteed Period Account." On any date
while the Certificate is in effect, the Cash Value is equal to the Annuity
Account Value less any withdrawal charge. The free corridor amount will not
apply when calculating the withdrawal charge applicable upon a surrender. See
"Surrendering the Certificates to Receive the Cash Value," and "Withdrawal
Charge" below.
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
the Annuitant is living and before the Annuity Commencement Date.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate will be terminated
as of that date. You may receive the Cash Value in a single sum payment or
apply it under one or more income annuity options. See "Income Annuity
Options" below. We will usually pay the Cash Value within seven calendar
days, but we may delay payment as described in "When Payments are Made"
below.
For the tax consequences of surrenders, see "Part 4: Tax Aspects of the
Certificates." The 10% free corridor amount is not applicable to a surrender.
INCOME ANNUITY OPTIONS
Income annuity options provide periodic payments over a specified period of
time which may be fixed or may be based on the Annuitant's life.
Annuitization payments are calculated as of the Annuity Commencement Date,
which is on file with our Processing Office. You can change the Annuity
Commencement Date by writing to our Processing Office any time before the
Annuity Commencement Date. However, you may not choose a date later than the
28th day of any month. Also, no Annuity Commencement Date will be later than
the earliest available Expiration Date which follows the Contract Date
anniversary following the Annuitant's 90th birthday.
Before the Annuity Commencement Date, we will send a letter advising that
annuity benefits may be elected. Unless you otherwise elect, we will pay
fixed annuity benefits on the "normal form" indicated for your Certificate as
of the Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or
(2) the Cash Value for any period certain only annuity form except that if
the period certain is more than five years, the amount applied will be no
less than 95% of the Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an income annuity option
prior to an Expiration Date will result in a market value adjustment. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 2.
Annuity Forms
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with
this annuity form, it provides the highest monthly payment of any of the
life income annuity options, so long as the Annuitant is living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before a specified period of time (the "certain period") has ended,
payments will continue to the beneficiary for the balance of the certain
period. Certain periods may be 5, 10, 15 or 20 years. A life annuity
with a certain period of 10 years is the normal form of annuity under
the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The Certificates offer the income annuity options outlined above in fixed
form. Fixed annuity payments are guaranteed by us and will be based on the
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tables of guaranteed annuity payments in your Certificate or on our then
current annuity rates, whichever is more favorable for the Annuitant.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here.
For each income annuity option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
income annuity option, the Annuitant's age (or the Annuitant's and joint
Annuitant's ages) and in certain instances, the sex of the Annuitant(s). Once
an income annuity option is chosen and payments have commenced, no change can
be made.
If, at the time you elect an income annuity option, the amount to be applied
is less than $2,000 or the initial payment under the option elected is less
than $20 monthly, we reserve the right to pay the Annuity Account Value in a
single sum rather than as payments under the annuity form chosen.
INCOME MANAGER
The Income Manager is one of the series of immediate annuities which offers
both income and access to a Cash Value. You may at any time apply your
Annuity Account Value to purchase the Income Manager (Life Annuity with a
Period Certain), provided the Annuitant meets the issue age and payment
restrictions for an Income Manager. If the Annuity Account Value is applied
from a Certificate to purchase the Income Manager at a time when the dollar
amount of the withdrawal charge is greater than 2% of remaining contributions
(after withdrawals), such withdrawal charge will not be deducted. However, a
new withdrawal charge schedule will apply under the Income Manager. If the
Annuity Account Value is applied from your Certificate when the dollar amount
of the withdrawal charge is 2% or less, there will be no withdrawal charge
schedule under the Income Manager. You should consider the timing of your
purchase as it relates to the potential for withdrawal charges under the
Income Manager. No subsequent contributions will be permitted under the
Income Manager.
You may also apply your Annuity Account Value to purchase the Income Manager
(Period Certain) once withdrawal charges under your Certificate are no longer
in effect. This version of the Income Manager provides for annual payments
for a specified period. No withdrawal charges will apply under the Income
Manager Certificate.
The Income Manager (Life Annuity with a Period Certain) and Income Manager
(Period Certain) are described in our Prospectus for the Income Manager,
dated May 1, 1997. Copies are available from your registered representative.
To purchase an Income Manager we require the return of your Certificate. An
Income Manager Certificate will be issued putting the Income Manager into
effect.
Depending upon your circumstances, this may be accomplished on a tax-free
basis. Consult your tax adviser.
WHEN PAYMENTS ARE MADE
We can defer payment of any portion of the Annuity Account Value (other than
for death benefits) for up to six months while you are living. We may also
defer payments for any amount attributable to a contribution made in the form
of a check for a reasonable amount of time (not to exceed 15 days) to permit
the check to clear.
ASSIGNMENT
IRA Certificates are not assignable or transferable except through surrender
to us. They may not be borrowed against or used as collateral for a loan or
other obligation.
NQ Certificates may be assigned at any time before the Annuity Commencement
Date and for any purpose other than as collateral or security for a loan.
Equitable Life will not be bound by an assignment unless it is in writing and
we have received it at our Processing Office. In some cases, an assignment
may have adverse tax consequences. See "Part 4: Tax Aspects of the
Certificates."
DISTRIBUTION OF THE CERTIFICATES
Equitable Distributors, Inc. (EDI), an indirect wholly owned subsidiary of
Equitable Life, has responsibility for sales and marketing functions and may
be deemed to be the distributor of the Certificates. EDI is registered with
the SEC as a broker-dealer under the Exchange Act and is a member of the
National Association of Securities Dealers, Inc. EDI's principal business
address is 1290 Avenue of the Americas, New York, New York 10104. EDI was
paid a fee of $1,204,370 for 1996 and $126,914 for 1995, for its services
under its "Distribution Agreement" with Equitable Life.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents, as well as by
unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation (including for EDI and its
affiliates) will not
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exceed five percent of total contributions made under a Certificate. EDI may
also receive compensation and reimbursement for its marketing services under
the terms of its distribution agreement with Equitable Life. Broker-dealers
receiving sales compensation will generally pay a portion thereof to their
registered representatives as commission related to sales of the
Certificates. The offering of the Certificates is intended to be continuous.
WITHDRAWAL CHARGE
A withdrawal charge will be imposed as a percentage of your contribution to
the extent that a withdrawal exceeds the free corridor amount, or if the
Certificate is surrendered to receive its Cash Value.
The withdrawal charge percentage initially equals the number of years to
maturity of the Guarantee Period you select. A partial year will be
considered a full year for this purpose, however, in no event will a
withdrawal charge percentage exceed 7% nor will the withdrawal charge period
exceed 7 years. The percentage is subsequently reduced by 1% on each Contract
Date anniversary.
Free Corridor Amount
The free corridor amount is 10% of the Annuity Account Value at the
beginning of the Contract Year.
The 10% free corridor amount is not applicable to a surrender.
For purposes of calculating the withdrawal charge, amounts withdrawn up to
the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge, for purposes of
calculating taxable income the Federal income tax law treats earnings as
withdrawn first. See "Part 4: Tax Aspects of the Certificates."
The withdrawal charge is to help cover sales expenses. This charge will not
be increased for the life of the Certificates. We may reduce this charge
under group or sponsored arrangements. See "Group or Sponsored Arrangements"
below.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
We deduct a charge for applicable taxes, such as state or local premium
taxes, that might be imposed in your state. Generally we deduct this charge
from the amount applied to provide an income annuity option. In certain
states, however, we may deduct the charge for taxes from contributions. The
current tax charge that might be imposed varies by state and ranges from 0%
to 2.25% for IRA Certificates and from 0% to 3.5% (the rate is 1% in Puerto
Rico and 5% in the Virgin Islands) for NQ Certificates.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal
charge or change the minimum single contribution requirements. Group
arrangements include those in which a trustee or an employer, for example,
purchases contracts covering a group of individuals on a group basis.
Sponsored arrangements include those in which an employer allows us to sell
Certificates to its employees or retirees on an individual basis. IRA
Certificates are only available for sponsored arrangements.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these
factors into account when reducing charges. To qualify for reduced charges, a
group or sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy Certificates or that have
been in existence less than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the withdrawal charge will reflect
differences in costs or services and will not be unfairly discriminatory.
Group and sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR
MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE
ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The withdrawal charge may be reduced or eliminated when sales are made in a
manner that results in savings of sales and administrative expenses, such as
sales through persons who are compensated by clients for recommending
investments and receive no commission or reduced commissions in connection
with the sale of the Certificates. In no event will a reduction or
elimination of the withdrawal charge be permitted where it would be unfairly
discriminatory.
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PART 4: TAX ASPECTS OF THE CERTIFICATES
This Part of the prospectus generally covers our understanding of the current
Federal income tax rules that apply to NQ and IRA Certificates.
This prospectus does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities. In addition, the Treasury Department may amend
existing regulations, issue new regulations, or adopt new interpretations of
existing laws. State tax laws or, if you are not a United States resident,
foreign tax laws, may affect the tax consequences to you or the beneficiary.
These laws may change from time to time without notice and, as a result, the
tax consequences may be altered. There is no way of predicting whether, when
or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax from IRA
distributions and the taxable portion of annuity payments, unless the
recipient elects not to be subject to income tax withholding. The rate of
withholding will depend on the type of distribution and, in certain cases,
the amount of the distribution. Special withholding rules apply to foreign
recipients and United States citizens residing outside the United States. If
a recipient does not have sufficient income tax withheld or does not make
sufficient estimated income tax payments, however, the recipient may incur
penalties under the estimated income tax rules. Recipients should consult
their tax advisers to determine whether they should elect out of withholding.
Requests not to withhold Federal income tax must be made in writing prior to
receiving benefits under the Certificate. Our Processing Office will provide
forms for this purpose. No election out of withholding is valid unless the
recipient provides us with the correct taxpayer identification number and a
United States residence address.
Certain states have indicated that annuity income tax withholding will apply
to payments from the Certificates made to residents. In some states, a
recipient may elect out of state withholding. Generally, an election out of
Federal withholding will also be considered an election out of state
withholding. If you need more information concerning a particular state or
any required forms, call our Processing Office at the toll-free number and
consult your tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1997, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,400
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemption. A
withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than the Certificate Owner, a Federal generation skipping
tax may be payable with respect to the benefit at rates similar to the
maximum estate tax rate in effect at the time. The generation skipping tax
provisions generally apply to transfers which would also be subject to the
gift and estate tax rules. Individuals are generally allowed an aggregate
generation skipping tax exemption of $1 million. Because these rules are
complex, you should consult
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with your tax adviser for specific information, especially where benefits are
passing to younger generations, as opposed to a spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
TRANSFERS TO A GUARANTEE PERIOD
A Transfer to a new Guarantee Period is not taxable.
TAXATION OF NON-QUALIFIED ANNUITIES
Equitable Life has designed the NQ Certificates to qualify as an "annuity"
for purposes of Federal income tax law. This part of the prospectus contains
our understanding of the current Federal income tax rules applicable to NQ
Certificates. Gains in the Annuity Account Value of the Certificate generally
will not be taxable to an individual until a distribution occurs, either by a
withdrawal of part or all of its value or as a series of periodic payments.
However, there are some exceptions to this rule: (1) if an individual
transfers a Certificate as a gift to someone other than a spouse (or divorced
spouse), any gain in its Annuity Account Value will be taxed at the time of
transfer; (2) the assignment or pledge of any portion of the value of a
Certificate will be treated as a distribution of that portion of the
Certificate; and (3) when an insurance company (or its affiliate) issues more
than one non-qualified deferred annuity certificate or contract during any
calendar year to the same taxpayer, the certificates or contracts are
required to be aggregated in computing the taxable amount of any
distribution. Therefore, you should discuss the potential tax consequences
with your tax adviser before you purchase more than one NQ MVA Certificate in
the same calendar year.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Certificate
unless an exception under the Code applies.
Annuity contract payments are taxable as ordinary income and are subject to
income tax withholding. See "Federal and State Income Tax Withholding" above.
Withdrawals
Prior to the Annuity Commencement Date, any withdrawals which do not
terminate your total interest in the Certificate are taxable to you as
ordinary income to the extent there has been a gain in the Annuity Account
Value. The balance of the distribution is treated as a return of the
"investment" or "basis" in the Certificate and is not taxable. Generally, the
investment or basis in the Certificate equals the contributions made, less
any amounts previously withdrawn which were not taxable. Special rules may
apply if contributions made to another annuity certificate or contract prior
to August 14, 1982 are transferred to a Certificate in a tax-free exchange.
To take advantage of these rules, you must notify us prior to such an
exchange.
If you surrender or cancel the Certificate, the distribution is taxable to
the extent it exceeds the investment in the Certificate.
Annuity Payments
Once annuity payments begin, a portion of each payment is considered to be a
tax-free recovery of investment based on the ratio of the investment to the
expected return under the Certificate. The remainder of each payment will be
taxable. In the case of a life annuity, after the total investment in the
contract has been recovered, future payments are fully taxable. If payments
cease as a result of death, a deduction for any unrecovered investment will
be allowed.
Penalty Tax
In addition to income tax, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date you attain age 59 1/2, (2) made on or after your death, (3) attributable
to your disability, (4) is part of a series of substantially equal
installments as an annuity for your life (or life expectancy) or the joint
lives (or joint life expectancies) of you and a beneficiary, (5) with respect
to income allocable to amounts contributed to an annuity certificate or
contract prior to August 14, 1982 which are transferred to the Certificate in
a tax-free exchange, or (6) payments under an immediate annuity. An immediate
annuity is generally an annuity which commences payments within one year from
purchase and provides for a series of substantially equal periodic payments
made at least annually.
Payments as a Result of Death
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 3, the beneficiary is generally
subject to the same tax treatment as would apply to you. If the beneficiary
takes the death benefit in a single sum, the beneficiary is treated as if the
Certificate had been surrendered. The tax computation will reflect your
investment in the Certificate.
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If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a single sum death benefit first becomes payable and
before any benefit is actually paid. The taxable income that would otherwise
occur on a deemed surrender of the Certificate, will be deferred, and
payments will be taxed as described above under "Annuity Payments." Special
distribution requirements apply upon the death of the owner of a
non-qualified annuity. That is, in the case of a contract where the owner and
Annuitant are different, even though the annuity contract could continue
because the Annuitant has not died, Federal tax law requires that the person
who succeeds as owner of the contract take distribution of the contract
within a specified period of time.
SPECIAL RULES FOR NQ CERTIFICATES ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from NQ Certificates as
U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents
is excludable from U.S. taxation. Income from NQ Certificates is also subject
to Puerto Rico tax. The computation of the taxable portion of amounts
distributed from a Certificate may differ in the two jurisdictions.
Therefore, an individual might have to file both U.S. and Puerto Rico tax
returns, showing different amounts of income for each. Puerto Rico generally
provides a credit against Puerto Rico tax for U.S. tax paid. Depending on an
individual's personal situation and the timing of the different tax
liabilities, an individual may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
IRA TAX INFORMATION
TAX-QUALIFIED INDIVIDUAL RETIREMENT ANNUITIES (IRAS)
Introduction
This Prospectus contains the information which the Internal Revenue Service
(IRS) requires to be disclosed to an individual before he or she purchases an
IRA.
The IRA Certificate is designed to qualify as an IRA under Section 408(b) of
the Code. Your rights under the IRA cannot be forfeited.
This Prospectus covers some of the special tax rules that apply to individual
retirement arrangements. You should be aware that an IRA is subject to
certain restrictions in order to qualify for its special treatment under the
Federal tax law.
This Prospectus provides our general understanding of applicable Federal
income tax rules, but does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the IRA Certificates.
Further information on IRA tax matters can be obtained from any IRS district
office. Additional information regarding IRAs, including a discussion of
required distributions, can be found in IRS Publication 590, entitled
"Individual Retirement Arrangements (IRAs)," which is generally updated
annually.
The IRA Certificate has been approved by the IRS as to form for use as an
IRA. This IRS approval is a determination only as to the form of the annuity,
does not represent a determination of the merits of the annuity as an
investment, and may not address certain features under the IRA Certificates.
Cancellation
You can cancel a Certificate issued as an IRA by following the directions in
Part 3 under "Free Look Period." Since there may be adverse tax consequences
if a Certificate is cancelled (and because we are required to report to the
IRS certain distributions from cancelled IRAs), you should consult with a tax
adviser before making any such decision. If you cancel this Certificate, you
may establish a new individual retirement arrangement if at the time you meet
the requirements for establishing an individual retirement arrangement.
Contributions to IRAs
Individuals may make three different types of contributions to purchase an
IRA, or as later additions to an existing IRA: "regular" contributions out of
earnings, tax-free "rollover" contributions from tax-qualified plans, or
direct custodian-to-custodian transfers from other individual retirement
arrangements ("direct transfers").
The contribution to the Certificate must be either a rollover or a direct
custodian-to-custodian transfer. See "Tax-Free Transfers and Rollovers,"
discussed below. You may not make subsequent contributions under these IRA
Certificates. Therefore, the discussion below pertains only to rollover or
direct custodian-to-custodian transfers and not "regular" IRA contributions
which have different limits and restrictions.
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Excess Contributions
Excess contributions to an IRA are subject to a 6% excise tax for the year in
which made and for each year thereafter until withdrawn. In the case of
rollover IRA contributions, excess contributions are amounts which are not
eligible to be rolled over (for example, after tax contributions to a
qualified plan or minimum distributions required to be made after age 70
1/2). An excess contribution which is withdrawn, however, before the time for
filing the individual's Federal income tax return for the tax year (including
extensions) is not includable in income and therefore is not subject to the
10% penalty tax on early distributions (discussed below under "Penalty Tax on
Early Distributions"), provided any earnings attributable to the excess
contribution are also withdrawn and no tax deduction is taken for the excess
contribution. The withdrawn earnings on the excess contribution, however,
would be includable in the individual's gross income and would be subject to
the 10% penalty tax.
If excess rollover contributions are not withdrawn before the time for filing
the individual's Federal tax return for the year (including extensions) and
the excess contribution occurred as a result of incorrect information
provided by the plan, any such excess amount can be withdrawn if no tax
deduction was taken for the excess contribution. As above, excess rollover
contributions withdrawn under those circumstances would not be includable in
gross income and would not be subject to the 10% penalty tax. Annuity
contract payments are taxable as ordinary income and are subject to income
tax withholding. See "Federal and State Income Tax Withholding" below.
Tax-Free Transfers and Rollovers
Rollover contributions may be made to an IRA from these sources: (i)
qualified plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii)
other individual retirement arrangements.
The rollover amount must be transferred to the Certificate either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within
60 days of the date the proceeds from another individual retirement
arrangement or an eligible rollover distribution from a qualified plan or TSA
were received. Generally the taxable portion of any distribution from a
qualified plan or TSA is an eligible rollover distribution and may be rolled
over tax-free to an IRA unless the distribution is (i) a required minimum
distribution under Section 401(a)(9) of the Code; or (ii) one of a series of
substantially equal periodic payments made (not less frequently than
annually) (a) for the life (or life expectancy) of the plan participant or
the joint lives (or joint life expectancies) of the plan participant and his
or her designated beneficiary, or (b) for a specified period of ten years or
more.
Under some circumstances, amounts from a Certificate may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" IRA treatment, the
source of funds used to establish the IRA must be a rollover contribution
from the qualified plan and the entire amount received from the IRA
(including any earnings on the rollover contribution) must be rolled over
into another qualified plan within 60 days of the date received. Similar
rules apply in the case of a TSA. If you make a contribution to the
Certificate which is from an eligible rollover distribution and you commingle
such contribution with other contributions, you may not be able to roll over
these eligible rollover distribution contributions and earnings to another
qualified plan (or TSA, as the case may be) at a future date, unless the Code
permits.
Under the conditions and limitations of the Code, an individual may elect for
each IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers
and can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Certificate
and rolled over into other individual retirement arrangements unless the
distribution was received under an inherited IRA. Tax-free rollovers are also
available to the surviving spouse beneficiary of a deceased individual, or a
spousal alternate payee of a qualified domestic relations order applicable to
a qualified plan. In some cases, IRAs can be transferred on a tax-free basis
between spouses or former spouses incidental to a judicial decree of divorce
or separation.
Distributions from IRA Certificates
Income or gains on contributions under IRAs are not subject to Federal income
tax until benefits are distributed to the individual. Distributions include
withdrawals from your Certificate, surrender of your Certificate and annuity
payments from your Certificate. Death benefits are also distributions. Except
as discussed below, the amount of any distribution from an IRA is fully
includable as ordinary income by the individual in gross income.
If the individual has made non-deductible IRA contributions, those
contributions are recovered tax-free when distributions are received. The
individual must keep records of all nondeductible contributions. At the end
of each tax year in which the individual has received a distribution, the
individual determines a ratio of the total nondeductible IRA contributions
(less any amounts previously withdrawn tax-free) to the total account
balances of all IRAs held by the individual at the end of the tax
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year (including rollover IRAs) plus all IRA distributions made during such
tax year. The resulting ratio is then multiplied by all distributions from
the IRA during that tax year to determine the nontaxable portion of each
distribution.
In addition, a distribution (other than a required minimum distribution
received after age 70 1/2) is not taxable if (1) the amount received is a
return of excess contributions which are withdrawn, as described under
"Excess Contributions" above, (2) the entire amount received is rolled over
to another individual retirement arrangement (see "Tax-Free Transfers and
Rollovers" above) or (3) in certain limited circumstances, where the IRA acts
as a "conduit," the entire amount is paid into a qualified plan or TSA that
permits rollover contributions.
Distributions from an IRA are not entitled to the special favorable five-year
averaging method (or, in certain cases, favorable ten-year averaging and
long-term capital gain treatment) available in certain cases to distributions
from qualified plans.
Required Minimum Distributions
The IRA Certificate offered under this prospectus may not be an appropriate
vehicle for minimum distributions. Before purchasing an IRA Certificate, you
should consider your ability to take minimum distributions from other IRA
funds that you may have.
The minimum distribution rules require IRA owners to start taking annual
distributions from their retirement plans by age 70 1/2. The distribution
requirements are designed to provide for distribution of the owner's interest
in the IRA over the owner's life expectancy. Whether the correct amount has
been distributed is calculated on a year by year basis; there are no
provisions in the Code to allow amounts taken in excess of the required
amount to be carried over or carried back and credited to other years.
Generally, an individual must take the first required minimum distribution
with respect to the calendar year in which the individual turns age 70 1/2.
The individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2, or to delay taking it
until the three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date,"
which is the April 1st of the calendar year following the calendar year in
which the individual turns age 70 1/2.) If the individual chooses to delay
taking the first annual minimum distribution, then the individual will have
to take two minimum distributions in that year--the delayed one for the first
year and the one actually for that year. Once minimum distributions begin,
they must be made at some time every year.
There are two approaches to taking minimum distributions--"account based" or
"annuity based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
An account based minimum distribution approach may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. An annuity based approach involves application
of the Annuity Account Value to an annuity for the life of the individual or
the joint lives of the individual and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options
are best for your own personal situation. Individuals who are participants in
more than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Your required minimum distribution for any taxable year is calculated by
taking into account the required minimum distribution from each of your
individual retirement arrangements. The IRS, however, does not require that
you make the required distribution from each individual retirement
arrangement that you maintain. As long as the total amount distributed
annually satisfies your overall minimum distribution requirement, you may
choose to take your annual required distribution from any one or more
individual retirement arrangements that you maintain.
An individual may recompute his or her minimum distribution amount each year
based on the individual's current life expectancy as well as that of the
spouse. No recomputation is permitted, however, for a beneficiary other than
a spouse. If there is an insufficient distribution in any year, a 50% tax may
be imposed on the amount by which the minimum required to be distributed
exceeds the amount actually distributed. The penalty tax may be waived by the
Secretary of the Treasury in certain limited circumstances. Failure to have
distributions made as the Code and Treasury regulations require may result in
disqualification of your IRA. See "Tax Penalty for Insufficient
Distributions" below.
Except as described in the next sentence, if the individual dies after
distribution in the form of an annuity has begun, or after the Required
Beginning Date, payment of the remaining interest must be made at least as
rapidly as under the method used
20
<PAGE>
prior to the individual's death. (The IRS has indicated that an exception to
the rule that payment of the remaining interest must be made at least as
rapidly as under the method used prior to the individual's death applies if
the beneficiary of the IRA is the surviving spouse. In some circumstances,
the surviving spouse may elect to "make the IRA his or her own" and halt
distributions until he or she reaches age 70 1/2).
If an individual dies before the Required Beginning Date and before
distributions in the form of an annuity begin, distributions of the
individual's entire interest under the Certificate must be completed within
five years after death, unless payments to a designated beneficiary begin
within one year of the individual's death and are made over the beneficiary's
life or over a period certain which does not extend beyond the beneficiary's
life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay
the commencement of such payments up until the individual would have attained
70 1/2. In the alternative, a surviving spouse may elect to roll over the
inherited IRA into the surviving spouse's own IRA.
Taxation of Death Benefits
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if distribution had been made to
the individual.
If you elect to have your spouse be the sole primary beneficiary and to be
the successor Annuitant and Certificate Owner, then your surviving spouse
automatically becomes both the successor Certificate Owner and Annuitant, and
no death benefit is payable until the surviving spouse's death.
Prohibited Transaction
An IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the tax year in which
the event occurred. If this happens, the individual must include in Federal
gross income for that year an amount equal to the fair market value of the
IRA Certificate as of the first day of that tax year, less the amount of any
nondeductible contributions not previously withdrawn.
PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of IRA distributions will be subject to a 10% penalty tax
unless the distribution is made (1) on or after your death, (2) because you
have become disabled, (3) on or after the date when you reach age 59 1/2, or
(4) at least annually in the form of a substantially equal periodic payout
over your life or life expectancy (or joint and survivor lives or life
expectancies). Also not subject to penalty tax are IRA distributions used to
pay certain extraordinary medical expenses or medical insurance premiums for
defined unemployed individuals.
TAX PENALTY FOR INSUFFICIENT
DISTRIBUTIONS
Failure to make required distributions discussed above in "Required Minimum
Distributions" may cause the disqualification of the IRA. Disqualification
may result in current taxation of your entire benefit. In addition a 50%
penalty tax may be imposed on the difference between the required
distribution amount and the amount actually distributed, if any.
We do not automatically make distributions from a Certificate before the
Annuity Commencement Date unless a request has been made. It is your
responsibility to comply with the minimum distribution rules. We will notify
you when our records show that your age 70 1/2 is approaching. If you do not
select a method, we will assume you are taking your minimum distribution from
another IRA that you maintain. You should consult with your tax adviser
concerning these rules and their proper application to your situation.
TAX PENALTY FOR EXCESS DISTRIBUTIONS OR ACCUMULATION
A 15% excise tax is imposed on an individual's aggregate excess distributions
from all tax-favored retirement plans. The excise tax is in addition to the
ordinary income tax due, but is reduced by the amount (if any) of the early
distribution penalty tax imposed by the Code. This tax is temporarily
suspended for distributions to the individual for the years 1997, 1998 and
1999. However, the excise tax continues to apply for estate tax purposes. In
certain cases the estate tax imposed on a deceased individual's estate will
be increased if the accumulated value of the individual's interest in
tax-favored retirement plans is excessive. The aggregate accumulations will
be subject to excise tax in 1997 if they exceed the present value of a
hypothetical life annuity paying $160,000 a year.
21
<PAGE>
PART 5: INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life at December 31, 1996 and 1995 and for each of the
three years in the period ended December 31, 1996 included in Equitable
Life's Annual Report on Form 10-K, incorporated by reference in the
prospectus, have been examined by Price Waterhouse LLP, independent
accountants, whose reports thereon are incorporated herein by reference. Such
consolidated financial statements and consolidated financial statement
schedules have been incorporated herein by reference in reliance upon the
reports of Price Waterhouse LLP given upon their authority as experts in
accounting and auditing.
22
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1998 to a Guarantee Period with an Expiration Date
of February 15, 2007 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2002.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2002
---------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2002 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value .................. $144,048 $119,487
(2) Guaranteed Period Amount................ 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ....... 12,968 (11,593)
February 15, 2002 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000
(divided by) (1)] ...................... $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)] ........... 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ...... 85,581 76,229
(7) Maturity Value.......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value .................. 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
23
<PAGE>
INCOME MANAGERSM
(IRA AND NQ)
PROSPECTUS DATED MAY 1, 1997
PAYOUT ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- ------------------------------------------------------------------------------
This prospectus describes certificates The Equitable Life Assurance Society
of the United States (EQUITABLE LIFE, WE, OUR and US) offers under a payout
annuity contract (INCOME MANAGER) issued on a group basis or as individual
contracts. Enrollment under a group contract will be evidenced by issuance of
a certificate. Certificates and individual contracts each will be referred to
as "Certificates." Income Manager Certificates can be issued as individual
retirement annuities (IRA), or non-qualified annuities for after-tax
contributions only (NQ). A minimum contribution of $10,000 is required to put
a Certificate into effect. Under IRA Certificates, we will accept only
initial contributions that are rollover contributions or that are direct
transfers from other individual retirement arrangements, as described in this
prospectus.
The Owner (CERTIFICATE OWNER, YOU and YOUR) may choose to receive guaranteed
periodic payments under one of our Income Manager payout annuities. You may
choose to receive level guaranteed payments payable for a specified period
(PERIOD CERTAIN) with payments generally starting one payment mode from the
CONTRACT DATE. Or, you may choose to receive lifetime income payable for at
least a specified period (LIFE WITH A PERIOD CERTAIN) where the annuity
payments are level, or under NQ Certificates only payments may also increase.
You also choose whether payments are made for your life (SINGLE LIFE) or for
your life and the life of a joint Annuitant (JOINT AND SURVIVOR) you
designate.
Amounts are allocated to the GUARANTEED PERIOD ACCOUNT to provide payments
during the period certain. Amounts allocated to a GUARANTEE PERIOD in the
Guaranteed Period Account accumulate on a fixed basis and are credited with
interest at a rate we set for your class of Certificate (GUARANTEED RATE) for
the entire period. On each business day (BUSINESS DAY) we will determine the
Guaranteed Rates available for amounts newly allocated to Guarantee Periods.
A market value adjustment (positive or negative) will be made for
withdrawals, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). The Guarantee Periods currently
available are those maturing in calendar years 1998 through 2012. Each
Guarantee Period has its own Guaranteed Rates.
This prospectus provides information about the Certificates that prospective
investors should know before investing. You should read it carefully and
retain it for future reference.
A registration statement relating to interests under the Guarantee Periods
has been filed with the Securities and Exchange Commission (SEC).
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- ------------------------------------------------------------------------------
Copyright 1997
The Equitable Life Assurance Society of the United States,
New York, New York 10104.
All rights reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1996 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(EXCHANGE ACT) after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated
by reference in this prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated herein by reference shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified and superseded, to constitute a part of
this prospectus. Equitable Life files its Exchange Act documents and reports,
including its annual and quarterly reports on Form 10-K and Form 10-Q,
electronically pursuant to EDGAR under CIK No. 0000727920. The SEC maintains
a web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate
Secretary (telephone: (212) 554-1234).
2
<PAGE>
- ------------------------------------------------------------------------------
PROSPECTUS TABLE OF CONTENTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
PART 1: SUMMARY PAGE 5
What is the Income Manager? 5
Income Manager (Life Annuity with a
Period Certain) 5
Income Manager (Period Certain) 6
Other Provisions of the Certificates 6
Withdrawal Charge 6
Free Look Period 6
Services We Provide 7
Surrendering the Certificates 7
Annuity Benefits 7
Taxes 7
Charges for State Premium and Other
Applicable Taxes 7
Equitable Life 7
PART 2: THE GUARANTEED PERIOD
ACCOUNT PAGE 8
Guarantee Periods 8
Market Value Adjustment for
Withdrawals or Surrender Prior to the
Expiration Date 8
Modal Payment Portion 9
Investments 9
PART 3:PROVISIONS OF THE
CERTIFICATES PAGE 11
Income Manager (Life Annuity with
a Period Certain) 11
Lump Sum Withdrawals 13
Allocation of Lump Sum Withdrawals 13
Death Benefit 14
Surrendering the Certificates 15
Income Manager (Period Certain) 15
Lump Sum Withdrawals 16
Allocation of Lump Sum Withdrawals 16
Death Benefit 16
PART 4: OTHER PROVISIONS OF THE
CERTIFICATES AND SERVICES
WE PROVIDE PAGE 17
Methods of Payment 17
Free Look Period 17
Beneficiary 17
Cash Value 17
Surrendering the Certificates to
Receive the Cash Value 18
Annuity Benefits 18
When Payments are Made 18
Assignment 18
Distribution of the Certificates 18
Withdrawal Charge 19
Amounts Applied from Other Income
Manager Certificates 19
Charges for State Premium and Other
Applicable Taxes 19
Group or Sponsored Arrangements 20
Other Distribution Arrangements 20
PART 5: TAX ASPECTS OF THE CERTIFICATES PAGE 21
Tax Changes 21
Taxation of Non-Qualified Annuities 21
Special Rules for NQ Certificates
Issued in Puerto Rico 22
IRA Tax Information 23
Federal and State Income Tax
Withholding 28
Other Withholding 29
PART 6:INDEPENDENT ACCOUNTANTS PAGE 30
APPENDIX I: MARKET VALUE ADJUSTMENT
EXAMPLE PAGE 31
APPENDIX II: IRA CHART -- ESTIMATED
DEDUCTION TABLE PAGE 32
</TABLE>
3
<PAGE>
- ------------------------------------------------------------------------------
GENERAL TERMS
- ------------------------------------------------------------------------------
ANNUITANT--The individual who is the measuring life for determining benefits
under the Certificates. Under NQ Certificates the Annuitant can be different
from the Certificate Owner; under IRA Certificates, the Annuitant and
Certificate Owner must be the same individual.
ANNUITY ACCOUNT VALUE--The sum of the present value of the Maturity Value in
each Guarantee Period plus any amount in the Modal Payment Portion of the
Guaranteed Period Account.
ANNUITY COMMENCEMENT DATE--The date on which annuity payments are to
commence.
INCOME MANAGER (PERIOD CERTAIN)--An annuity under which you elect to receive
a level stream of periodic payments for a period certain.
INCOME MANAGER (LIFE ANNUITY WITH A PERIOD CERTAIN)--An annuity which
provides guaranteed periodic payments during a period certain and for your
lifetime thereafter or for your lifetime and the lifetime of a joint
Annuitant you designate.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns a Certificate and has the right to
exercise all rights under the Certificate. Under NQ Certificates the
Certificate Owner can be different from the Annuitants; under IRA
Certificates, the Certificate Owner must be the same individual as the
Annuitant.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE-- The effective date of the Certificates. This is usually the
Business Day we receive the initial contribution at our Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificate. Guarantee Periods
may also be referred to as Guaranteed Interest Rate Options (GIROs) or
Guaranteed Interest Rate Accounts.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods
and the Modal Payment Portion of such Account.
GUARANTEED PERIOD AMOUNT--The term used to refer to the amount allocated to
and accumulated in each Guarantee Period.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
IRA--An individual retirement annuity, as defined in Section 408(b) of the
Code.
JOINT AND SURVIVOR--The form of the Income Manager (Life Annuity with a
Period Certain) under which after the death of an Annuitant payments continue
to the surviving Annuitant. Payments are made as long as at least one
Annuitant is living. Under IRA Certificates, the joint Annuitant must be your
spouse.
LIFE CONTINGENT ANNUITY--The component of the payout annuity Certificates
that provides guaranteed lifetime income after a period certain.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
MODAL PAYMENT PORTION--The portion of the Guaranteed Period Account from
which payments, other than payments due on an Expiration Date, are made.
NQ--An annuity contract which may be purchased only with after tax dollars.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., withdrawals, etc.) or other written communications must be sent. See
"Services We Provide" in Part 1.
SINGLE LIFE--The form of the Income Manager (Life Annuity with a Period
Certain) under which payments are made to you for your lifetime.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
4
<PAGE>
- ------------------------------------------------------------------------------
PART 1: SUMMARY
- ------------------------------------------------------------------------------
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE INCOME MANAGER?
The Income Manager is a family of Payout annuities designed to provide
retirement income. Income Manager Payout Annuities feature a series of
Guarantee Periods which provides the source of a Cash Value.
INCOME MANAGER
(LIFE ANNUITY WITH A PERIOD CERTAIN)
This version of the payout annuities provides level or increasing payments
for a period certain and continuing for the lifetime of the Annuitant and any
joint Annuitant. Increasing payments are not available under IRA
Certificates. You may elect to receive payments on a monthly, quarterly or
annual mode.
Payments will generally start one payment mode from the Contract Date. You
can also elect to delay the date payments will start. You may elect to defer
the date payments will start generally for a period of up to 72 months. The
ability to defer the payment start date may not be available in all states.
Based on information you provide, your contribution (less any charge for
applicable taxes) is allocated among the Guarantee Periods, the Modal Payment
Portion of the Guaranteed Period Account, if applicable, and the Life
Contingent Annuity. This allocation will not be changed (unless a Lump Sum
Withdrawal is made). Payments during the period certain represent
distributions of the Maturity Values of serially maturing Guarantee Periods
on their Expiration Dates or distributions from amounts in the Modal Payment
Portion of the Guaranteed Period Account.
Under NQ Certificates a portion of each payment will generally be excludable
from taxable income until you have received a tax-free recovery of your
investment in your Certificate. Under IRA Certificates all amounts are
generally fully taxable.
The Life Contingent Annuity continues lifetime payments if the Annuitant or a
joint Annuitant is living at the end of the period certain. Payments continue
while the Annuitant or joint Annuitant, if applicable is alive. The portion
of your contribution that is applied under the Life Contingent Annuity does
not have a Cash Value or an Annuity Account Value and, therefore, does not
provide for withdrawals.
o Contributions
To put a Certificate into effect, you must make a contribution of at
least $10,000. You may make subsequent contributions of at least $1,000
at any time up until 15 days before the Annuity Commencement Date.
However, subsequent contributions are not permitted after you attain age
78 except for contributions made within the first Contract Year. Also,
if you apply amounts to an Income Manager payout annuity from another
annuity Certificate issued by us, no subsequent contributions are
permitted.
Under IRA Certificates your initial contribution must be in the form of
either a rollover contribution or a direct custodian-to-custodian
transfer from one or more other individual retirement arrangements.
Subsequent contributions must not exceed $2,000 for any taxable year,
except for additional rollover contributions or direct transfers, both
of which are unlimited.
o Lump Sum Withdrawals
After the first Contract Year and during the period certain, you may
take a Lump Sum Withdrawal from your Certificate once per Contract Year
at any time during such Contract Year. You may request such Lump Sum
Withdrawal, which must be at least $1,000, by submitting a written
request in a form satisfactory to us. A request to withdraw more than
90% of the Cash Value as of the Transaction Date will result in the
termination of the Certificate and will be treated as a surrender of the
Certificate for its cash value. Lump Sum Withdrawals may result in a
market value adjustment.
Lump Sum Withdrawals may be subject to a withdrawal charge to the extent
that a Lump Sum Withdrawal exceeds the 10% free corridor amount. Lump
Sum Withdrawals will reduce the amount of your future payments.
<PAGE>
o Death Benefit
If the Annuitant dies before the Annuity Commencement Date, the
beneficiary will be paid a death benefit equal to the greater of (i) the
Annuity Account Value and (ii) the sum of the Guaranteed Period Amounts
in each Guarantee Period, plus any amount in the Modal Payment Portion
of the Guaranteed Period Account. However, if the Annuitant's spouse is
the designated beneficiary
5
<PAGE>
under the Certificate and no delay in the payment start date has been
elected, or if payments are scheduled to start within one year under a
deferral schedule, such beneficiary may elect to receive the payments
for the period certain starting on the scheduled Annuity Commencement
Date, in lieu of taking the death benefit. Unless you have elected a
Joint and Survivor form, after the Annuitant dies no payment will be
made under the Life Contingent Annuity.
If death occurs after the Annuity Commencement Date, payments will
continue to be made during the period certain to the designated
beneficiary on the same payment basis that was in effect prior to the
death. If you have elected a Joint and Survivor form, payments will be
made as long as either the Annuitant or the joint Annuitant is living
after the end of the period certain. In lieu of continuing payments
during the period certain, the beneficiary may elect to receive a single
sum.
o Surrendering Your Certificate
During the period certain, you may surrender your Certificate for its
Cash Value, and thereafter receive the lifetime income provided by the
Life Contingent Annuity. You cannot surrender the Life Contingent
Annuity.
INCOME MANAGER (Period Certain)
Under this version of the payout annuities, you will receive a level stream
of payments which are fully guaranteed for a period certain which you select.
The period certain may be for a duration of from 7 to 15 years. You may elect
to receive payments on a monthly, quarterly or annual mode. Payments will
generally start one payment mode from the Contract Date. Based on information
you provide, your contribution is allocated among the Guarantee Periods and
the Modal Payment Portion of the Guaranteed Period Account, if applicable.
This allocation will not be changed (unless a Lump Sum Withdrawal is made).
Payments during the period certain represent distributions of the Maturity
Values of serially maturing Guarantee Periods on their Expiration Dates or,
distributions from amounts in the Modal Payment Portion of the Guaranteed
Period Account.
Under NQ Certificate a portion of each payment will be excludable from
taxable income. Under IRA Certificates amounts are generally taxable.
o Contributions
To put the Certificate into effect, you must make a single contribution
of at least $10,000. Under IRA Certificates your contribution must be in
the form of either a rollover contribution or a direct
custodian-to-custodian transfer from one or more other individual
retirement arrangements. Subsequent contributions are not permitted.
o Lump Sum Withdrawals
After the first Contract Year and during the period certain, you may take
a Lump Sum Withdrawal from your Certificate once per Contract Year . Such
Lump Sum Withdrawal must be in a minimum amount of the greater of $2,000
or 25% of the Cash Value, and requested in writing in a form satisfactory
to us. A request to withdraw more than 90% of the Cash Value as of the
Transaction Date will result in the termination of the Certificate and
will be treated as a surrender of the Certificate for its cash value.
Lump Sum Withdrawals may result in a market value adjustment and may be
subject to a withdrawal charge. There is no free corridor amount for Lump
Sum Withdrawals. Lump Sum Withdrawals will reduce the amount of your
future annual payments.
o Death Benefit
If the Annuitant dies before the Annuity Commencement Date, the
beneficiary will be paid the death benefit equal to the greater of the
(i) Annuity Account Value and (ii) the sum of the Guaranteed Period
Amounts in each Guarantee Period, plus any amount in the Modal Payment
Portion of the Guaranteed Period Account.
If the Annuitant dies after the Annuity Commencement Date, payments will
continue to be made for the remainder of the period certain to the
designated beneficiary on the same payment basis that was in effect at
the time of death, or the beneficiary may elect to receive a single sum.
OTHER PROVISIONS OF THE CERTIFICATES
WITHDRAWAL CHARGE
A withdrawal charge is imposed as a percentage of the portion of each
contribution (or the single contribution) allocated to the Guaranteed Period
Account, for a Lump Sum Withdrawal as discussed above, or if the Certificate
is surrendered. The withdrawal charge is determined separately for each
contribution in accordance with the table below.
<PAGE>
<TABLE>
<CAPTION>
CONTRACT YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7 8+
------------------------------------------------------
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the Lump Sum Withdrawal is made or the Certificate is
surrendered. For each contribution, the Contract Year in which we receive
that contribution is "Contract Year 1."
FREE LOOK PERIOD
You have the right to examine your Certificate for a period of 10 days after
you receive it, and to return it to us for a refund. You may cancel it by
sending it
6
<PAGE>
to our Processing Office. Your refund will equal the Annuity Account Value
reflecting any positive or negative market value adjustment, through the
Transaction Date we receive your Certificate for cancellation at our
Processing Office. If you elected the Income Manager (Life Annuity with a
Period Certain), your refund will also include any amount applied to the Life
Contingent Annuity.
SERVICES WE PROVIDE
o REGULAR REPORTS
o Statement of your Certificate values as of the last day of the
calendar year;
o Three additional reports of your Certificate values each year;
o Written confirmation of financial transactions.
o TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Guaranteed Rates
applicable to the Guarantee Periods. Also call during our regular
business hours to speak to one of our customer service
representatives.
o PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR WITHDRAWALS) SENT BY
REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR WITHDRAWALS) SENT BY
EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time while
the Annuitant is living and the Certificate is in effect. Withdrawal charges
and a market value adjustment may apply. A surrender may also be subject to
income tax and tax penalty.
ANNUITY BENEFITS
The Certificates provide annuity benefits to which the beneficiary may have
amounts applied if the Annuitant dies before the Annuity Commencement Date.
The annuity benefits are offered on a fixed basis.
TAXES
Generally, earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject
to tax penalty.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
Generally, we deduct a charge for premium and other applicable taxes from
your contribution(s). The current tax charge that might be imposed varies by
state and ranges from 0% to 2.25% for IRA Certificates and from 0 to 3.5% for
NQ Certificates (the rate is 1% in Puerto Rico and 5% in the Virgin Islands).
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Our home office is located at
1290 Avenue of the Americas, New York, New York 10104. We are authorized to
sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico and the Virgin Islands. We maintain local offices
throughout the United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1996, AXA beneficially owned
63.8% of the outstanding shares of common stock of the Holding Company
(assuming conversion of convertible preferred stock held by AXA). Under its
investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
7
<PAGE>
- ------------------------------------------------------------------------------
PART 2: THE GUARANTEED PERIOD ACCOUNT
- ------------------------------------------------------------------------------
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. We may establish
different Guaranteed Rates under different classes of Certificates. The
Guaranteed Rate for each allocation is the annual interest rate applicable to
new allocations to that Guarantee Period, which was in effect on the
Transaction Date for the allocation. We use the term Guaranteed Period Amount
to refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
with respect to the Guarantee Periods on any Business Day, therefore, will be
the sum of the present value of the Maturity Value in each Guarantee Period,
using the Guaranteed Rate in effect for new allocations to such Guarantee
Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1998 through 2012. As Guarantee Periods expire, we expect to
add maturity years so that generally 15 are available.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no withdrawals are made). The required amount is the
present value of that Maturity Value at the Guaranteed Rate on the
Transaction Date for the contribution, which may also be expressed as the
price per $100 of Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of April 15, 1997 and the related
price per $100 of Maturity Value for each currently available Guarantee
Period were as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH
EXPIRATION DATE GUARANTEED PRICE
FEBRUARY 15TH OF RATE AS OF PER $100 OF
MATURITY YEAR APRIL , 1997 MATURITY VALUE
- ---------------- --------------- --------------
<S> <C> <C>
1998 4.93% $96.05
1999 5.40 90.78
2000 5.64 85.58
2001 5.76 80.65
2002 5.86 75.91
2003 5.94 71.39
2004 6.03 66.99
2005 6.09 62.89
2006 6.17 58.89
2007 6.23 55.16
2008 6.20 52.08
2009 6.20 49.04
2010 6.20 46.17
2011 6.20 43.48
2012 6.20 40.94
</TABLE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which would need to be allocated to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, to have $100 mature on February 15th of each of years 1998
through 2002, according to the above table the lump sum contribution that
would have to be made as of April 15, 1997 would be $428.97 (i.e., the sum of
the price per $100 of Maturity Value for each maturity year from 1998 through
2002).
The above table is provided to illustrate the use of present value
calculations. It does not take into account withdrawals and withdrawal
charges. Actual calculations will also be based on Guaranteed Rates on each
actual Transaction Date, which may differ.
MARKET VALUE ADJUSTMENT FOR
WITHDRAWALS OR SURRENDER
PRIOR TO THE EXPIRATION DATE
Any withdrawal (including surrender and deductions) from a Guarantee Period
prior to its Expira-
8
<PAGE>
tion Date will cause any remaining Guaranteed Period Amount for that
Guarantee Period to be increased or decreased by a market value adjustment.
The amount of the adjustment will depend on two factors: (a) the difference
between the Guaranteed Rate applicable to the amount being withdrawn and the
Guaranteed Rate on the Transaction Date for new allocations to a Guarantee
Period with the same Expiration Date, and (b) the length of time remaining
until the Expiration Date. In general, if interest rates have risen between
the time when an amount was originally allocated to a Guarantee Period and
the time it is withdrawn, the market value adjustment will be negative, and
vice versa; and the longer the period of time remaining until the Expiration
Date, the greater the impact of the interest rate difference. Therefore, it
is possible that a significant rise in interest rates could result in a
substantial reduction in your Annuity Account Value related to longer term
Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Guarantee Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal (including any withdrawal charges) of a portion of the amount in a
Guarantee Period will be a percentage of the market value adjustment that
would be applicable upon a withdrawal of all funds from a Guarantee Period.
This percentage is determined by (i) dividing the amount of the withdrawal
from the Guarantee Period by (ii) the Annuity Account Value in such Guarantee
Period prior to the withdrawal. See Appendix I for an example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate
in (1)(c) above.
MODAL PAYMENT PORTION
A portion of your contributions is allocated to the Modal Payment Portion of
the Guaranteed Period Account for payments to be made prior to the Expiration
Date of the earliest Guarantee Period we then offer. Such amount will
accumulate interest beginning on the Transaction Date at an interest rate we
set. Interest will be credited daily. Such rate will not be less than 3%.
Upon the expiration of a Guarantee Period, the Guaranteed Period Amount will
be held in the Modal Payment Portion of the Guaranteed Period Account.
Amounts from an expired Guarantee Period held in the Modal Payment Portion of
the Guaranteed Period Account will be credited with interest at a rate equal
to the Guaranteed Rate applicable to the expired Guarantee Period, beginning
on the Expiration Date of such Guarantee Period.
There is no market value adjustment with respect to amounts held in the Modal
Payment Portion of the Guaranteed Period Account.
INVESTMENTS
Amounts allocated to Guarantee Periods or the Modal Payment Portion of the
Guaranteed Period Account will be held in a "nonunitized" separate account
established by Equitable Life under the laws of New York. This separate
account provides an additional measure of assurance that full payment of
amounts due under the Guarantee Periods will be made. Under the New York
Insurance Law, the portion of the separate account's assets equal to the
reserves and other contract liabilities relating to the
9
<PAGE>
Certificates are not chargeable with liabilities arising out of any other
business we may conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees
including those applicable to the Guaranteed Period Account, as well as our
general obligations. Amounts applied under the Life Contingent Annuity become
part of our general account. For a discussion of the Life Contingent Annuity
see "Payments After the Period Certain," in Part 3.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933, as amended
(1933 Act), nor is the general account an investment company under the
Investment Company Act of 1940, as amended (1940 Act). Accordingly, neither
the general account nor the Life Contingent Annuity is subject to regulation
under the 1933 Act or the 1940 Act. However, the market value adjustment
interests under the Certificates are registered under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in this prospectus for your information that
relates to the general account (other than market value adjustment interests)
and the Life Contingent Annuity. The disclosure, however, may be subject to
certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
10
<PAGE>
- ------------------------------------------------------------------------------
PART 3: PROVISIONS OF THE CERTIFICATES
- ------------------------------------------------------------------------------
We offer two forms of the Income Manager payout annuity Certificates from
which you may choose to receive your retirement income. The Income Manager
(Life Annuity with a Period Certain) and the Income Manager (Period Certain)
Certificates. Both forms are described below. The payout annuity Certificate
may not be available in all states, and IRA Certificates are not available in
Puerto Rico.
INCOME MANAGER
(Life Annuity with a Period Certain)
This payout annuity provides guaranteed lifetime payments, with payments
continuing during a "period certain," even if the Annuitant has died.
Guaranteed payments may be provided on a Single Life basis or a Joint and
100% to Survivor basis. Payments may also be provided on a Joint and one-half
to Survivor or a Joint and two-thirds to Survivor basis.
This payout annuity with level or increasing payments is available at issue
ages 59 1/2 through 83 except as described below, and Certificate owner age
59 1/2 and over. Increasing payments are not available under IRA
Certificates. The payout annuity with level payments is also available at
issue ages as young as 45 subject to restrictions described below under
"Purchase Restrictions for Joint & Survivors." However, there are tax
considerations that should be taken into account before purchasing a
Certificate if you are under age 59 1/2. See "Penalty Tax" in Part 5. NQ
Certificate increasing payments (described below) are available at ages as
young as 53 1/2, provided payments do not start prior to your age 59 1/2.
Payments during the period certain are designed to pay out the entire Annuity
Account Value by the end of the period certain. All payments committed to be
paid out must be paid out as the Guarantee Periods serially mature and
amounts are due to be paid from the Modal Payment Portion of the Guaranteed
Period Account. Once commenced, these payments occur automatically through
income payments to you and may not be stopped. The period certain may be
referred to as a "liquidity period," as unlike traditional life annuities
that provide periodic payments, you will be able to make Lump Sum Withdrawals
prior to the end of the period certain, while continuing lifetime income in
reduced amounts or to surrender the Certificate for its Cash Value.
Contributions
Your initial contribution must be at least $10,000. If your Annuity
Commencement Date is February 15, 1998 or later, you may make subsequent
contributions of at least $1,000 at any time up until 15 days before the
Annuity Commencement Date. However, subsequent contributions are not
permitted after you attain age 78 except for contributions made within the
first Contract Year.
Under IRA Certificates, we will only accept initial contributions which are
either rollover contributions under Section 402(c), 403(a)(4), 403(b)(8), or
408(d)(3) of the Code, or direct custodian-to-custodian transfer from other
individual retirement arrangements. Subsequent contributions may be made at
any time until 15 days before the Annuity Commencement Date, subject to age
restrictions discussed here. Subsequent contributions may be any of regular
rollover or direct transfers. Subsequent "regular" IRA contributions may no
longer be made for the taxable year in which you attain age 70 1/2 and
thereafter. If you make a direct transfer or rollover contribution in the
year or turn age 70 1/2 or later you must have taken the required minimum
distribution for the year before the funds are apply to this Certificate. See
"IRA Tax Information in Part 5."
If your Certificate resulted from application of proceeds from another
certificate issued by us, no subsequent contributions are permitted. For
applications received under certain types of transactions, we may offer the
opportunity to lock in Guaranteed Rates on contributions.
We may refuse to accept any contribution if the sum of all contributions
under a Certificate would then total more than $1,500,000. We may also refuse
to accept any contribution if the sum of all contributions under all
Equitable annuity distribution certificates/contracts that you own would then
total more than $2,500,000.
Allocation of Contributions
Based on the amount of your contribution, your age and sex (and the age and
sex of the joint Annuitant, if the Joint and Survivor is elected), the mode
of payment, the form of annuity and the period certain you select, your
contribution is allocated by us among the Guarantee Periods, and the Modal
Payment Portion of the Guaranteed Period Account, if applicable, and applied
to the Life Contingent Annuity. This allocation may not be changed by you.
11
<PAGE>
- ------------------------------------------------------------------------------
INCOME MANAGER (Life Annuity with a Period Certain) (CONTINUED)
- ------------------------------------------------------------------------------
Any subsequent contributions will be allocated by us to the Guarantee Periods
and the Life Contingent Annuity so as to increase the level of all payments.
Payments
You may elect to receive monthly, quarterly or annual payments. However, all
payments are made on the 15th of the month. The payments to be made on an
Expiration Date during the period certain you select represent distributions
of the Maturity Values of serially maturing Guarantee Periods on their
Expiration Dates. Payments to be made monthly, quarterly or annually on dates
other than an Expiration Date represent distributions from amounts in the
Modal Payment Portion of the Guaranteed Period Account.
You may elect to receive level payments during the period certain and under
the Life Contingent Annuity. Under NQ Certificates, you may elect to receive
payments that increase. If you elect the increasing payments during the
period certain, the amounts and dates of the increase will be set forth in
your Certificate.
After the end of the period certain, payments continue under the Life
Contingent Annuity. Your first payment under the Life Contingent Annuity will
generally be equal to or greater than the final payment under the period
certain. See "Payments After the Period Certain" below. Under NQ Certificates
a portion of each payment is excluded from taxable income until the total
amount of your investment in the contract has been recovered. Under IRA
Certificate all amounts are generally taxable.
Payments generally start one payment mode from the Contract Date. However,
you may elect to defer the date payments will start generally for a period of
up to 72 months. Deferral of the payment start date permits you to lock in
rates at a time when you may consider current rates to be high, while
permitting you to delay receiving payments if you have no immediate need to
receive income under your Certificate. In making this decision, you should
consider that the amount of income you purchase is based on the rates
applicable on the Transaction Date, so if rates rise during the interim, your
payments may be less than they would have been if you had purchased a
Certificate at a later date. Deferral of the payment start date is not
available above age 80. The ability to defer the payment start date may not
be available in all states. Under IRA Certificates if your deferred payment
start date is the year you turn 70 1/2 or later you should consider the
effect that deferral may have on the requirement to take minimum distribution
from IRAs.
If your initial contribution will come from multiple sources, the payment
start date must be deferred until at least the February 15th next following
the date the last amount of the initial contribution is received.
Period Certain
If you elect level payments, you may select a period certain of not less than
7 years nor more than 15 years. The maximum period certain available based on
the age of the Annuitant at issue of the Certificate is as follows:
<TABLE>
<CAPTION>
NQ CERTIFICATES
- ---------------------------------------
ANNUITANT MAXIMUM
ISSUE AGE* PERIOD CERTAIN
- ----------------- ---------------------
<S> <C>
45 through 70 15 years
71 through 75 85 less issue age
76 through 80 10 years
81 through 83 90 less issue age
</TABLE>
<TABLE>
<CAPTION>
IRA CERTIFICATES
- ---------------------------------------
ANNUITANT MAXIMUM
AGE* PERIOD CERTAIN
- ----------------- ---------------------
<S> <C>
45 through 70 15 years
71 through 78 85 less issue age
79 through 83 7 years
</TABLE>
The minimum and maximum period certain will be reduced by each year you defer
the date your payments will start.
Under NQ Certificates if you elect increasing payments, you do not have a
choice as to the period certain. Based on the age of the Annuitant at issue
of the Certificate, your period certain will be as follows:
<TABLE>
<CAPTION>
ISSUE AGE* PERIOD CERTAIN
- ----------------- ------------------
<S> <C>
59 1/2 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
</TABLE>
If you elect increasing payments and defer the date payments will start, your
period certain will be as follows:
<TABLE>
<CAPTION>
PERIOD CERTAIN BASED ON
DEFERRAL PERIOD
------------------------------------
1-36 37-60 61-72
ISSUE AGE* MONTHS MONTHS MONTHS
- ----------------- ------------ ----------- -----------
<S> <C> <C> <C>
53 1/2 through 70 12 years 9 years 9 years
71 through 75 9 years 9 years N/A
76 through 80 6 years 6 years N/A
81 through 83 N/A N/A N/A
</TABLE>
* For joint and survivor, the period certain is based on the age of the
younger Annuitant.
12
<PAGE>
- ------------------------------------------------------------------------------
INCOME MANAGER (Life Annuity with a Period Certain) (CONTINUED)
- ------------------------------------------------------------------------------
Purchase Restrictions for Joint & Survivors
Under the Joint and Survivor forms: (i) the joint Annuitant must also be the
beneficiary under the Certificate. Under IRA Certificates the joint Annuitant
must be your spouse; (ii) for purposes of the above limitations, we use the
age of the younger Annuitant; (iii) neither you nor the joint Annuitant can
be over age 83; (iv) under level payments the Joint and 100% to Survivor form
is only available for the longest period certain permitted; and (v) if either
you or the joint Annuitant is under age 59 1/2, only the Joint and 100% to
Survivor form is permitted.
Payments After the Period Certain
The Life Contingent Annuity continues lifetime payments if you are living at
the end of the period certain. Payments continue during your lifetime (and
the lifetime of the joint Annuitant, if applicable) on the same payment mode
and date as the payments that were made during the period certain. The
portion of your contribution applied under the Life Contingent Annuity does
not have a Cash Value or an Annuity Account Value and, therefore, does not
provide for withdrawals.
THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND
ANNUITY INCOME IS PAID ONLY IF YOU (OR A JOINT ANNUITANT) ARE LIVING AT THE
DATE ANNUITY BENEFITS BEGIN. BENEFITS ARE ONLY PAID DURING YOUR LIFETIME AND,
IF APPLICABLE, THE LIFETIME OF A JOINT ANNUITANT. CONSEQUENTLY, YOU SHOULD
CONSIDER THE POSSIBILITY THAT NO AMOUNTS WILL BE PAID UNDER THE LIFE
CONTINGENT ANNUITY IF YOU (OR A JOINT ANNUITANT) DO NOT SURVIVE TO THE DATE
PAYMENTS ARE TO START UNDER SUCH ANNUITY.
You may elect to have the Life Contingent Annuity provide level or increasing
(NQ Certificates) payments on a Single Life or a Joint and 100% to Survivor
basis. If you elect increasing payments under NQ Certificates, your first
payment under the Life Contingent Annuity will generally be equal to or
greater than the final payment under the period certain. Thereafter, payments
will increase annually on each anniversary of the payment start date under
the Life Contingent Annuity, based on the annual increase in the Consumer
Price Index, but in no event greater than 3% per year. The Life Contingent
Annuity may also provide payments on a Joint and one-half to Survivor or a
Joint and two-third to Survivor basis.
Example of Payments
The chart below illustrates level payments for a male, age 70 who purchases
the Income Manager (Life Annuity with a Period Certain) on a single life
basis, with a single contribution of $100,000. The example also assumes a
period certain of 15 years. Based on Guaranteed Rates in effect on the
Contract Date of April 15, 1997, an election of either monthly, quarterly or
annual payments with payments starting one payment mode from the Contract
Date, the following level payments would be provided:
<TABLE>
<CAPTION>
MODE MONTHLY QUARTERLY ANNUAL
- ------------ --------- ----------- -----------
<S> <C> <C> <C>
Start Date 6/15/97 8/15/97 5/15/98
Payment $ 722.74 $2,186.05 $9,013.72
</TABLE>
LUMP SUM WITHDRAWALS
After the first Contract Year, you may take a Lump Sum Withdrawal once per
Contract Year at any time during such Contract Year. You may request such
withdrawal, in an amount of at least $1,000, by submitting a written request
on a form satisfactory to us. A request to withdraw more than 90% of the Cash
Value as of the Transaction Date will result in the termination of the
Certificate and will be treated as a surrender of the Certificate for its
Cash Value. See "Surrendering the Certificates" below. Amounts withdrawn from
the Guarantee Periods, other than at the Expiration Date, will result in a
market value adjustment. See "Market Value Adjustment for Withdrawals or
Surrender Prior to the Expiration Date" in Part 2. If you take a Lump Sum
Withdrawal under an NQ Certificate, a portion of such Lump Sum Withdrawal may
be excludable from taxable income, only if payments have commenced. If you
have a deferred payment start date and you are under age 59 1/2, withdrawals
may be taxable and subject to a 10% additional Federal income tax penalty.
A withdrawal charge will be imposed as a percentage of the portion of each
contribution allocated to the Guarantee Period Account to the extent that a
Lump Sum Withdrawal exceeds the free corridor amount.
Free Corridor Amount
The free corridor amount is 10% of the Annuity Account Value at the
beginning of the Contract Year.
See "Withdrawal Charge" in Part 4.
ALLOCATION OF LUMP SUM WITHDRAWALS
Lump Sum Withdrawals will be taken from all remaining Guarantee Periods to
which your Annuity Account Value is allocated and the Modal Payment
13
<PAGE>
- ------------------------------------------------------------------------------
INCOME MANAGER (Life Annuity with a Period Certain) (CONTINUED)
- ------------------------------------------------------------------------------
Portion of the Guaranteed Period Account such that the amount of the payments
and the length of the period certain will be reduced, and the date payments
under the Life Contingent Annuity are to start will be accelerated.
Additional amounts above the amount of the requested withdrawal will be
withdrawn from the Guaranteed Period Account and applied to the Life
Contingent Annuity to the extent necessary to achieve this result. As a
result, the same pattern of payments will continue in reduced amounts for
your life, and if applicable, the life of your joint Annuitant. If you have
elected increasing payments, the first reduction in your payments will take
place no later than the date of the next planned increase.
Example
The example below illustrates the effect of a Lump Sum Withdrawal. This
example assumes a single contribution of $100,000 is paid on April 15, 1997,
which purchases level annual payments of $8,539.87 to be made on February
15th each year, for a male and female, both age 70, on a Joint and two-thirds
to Survivor basis with a period certain of 15 years. It assumes a Lump Sum
Withdrawal at the beginning of the fourth Contract Year of 25% of an Annuity
Account Value of $71,539.43 at which time the Annuitants are age 73.
The requested withdrawal amount would be $17,884.86 ($71,539.43 x .25). In
this case, $7,153.94 ($71,539.43 x .10) would be the free corridor amount and
could be withdrawn without the imposition of a withdrawal charge. The balance
$10,730.91 ($17,884.86-$7,153.94) would be considered a withdrawal of a part
of the contribution of $100,000. This contribution would be subject to a 4.0%
withdrawal charge of $429.24 ($10,730.91 x .04). The Annuity Account Value
after the withdrawal is $53,225.33 ($71,539.43-$17,884.86-$429.24). The
payments would be reduced to $6,978.43 and the remaining period certain would
be reduced to 10 years from 12.
DEATH BENEFIT
Before the Annuity Commencement Date
Upon receipt of proof satisfactory to us of the Annuitant's death before the
Annuity Commencement Date the death benefit will be paid to the beneficiary
named in your Certificate. See "Beneficiary" in Part 4. The death benefit is
the greater of (i) the Annuity Account Value and (ii) the sum of the
Guaranteed Period Amounts in each Guarantee Period, plus any amounts in the
Modal Payment Portion of the Guaranteed Period Account. However, if you are
the Annuitant and your spouse is the designated beneficiary under the
Certificate and you have not elected to defer the date payments are to start,
or if payments are scheduled to start within one year under a deferral
schedule, such beneficiary may elect to receive the payments for the period
certain starting on the scheduled Annuity Commencement Date in lieu of taking
the death benefit. If you have elected to defer the date payments will start,
your spouse also has to have been named successor Annuitant/Certificate Owner
in order to elect the payments in lieu of the death benefit. Unless you have
elected a Joint and Survivor form, after the Annuitant dies no payment will
be made under the Life Contingent Annuity. The death benefit payable relates
only to the Guaranteed Period Account; a death benefit is never payable under
the Life Contingent Annuity.
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the annuity
benefit you have chosen under your Certificate. If no income annuity benefit
has been chosen at the time of the Annuitant's death, the beneficiary will
receive the death benefit in a lump sum. However, subject to certain
exceptions in the Certificate, Equitable Life's rules then in effect and any
other applicable requirements under the Code, the beneficiary may elect to
apply the death benefit to one or more annuity benefits offered by Equitable
Life. See "Annuity Benefits" in Part 4. Such an election when made on a
timely basis, can defer otherwise taxable income. See "Death Benefits" in
Part 5. Note that if you are both the Certificate Owner and the Annuitant
only a life annuity or an annuity that does not extend beyond the life
expectancy of the beneficiary may be elected.
When the NQ Certificate Owner Dies Before the
Annuitant
When you are the Certificate Owner under an NQ Certificate but not the
Annuitant and you die before the Annuity Commencement Date, the beneficiary
named to receive the death benefit upon the Annuitant's death will
automatically succeed as Certificate Owner (unless you name a different
person as a successor Owner in a written form acceptable to us and send it to
our Processing Office). The NQ Certificate provides that the original
Certificate Owner's entire interest in the Certificate be completely
distributed to the named beneficiary by the fifth anniversary of such Owner's
death (unless an annuity benefit is elected and payments begin within one
year after the Certificate Owner's death and are made over the beneficiary's
life or over a period not
14
<PAGE>
- ------------------------------------------------------------------------------
INCOME MANAGER (Life Annuity with a Period Certain) (CONTINUED)
- ------------------------------------------------------------------------------
to exceed the beneficiary's life expectancy). If an annuity benefit has not
been elected, as described above, on the fifth anniversary of your death, we
will pay any Annuity Account Value remaining on such date, less any
applicable withdrawal charge. If the successor Certificate Owner is your
surviving spouse, no distributions are required as long as both the surviving
spouse and the Annuitant are living.
After the Annuity Commencement Date
If death occurs after the Annuity Commencement Date, payments will continue
to be made during the period certain to the designated beneficiary (who
effectively becomes the Certificate Owner) on the same payment basis that was
in effect prior to the death. If you have elected a Joint and Survivor form,
payments will be made as long as either you or the joint Annuitant is living
after the end of the period certain. The designated beneficiary and the joint
Annuitant must be the same person. In lieu of continuing payments during the
period certain, the beneficiary may elect to receive a single sum. If a
single sum is elected within one year from the date of death, the single sum
will be equal to the Annuity Account Value, or if greater, the sum of the
Guaranteed Period Amounts in each Guarantee Period, plus any amount in the
Modal Payment Portion of the Guaranteed Period Account. After one year, the
beneficiary may surrender the Certificate and receive the Cash Value. If a
single sum is elected and there is a joint Annuitant, the date payments are
to start under the Life Contingent Annuity will be accelerated so that
payments will be made in reduced amounts.
SURRENDERING THE CERTIFICATES
You may surrender the Certificate for its Cash Value at any time during the
period certain, and thereafter receive the lifetime income provided by the
Life Contingent Annuity. See "Cash Value," in Part 4.
Once the Certificate is surrendered, the date payments are to start under the
Life Contingent Annuity will be accelerated to the date when the next payment
was to be received under the period certain and such payments will be made in
reduced amounts. Once your Certificate has been surrendered, it will be
returned to you with a notation that the Life Contingent Annuity is still in
effect. The Life Contingent Annuity cannot be surrendered.
INCOME MANAGER
(Period Certain)
This version of the payout annuities (available at issue ages 59 1/2 through
78) provides a level stream of guaranteed payments for a period certain of
not less than 7 years nor more than 15 years. At issue ages over 70, the
maximum period certain is age 85 less the issue age.
You may elect to receive monthly, quarterly or annual payments. However, all
payments are made on the 15th of the month. Payments will start one payment
mode from the Contract Date. The level payments to be made on Expiration
Dates during the period certain represent distributions of the Maturity
Values of serially maturing Guarantee Periods on their Expiration Dates.
Payments to be made monthly, quarterly or annually on dates other than an
Expiration Date represent distributions from amounts in the Modal Payment
Portion of the Guaranteed Period Account.
Under NQ Certificates, a portion of each payment will be excluded from
taxable income. Under IRA Certificates, all amounts are generally fully
taxable.
During the period certain (which may also be referred to as the "liquidity
period") you have access to your Cash Value through Lump Sum Withdrawals or
surrender of the Certificate.
Contribution
Under this Certificate the minimum single contributions $10,000. You may not
make subsequent contributions under this plan. For applications received
under certain types of transactions, we may offer the opportunity to lock in
Guaranteed Rates on contributions.
Under IRA Certificates, we will only accept single contributions which are
either rollover contributions under Section 402(c), 403(a)(4), 403(b)(8), or
408(d)(3) of the Code, or direct custodian-to-custodian transfers from other
individual retirement arrangements. If you are age 70 1/2 or over when you
purchase a Certificate, the amount contributed must be net of your required
minimum distribution for the year in which the rollover or direct transfer
contribution is made. See " IRA Tax Information in Part 5."
We may refuse to accept a contribution in excess of $1,500,000. We may also
refuse to accept any contribution if the sum of all contributions under all
Equitable annuity distribution certificates/contracts that you own would then
total more than $2,500,000.
<PAGE>
Allocation of Contribution
Based on the amount of your contribution and the period certain you select,
your contribution is allo-
15
<PAGE>
- ------------------------------------------------------------------------------
INCOME MANAGER (Period Certain) (CONTINUED)
- ------------------------------------------------------------------------------
cated by us among the Guarantee Periods and the Modal Payment Portion of the
Guaranteed Period Account, if applicable, and may not be changed by you, such
that you are assured a level stream of periodic payments.
The following example illustrates a ten year level stream of annual payments,
each in the amount of $10,000, purchased on April 15, 1997 with the first
payment on February 15, 1998. To achieve this result, a single contribution
of $74,428.68 is required, and is allocated among the Guarantee Periods as
indicated below.
<TABLE>
<CAPTION>
FEBRUARY
15TH,
OF CALENDAR PRICE PER $100 ALLOCATION OF
YEAR PAYMENT OF MATURITY VALUE CONTRIBUTION
- ------------- --------- ----------------- ---------------
<S> <C> <C> <C>
1998 10,000 $96.05 $ 9,604.59
1999 10,000 90.78 9,078.43
2000 10,000 85.58 8,557.89
2001 10,000 80.65 8,064.53
2002 10,000 75.91 7,590.50
2003 10,000 71.39 7,138.75
2004 10,000 66.99 6,699.45
2005 10,000 62.89 6,289.47
2006 10,000 58.89 5,889.04
2007 10,000 55.16 5,516.04
Total $74,428.68
</TABLE>
LUMP SUM WITHDRAWALS
After the first Contract Year, you may take a Lump Sum Withdrawal once per
Contract Year at any time during such Contract Year. You may request such
withdrawal by submitting a written request on a form satisfactory to us. The
minimum amount of a Lump Sum Withdrawal is the greater of $2,000 and 25% of
the Cash Value. A request to withdraw more than 90% of the Cash Value as of
the Transaction Date will result in the termination of the Certificate and
will be treated as a surrender of the Certificate for its Cash Value. See
"Surrendering the Certificates to Receive the Cash Value" below. Amounts
withdrawn from the Guarantee Periods other than at the Expiration Date, will
result in a market value adjustment. See "Market Value Adjustment for
Withdrawals or Surrender Prior to the Expiration Date" in Part 2. Lump Sum
Withdrawals may be subject to a withdrawal charge. See "Withdrawal Charge" in
Part 4. There is no free corridor amount. Under NQ Certificates if you take a
Lump Sum Withdrawal a portion of such Lump Sum Withdrawal may be excludable
from taxable income. Under IRA Certificate all amounts are generally fully
taxable.
ALLOCATION OF LUMP SUM WITHDRAWALS
Lump Sum Withdrawals will be taken pro rata from all unmatured Guarantee
Periods and the Modal Payment Portion of the Guaranteed Period Account so
that periodic payments will continue in reduced level amounts over the
remaining term of the period certain.
DEATH BENEFIT
Before the Annuity Commencement Date
Upon receipt of proof satisfactory to us of the Annuitant's death before the
Annuity Commencement Date, we will pay the death benefit described under
Income Manager "(Life Annuity with a Period Certain)," "Death Benefit" above.
When the NQ Certificate Owner Dies Before
the Annuitant
When you are not the Annuitant and you die before the Annuity Commencement
Date, the beneficiary will automatically succeed as Certificate Owner as
described under "Income Manager (Life Annuity with a Period Certain)--Death
Benefit" above.
<PAGE>
After the Annuity Commencement Date
If death occurs after the Annuity Commencement Date, payments will continue
to be made to the designated beneficiary on the same payment basis that was
in effect prior to the Annuitant's death. See "Beneficiary" in Part 4. At the
beneficiary's option, payments may be discontinued and paid in a single sum.
If the single sum is elected within one year of the Annuitant's death, the
single sum will be equal to the Annuity Account Value, or if greater, the sum
of the Guaranteed Period Amounts in each Guarantee Period, plus any amounts
in the Modal Payment Portion of the Guaranteed Period Account. After the one
year period, the beneficiary may surrender the Certificate and receive the
Cash Value.
16
<PAGE>
- ------------------------------------------------------------------------------
PART 4: OTHER PROVISIONS OF THE CERTIFICATES AND SERVICES
WE PROVIDE
- ------------------------------------------------------------------------------
The provisions of your Certificate may be restricted by applicable laws or
regulations.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check drawn on a
bank or credit union in the U.S., in U.S. dollars and made payable to
Equitable Life. All checks are accepted subject to collection. Contributions
must be sent to Equitable Life at our Processing Office address designated
for contributions. Your initial or single contribution must be accompanied by
a completed application which is acceptable to us. In the event the
application information or the application is otherwise not acceptable, we
may retain your contribution for a period not exceeding five Business Days
while an attempt is made to obtain the required information. If the required
information cannot be obtained within those five Business Days, the
Processing Office will inform the broker-dealer, on behalf of the applicant,
of the reasons for the delay and return the contribution immediately to the
applicant, unless the applicant specifically consents to our retaining the
contribution until the required information is received by the Processing
Office.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will receive the Guaranteed Rate(s) in
effect for the applicable Guarantee Period(s) on the Business Day
contributions are received. Wire orders not accompanied by complete
information may be retained as described above.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate will not be issued until the receipt and
acceptance of a properly completed application. During the time from receipt
of the initial contribution until a signed application is received from the
Certificate Owner, no other financial transactions may be requested.
If an application is not received within ten days of receipt of the initial
contribution via wire order, or if an incomplete application is received and
cannot be completed within ten days of receipt of the initial contribution,
the amount of the initial contribution will be returned to the applicant with
immediate notification to the broker-dealer.
After your Certificate has been issued, subsequent contributions under the
Income Manager (Life Annuity with a Period Certain) may be transmitted by
wire.
FREE LOOK PERIOD
You have the right to examine your Certificate for a period of 10 days after
you receive it, and to return it to us for a refund. You cancel it by sending
it to our Processing Office. The free look is extended if your state requires
a refund period of longer than 10 days.
Your refund will equal the Annuity Account Value reflecting any positive or
negative market value adjustment, through the date we receive your
Certificate for cancellation at our Processing Office. Under the Income
Manager (Life Annuity with a Period Certain) your refund will also include
any amount applied to the Life Contingent Annuity. Some states or Federal
income tax regulations may require that we calculate the refund differently.
If you cancel your Certificate during the free look period, we may require
that you wait six months before you may apply for a Certificate with us
again.
We follow these same procedures if you change your mind before you receive
your Certificate, but after a contribution has been made. See "Part 5: Tax
Aspects of the Certificates" for possible tax consequences of canceling your
Certificate during the free look period.
BENEFICIARY
You designate the beneficiary at the time you apply for the Certificate.
While the Certificate is in effect, you may change your beneficiary by
writing to our Processing Office. The change will be effective on the date
the written submission was signed.
CASH VALUE
The Cash Value under the Certificate reflects any upward or downward market
value adjustment. See "Part 2: The Guaranteed Period Account." On any date
while the Certificate is in effect, the Cash Value
17
<PAGE>
is equal to the Annuity Account Value less any withdrawal charge. The free
corridor amount will not apply when calculating the withdrawal charge
applicable upon a surrender. See "Withdrawal Charge" below.
SURRENDERING THE CERTIFICATES TO RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
the Annuitant is living and the Certificate is in effect. See "Cash Value,"
above.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate (other than Life
Contingent Annuity benefits) will be terminated as of that date. See
"Surrendering the Certificates" in Part 3. We will usually pay the Cash Value
in a single sum payment within seven calendar days, but we may delay payment
as described in "When Payments are Made" below.
For the tax consequences of surrenders, see "Part 5: Tax Aspects of the
Certificates."
ANNUITY BENEFITS
If you die before the Annuity Commencement Date, the beneficiary may elect to
apply the death benefit to an annuity benefit.
Annuity Forms
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with
this annuity form, it provides the highest monthly payment of any of the
life income annuity options, so long as the Annuitant is living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before a specified period of time (the "certain period") has ended,
payments will continue to the beneficiary for the balance of the certain
period. Certain periods may be 5, 10, 15 or 20 years. A life annuity
with a certain period of 10 years is the normal form of annuity under
the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity-refund certain are
available on either a single life or joint and survivor life basis.
The Certificates offer the annuity benefits outlined above in fixed form.
Fixed annuity payments are guaranteed by us and will be based on the tables
of guaranteed annuity payments in your Certificate or on our then current
annuity rates, whichever is more favorable for the Annuitant.
For each annuity benefit, we will issue a separate written agreement putting
the benefit into effect. Before we pay any annuity benefit, we require the
return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
annuity form, the Annuitant's age (or the Annuitant's and joint Annuitant's
ages) and in certain instances, the sex of the Annuitant(s). Once an annuity
form is chosen and payments have commenced, no change can be made.
If, at the time an annuity form is elected, the amount to be applied is less
than $2,000 or the initial payment under the form elected is less than $20
monthly, we reserve the right to pay the death benefit in a single sum rather
than as payments under the annuity form chosen.
WHEN PAYMENTS ARE MADE
We can defer payment of any portion of the Annuity Account Value for up to
six months while you are living. We may also defer payments for any amount
attributable to a contribution made in the form of a check for a reasonable
amount of time (not to exceed 15 days) to permit the check to clear.
ASSIGNMENT
IRA Certificates are not assignable or transferable except through surrender
to us. They may not be borrowed against or used as collateral for a loan or
other obligation.
NQ Certificates may not be assigned.
DISTRIBUTION OF THE CERTIFICATES
Equitable Distributors, Inc. (EDI), an indirect wholly owned subsidiary of
Equitable Life, has responsibil-
18
<PAGE>
ity for sales and marketing functions and may be deemed to be the distributor
of the Certificates. EDI is registered with the SEC as a broker-dealer under
the Exchange Act and is a member of the National Association of Securities
Dealers, Inc. EDI's principal business address is 1290 Avenue of the
Americas, New York, New York 10104. EDI was paid a fee of $1,204,370 for 1996
and $126,914 for 1995 for its services under its "Distribution Agreement"
with Equitable Life.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents, as well as by
unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation (including for EDI and its
affiliates) will not exceed five percent of total contributions made under a
Certificate. EDI may also receive compensation and reimbursement for its
marketing services under the terms of its distribution agreement with
Equitable Life. Broker-dealers receiving sales compensation will generally
pay a portion thereof to their registered representatives as commission
related to sales of the Certificates. The offering of the Certificates is
intended to be continuous.
WITHDRAWAL CHARGE
A withdrawal charge for Lump Sum Withdrawals will be imposed as a percentage
of the portion of each contribution allocated to the Guaranteed Period
Account as discussed under "Lump Sum Withdrawals" in Part 3, or if the
Certificate is surrendered to receive the Cash Value. We determine the
withdrawal charge separately for each contribution in accordance with the
table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7 8+
------------------------------------------------------
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the Lump Sum Withdrawal is made or the Certificate is
surrendered, beginning with "Contract Year 1" with respect to each
contribution withdrawn or surrendered. For each contribution, the Contract
Year in which we receive that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Guaranteed Period Account in
proportion to the amount being withdrawn from each Guarantee Period and the
Modal Payment Portion of the Guaranteed Period Account.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge, the Federal income tax law
treats earnings as withdrawn first. See "Part 5: Tax Aspects of the
Certificates."
The withdrawal charge is to help cover sales expenses. This charge will not
be increased for the life of the Certificates. We may reduce this charge
under group or sponsored arrangements. See "Group or Sponsored Arrangements"
below.
AMOUNTS APPLIED FROM OTHER INCOME MANAGER CERTIFICATES
Life Annuity with a Period Certain
A Certificate Owner of certain other Income Manager certificates issued by us
may apply the Annuity Account Value to purchase the Income Manager (Life
Annuity with a Period Certain) provided the issue age and payment
restrictions for the Income Manager are met. If the Annuity Account Value is
applied from another Certificate issued by us to purchase the Income Manager
at a time when the dollar amount of the withdrawal charge is greater than 2%
of remaining contributions (after withdrawals), such withdrawal charge will
not be deducted. However, a new withdrawal charge schedule will apply under
the new certificate . For purposes of the withdrawal charge schedule, the
year in which your Annuity Account Value is applied under the new certificate
will be "Contract Year 1." If the Annuity Account Value is applied from such
other certificate when the dollar amount of the withdrawal charge is 2% or
less, there will be no withdrawal charge schedule under the Income Manager.
You should consider the timing of your purchase as it relates to the
potential for withdrawal charges under the Income Manager.
Period Certain
A Certificate Owner of certain other Income Manager certificates issued by us
may apply the Annuity Account Value to purchase this Income Manager (Period
Certain) once withdrawal charges are no longer in effect under such other
Income Manager certificates. No withdrawal charges will apply under the
Income Manager.
To purchase an Income Manager, we require the return of the original
certificate. New Income Manager Certificate will be issued putting this
annuity form into effect.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
Generally, we deduct a charge for applicable taxes, such as state or local
premium taxes, from your
19
<PAGE>
contribution(s). The current tax charge that might be imposed varies by state
and ranges from 0% to 2.25% for IRA Certificates and from 0% to 3.5% for NQ
Certificates (the rate is 1% in Puerto Rico and 5% in the Virgin Islands).
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal
charge or change the minimum contribution requirements. We may increase
Guaranteed Rates for the Guarantee Periods and reduce purchase rates for the
Life Contingent Annuity. Group arrangements include those in which a trustee
or an employer, for example, purchases contracts covering a group of
individuals on a group basis. Sponsored arrangements include those in which
an employer allows us to sell Certificates to its employees or retirees on an
individual basis. IRA Certificates are only available for sponsored
arrangements.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these
factors into account when reducing charges. To qualify for reduced charges, a
group or sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy Certificates or that have
been in existence less than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the withdrawal charge will reflect
differences in costs or services and will not be unfairly discriminatory.
Group and sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR
MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE
ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The withdrawal charge may be reduced or eliminated when sales are made in a
manner that results in savings of sales and administrative expenses, such as
sales through persons who are compensated by clients for recommending
investments and receive no commission or reduced commissions in connection
with the sale of the Certificates. In no event will a reduction or
elimination of the withdrawal charge be permitted where it would be unfairly
discriminatory.
20
<PAGE>
- ------------------------------------------------------------------------------
PART 5: TAX ASPECTS OF THE CERTIFICATES
- ------------------------------------------------------------------------------
This Part of the prospectus generally covers our understanding of the current
Federal income tax rules that apply to IRA and NQ Certificates.
This prospectus does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities. In addition, the Treasury Department may amend
existing regulations, issue new regulations, or adopt new interpretations of
existing laws. State tax laws or, if you are not a United States resident,
foreign tax laws, may affect the tax consequences to you or the beneficiary.
These laws may change from time to time without notice and, as a result, the
tax consequences may be altered. There is no way of predicting whether, when
or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
TAXATION OF NON-QUALIFIED ANNUITIES
This section generally covers our understanding of the current Federal income
tax laws that apply to a non-qualified annuity purchased with only after-tax
dollars.
Equitable Life has designed the NQ Certificates to qualify as an "annuity"
for purposes of Federal income tax law. Annuity contract payments are taxable
as ordinary income and are subject to income tax withholding. See "Federal
and State Income Tax Withholding" below. Gains in the Annuity Account Value
of the Certificate generally will not be taxable to an individual until a
distribution occurs, either by a withdrawal of part or all of its value or as
a series of periodic payments. However, there are some exceptions to this
rule for transactions occuring before the annuity commencement date: (1) an
individual transfers a Certificate as a gift to someone other than a spouse
(or divorced spouse), any gain in its Annuity Account Value will be taxed at
the time of transfer; (2) the assignment or pledge of any portion of the
value of a Certificate will be treated as a distribution of that portion of
the Certificate; and (3) when an insurance company (or its affiliate) issues
more than one non-qualified deferred annuity certificate or contract during
any calendar year to the same taxpayer, the certificates or contracts are
required to be aggregated in computing the taxable amount of any
distribution. The Income Manager (Life Annuity with a Period Certain) will be
treated as a non-qualified deferred annuity if annuity payments start after
12 months of the Contract Date.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Certificate
unless an exception under the Code applies. There is an exception for
immediate annuities. Discuss with your tax adviser if this exception may
apply in your case.
Withdrawals
Prior to the Annuity Commencement Date, any withdrawals (withdrawals which do
not terminate your total interest in the Certificate) are taxable to you as
ordinary income to the extent there has been a gain in the Annuity Account
Value and is subject to income tax withholding. See "Federal and State Income
Tax Withholding" below. The balance of the distribution is treated as a
return of the "investment" or "basis" in the Certificate and is not taxable.
Generally, the investment or basis in the Certificate equals the
contributions made, less any amounts previously withdrawn which were not
taxable. Special rules may apply if contributions made to another annuity
certificate or contract prior to August 14, 1982 are transferred to a
Certificate in a tax-free exchange. To take advantage of these rules, you
must notify us prior to such an exchange.
If you surrender or cancel the Certificate, the distribution is taxable to
the extent it exceeds the investment in the Certificate.
You should discuss with your tax adviser the effect of any surrender or
withdrawal under an Income Manager.
<PAGE>
Annuity Payments
Once annuity payments begin (whether under one of the Income Manager
immediate annuities or under an income annuity option), a portion of each
payment is considered to be a tax-free recovery of investment based on the
ratio of the investment to the expected return under the Certificate. The
remainder of each payment will be taxable. In the case of a life annuity,
after the total investment in the contract has been recovered, future
payments are
21
<PAGE>
fully taxable. If payments cease as a result of death, a deduction for any
unrecovered investment will be allowed.
Taxation of Lump Sum Withdrawals Made After Payments Have Commenced
If your Lump Sum Withdrawal terminates all periodic payments due, it will be
taxable as a complete surrender as discussed above. If you make a Lump Sum
Withdrawal under one of the Income Manager payout annuities which does not
terminate all periodic payments due, then a portion of the remaining reduced
payments will be eligible for tax-free recovery of investment. Also, a
portion of such Lump Sum Withdrawal may be excludable from taxable income.
You should discuss with your tax adviser the taxation of any surrender or
withdrawal of Cash Value.
Early Distribution Penalty Tax
In addition to income tax, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date you attain age 59 1/2, (2) made on or after your death, (3) attributable
to your disability, (4) is part of a series of substantially equal
installments as an annuity for your life (or life expectancy) or the joint
lives (or joint life expectancies) of you and a beneficiary, (5) with respect
to income allocable to amounts contributed to an annuity certificate or
contract prior to August 14, 1982 which are transferred to the Certificate in
a tax-free exchange, or (6) payments under an immediate annuity. An immediate
annuity is generally an annuity which commences payments within one year from
purchase and provides for a series of substantially equal periodic payments
made at least annually.
Periodic annuity payments made to an individual under age 59 1/2 from the
Income Manager (Life Annuity with a Period Certain) should qualify for the
"substantially equal periodic payments for life" exception under (4) above.
However, this exception may not apply if the individual takes a Lump Sum
Withdrawal, surrenders the Certificate or changes the payment pattern in any
way. Once you begin receiving Income Manager payments and you are under age
59 1/2, the payments should not be stopped or changed until the later of your
attaining age 59 1/2 or five years after the date of the first payment, or
the penalty tax, including an interest charge for the prior penalty
avoidance, may apply. Also, it is possible that the IRS could view any
additional withdrawal you take from your Certificate as changing the pattern
of substantially equal payments for purposes of determining whether the
penalty applies.
If a taxpayer under age 59 1/2 purchases a joint life-contingent annuity
certificate with a reduced payment to the survivor (e.g., joint and 50% to
survivor), a question might be raised whether payments will not be
substantially equal for the joint lives of the taxpayer and survivor, as the
payments will be reduced at some point. In issuing our information returns,
we code annuity payments from such a certificate as eligible for an exception
from the early distribution penalty. We believe that any change in payments
to the survivor would come within the statutory provision covering a change
of payments on account of death. As there is no direct authority on point,
however, if you are under age 59 1/2, you should discuss this item with your
own tax adviser when electing a reduced survivorship option.
Payments as a of Death
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 3, the beneficiary is generally
subject to the same tax treatment as would apply to you. If the beneficiary
takes the death benefit in a single sum, the beneficiary is treated as if the
Certificate had been surrendered. The tax computation will reflect your
investment in the Certificate.
If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a single sum death benefit first becomes payable and
before any benefit is actually paid. The taxable income that would otherwise
occur, will be deferred, and payments will be taxed as described above under
"Annuity Payments."
Special distribution requirements apply upon the death of the owner of a
non-qualified annuity before annuity payments have begun. That is, in the
case of a Certificate where the owner and annuitant are different, even
though the annuity contract could continue because that annuitant has not
died, Federal tax law requires that the person who succeeds as owner of the
contract take distribution of the contract within a specified period of time.
<PAGE>
SPECIAL RULES FOR NQ CERTIFICATES
ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from NQ Certificates as
U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents
is excludable from U.S. taxation. Income from NQ Certificates is also subject
to Puerto Rico tax. The computation of the taxable portion of amounts
distributed from a Certificate
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may differ in the two jurisdictions. Therefore, an individual might have to
file both U.S. and Puerto Rico tax returns, showing different amounts of
income for each. Puerto Rico generally provides a credit against Puerto Rico
tax for U.S. tax paid. Depending on an individual's personal situation and
the timing of the different tax liabilities, an individual may not be able to
take full advantage of this credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
IRA TAX INFORMATION
TAX-QUALIFIED INDIVIDUAL RETIREMENT
ANNUITIES (IRAS)
This prospectus contains the information which the Internal Revenue Service
(IRS) requires to be disclosed to an individual before he or she purchases an
IRA.
Introduction
The IRA Certificate is designed to qualify as an IRA under Section 408(b) of
the Code. Your rights under the IRA Certificates cannot be forfeited.
This prospectus covers some of the special tax rules that apply to individual
retirement arrangements. You should be aware that an IRA is subject to
certain restrictions in order to qualify for its special treatment under the
Federal tax law.
This prospectus provides our general understanding of applicable Federal
income tax rules, but does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the IRA Certificates.
Further information on IRA tax matters can be obtained from any IRS district
office. Additional information regarding IRAs, including a discussion of
required distributions, can be found in IRS Publication 590, entitled
"Individual Retirement Arrangements (IRAs)," which is generally updated
annually.
The IRA Certificate has been approved by the IRS as to form for use as an
IRA. This IRS approval is a determination only as to the form of the annuity
and does not represent a determination of the merits of the annuity as an
investment, and may not address certain features under the IRA Certificates,
and may not address certain features under the IRA Certificates.
Cancellation
You can cancel a Certificate issued as an IRA by following the directions in
Part 4 under "Free Look Period." Since there may be adverse tax consequences
if a Certificate is cancelled (and because we are required to report to the
IRS certain distributions from cancelled IRAs), you should consult with a tax
adviser before making any such decision. If you cancel this Certificate, you
may establish a new individual retirement arrangement if at the time you meet
the requirements for establishing an individual retirement arrangement.
Contributions to IRAs
Individuals may make three different types of contributions to purchase an
IRA, or as later additions to an existing IRA: "regular" contributions out of
earnings, tax-free "rollover" contributions from tax-qualified plans, or
direct custodian-to-custodian transfers from other individual retirement
arrangements ("direct transfers").
The initial contribution to the Certificate must be either a rollover or a
direct custodian-to-custodian transfer. See "Tax-Free Transfers and
Rollovers," discussed below. Any subsequent contributions you make may be any
of rollovers, direct transfers or "regular" IRA contributions. See
"Contributions Under the Certificates" in Part 4. The immediately following
discussion relates to "regular" IRA contributions. For the reasons noted in
"Tax-Free Transfers and Rollovers" below, you should consult with your tax
adviser before making any subsequent contributions to an IRA which is
intended to serve as a "conduit" IRA. This vehicle may not be appropriate for
a conduit IRA.
Generally, $2,000 is the maximum amount of deductible and nondeductible
contributions which may be made to all IRAs by an individual in any taxable
year. The above limit may be less when the individual's earnings are below
$2,000. This limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into an IRA.
The amount of IRA contributions for a tax year that an individual can deduct
depends on whether the individual (or the individual's spouse, if a joint
return is filed) is covered by an employer-sponsored tax-favored retirement
plan. If the individual's spouse does not work or elects to be treated as
having no compensation, the individual and the individual's spouse may
contribute up to $4,000 to individual retirement arrangements (but no more
than $2,000 to any one individual retirement arrangement). The non-working
spouse owns his or her individual retirement arrangements, even if the
working spouse makes contributions to purchase the spousal individual
retirement arrangements.
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If neither the individual nor the individual's spouse is covered during any
part of the taxable year by an employer-sponsored tax-favored retirement plan
(including a qualified plan, a tax sheltered account or annuity under Section
403(b) of the Code (TSA) or a simplified employee pension plan), then
regardless of adjusted gross income (AGI), each working spouse may make
deductible contributions to an IRA for each tax year (MAXIMUM PERMISSIBLE
DOLLAR DEDUCTION) up to the lesser of $2,000 or 100% of compensation. In
certain cases, individuals covered by a tax-favored retirement plan include
persons eligible to participate in the plan although not actually
participating. Whether or not a person is covered by a retirement plan will
be reported on an employee's Form W-2.
If the individual is single and covered by a retirement plan during any part
of the taxable year, the deduction for IRA contributions phases out with AGI
between $25,000 and $35,000. If the individual is married and files a joint
return, and either the individual or the spouse is covered by a tax-favored
retirement plan during any part of the taxable year, the deduction for IRA
contributions phases out with AGI between $40,000 and $50,000. If the
individual is married, files a separate return and is covered by a
tax-favored retirement plan during any part of the taxable year, the
deduction for IRA contributions phases out with AGI between $0 and $10,000.
Married individuals filing separate returns must take into account the
retirement plan coverage of the other spouse, unless the couple has lived
apart for the entire taxable year. If AGI is below the phase-out range, an
individual is entitled to the Maximum Permissible Dollar Deduction. In
computing the partial deduction for IRA contributions the individual must
round the amount of the deduction to the nearest $10. The permissible
deduction for IRA contributions is a minimum of $200 if AGI is less than the
amount at which the deduction entirely phases out.
If the individual (or the individual's spouse, unless the couple has lived
apart the entire taxable year and their filing status is married, filing
separately) is covered by a tax-favored retirement plan, the deduction for
IRA contributions must be computed using one of two methods. Under the first
method, the individual determines AGI and subtracts $25,000 if the individual
is a single person, $40,000 if the individual is married and files a joint
return with the spouse, or $0 if the individual is married and files a
separate return. The resulting amount is the individual's Excess AGI. The
individual then determines the limit on the deduction for IRA contributions
using the following formula:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Maximum Adjusted
$10,000-Excess AGI Permissible Dollar
$10,000 x Dollar = Deduction
Deduction Limit
</TABLE>
Under the second method, the individual determines his or her Excess AGI and
then refers to the table in Appendix II originally prepared by the IRS to
determine the deduction.
Contributions may be made for a tax year until the deadline for filing a
Federal income tax return for that tax year (without extensions). No
contributions are allowed for the tax year in which an individual attains age
70 1/2 or any tax year after that. A working spouse age 70 1/2 or over,
however, can contribute up to the lesser of $2,000 or 100% of "earned income"
to a spousal individual retirement arrangement for a non-working spouse until
the year in which the non-working spouse reaches age 70 1/2.
An individual not eligible to deduct part or all of the IRA contribution may
still make nondeductible contributions on which earnings will accumulate on a
tax-deferred basis. The deductible and nondeductible contributions to the
individual's IRA (or the non-working spouse's IRA) may not, however, together
exceed the maximum $2,000 per person limit. See "Excess Contributions" below.
Individuals must keep their own records of deductible and nondeductible
contributions in order to prevent double taxation on the distribution of
previously taxed amounts. See "Distributions from IRA Certificates" below.
An individual making nondeductible contributions in any taxable year, or any
individual who has made nondeductible contributions to an IRA in prior years
and is receiving amounts from any IRA must file the required information with
the IRS. Moreover, individuals making nondeductible IRA contributions must
retain all income tax returns and records pertaining to such contributions
until interests in all IRAs are fully distributed.
Excess Contributions
Excess contributions to an IRA are subject to a 6% excise tax for the year in
which made and for each year thereafter until withdrawn. In the case of
"regular" IRA contributions any contribution in excess of the lesser of
$2,000 or 100% of compensation or earned income is an "excess contribution,"
(without regard to the deductibility or nondeductibility of IRA contributions
under this limit). Also, any "regular" contributions made after you reach age
70 1/2 are excess contributions. In the case of rollover IRA contributions,
excess contributions are amounts which are not eligible to be rolled over
(for example, after tax contributions to a qualified plan or minimum
distributions required to be made after age
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70 1/2). An excess contribution (rollover or "regular") which is withdrawn,
however, before the time for filing the individual's Federal income tax
return for the tax year (including extensions) is not includable in income
and therefore is not subject to the 10% penalty tax on early distributions
(discussed below under "Penalty Tax on Early Distributions"), provided any
earnings attributable to the excess contribution are also withdrawn and no
tax deduction is taken for the excess contribution. The withdrawn earnings on
the excess contribution, however, would be includable in the individual's
gross income and would be subject to the 10% penalty tax. If excess
contributions are not withdrawn before the time for filing the individual's
Federal income tax return for the year (including extensions), "regular"
contributions may still be withdrawn after that time if the IRA contribution
for the tax year did not exceed $2,000 and no tax deduction was taken for the
excess contribution; in that event, the excess contribution would not be
includable in gross income and would not be subject to the 10% penalty tax.
Lastly, excess "regular" contributions may also be removed by underutilizing
the allowable contribution limits for a later year.
If excess rollover contributions are not withdrawn before the time for filing
the individual's Federal tax return for the year (including extensions) and
the excess contribution occurred as a result of incorrect information
provided by the plan, any such excess amount can be withdrawn if no tax
deduction was taken for the excess contribution. As above, excess rollover
contributions withdrawn under those circumstances would not be includable in
gross income and would not be subject to the 10% penalty tax.
Tax-Free Transfers and Rollovers
Rollover contributions may be made to an IRA from these sources: (i)
qualified plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii)
other individual retirement arrangements.
The rollover amount must be transferred to the Certificate either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within
60 days of the date the proceeds from another individual retirement
arrangement or an eligible rollover distribution from a qualified plan or TSA
were received. Generally the taxable portion of any distribution from a
qualified plan or TSA is an eligible rollover distribution and may be rolled
over tax-free to an IRA unless the distribution is (i) a required minimum
distribution under Section 401(a)(9) of the Code; or (ii) one of a series of
substantially equal periodic payments made (not less frequently than
annually) (a) for the life (or life expectancy) of the plan participant or
the joint lives (or joint life expectancies) of the plan participant and his
or her designated beneficiary, or (b) for a specified period of ten years or
more.
Under some circumstances, amounts from a Certificate may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" IRA treatment, the
source of funds used to establish the IRA must be a rollover contribution
from the qualified plan and the entire amount received from the IRA
(including any earnings on the rollover contribution) must be rolled over
into another qualified plan within 60 days of the date received. Similar
rules apply in the case of a TSA. If you make a contribution to the
Certificate which is from an eligible rollover distribution and you commingle
such contribution with other contributions, you may not be able to roll over
these eligible rollover distribution contributions and earnings to another
qualified plan (or TSA, as the case may be) at a future date, unless the Code
permits. Because this is intended to be a payout vehicle, this may not be an
appropriate Certificate if you intend to use it as a conduit IRA.
Under the conditions and limitations of the Code, an individual may elect for
each IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers
and can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Certificate
and rolled over into other individual retirement arrangements unless the
distribution was received under an inherited IRA. Tax-free rollovers are also
available to the surviving spouse beneficiary of a deceased individual, or a
spousal alternate payee of a qualified domestic relations order applicable to
a qualified plan. In some cases, IRAs can be transferred on a tax-free basis
between spouses or former spouses incidental to a judicial decree of divorce
or separation.
Distributions from IRA Certificates
Income or gains on contributions under IRAs are not subject to Federal income
tax until benefits are distributed to the individual. Distributions include
withdrawals from your Certificate, surrender of your Certificate and annuity
payments from your Certificate. Death benefits are also distributions. Except
as discussed below, the amount of any distribution from an IRA is fully
includable as ordinary income by the individual in gross income.
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<PAGE>
If the individual has made non-deductible IRA contributions to any IRA, those
contributions are recovered tax-free when any IRA distributions are received.
The individual must keep records of all nondeductible contributions. At the
end of each tax year in which the individual has received a distribution, the
individual determines a ratio of the total nondeductible IRA contributions
(less any amounts previously withdrawn tax-free) to the total account
balances of all IRAs held by the individual at the end of the tax year
(including rollover IRAs and payout IRAs) plus all IRA distributions made
during such tax year. The resulting ratio is then multiplied by all
distributions from the IRA during that tax year to determine the nontaxable
portion of each distribution.
In addition, a distribution (other than a required minimum distribution
received after age 70 1/2) is not taxable if (1) the amount received is a
return of excess contributions which are withdrawn, as described under
"Excess Contributions" above, (2) the entire amount received is rolled over
to another individual retirement arrangement (see "Tax-Free Transfers and
Rollovers" above) or (3) in certain limited circumstances, where the IRA acts
as a "conduit," the entire amount is paid into a qualified plan or TSA that
permits rollover contributions.
Distributions from an IRA are not entitled to the special favorable five-year
averaging method (or, in certain cases, favorable ten-year averaging and
long-term capital gain treatment) available in certain cases to distributions
from qualified plans.
Required Minimum Distributions
The minimum distribution rules require IRA owners to start taking annual
distributions from their retirement plans by age 70 1/2. The distribution
requirements are designed to provide for distribution of the owner's interest
in the IRA over the owner's life expectancy. Whether the correct amount has
been distributed is calculated on a year by year basis; there are no
provisions in the Code to allow amounts taken in excess of the required
amount to be carried over or carried back and credited to other years.
Generally, an individual must take the first required minimum distribution
with respect to the calendar year in which the individual turns age 70 1/2.
The individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2, or to delay taking it
until the three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date,"
which is the April 1st of the calendar year following the calendar year in
which the individual turns age 70 1/2.) If the individual chooses to delay
taking the first annual minimum distribution, then the individual will have
to take two minimum distributions in that year--the delayed one for the first
year and the one actually for that year. Once minimum distributions begin,
they must be made at some time every year.
There are two approaches to taking minimum distributions--"account based" or
"annuity based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
An account based minimum distribution approach may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. An annuity based approach involves application
of the Annuity Account Value to an annuity for the life of the individual or
the joint lives of the individual and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options
are best for your own personal situation. Individuals who are participants in
more than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Your required minimum distribution for any taxable year is calculated by
taking into account the required minimum distribution from each of your
individual retirement arrangements. The IRS, however, does not require that
you make the required distribution from each individual retirement
arrangement that you maintain. As long as the total amount distributed
annually satisfies your overall minimum distribution requirement, you may
choose to take your annual required distribution from any one or more
individual retirement arrangements that you maintain.
An individual may recompute his or her minimum distribution amount each year
based on the individual's current life expectancy as well as that of the
spouse. No recomputation is permitted, however, for a beneficiary other than
a spouse. If there is an insufficient distribution in any year, a 50% tax may
be imposed on the amount by which the minimum required to be distributed
exceeds the amount actually distributed. The penalty tax may be waived by the
Secretary of the Treasury in certain limited circumstances. Failure to have
distributions made as the Code and Treasury regulations require may result in
disqualification of your IRA. See "Tax Penalty for Insufficient
Distributions" below.
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Except as described in the next sentence, if the individual dies after
distribution in the form of an annuity has begun, or after the Required
Beginning Date, payment of the remaining interest must be made at least as
rapidly as under the method used prior to the individual's death. (The IRS
has indicated that an exception to the rule that payment of the remaining
interest must be made at least as rapidly as under the method used prior to
the individual's death applies if the beneficiary of the IRA is the surviving
spouse. In some circumstances, the surviving spouse may elect to "make the
IRA his or her own" and halt distributions until he or she reaches age 70
1/2).
If an individual dies before the Required Beginning Date and before
distributions in the form of an annuity begin, distributions of the
individual's entire interest under the Certificate must be completed within
five years after death, unless payments to a designated beneficiary begin
within one year of the individual's death and are made over the beneficiary's
life or over a period certain which does not extend beyond the beneficiary's
life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay
the commencement of such payments up until the individual would have attained
70 1/2. In the alternative, a surviving spouse may elect to roll over the
inherited IRA into the surviving spouse's own IRA.
Tax Considerations for the IRA Certificates
Although the Life Contingent Annuity portion of the Income Manager (Life with
a Period Certain) does not have a Cash Value, it will be assigned a value for
tax purposes which will generally change each year. This value must be taken
into account when determining the amount before the Annuity Commencement Date
of account based required minimum distributions from your IRA even though the
Life Contingent Annuity may not be providing a source of funds to satisfy
such required minimum distribution. Accordingly, you should consult with your
tax adviser to determine the impact of purchasing the Income Manager after
age 70 1/2 in view of your own particular situation.
You will generally be required to determine your required minimum
distribution by annually recalculating your life expectancy. The Income
Manager will not be available if you have previously made a different
election with the funds used to purchase the Certificates. Recalculation is
no longer required once the only payments you or your spouse receive are
under the Life Contingent Annuity.
If prior to the date payments are to start under the Life Contingent Annuity,
you surrender your Certificate, or withdraw any remaining Annuity Account
Value, it may be necessary for you to satisfy your required minimum
distribution by accelerating the start date of payments for your Life
Contingent Annuity, or to the extent available, take distributions from other
IRA funds you may have. Alternatively you may convert your IRA Life
Contingent Annuity under the IRA Certificates to a non-qualifed Life
Contingent Annuity. This would be viewed as a distribution of the value of
the Life Contingent Annuity from the IRA, and therefore, would be a taxable
event. However, since the Life Contingent Annuity would no longer be part of
an IRA, its value would not have to be taken into account in determining
future required minimum distributions.
If you have elected a Joint and Survivor form of the Life Contingent Annuity,
the joint Annuitant must be your spouse. You must determine your required
minimum distribution by annually recalculating both your life expectancy and
your spouse's life expectancy. The Income Manager will not be available if
you have previously made a different election for the funds used to purchase
the Certificates. Recalculation is no longer required once the only payments
you or your spouse receive are under the Life Contingent Annuity. The value
of such an annuity will change in the event of your death or the death of
your spouse. For this reason, it is important that we be informed if you or
your spouse dies before the Life Contingent Annuity has started payments so
that a lower valuation can be made. Otherwise a higher tax value may result
in an overstatement of the amount that would be necessary to satisfy your
required minimum distribution amount.
Allocations of funds to the Life Contingent Annuity may prevent the
Certificate from later receiving "conduit" IRA treatment. See "Tax-Free
Transfers and Rollovers" above.
Taxation of Death Benefits
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if distribution had been made to
the individual.
If you elect to have your spouse be the sole primary beneficiary and to be
the successor Annuitant and Certificate Owner, then your surviving spouse
automatically becomes both the successor Certificate Owner and Annuitant, and
no death benefit is payable until the surviving spouse's death.
<PAGE>
Prohibited Transaction
An IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the
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tax year in which the event occurred. If this happens, the individual must
include in Federal gross income for that year an amount equal to the fair
market value of the IRA Certificate as of the first day of that tax year,
less the amount of any nondeductible contributions not previously withdrawn.
Also, the early distribution penalty tax of 10% will apply if the individual
has not reached age 59 1/2 before the first day of that tax year. See
"Penalty Tax on Early Distributions" below.
PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of IRA distributions will be subject to a 10% penalty tax
unless the distribution is made (1) on or after your death, (2) because you
have become disabled, (3) on or after the date when you reach age 59 1/2, or
(4) in accordance with the exception outlined below if you are under 59 1/2.
Also not subject to penalty tax are IRA distributions used to pay certain
extraordinary medical expenses or medical insurance premiums for defined
unemployed individuals.
A payout over your life or life expectancy (or joint and survivor lives or
life expectancies), which is part of a series of substantially equal periodic
payments made at least annually, is also not subject to penalty tax. An
Income Manager (Life Annuity with a Period Certain), with no deferral of the
payment start date, should fit this payout exception. One Income Manager
(Life Annuity with a Period Certain) payments begin, the distributions should
not be changed until the later of your attaining age 59 1/2 or five years
after the date of the first distribution, or the penalty tax, including an
interest charge for the prior penalty avoidance, may apply to all
withdrawals. Also, it is possible that the IRS could view any additional
withdrawal or payment you take from your Certificate as changing your pattern
of Income Manager payments for purposes of determining whether the penalty
applies.
Where a taxpayer under age 59 1/2 purchases an individual retirement annuity
contract calling for substantially equal periodic payments during a fixed
period, continuing afterwards under a joint life contingent annuity with a
reduced payment to the survivor (e.g., a joint and 50% to survivor), the
question might be raised whether payments will not be substantially equal for
the joint lives of the taxpayer and survivor, as the payments will be reduced
at some point. In issuing our information returns, we code the substantially
equal periodic payments from such a contract as eligible for an exception
from the early distribution penalty. We believe that any change in payments
to the survivor would come within the statutory provision covering change of
payments on account of death. As there is no direct authority on this point,
however, if you are under age 59 1/2, you should discuss this item with your
own tax adviser when electing a reduced survivorship option.
TAX PENALTY FOR INSUFFICIENT
DISTRIBUTIONS
Failure to make required distributions discussed above in "Required Minimum
Distributions" may cause the disqualification of the IRA. Disqualification
may result in current taxation of your entire benefit. In addition a 50%
penalty tax may be imposed on the difference between the required
distribution amount and the amount actually distributed, if any.
We do not automatically make distributions from a Certificate before the
Annuity Commencement Date unless a request has been made. It is your
responsibility to comply with the minimum distribution rules. We will notify
you when our records show that your age 70 1/2 is approaching. If you do not
select a method, we will assume you are taking your minimum distribution from
another IRA that you maintain. You should consult with your tax adviser
concerning these rules and their proper application to your situation.
TAX PENALTY FOR EXCESS DISTRIBUTIONS OR
ACCUMULATION
A 15% excise tax applies to an individual's aggregate excess distributions
from all tax-favored retirement plans. The excise tax is in addition to the
ordinary income tax due but is reduced by the amount (if any) of the early
distribution penalty tax imposed by the Code. This tax is temporarily
suspended for distributions to the individual for the years 1997, 1998 and
1999. However, the excise tax continues to apply for estate tax purposes. In
certain cases the estate tax imposed on a deceased individual's estate will
be increased if the accumulated value of the individ ual's interest in
tax-favored retirement plans is excessive. The aggregate accumulation will be
subject to excise tax in 1997 if they exceed the present value of a
hypothetical life annuity paying $160,000 a year.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax IRA distributions
and the taxable portion of annuity payments, unless the recipient elects not
to be subject to income tax withholding. The rate of withholding will depend
on the type of distribution and, in certain cases, the amount of the
distribution. Special withholding rules apply to foreign recipients
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and United States citizens residing outside the United States. If a recipient
does not have sufficient income tax withheld or does not make sufficient
estimated income tax payments, however, the recipient may incur penalties
under the estimated income tax rules. Recipients should consult their tax
advisers to determine whether they should elect out of withholding. Requests
not to withhold Federal income tax must be made in writing prior to receiving
benefits under the Certificate. Our Processing Office will provide forms for
this purpose. No election out of withholding is valid unless the recipient
provides us with the correct taxpayer identification number and a United
States residence address.
Certain states have indicated that annuity income tax withholding will apply
to payments from the Certificates made to residents. In some states, a
recipient may elect out of state withholding. Generally, an election out of
Federal withholding will also be considered an election out of state
withholding. If you need more information concerning a particular state or
any required forms, call our Processing Office at the toll-free number and
consult your tax adviser.
Periodic payments such as Income Manager payments after the Annuity
Commencement Date are generally subject to wage-bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1997, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,400
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemptions.
A withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution for example a Lump Sum Withdrawal
or death benefit before the Annuity Commencement Date will generally be
subject to withholding at a flat 10% rate. A recipient who provides a United
States residence address and a correct taxpayer identification number will
generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than the Certificate Owner, a Federal generation skipping
tax may be payable with respect to the benefit at rates similar to the
maximum estate tax rate in effect at the time. The generation skipping tax
provisions generally apply to transfers which would also be subject to the
gift and estate tax rules. Individuals are generally allowed an aggregate
generation skipping tax exemption of $1 million. Because these rules are
complex, you should consult with your tax adviser for specific information,
especially where benefits are passing to younger generations, as opposed to a
spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
29
<PAGE>
- ------------------------------------------------------------------------------
PART 6: INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------------------------------
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life at December 31, 1996 and 1995 and for each of the
three years in the period ended December 31, 1996 included in Equitable
Life's Annual Report on Form 10-K, incorporated by reference in the
prospectus, have been examined by Price Waterhouse LLP, independent
accountants, whose reports thereon are incorporated herein by reference. Such
consolidated financial statements and consolidated financial statement
schedules have been incorporated herein by reference in reliance upon the
reports of Price Waterhouse LLP given upon their authority as experts in
accounting and auditing.
30
<PAGE>
- ------------------------------------------------------------------------------
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- ------------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1998 to a Guarantee Period with an Expiration Date
of February 15, 2007 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2002.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2002
---------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2002 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also Annuity
Account Value ...................................... $144,048 $119,487
(2) Guaranteed Period Amount.............................. 131,080 131,080
(3) Market Value Adjustment: (1)-(2)...................... 12,968 (11,593)
February 15, 2002 (After Withdrawal)
- ------------------------------------
(4) Portion of (3) Associated with Withdrawal:
(3) x [$50,000/(1)]................................. $ 4,501 $ (4,851)
(5) Reduction in Guaranteed Period Amount: [$50,000-(4)] . 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5)..................... 85,581 76,229
(7) Maturity Value........................................ 120,032 106,915
(8) Present Value of (7), also Annuity Account Value...... 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
31
<PAGE>
- ------------------------------------------------------------------------------
APPENDIX II: IRS CHART--ESTIMATED DEDUCTION TABLE
- -----------------------------------------------------------------------------
If your Maximum Permissible Dollar Deduction is $2,000, use this table to
estimate the amount of your contribution which will be deductible.
<TABLE>
<CAPTION>
EXCESS EXCESS EXCESS EXCESS
AGI DEDUCTION AGI DEDUCTION AGI DEDUCTION AGI DEDUCTION
- ------ --------- ------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 $2,000 $2,550 $1,490 $5,050 $990 $ 7,550 $490
50 1,990 2,600 1,480 5,100 980 7,600 480
100 1,980 2,650 1,470 5,150 970 7,650 470
150 1,970 2,700 1,460 5,200 960 7,700 460
200 1,960 2,750 1,450 5,250 950 7,750 450
250 1,950 2,800 1,440 5,300 940 7,800 440
300 1,940 2,850 1,430 5,350 930 7,850 430
350 1,930 2,900 1,420 5,400 920 7,900 420
400 1,920 2,950 1,410 5,450 910 7,950 410
450 1,910 3,000 1,400 5,500 900 8,000 400
500 1,900 3,050 1,390 5,550 890 8,050 390
550 1,890 3,100 1,380 5,600 880 8,100 380
600 1,880 3,150 1,370 5,650 870 8,150 370
650 1,870 3,200 1,360 5,700 860 8,200 360
700 1,860 3,250 1,350 5,750 850 8,250 350
750 1,850 3,300 1,340 5,800 840 8,300 340
800 1,840 3,350 1,330 5,850 830 8,350 330
850 1,830 3,400 1,320 5,900 820 8,400 320
900 1,820 3,450 1,310 5,950 810 8,450 310
950 1,810 3,500 1,300 6,000 800 8,500 300
1,000 1,800 3,550 1,290 6,050 790 8,550 290
1,050 1,790 3,600 1,280 6,100 780 8,600 280
1,100 1,780 3,650 1,270 6,150 770 8,650 270
1,150 1,770 3,700 1,260 6,200 760 8,700 260
1,200 1,760 3,750 1,250 6,250 750 8,750 250
1,250 1,750 3,800 1,240 6,300 740 8,800 240
1,300 1,740 3,850 1,230 6,350 730 8,850 230
1,350 1,730 3,900 1,220 6,400 720 8,900 220
1,400 1,720 3,950 1,210 6,450 710 8,950 210
1,450 1,710 4,000 1,200 6,500 700 9,000 200
1,500 1,700 4,050 1,190 6,550 690 9,050 200
1,550 1,690 4,100 1,180 6,600 680 9,100 200
1,600 1,680 4,150 1,170 6,650 670 9,150 200
1,650 1,670 4,200 1,160 6,700 660 9,200 200
1,700 1,660 4,250 1,150 6,750 650 9,250 200
1,750 1,650 4,300 1,140 6,800 640 9,300 200
1,800 1,640 4,350 1,130 6,850 630 9,350 200
1,850 1,630 4,400 1,120 6,900 620 9,400 200
1,900 1,620 4,450 1,110 6,950 610 9,450 200
1,950 1,610 4,500 1,100 7,000 600 9,500 200
2,000 1,600 4,550 1,090 7,050 590 9,550 200
2,050 1,590 4,600 1,080 7,100 580 9,600 200
2,100 1,580 4,650 1,070 7,150 570 9,650 200
2,150 1,570 4,700 1,060 7,200 560 9,700 200
2,200 1,560 4,750 1,050 7,250 550 9,750 200
2,250 1,550 4,800 1,040 7,300 540 9,800 200
2,300 1,540 4,850 1,030 7,350 530 9,850 200
2,350 1,530 4,900 1,020 7,400 520 9,900 200
2,400 1,520 4,950 1,010 7,450 510 9,950 200
2,450 1,510 5,000 1,000 7,500 500 10,000 0
2,500 1,500
</TABLE>
[FN]
- ------------
Excess AGI = Your AGI minus your THRESHOLD LEVEL:
If you are single, your Threshold Level is $25,000.
If you are married, your Threshold Level is $40,000.
If you are married and file a separate tax return, your Excess
AGI = your AGI.
32
<PAGE>
INCOME MANAGERSM
PROSPECTUS FOR
ASSURED PAYMENT PLAN
DATED MAY 1, 1996
-----------------
ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- -------------------------------------------------------------------------------
This prospectus describes certificates The Equitable Life Assurance Society
of the United States (EQUITABLE LIFE, WE, OUR and US) offers under an annuity
contract (ASSURED PAYMENT PLAN) issued on a group basis or as individual
contracts. Enrollment under a group contract will be evidenced by issuance of
a certificate. Certificates and individual contracts each will be referred to
as "Certificates." Assured Payment Plan Certificates are used for after-tax
contributions to a non-qualified annuity. A minimum contribution of $10,000
is required to put a Certificate into effect.
The Owner (CERTIFICATE OWNER, YOU and YOUR) may choose to receive guaranteed
periodic payments under one of our Assured Payment Plans. You may choose to
receive level guaranteed payments payable for a specified period (PERIOD
CERTAIN) with payments generally starting one payment mode from the CONTRACT
DATE. Or, you may choose to receive level or increasing guaranteed payments
for a specified period of time, and continuing for life thereafter (LIFE
ANNUITY WITH A PERIOD CERTAIN). Under this plan you choose whether to receive
payments for your life (SINGLE LIFE) or for your life and the life of a joint
Annuitant (JOINT AND SURVIVOR) you designate.
Amounts are allocated to the GUARANTEED PERIOD ACCOUNT to provide payments
during the period certain. Amounts allocated to a GUARANTEE PERIOD in the
Guaranteed Period Account accumulate on a fixed basis and are credited with
interest at a rate we set (GUARANTEED RATE) for the entire period. On each
business day (BUSINESS DAY) we will determine the Guaranteed Rates available
for amounts newly allocated to Guarantee Periods. A market value adjustment
(positive or negative) will be made for withdrawals, surrender and certain
other transactions from a Guarantee Period before its expiration date
(EXPIRATION DATE). The Guarantee Periods currently available are those
maturing in calendar years 1997 through 2011. Each Guarantee Period has its
own Guaranteed Rates.
This prospectus provides information about the Assured Payment Plan that
prospective investors should know before investing. You should read it
carefully and retain it for future reference.
A registration statement relating to interests under the Guarantee Periods
has been filed with the Securities and Exchange Commission (SEC).
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- -------------------------------------------------------------------------------
Copyright 1996
The Equitable Life Assurance Society of the United States, New York, New York
10019.
All rights reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1995 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE
ACT) after the date hereof and prior to the termination of the offering of
the securities offered hereby shall be deemed to be incorporated by reference
in this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this prospectus.
Equitable Life files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically
pursuant to EDGAR under CIK No. 0000727920.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 787
Seventh Avenue, New York, New York 10019. Attention: Corporate Secretary
(telephone: (212) 554-1234).
2
<PAGE>
PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
PART 1: SUMMARY PAGE 5
What is the INCOME MANAGER? 5
Assured Payment Plan (Life Annuity with a
Period Certain) 5
Assured Payment Plan (Period Certain) 6
Other Provisions of the Assured Payment
Plan 6
Withdrawal Charge 6
Free Look Period 7
Services We Provide 7
Surrendering the Certificates 7
Income Annuity Options 7
Taxes 7
Charges for State Premium and Other
Applicable Taxes 7
Equitable Life 7
PART 2: THE GUARANTEED PERIOD ACCOUNT PAGE 8
Guarantee Periods 8
Market Value Adjustment for
Withdrawals or Surrender Prior to the
Expiration Date 9
Modal Payment Portion 9
Investments 9
PART 3:PROVISIONS OF THE ASSURED PAYMENT
PLAN PAGE 11
Assured Payment Plan (Life Annuity with
a Period Certain) 11
Lump Sum Withdrawals 13
Allocation of Lump Sum Withdrawals 13
Death Benefit 14
Surrendering the Certificates 14
Assured Payment Plan (Period Certain) 14
Lump Sum Withdrawals 15
Allocation of Lump Sum Withdrawals 15
Death Benefit 15
PART 4: OTHER PROVISIONS OF THE CERTIFICATES
AND SERVICES WE PROVIDE PAGE 16
Methods of Payment 16
Free Look Period 16
Beneficiary 16
Cash Value 16
Surrendering the Certificates to Receive
the Cash Value 17
Income Annuity Options 17
When Payments are Made 17
Assignment 17
Distribution of the Certificates 17
Withdrawal Charge 18
Amounts Applied from Other INCOME
MANAGER Certificates 18
Charges for State Premium and Other
Applicable Taxes 18
Group or Sponsored Arrangements 19
Other Distribution Arrangements 19
PART 5: TAX ASPECTS OF THE CERTIFICATES PAGE 20
Tax Changes 20
Taxation of Non-Qualified Annuities 20
Federal and State Income Tax
Withholding 21
Other Withholding 22
Special Rules for Certificates Issued in
Puerto Rico 22
PART 6:INDEPENDENT ACCOUNTANTS PAGE 23
APPENDIX: MARKET VALUE ADJUSTMENT
EXAMPLE PAGE 24
</TABLE>
3
<PAGE>
GENERAL TERMS
ANNUITANT--The individual who is the measuring life for determining annuity
benefits.
ANNUITY ACCOUNT VALUE--The sum of the present value of the Maturity Value in
each Guarantee Period plus any amount in the Modal Payment Portion of the
Guaranteed Period Account.
ANNUITY COMMENCEMENT DATE--The date on which annuity payments are to
commence.
ASSURED PAYMENT PLAN (Period Certain)-- An annuity under which you elect to
receive a level stream of periodic payments for a period certain.
ASSURED PAYMENT PLAN (Life Annuity with a Period Certain)--An annuity which
provides guaranteed periodic payments during a period certain and for your
lifetime thereafter or for your lifetime and the lifetime of a joint
Annuitant you designate.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns an Assured Payment Plan Certificate
and has the right to exercise all rights under the Certificate. The
Certificate Owner must also be the Annuitant.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The date on which the Annuitant is enrolled under the group
annuity contract, or the effective date of the individual contract. This is
usually the Business Day we receive the initial contribution at our
Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificate.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods
and the Modal Payment Portion of such Account.
GUARANTEED PERIOD AMOUNT--The term used to refer to the amount allocated to
and accumulated in each Guarantee Period.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
JOINT AND SURVIVOR--The form of Assured Payment Plan (Life Annuity with a
Period Certain) under which after the death of an Annuitant payments continue
to the surviving Annuitant. Payments are made as long as at least one
Annuitant is living.
LIFE CONTINGENT ANNUITY--Provides guaranteed lifetime income beginning at a
future date under the Assured Payment Plan (Life Annuity with a Period
Certain).
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
MODAL PAYMENT PORTION--The portion of the Guaranteed Period Account from
which payments, other than payments due on an Expiration Date, are made.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., withdrawals, etc.) or other written communications must be sent. See
"Services We Provide" in Part 1.
SINGLE LIFE--The form of Assured Payment Plan (Life Annuity with a Period
Certain) under which payments are made to you for your lifetime.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
4
<PAGE>
PART 1: SUMMARY
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE INCOME MANAGER?
The INCOME MANAGER is a family of annuities designed to provide retirement
income. The Assured Payment Plan annuities provide for the investment of
funds on an after-tax basis. They feature a series of Guarantee Periods
providing guaranteed interest. The Assured Payment Plan may not be available
in all states.
O GUARANTEE PERIODS
Guarantee Periods maturing on February 15th in each of calendar years 1997
through 2011 are available.
ASSURED PAYMENT PLAN
(Life Annuity with a Period Certain)
This version of the Assured Payment Plan provides you with level or
increasing payments for a period certain and continuing for your lifetime or
for your lifetime and the lifetime of a joint Annuitant under the Life
Contingent Annuity. You may elect to receive payments on a monthly, quarterly
or annual mode. Payments will generally start one payment mode from the
Contract Date. You can also elect to delay the date payments will start. You
may elect to defer the date payments will start generally for a period of up
to 60 months. The ability to defer the payment start date may not be
available in all states.
Based on certain information you provide, your contribution is allocated
among the Guarantee Periods, the Modal Payment Portion of the Guaranteed
Period Account, if applicable, and the Life Contingent Annuity. This
allocation will not be changed (unless a Lump Sum Withdrawal is made).
Payments during the period certain represent distributions of the Maturity
Values of serially maturing Guarantee Periods on their Expiration Dates or,
distributions from amounts in the Modal Payment Portion of the Guaranteed
Period Account.
A portion of each payment under the Assured Payment Plan will generally be
excludable from taxable income until you have received a tax-free recovery of
your investment in your Certificate.
The Life Contingent Annuity continues lifetime payments if you are living at
the end of the period certain. Payments continue during your lifetime (and
the lifetime of the joint Annuitant, if applicable) on the same date(s) as
the payments that were made during the period certain. The portion of your
contribution applied under the Life Contingent Annuity does not have a Cash
Value or an Annuity Account Value and, therefore, does not provide for
withdrawals.
A $2.50 charge will be deducted from each payment made on a monthly or
quarterly basis.
o Contributions
To put a Certificate into effect, you must make a contribution of at
least $10,000. You may make subsequent contributions of at least $1,000
at any time up until 15 days before the Annuity Commencement Date.
However, subsequent contributions are not permitted after you attain age
78 except for contributions made within the first Contract Year. Also,
if you chose to apply amounts to the Assured Payment Plan from another
INCOME MANAGER Annuity Certificate, no subsequent contributions are
permitted.
o Lump Sum Withdrawals
After the first Contract Year and while the Certificate is in effect,
you may take a Lump Sum Withdrawal from your Certificate once per
Contract Year at any time during such Contract Year. You may request
such Lump Sum Withdrawal, which must be at least $1,000, by submitting a
written request in a form satisfactory to us. Lump Sum Withdrawals may
result in a market value adjustment.
Lump Sum Withdrawals may be subject to a withdrawal charge to the extent
that a Lump Sum Withdrawal exceeds the 10% free corridor amount. Lump
Sum Withdrawals will reduce the amount of your future payments.
o Death Benefit
If the Annuitant dies before the Annuity Commencement Date, the
Certificate provides a death benefit. The beneficiary will be paid the
death benefit, which is the greater of (i) the Annuity Account Value and
(ii) the sum of the Guaranteed Period Amounts in each Guarantee Period,
plus any amount in the Modal Payment Portion of the Guaranteed Period
Account. However, if your spouse is the designated beneficiary under the
Certificate and you have not elected to delay the payment start date, or
if payments are scheduled to start within one year under a deferral
schedule, such beneficiary may elect to receive the
5
<PAGE>
payments for the period certain starting on the scheduled Annuity
Commencement Date, in lieu of taking the death benefit. Unless you have
elected a Joint and Survivor form, no payment will be made under the
Life Contingent Annuity.
If death occurs after the Annuity Commencement Date, payments will
continue to be made during the period certain to the designated
beneficiary on the same payment basis that was in effect prior to the
death. If you have elected a Joint and Survivor form, payments will be
made as long as either you or the joint Annuitant is living after the
end of the period certain. In lieu of continuing payments during the
period certain, the beneficiary may elect to receive a single sum.
o Surrendering Your Certificate
You may surrender your Certificate for its Cash Value, and thereafter
receive the lifetime income provided by the Life Contingent Annuity.
ASSURED PAYMENT PLAN (Period Certain)
Under this version of the Assured Payment Plan, you will receive a level
stream of payments which are fully guaranteed for a period certain which you
select. The period certain may be for a duration of from 7 to 15 years. You
may elect to receive payments on a monthly, quarterly or annual mode.
Payments will generally start one payment mode from the Contract Date. Based
on information you provide, your contribution is allocated among the
Guarantee Periods and the Modal Payment Portion of the Guaranteed Period
Account, if applicable. This allocation will not be changed (unless a Lump
Sum Withdrawal is made). Payments during the period certain represent
distributions of the Maturity Values of serially maturing Guarantee Periods
on their Expiration Dates or, distributions from amounts in the Modal Payment
Portion of the Guaranteed Period Account. A $2.50 charge will be deducted
from each payment made on a monthly or quarterly basis.
A portion of each payment under this Assured Payment Plan will be excludable
from taxable income.
o Contributions
To put the Certificate into effect, you must make a single contribution of
at least $10,000. Subsequent contributions are not permitted.
o Lump Sum Withdrawals
After the first Contract Year and while the Certificate is in effect, you
may take a Lump Sum Withdrawal from your Certificate once per
Contract Year at any time during such Contract Year. You may request
such Lump Sum Withdrawal, which must be in a minimum amount of the
greater of $2,000 or 25% of the Cash Value, by submitting a written
request in a form satisfactory to us. Lump Sum Withdrawals may
result in a market value adjustment and may be subject to a
withdrawal charge. There is no free corridor amount for Lump Sum
Withdrawals. Lump Sum Withdrawals will reduce the amount of your
future annual payments.
o Death Benefit
If the Annuitant dies before the Annuity Commencement Date, the
Certificate provides a death benefit. The beneficiary will be paid
the death benefit, which is the greater of the (i) Annuity Account
Value and (ii) the sum of the Guaranteed Period Amounts in each
Guarantee Period, plus any amount in the Modal Payment Portion of
the Guaranteed Period Account.
If the Annuitant dies after the Annuity Commencement Date, payments
will continue to be made for the remainder of the period certain to
the designated beneficiary on the same payment basis that was in
effect at the time of death, or the beneficiary may elect to receive
a single sum.
OTHER PROVISIONS OF THE ASSURED
PAYMENT PLAN
WITHDRAWAL CHARGE
A withdrawal charge is imposed as a percentage of the portion of each
contribution allocated to the Guaranteed Period Account, for a Lump Sum
Withdrawal as discussed above, or if the Certificate is surrendered. The
withdrawal charge is determined separately for each contribution in
accordance with the table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7 8+
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contact Year
in which the Lump Sum Withdrawal is made or the Certificate is surrendered.
For each contribution, the Contract Year in which we receive that
contribution is "Contract Year 1."
6
<PAGE>
FREE LOOK PERIOD
You have the right to examine the Assured Payment Plan Certificate for a
period of 10 days after you receive it, and to return it to us for a refund.
You may cancel it by sending it to our Processing Office. Your refund will
equal the Annuity Account Value reflecting any positive or negative market
value adjustment, through the date we receive your Certificate at our
Processing Office. If you elected the Assured Payment Plan (Life Annuity with
a Period Certain), your refund will also include any amount applied to the
Life Contingent Annuity.
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the
calendar year;
o Three additional reports of your Certificate values each year;
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Guaranteed Rates
applicable to the Guarantee Periods. Also call during our regular
business hours to speak to one of our customer service
representatives.
O PROCESSING OFFICE
O FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR WITHDRAWALS) SENT
BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR WITHDRAWALS) SENT
BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time while
the Annuitant is living and the Certificate is in effect. Withdrawal charges
and a market value adjustment may apply. A surrender may also be subject to
income tax and tax penalty.
INCOME ANNUITY OPTIONS
The Certificates provide income annuity options to which the beneficiary may
have amounts applied if you die before the Annuity Commencement Date. The
income annuity options, are offered on a fixed basis.
TAXES
Generally, earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject
to tax penalty.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
Generally, we deduct a charge for premium and other applicable taxes from
your contribution(s). The current tax charge that might be imposed varies by
state and ranges from 0 to 3.5% (the rate is 1% in Puerto Rico and 5% in the
Virgin Islands).
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our home office is located
at 787 Seventh Avenue, New York, New York 10019. We are authorized to sell
life insurance and annuities in all fifty states, the District of Columbia,
Puerto Rico and the Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding shares of
common stock of the Holding Company plus convertible preferred stock. Under
its investment arrangements with Equitable Life 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
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
7
<PAGE>
PART 2: THE GUARANTEED PERIOD ACCOUNT
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. We may establish
different Guaranteed Rates under different classes of Certificates. The
Guaranteed Rate for each allocation is the annual interest rate applicable to
new allocations to that Guarantee Period, which was in effect on the
Transaction Date for the allocation. We use the term Guaranteed Period Amount
to refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
with respect to the Guarantee Periods on any Business Day, therefore, will be
the sum of the present value of the Maturity Value in each Guarantee Period,
using the Guaranteed Rate in effect for new allocations to such Guarantee
Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1997 through 2011. As Guarantee Periods expire, we expect to
add maturity years so that generally 15 are available.
We will not allocate amounts to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no withdrawals are made). The required amount is the
present value of that Maturity Value at the Guaranteed Rate on the
Transaction Date for the contribution, which may also be expressed as the
price per $100 of Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of May 1, 1996 and the related price
per $100 of Maturity Value for each currently available Guarantee Period were
as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH
EXPIRATION DATE GUARANTEED PRICE PER $100
FEBRUARY 15TH OF RATE AS OF OF MATURITY
MATURITY YEAR MAY 1, 1996 VALUE
- ---------------- ----------- --------------
<S> <C> <C>
1997 4.54% $96.53
1998 5.16 91.37
1999 5.37 86.40
2000 5.51 81.59
2001 5.62 76.93
2002 5.75 72.32
2003 5.88 67.82
2004 5.85 64.19
2005 5.98 59.98
2006 6.08 56.08
2007 6.03 53.13
2008 6.03 50.11
2009 6.03 47.25
2010 6.03 44.57
2011 6.03 42.03
</TABLE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which would need to be allocated to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, to have $100 mature on February 15th of each of years 1997
through 2001, according to the above table the lump sum contribution that
would have to be made as of May 1, 1996 would be $432.82 (i.e., the sum of
the price per $100 of Maturity Value for each maturity year from 1997 through
2001).
The above table is provided to illustrate the use of present value
calculations. It does not take into account withdrawals and withdrawal
charges. Actual calculations will also be based on Guaranteed Rates on each
actual Transaction Date, which may differ.
8
<PAGE>
MARKET VALUE ADJUSTMENT FOR
WITHDRAWALS OR SURRENDER
PRIOR TO THE EXPIRATION DATE
Any withdrawal (including surrender and deductions) from a Guarantee Period
prior to its Expiration Date will cause any remaining Guaranteed Period
Amount for that Guarantee Period to be increased or decreased by a market
value adjustment. The amount of the adjustment will depend on two factors:
(a) the difference between the Guaranteed Rate applicable to the amount being
withdrawn and the Guaranteed Rate on the Transaction Date for new allocations
to a Guarantee Period with the same Expiration Date, and (b) the length of
time remaining until the Expiration Date. In general, if interest rates have
risen between the time when an amount was originally allocated to a Guarantee
Period and the time it is withdrawn, the market value adjustment will be
negative, and vice versa; and the longer the period of time remaining until
the Expiration Date, the greater the impact of the interest rate difference.
Therefore, it is possible that a significant rise in interest rates could
result in a substantial reduction in your Annuity Account Value related to
longer term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Guarantee Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal of a portion of the amount in a Guarantee Period will be a
percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds from a Guarantee Period. This percentage is
determined by (i) dividing the amount of the withdrawal from the Guarantee
Period by (ii) the Annuity Account Value in such Guarantee Period prior to
the withdrawal. See the Appendix for an example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate
in (1)(c) above.
MODAL PAYMENT PORTION
A portion of your contributions is allocated to the Modal Payment Portion of
the Guaranteed Period Account for payments to be made prior to the Expiration
Date of the earliest Guarantee Period we then offer. Such amount will
accumulate interest beginning on the Transaction Date at an interest rate we
set. Interest will be credited daily. Such rate will not be less than 3%.
Upon the expiration of a Guarantee Period, the Guaranteed Period Amount will
be held in the Modal Payment Portion of the Guaranteed Period Account.
Amounts from an expired Guarantee Period held in the Modal Payment Portion of
the Guaranteed Period Account will be credited with interest at a rate equal
to the Guaranteed Rate applicable to the expired Guarantee Period, beginning
on the Expiration Date of such Guarantee Period.
There is no market value adjustment with respect to amounts held in the Modal
Payment Portion of the Guaranteed Period Account.
INVESTMENTS
Amounts allocated to Guarantee Periods or the Modal Payment Portion of the
Guaranteed Period Account will be held in a "nonunitized" separate account
established by Equitable Life under the laws of New York. This separate
account provides an additional measure of assurance that full payment
9
<PAGE>
of amounts due under the Guarantee Periods will be made. Under the New York
Insurance Law, the portion of the separate account's assets equal to the
reserves and other contract liabilities relating to the Certificates are not
chargeable with liabilities arising out of any other business we may conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life may, subject to
applicable state law, transfer all assets allocated to the separate account
to its general account. Regardless of whether assets supporting Guaranteed
Period Accounts are held in a separate account or our general account, all
benefits relating to the Annuity Account Value in the Guaranteed Period
Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees
including those applicable to the Guaranteed Period Account, as well as our
general obligations. Amounts applied under the Life Contingent Annuity become
part of our general account. For a discussion of the Life Contingent Annuity
see "Payments After the Period Certain," in Part 3.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933 (1933 Act),
nor is the general account an investment company under the 1940 Act.
Accordingly, neither the general account nor the Life Contingent Annuity is
subject to regulation under the 1933 Act or the 1940 Act. However, the market
value adjustment interests under the Certificates are registered under the
1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in this prospectus for your information that
relates to the general account (other than market value adjustment interests)
and the Life Contingent Annuity. The disclosure, however, may be subject to
certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
10
<PAGE>
PART 3: PROVISIONS OF THE ASSURED PAYMENT PLAN
We offer two forms of the Assured Payment Plan from which you may choose to
receive your retirement income. The Assured Payment Plan (Life Annuity with a
Period Certain) and the Assured Payment Plan (Period Certain). Both plans are
described below. The Assured Payment Plan may not be available in all states.
ASSURED PAYMENT PLAN
(Life Annuity with a Period Certain)
This Assured Payment Plan is an annuity designed to provide guaranteed
lifetime payments, with a period certain. Guaranteed payments may be provided
on a Single Life basis or a Joint and 100% to Survivor basis. Payments may
also be provided on a Joint and one-half to Survivor or a Joint and two-
thirds to Survivor basis.
This Assured Payment Plan is available at issue ages 59 1/2 through 83. The
Assured Payment Plan with level payments is available at issue ages as young
as 45 subject to restrictions described below under "Purchase Restrictions
for Joint & Survivors." Also, there are tax considerations that should be
taken into account before purchasing the Assured Payment Plan if you are
under age 59 1/2 . See "Penalty Tax" in Part 5. Increasing payments
(described below) are available at ages as young as 53 1/2 , provided
payments do not start prior to age 59 1/2 .
Payments during the period certain are designed to pay out the entire Annuity
Account Value by the end of the period certain. All payments committed to be
paid out must be paid out as the Guarantee Periods serially mature and
amounts are due to be paid from the Modal Payment Portion of the Guaranteed
Period Account. Once commenced, these payments occur automatically through
income payments to you and may not be stopped. The period certain may be
referred to as a "liquidity period" as unlike traditional life annuities that
provide periodic payments, you will be able to make Lump Sum Withdrawals or
surrender the Certificate for its Cash Value prior to the end of the period
certain, while continuing lifetime income in reduced amounts.
Contributions
Your initial contribution must be at least $10,000. If your Annuity
Commencement Date is February 15, 1997 or later, you may make subsequent
contributions of at least $1,000 at any time up until 15 days before the
Annuity Commencement Date. However, subsequent contributions are not
permitted after you attain age 78 except for contributions made within the
first Contract Year. Also, if your Assured Payment Plan resulted from
application of proceeds from another INCOME MANAGER Certificate, no
subsequent contributions are permitted. For applications received under
certain types of transactions, we may offer the opportunity to lock in
Guaranteed Rates on contributions.
We may refuse to accept any contribution if the sum of all contributions
under a Certificate would then total more than $1,500,000. We may also refuse
to accept any contribution if the sum of all contributions under all
Equitable annuity distribution certificates/contracts that you own would then
total more than $2,500,000.
Allocation of Contributions
Based on the amount of your contribution, your age and sex (and the age and
sex of the joint Annuitant, if the Joint and Survivor is elected), the mode
of payment, the form of annuity and the period certain you select, your
contribution is allocated by us among the Guarantee Periods, and the Modal
Payment Portion of the Guaranteed Period Account, if applicable, and applied
to the Life Contingent Annuity. This allocation may not be changed by you.
Any subsequent contributions will be allocated by us to the Guarantee Periods
and the Life Contingent Annuity.
Payments
You may elect to receive monthly, quarterly or annual payments. However, all
payments are made on the 15th of the month. The payments to be made on an
Expiration Date during the period certain you select represent distributions
of the Maturity Values of serially maturing Guarantee Periods on their
Expiration Dates. Payments to be made monthly, quarterly or annually on dates
other than an Expiration Date represent distributions from amounts in the
Modal Payment Portion of the Guaranteed Period Account.
A $2.50 charge will be deducted from each payment made on a monthly or
quarterly basis during the period certain and under the Life Contingent
Annuity.
You may elect to receive level payments during the period certain and under
the Life Contingent Annuity. Or, you may elect to receive payments that
increase. If you elect the increasing payments, during the period certain,
payments increase by 10% every three years on each third anniversary of the
Annuity Commencement Date. After the end of the period certain, payments
continue under the Life
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<PAGE>
ASSURED PAYMENT PLAN (Life Annuity with a Period Certain) (CONTINUED)
Contingent Annuity. Your first payment under the Life Contingent Annuity will
be 10% greater than the final payment under the period certain. See "Payments
After the Period Certain" below. A portion of each payment is excluded from
taxable income until the total amount of your investment in the contract has
been recovered.
Payments generally start one payment mode from the Contract Date. However,
you may elect to defer the date payments will start generally for a period of
up to 60 months. Deferral of the payment start date permits you to lock in
rates at a time when you may consider current rates to be high, while
permitting you to delay receiving payments if you have no immediate need to
receive income under your Certificate. In making this decision, you should
consider that the amount of income you purchase is based on the rates
applicable on the Transaction Date, so if rates rise during the interim, your
payments may be less than they would have been if you had purchased the
Assured Payment Plan at a later date. Deferral of the payment start date is
not available above age 80. The ability to defer the payment start date may
not be available in all states.
If your initial contribution will come from multiple sources, the payment
start date must be deferred until at least the February 15th next following
the date the last amount of the initial contribution is received.
Period Certain
If you elect level payments, you may select a period certain of not less than
7 years nor more than 15 years. The maximum period certain available based on
your age at issue of the Certificate is as follows:
<TABLE>
<CAPTION>
ISSUE AGE MAXIMUM PERIOD CERTAIN
--------- ----------------------
<S> <C>
45 through 70 15 years
71 through 75 85 less your issue age
76 through 80 10 years
81 through 83 90 less your issue age
</TABLE>
The minimum and maximum period certain will be reduced by each year you defer
the date your payments will start.
If you elect increasing payments, you do not have a choice as to the period
certain. Based on your age at issue of the Certificate, your period certain
will be as follows:
<TABLE>
<CAPTION>
ISSUE AGE PERIOD CERTAIN
--------- --------------
<S> <C>
59 1/2 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
</TABLE>
If you elect increasing payments and defer the date payments will start, your
period certain will be as follows:
<TABLE>
<CAPTION>
PERIOD CERTAIN BASED ON
DEFERRAL PERIOD
-----------------------
1-36 37-60
ISSUE AGE MONTHS MONTHS
--------- ------ ------
<S> <C> <C>
53 1/2 through 70 12 years 9 years
71 through 75 9 years 9 years
76 through 80 6 years 6 years
81 through 83 N/A N/A
</TABLE>
Purchase Restrictions for Joint & Survivors
Under the Joint and Survivor forms: (i) the joint Annuitant must also be the
beneficiary under the Certificate (ii) for purposes of the above limitations,
we use the age of the younger Annuitant; (iii) neither you nor the joint
Annuitant can be over age 83; (iv) under level payments the Joint and 100% to
Survivor form is only available for the longest period certain permitted; and
(v) if either you or the joint Annuitant is under age 59 1/2 , only the Joint
and 100% to Survivor form is permitted.
Payments After the Period Certain
The Life Contingent Annuity continues lifetime payments if you are living at
the end of the period certain. Payments continue during your lifetime (and
the lifetime of the joint Annuitant, if applicable) on the same payment mode
and date as the payments that were made during the period certain. The
portion of your contribution applied under the Life Contingent Annuity does
not have a Cash Value or an Annuity Account Value and, therefore, does not
provide for withdrawals.
THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND
ANNUITY INCOME IS PAID ONLY IF YOU (OR A JOINT ANNUITANT) ARE LIVING AT THE
DATE ANNUITY BENEFITS BEGIN. BENEFITS ARE ONLY PAID DURING YOUR LIFETIME AND,
IF APPLICABLE, THE LIFETIME OF A JOINT ANNUITANT. CONSEQUENTLY, YOU SHOULD
CONSIDER THE POSSIBILITY THAT NO AMOUNTS WILL BE PAID UNDER THE LIFE
CONTINGENT ANNUITY IF YOU (OR A JOINT ANNUITANT) DO NOT SURVIVE TO THE DATE
PAYMENTS ARE TO START UNDER SUCH ANNUITY.
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ASSURED PAYMENT PLAN (Life Annuity with a Period Certain) (CONTINUED)
You may elect to have the Life Contingent Annuity provide level or increasing
payments on a Single Life or a Joint and 100% to Survivor basis. If you elect
increasing payments, your first payment under the Life Contingent Annuity
will be 10% greater than the final payment under the period certain.
Thereafter, payments will increase annually on each anniversary of the
payment start date under the Life Contingent Annuity, based on the annual
increase in the Consumer Price Index, but in no event greater than 3% per
year. The Life Contingent Annuity may also provide payments on a Joint and
one-half to Survivor or a Joint and two-third to Survivor basis.
Example of Payments
The chart below illustrates level payments for a male, age 70 who purchases
the Assured Payment Plan (Life Annuity with a Period Certain) on a single
life basis, with a single contribution of $100,000. The example also assumes
a period certain of 15 years. Based on Guaranteed Rates in effect on the
Contract Date of May 1, 1996, an election of either monthly, quarterly or
annual payments with payments starting one payment mode from the Contract
Date, the following level payments would be provided:
<TABLE>
<CAPTION>
MODE MONTHLY QUARTERLY ANNUAL
---- ------- --------- ------
<S> <C> <C> <C>
Start Date 6/15/96 8/15/96 5/15/97
Payment $ 709.01 $2,145.66 $8,833.22
</TABLE>
LUMP SUM WITHDRAWALS
After the first Contract Year, you may take a Lump Sum Withdrawal once per
Contract Year at any time during such Contract Year. You may request such
withdrawal, in an amount of at least $1,000, by submitting a written request
on a form satisfactory to us. A request to withdraw more than 90% of the Cash
Value as of the Transaction Date will result in the termination of the
Certificate and will be treated as a surrender of the Certificate for its
Cash Value. See "Surrendering the Certificates" below. Amounts withdrawn from
the Guarantee Periods, other than at the Expiration Date, will result in a
market value adjustment. See "Market Value Adjustment for Withdrawals or
Surrender Prior to the Expiration Date" in Part 2. If you take a Lump Sum
Withdrawal a portion of such Lump Sum Withdrawal may be excludable from
taxable income.
A withdrawal charge will be imposed as a percentage of the portion of each
contribution allocated to the Guarantee Period Account to the extent that a
Lump Sum Withdrawal exceeds the free corridor amount.
Free Corridor Amount
The free corridor amount is 10% of the Annuity Account Value at the
beginning of the Contract Year.
See "Withdrawal Charge" in Part 4.
ALLOCATION OF LUMP SUM WITHDRAWALS
Lump Sum Withdrawals will be taken from all remaining Guarantee Periods to
which your Annuity Account Value is allocated and the Modal Payment Portion
of the Guaranteed Period Account such that the amount of the payments and the
length of the period certain will be reduced, and the date payments under the
Life Contingent Annuity are to start will be accelerated. Additional amounts
above the amount of the requested withdrawal will be withdrawn from the
Guaranteed Period Account and applied to the Life Contingent Annuity to the
extent necessary to achieve this result. As a result, the same pattern of
payments will continue in reduced amounts for your life, and if applicable,
the life of your joint Annuitant. If you have elected increasing payments,
the first reduction in your payments will take place no later than the date
of the next planned increase.
Example
The example below illustrates the effect of a Lump Sum Withdrawal. This
example assumes a single contribution of $100,000 is paid on May 1, 1996,
which purchases level annual payments of $8,192.98 to be made on February
15th each year, for a male and female, both age 70, on a Joint and two-thirds
to Survivor basis with a period certain of 15 years. It assumes a Lump Sum
Withdrawal at the beginning of the fourth Contract Year of 25% of an Annuity
Account Value of $70,160.74 at which time the Annuitants are age 73.
The requested withdrawal amount would be $17,540.18 ($70,160.74 x .25). In
this case, $7,016.07 ($70,160.74 x .10) would be the free corridor amount and
could be withdrawn without the imposition of a withdrawal charge. The balance
$10,524.11 ($17,540.18-$7,016.07) would be considered a withdrawal of a part
of the contribution of $100,000. This contribution would be subject to a 4.0%
withdrawal charge of $420.96 ($10,524.11 x .04). The Annuity Account Value
after the withdrawal is $52,199.59 ($70,160.74-$17,540.18-$420.96). The
payments would be reduced to $6,716.15 and the remaining period certain would
be reduced to 10 years from 12.
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ASSURED PAYMENT PLAN (Life Annuity with a Period Certain) (CONTINUED)
DEATH BENEFIT
Before the Annuity Commencement Date
Upon receipt of proof satisfactory to us of your death before the Annuity
Commencement Date the death benefit will be paid to the beneficiary named in
your Certificate. See "Beneficiary" in Part 4. The death benefit is the
greater of (i) the Annuity Account Value and (ii) the sum of the Guaranteed
Period Amounts in each Guarantee Period, plus any amounts in the Modal
Payment Portion of the Guaranteed Period Account. However, if your spouse is
the designated beneficiary under the Certificate and you have not elected to
defer the date payments are to start, or if payments are scheduled to start
within one year under a deferral schedule, such beneficiary may elect to
receive the payments for the period certain starting on the scheduled Annuity
Commencement Date in lieu of taking the death benefit. If you have elected to
defer the date payments will start, your spouse also has to have been named
successor Annuitant/Certificate Owner in order to elect the payments in lieu
of the death benefit. Unless you have elected a Joint and Survivor form, no
payment will be made under the Life Contingent Annuity. The death benefit
payable relates only to the Guaranteed Period Account; a death benefit is
never payable under the Life Contingent Annuity.
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the income
annuity option you have chosen under your Certificate. If no income annuity
option has been chosen at the time of the Annuitant's death, the beneficiary
will receive the death benefit in a lump sum. However, subject to certain
exceptions in the Certificate, Equitable Life's rules then in effect and any
other applicable requirements under the Code, the beneficiary may elect to
apply the death benefit to one or more income annuity options offered by
Equitable Life. See "Income Annuity Options" in Part 4. Such an election when
made on a timely basis, can defer otherwise taxable income. See "Death
Benefits" in Part 5. Note that only a life annuity or an annuity that does
not extend beyond the life expectancy of the beneficiary may be elected.
After the Annuity Commencement Date
If death occurs after the Annuity Commencement Date, payments will continue
to be made during the period certain to the designated beneficiary on the
same payment basis that was in effect prior to the death. If you have elected
a Joint and Survivor form, payments will be made as long as either you or the
joint Annuitant is living after the end of the period certain. The designated
beneficiary and the joint Annuitant must be the same person. In lieu of
continuing payments during the period certain, the beneficiary may elect to
receive a single sum. If a single sum is elected within one year from the
date of death, the single sum will be equal to the Annuity Account Value, or
if greater, the sum of the Guaranteed Period Amounts in each Guarantee
Period, plus any amount in the Modal Payment Portion of the Guaranteed Period
Account. After one year, the beneficiary may surrender the Certificate and
receive the Cash Value. If a single sum is elected and there is a joint
Annuitant, the date payments are to start under the Life Contingent Annuity
will be accelerated so that payments will be made in reduced amounts.
SURRENDERING THE CERTIFICATES
You may surrender the Certificate for its Cash Value at any time while it is
in effect, and thereafter receive the lifetime income provided by the Life
Contingent Annuity. See "Cash Value," in Part 4.
Once the Certificate is surrendered, the date payments are to start under the
Life Contingent Annuity will be accelerated to the date when the next payment
was to be received under the period certain and such payments will be made in
reduced amounts. Once your Certificate has been surrendered, it will be
returned to you with a notation that the Life Contingent Annuity is still in
effect. The Life Contingent Annuity cannot be surrendered.
ASSURED PAYMENT PLAN (Period Certain)
This version of the Assured Payment Plan is an annuity (available at issue
ages 59 1/2 through 78) which is designed to provide a level stream of
guaranteed payments for a period certain of not less than 7 years nor more
than 15 years. At issue ages over 70, the maximum period certain is age 85
less the issue age.
You may elect to receive monthly, quarterly or annual payments. However, all
payments are made on the 15th of the month. Payments will start one payment
mode from the Contract Date. The level payments to be made on Expiration
Dates during the period certain represent distributions of the Maturity
Values of serially maturing Guarantee Periods on their Expiration Dates.
Payments to be made monthly, quarterly or annually on dates other than an
Expiration Date represent distributions from amounts in the Modal Payment
Portion of the Guaranteed Period Account. A $2.50 charge will be deducted
from each payment made on a monthly or quarterly basis.
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<PAGE>
ASSURED PAYMENT PLAN (Period Certain) (CONTINUED)
A portion of each payment will be excluded from taxable income.
During the period certain (which may also be referred to as the "liquidity
period") you have access to your Cash Value through Lump Sum Withdrawals or
surrender of the Certificate.
Contribution
Under this Assured Payment Plan your single contribution must be at least
$10,000. You may not make subsequent contributions under this plan. For
applications received under certain types of transactions, we may offer the
opportunity to lock in Guaranteed Rates on contributions.
We may refuse to accept a contribution in excess of $1,500,000. We may also
refuse to accept any contribution if the sum of all contributions under all
Equitable annuity distribution certificates/contracts that you own would then
total more than $2,500,000.
Allocation of Contribution
Based on the amount of your contribution and the period certain you select,
your contribution is allocated by us among the Guarantee Periods and the
Modal Payment Portion of the Guaranteed Period Account, if applicable, and
may not be changed by you, such that you are assured a level stream of
periodic payments.
The following example illustrates a ten year level stream of annual payments,
each in the amount of $10,000, purchased on May 1, 1996 with the first
payment on February 15, 1997. To achieve this result, a single contribution
of $75,320.04 is required, and is allocated among the Guarantee Periods as
indicated below.
<TABLE>
<CAPTION>
FEBRUARY
15TH,
OF CALENDAR PRICE PER $100 OF ALLOCATION OF
YEAR PAYMENT MATURITY VALUE CONTRIBUTION
---- ------- -------------- ------------
<S> <C> <C> <C>
1997 10,000 $96.53 $ 9,653.39
1998 10,000 91.37 9,136.69
1999 10,000 86.40 8,640.06
2000 10,000 81.59 8,158.53
2001 10,000 76.93 7,692.78
2002 10,000 72.32 7,231.70
2003 10,000 67.82 6,781.62
2004 10,000 64.19 6,419.17
2005 10,000 59.98 5,998.32
2006 10,000 56.08 5,607.79
Total $75,320.04
</TABLE>
LUMP SUM WITHDRAWALS
After the first Contract Year, you may take a Lump Sum Withdrawal once per
Contract Year at any time during such Contract Year. You may request such
withdrawal by submitting a written request on a form satisfactory to us. The
minimum amount of a Lump Sum Withdrawal is the greater of $2,000 and 25% of
the Cash Value. A request to withdraw more than 90% of the Cash Value as of
the Transaction Date will result in the termination of the Certificate and
will be treated as a surrender of the Certificate for its Cash Value. See
"Surrendering the Certificates to Receive the Cash Value" below. Amounts
withdrawn from the Guarantee Periods other than at the Expiration Date, will
result in a market value adjustment. See "Market Value Adjustment for
Withdrawals or Surrender Prior to the Expiration Date" in Part 2. Lump Sum
Withdrawals may be subject to a withdrawal charge. See "Withdrawal Charge" in
Part 4. There is no free corridor amount. If you take a Lump Sum Withdrawal a
portion of such Lump Sum Withdrawal may be excludable from taxable income.
ALLOCATION OF LUMP SUM WITHDRAWALS
Lump Sum Withdrawals will be taken pro rata from all unmatured Guarantee
Periods and the Modal Payment Portion of the Guaranteed Period Account so
that periodic payments will continue in reduced level amounts over the
remaining term of the period certain.
DEATH BENEFIT
Before the Annuity Commencement Date
Upon receipt of proof satisfactory to us of your death before the Annuity
Commencement Date, we will pay the death benefit described under "Assured
Payment Plan (Life Annuity with a Period Certain)," "Death Benefit" above.
After the Annuity Commencement Date
If death occurs after the Annuity Commencement Date, payments will continue
to be made to the designated beneficiary on the same payment basis that was
in effect prior to your death. See "Beneficiary" in Part 4. At the
beneficiary's option, payments may be discontinued and paid in a single sum.
If the single sum is elected within one year of your death, the single sum
will be equal to the Annuity Account Value, or if greater, the sum of the
Guaranteed Period Amounts in each Guarantee Period, plus any amounts in the
Modal Payment Portion of the Guaranteed Period Account. After the one year
period, the beneficiary may surrender the Certificate and receive the Cash
Value.
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PART 4: OTHER PROVISIONS OF THE CERTIFICATES AND SERVICES
WE PROVIDE
The provisions of your Certificate may be restricted by applicable laws or
regulations.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check. All
contributions made by check must be drawn on a bank or credit union in the
U.S., in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. All contributions should be sent to Equitable
Life at our Processing Office address designated for contributions.
Contributions are credited as of the Transaction Date.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will receive the Guaranteed Rate(s) in
effect for the applicable Guarantee Period(s) on the date contributions are
received. Wire orders not accompanied by complete information may be retained
for a period not exceeding five Business Days while an attempt is made to
obtain the required information. If the required information cannot be
obtained within those five Business Days, the Processing Office will inform
the broker-dealer, on behalf of the applicant, of the reasons for the delay
and return the contribution immediately to the applicant, unless the
applicant specifically consents to our retaining the contribution until the
required information is received by the Processing Office.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate will not be issued until the receipt and
acceptance of a properly completed application. During the time from receipt
of the initial contribution until a signed application is received from the
Certificate Owner, no other financial transactions may be requested.
If an application is not received within ten days of receipt of the initial
contribution via wire order, or if an incomplete application is received and
cannot be completed within ten days of receipt of the initial contribution,
the amount of the initial contribution will be returned to the applicant with
immediate notification to the broker-dealer.
After your Certificate has been issued, subsequent contributions under the
Assured Payment Plan (Life Annuity with a Period Certain) may be transmitted
by wire.
FREE LOOK PERIOD
You have the right to examine the Assured Payment Plan Certificate for a
period of 10 days after you receive it, and to return it to us for a refund.
You cancel it by sending it to our Processing Office. The free look is
extended if your state requires a refund period of longer than 10 days. This
right applies only to the initial owner of a Certificate.
Your refund will equal the Annuity Account Value reflecting any positive or
negative market value adjustment, through the date we receive your
Certificate at our Processing Office. Under the Assured Payment Plan (Life
Annuity with a Period Certain) your refund will also include any amount
applied to the Life Contingent Annuity. Some states may require that we
calculate the refund differently.
We follow these same procedures if you change your mind before a Certificate
has been issued, but after a contribution has been made. See "Part 5: Tax
Aspects of the Certificates" for possible consequences of canceling your
Certificate during the free look period.
If you cancel your Certificate during the free look period, we may require
that you wait six months before you may apply for a Certificate with us
again.
BENEFICIARY
You designate the beneficiary at the time you apply for the Certificate.
While the Certificate is in effect, you may change your beneficiary by
writing to our Processing Office. The change will be effective on the date
the written submission was signed.
CASH VALUE
The Cash Value under the Certificate reflects any upward or downward market
value adjustment. See "Part 2: The Guaranteed Period Account." On any
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<PAGE>
date while the Certificate is in effect, the Cash Value is equal to the
Annuity Account Value less any withdrawal charge. The free corridor amount
will not apply when calculating the withdrawal charge applicable upon a
surrender. See "Withdrawal Charge" below.
SURRENDERING THE CERTIFICATES TO RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
the Annuitant is living and the Certificate is in effect. See "Cash Value,"
above.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate (other than Life
Contingent Annuity benefits) will be terminated as of that date. See
"Surrendering the Certificates" in Part 3. We will usually pay the Cash Value
in a single sum payment within seven calendar days, but we may delay payment
as described in "When Payments are Made" below.
For the tax consequences of surrenders, see "Part 5: Tax Aspects of the
Certificates."
INCOME ANNUITY OPTIONS
If you die before the Annuity Commencement Date, the beneficiary may elect to
apply the death benefit to an income annuity option.
Annuity Forms
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with
this annuity form, it provides the highest monthly payment of any of the
life income annuity options, so long as the Annuitant is living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before a specified period of time (the "certain period") has ended,
payments will continue to the beneficiary for the balance of the certain
period. Certain periods may be 5, 10, 15 or 20 years. A life annuity
with a certain period of 10 years is the normal form of annuity under
the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity- refund certain are
available on either a single life or joint and survivor life basis.
The Certificate offers the income annuity options outlined above in fixed
form. Fixed annuity payments are guaranteed by us and will be based on the
tables of guaranteed annuity payments in your Certificate or on our then
current annuity rates, whichever is more favorable for the Annuitant.
For each income annuity option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
income annuity option, the Annuitant's age (or the Annuitant's and joint
Annuitant's ages) and in certain instances, the sex of the Annuitant(s). Once
an income annuity option is chosen and payments have commenced, no change can
be made.
If, at the time an income annuity option is elected, the amount to be applied
is less than $2,000 or the initial payment under the option elected is less
than $20 monthly, we reserve the right to pay the death benefit in a single
sum rather than as payments under the annuity form chosen.
WHEN PAYMENTS ARE MADE
We can defer payment of any portion of the Annuity Account Value for up to
six months while you are living. We may also defer payments for any amount
attributable to a contribution made in the form of a check for a reasonable
amount of time (not to exceed 15 days) to permit the check to clear.
ASSIGNMENT
Certificates purchased under the Assured Payment Plan may not be assigned.
DISTRIBUTION OF THE CERTIFICATES
Equitable Distributors, Inc. (EDI), an indirect wholly owned subsidiary of
Equitable Life, has responsibility for sales and marketing functions and may
be deemed to be the distributor of the Certificates. EDI
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<PAGE>
is registered with the SEC as a broker-dealer under the Exchange Act and is a
member of the National Association of Securities Dealers, Inc. EDI's
principal business address is 787 Seventh Avenue, New York, New York 10019.
For 1995, EDI was paid a fee of $126,914 for its services under its
"Distribution Agreement" with Equitable Life.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents, as well as by
unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation (including for EDI and its
affiliates) will not exceed five percent of total contributions made under a
Certificate. EDI may also receive compensation and reimbursement for its
marketing services under the terms of its distribution agreement with
Equitable Life. Broker-dealers receiving sales compensation will generally
pay a portion thereof to their registered representatives as commission
related to sales of the Certificates. The offering of the Certificates is
intended to be continuous.
WITHDRAWAL CHARGE
A withdrawal charge for Lump Sum Withdrawals will be imposed as a percentage
of the portion of each contribution allocated to the Guaranteed Period
Account as discussed under "Lump Sum Withdrawals" in Part 3, or if the
Certificate is surrendered to receive the Cash Value. We determine the
withdrawal charge separately for each contribution in accordance with the
table below.
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 5 6 7 8+
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the Lump Sum Withdrawal is made or the Certificate is
surrendered, beginning with "Contract Year 1" with respect to each
contribution withdrawn or surrendered. For each contribution, the Contract
Year in which we receive that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Guaranteed Period Account in
proportion to the amount being withdrawn from each Guarantee Period and the
Modal Payment Portion of the Guaranteed Period Account.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge, the Federal income tax law
treats earnings as withdrawn first. See "Part 5: Tax Aspects of the
Certificates."
The withdrawal charge is to help cover sales expenses. This charge will not
be increased for the life of the Certificates. We may reduce this charge
under group or sponsored arrangements. See "Group or Sponsored Arrangements"
below.
AMOUNTS APPLIED FROM OTHER
INCOME MANAGER CERTIFICATES
Life Annuity with a Period Certain
A Certificate Owner of certain other INCOME MANAGER Certificates that we
offer may apply the Annuity Account Value to purchase the Assured Payment
Plan (Life Annuity with a Period Certain) provided the issue age and payment
restrictions for the Assured Payment Plan are met. If the Annuity Account
Value is applied from another INCOME MANAGER Certificate to purchase the
Assured Payment Plan at a time when the dollar amount of the withdrawal
charge is greater than 2% of remaining contributions (after withdrawals),
such withdrawal charge will not be deducted. However, a new withdrawal charge
schedule will apply under the Assured Payment Plan. For purposes of the
Assured Payment Plan withdrawal charge schedule, the year in which your
Annuity Account Value is applied under the Assured Payment Plan will be
"Contract Year 1." If the Annuity Account Value is applied from such other
Certificate when the dollar amount of the withdrawal charge is 2% or less,
there will be no withdrawal charge schedule under the Assured Payment Plan.
You should consider the timing of your purchase as it relates to the
potential for withdrawal charges under the Assured Payment Plan.
Period Certain
A Certificate Owner of certain other INCOME MANAGER Certificates may apply
the Annuity Account Value to purchase this Assured Payment Plan once
withdrawal charges are no longer in effect under such other INCOME MANAGER
Certificates. No withdrawal charges will apply under the Assured Payment Plan
Certificate.
To purchase an Assured Payment Plan, we require the return of the original
Certificate. An Assured Payment Plan Certificate will be issued putting this
annuity form into effect.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
Generally, we deduct a charge for applicable taxes, such as state or local
premium taxes, from your
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contribution(s). The current tax charge that might be imposed varies by state
and ranges from 0% to 3.5% (the rate is 1% in Puerto Rico and 5% in the
Virgin Islands).
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal
charge or change the minimum contribution requirements. We may increase
Guaranteed Rates for the Guarantee Periods and reduce purchase rates for the
Life Contingent Annuity. Group arrangements include those in which a trustee
or an employer, for example, purchases contracts covering a group of
individuals on a group basis. Sponsored arrangements include those in which
an employer allows us to sell Certificates to its employees or retirees on an
individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these
factors into account when reducing charges. To qualify for reduced charges, a
group or sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy Certificates or that have
been in existence less than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the withdrawal charge will reflect
differences in costs or services and will not be unfairly discriminatory.
Group and sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR
MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE
ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The withdrawal charge may be reduced or eliminated when sales are made in a
manner that results in savings of sales and administrative expenses, such as
sales through persons who are compensated by clients for recommending
investments and receive no commission or reduced commissions in connection
with the sale of the Certificates. In no event will a reduction or
elimination of the withdrawal charge be permitted where it would be unfairly
discriminatory.
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<PAGE>
PART 5: TAX ASPECTS OF THE CERTIFICATES
This prospectus generally covers our understanding of the current Federal
income tax rules that apply to an annuity purchased with after-tax dollars
(non- qualified annuity).
This prospectus does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Assured Payment Plan Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities. In addition, the Treasury Department may amend
existing regulations, issue new regulations, or adopt new interpretations of
existing laws. State tax laws or, if you are not a United States resident,
foreign tax laws, may affect the tax consequences to you or the beneficiary.
These laws may change from time to time without notice and, as a result, the
tax consequences may be altered. There is no way of predicting whether, when
or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
TAXATION OF NON-QUALIFIED ANNUITIES
Equitable Life has designed the Assured Payment Plan Certificates to qualify
as an "annuity" for purposes of Federal income tax law. Annuity contract
payments are taxable as ordinary income and are subject to income tax
withholding. See "Federal and State Income Tax Withholding" below. Gains in
the Annuity Account Value of the Certificate generally will not be taxable to
an individual until a distribution occurs, either by a withdrawal of part or
all of its value or as a series of periodic payments. However, there are some
exceptions to this rule: (1) if an individual transfers a Certificate as a
gift to someone other than a spouse (or divorced spouse), any gain in its
Annuity Account Value will be taxed at the time of transfer; (2) the
assignment or pledge of any portion of the value of a Certificate will be
treated as a distribution of that portion of the Certificate; and (3) when an
insurance company (or its affiliate) issues more than one non-qualified
deferred annuity certificate or contract during any calendar year to the same
taxpayer, the certificates or contracts are required to be aggregated in
computing the taxable amount of any distribution. The Assured Payment Plan
(Life Annuity with a Period Certain) will be treated as a non-qualified
deferred annuity if annuity payments start after 12 months of the Contract
Date.
Corporations, partnerships, trusts and other non- natural persons generally
cannot defer the taxation of current income credited to the Certificate
unless an exception under the Code applies.
Withdrawals
Prior to the Annuity Commencement Date, any withdrawals (withdrawals which do
not terminate your total interest in the Certificate) are taxable to you as
ordinary income to the extent there has been a gain in the Annuity Account
Value. The balance of the distribution is treated as a return of the
"investment" or "basis" in the Certificate and is not taxable. Generally, the
investment or basis in the Certificate equals the contributions made, less
any amounts previously withdrawn which were not taxable. Special rules may
apply if contributions made to another annuity certificate or contract prior
to August 14, 1982 are transferred to a Certificate in a tax-free exchange.
To take advantage of these rules, you should notify us prior to such an
exchange.
If you surrender or cancel the Certificate, the distribution is taxable to
the extent it exceeds the investment in the Certificate.
You should discuss with your tax adviser the effect of any surrender or
withdrawal under an Assured Payment Plan.
Annuity Payments
Once annuity payments begin (whether under one of the Assured Payment Plans
or under an income annuity option), a portion of each payment is considered
to be a tax-free recovery of investment based on the ratio of the investment
to the expected return under the Certificate. The remainder of each payment
will be taxable. In the case of a life annuity, after the total investment in
the contract has been recovered, future payments are fully taxable. If
payments cease as a result of death, a deduction for any unrecovered
investment will be allowed.
Taxation of Lump Sum Withdrawals Made After Payments Have Commenced
If your Lump Sum Withdrawal terminates all periodic payments due, it will be
taxable as a complete
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<PAGE>
surrender as discussed above. If you make a Lump Sum Withdrawal under one of
the Assured Payment Plans which does not terminate all periodic payments due,
then a portion of the remaining reduced payments will be eligible for
tax-free recovery of investment. Also, a portion of such Lump Sum Withdrawal
may be excludable from taxable income. You should discuss with your tax
adviser the taxation of any surrender or withdrawal of Cash Value.
Penalty Tax
In addition to income tax, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date you attain age 59 1/2 , (2) made on or after your death, (3)
attributable to your disability, (4) is part of a series of substantially
equal installments as an annuity for your life (or life expectancy) or the
joint lives (or joint life expectancies) of you and a beneficiary, (5) with
respect to income allocable to amounts contributed to an annuity certificate
or contract prior to August 14, 1982 which are transferred to the Certificate
in a tax-free exchange, or (6) payments under an immediate annuity. An
immediate annuity is generally an annuity which commences payments within one
year from purchase and provides for a series of substantially equal periodic
payments made at least annually.
Periodic annuity payments made to an individual under age 59 1/2 from the
Assured Payment Plan (Life Annuity with a Period Certain) should qualify for
the "substantially equal periodic payments for life" exception under (4)
above. However, this exception may not apply if the individual takes a Lump
Sum Withdrawal, surrenders the Certificate or changes the payment pattern in
any way. Once you begin receiving Assured Payment Plan payments and you are
under age 59 1/2 , the payments should not be stopped or changed until the
later of your attaining age 59 1/2 or five years after the date of the first
payment, or the penalty tax, including an interest charge for the prior
penalty avoidance, may apply. Also, it is possible that the IRS could view
any additional withdrawal you take from your Certificate as changing the
pattern of substantially equal payments for purposes of determining whether
the penalty applies.
Death Benefits
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 3, the beneficiary is generally
subject to the same tax treatment as would apply to you. If the beneficiary
takes the death benefit in a single sum, the beneficiary is treated as if the
Certificate had been surrendered. The tax computation will reflect your
investment in the Certificate.
If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a single sum death benefit first becomes payable and
before any benefit is actually paid. The taxable income that would otherwise
occur, will be deferred, and payments will be taxed as described above under
"Annuity Payments."
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax on the taxable
portion of annuity payments, unless the recipient elects not to be subject to
income tax withholding. The rate of withholding will depend on the type of
distribution and, in certain cases, the amount of the distribution. Special
withholding rules apply to foreign recipients and United States citizens
residing outside the United States. If a recipient does not have sufficient
income tax withheld or does not make sufficient estimated income tax
payments, however, the recipient may incur penalties under the estimated
income tax rules. Recipients should consult their tax advisers to determine
whether they should elect out of withholding. Requests not to withhold
Federal income tax must be made in writing prior to receiving benefits under
the Certificate. Our Processing Office will provide forms for this purpose.
No election out of withholding is valid unless the recipient provides us with
the correct taxpayer identification number and a United States residence
address.
Certain states have indicated that annuity income tax withholding will apply
to payments from the Certificates made to residents. In some states, a
recipient may elect out of state withholding. Generally, an election out of
Federal withholding will also be considered an election out of state
withholding. If you need more information concerning a particular state or
any required forms, call our Processing Office at the toll-free number and
consult your tax adviser.
Periodic payments are generally subject to wage- bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1996, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,075
taxable amount will generally be exempt
21
<PAGE>
from Federal income tax withholding, unless the recipient specifies a
different choice of withholding exemptions. A withholding election may be
revoked at any time and remains effective until revoked. If a recipient fails
to provide a correct taxpayer identification number, withholding is made as
if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than you, a Federal generation skipping tax may be
payable with respect to the benefit at rates similar to the maximum estate
tax rate in effect at the time. The generation skipping tax provisions
generally apply to transfers which would also be subject to the gift and
estate tax rules. Individuals are generally allowed an aggregate generation
skipping tax exemption of $1 million. Because these rules are complex, you
should consult with your tax adviser for specific information, especially
where benefits are passing to younger generations, as opposed to a spouse or
child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
SPECIAL RULES FOR CERTIFICATES ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from Assured Payment Plan
Certificates as U.S.- source. A Puerto Rico resident is subject to U.S.
taxation on such U.S.-source income. Only Puerto Rico-source income of Puerto
Rico residents is excludable from U.S. taxation. Income from Assured Payment
Plan Certificates is also subject to Puerto Rico tax. The computation of the
taxable portion of amounts distributed from a Certificate may differ in the
two jurisdictions. Therefore, an individual might have to file both U.S. and
Puerto Rico tax returns, showing different amounts of income for each. Puerto
Rico generally provides a credit against Puerto Rico tax for U.S. tax paid.
Depending on an individual's personal situation and the timing of the
different tax liabilities, an individual may not be able to take full
advantage of this credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
22
<PAGE>
PART 6: INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life for the years ended December 31, 1995 and 1994
included in Equitable Life's Annual Report on Form 10-K, incorporated by
reference in the prospectus, have been examined by Price Waterhouse LLP,
independent accountants, whose reports thereon are incorporated herein by
reference. Such consolidated financial statements and consolidated financial
statement schedules have been incorporated herein by reference in reliance
upon the reports of Price Waterhouse LLP given upon their authority as
experts in accounting and auditing.
23
<PAGE>
APPENDIX: MARKET VALUE ADJUSTMENT EXAMPLE
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1997 to a Guarantee Period with an Expiration Date
of February 15, 2006 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2001.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2001
----------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2001 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value .................. $144,048 $119,487
(2) Guaranteed Period Amount ............... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ...... 12,968 (11,593)
February 15, 2001 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000 / (1)] . $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)] ........... 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ..... 85,581 76,229
(7) Maturity Value ......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value .................. 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
24
<PAGE>
INCOME MANAGERSM
PROSPECTUS FOR
ASSURED GROWTH PLAN
DATED MAY 1, 1996
-----------------
ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- -------------------------------------------------------------------------------
This prospectus describes certificates The Equitable Life Assurance Society
of the United States (EQUITABLE LIFE, WE, OUR and US) offers under an annuity
contract (ASSURED GROWTH PLAN) issued on a group basis or as individual
contracts. Enrollment under a group contract will be evidenced by issuance of
a certificate. Certificates and individual contracts each will be referred to
as "Certificates." Assured Growth Plan Certificates are used for after-tax
contributions to a non-qualified annuity. A minimum contribution of $10,000
is required to put a Certificate into effect.
The Assured Growth Plan is designed to provide retirement income at a future
date. The Owner (CERTIFICATE OWNER, YOU and YOUR) can choose to have amounts
accumulate on a tax-deferred basis until a later date, by investing in any or
all of the available GUARANTEE PERIODS.
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for the entire
period. On each business day (BUSINESS DAY) we will determine the Guaranteed
Rates available for amounts newly allocated to Guarantee Periods. A market
value adjustment (positive or negative) will be made for withdrawals,
transfers, surrender and certain other transactions from a Guarantee Period
before its expiration date (EXPIRATION DATE). The Guarantee Periods currently
available are those maturing in calendar years 1997 through 2006.
Under the Assured Growth Plan when you are ready to start receiving income,
you may choose from a variety of payout options, including the Assured
Payment Plan and other fixed annuities.
This prospectus provides information about the Assured Growth Plan that
prospective investors should know before investing. You should read it
carefully and retain it for future reference.
A registration statement relating to interests under the Guarantee Periods
has been filed with the Securities and Exchange Commission (SEC).
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.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE
NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- -------------------------------------------------------------------------------
Copyright 1996
The Equitable Life Assurance Society of the United States, New York, New York
10019.
All Rights Reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1995 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE
ACT) after the date hereof and prior to the termination of the offering of
the securities offered hereby shall be deemed to be incorporated by reference
in this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this prospectus.
Equitable Life files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically
pursuant to EDGAR under CIK No. 0000727920.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 787
Seventh Avenue, New York, New York 10019. Attention: Corporate Secretary
(telephone: (212) 554-1234).
2
<PAGE>
PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 4
PART 1: SUMMARY PAGE 5
What is the INCOME MANAGER? 5
Guarantee Periods 5
Contributions 5
Transfers 5
Withdrawals 5
Death Benefit 5
Withdrawal Charge 5
Free Look Period 5
Services We Provide 6
Surrendering the Certificates 6
Income Annuity Options 6
Taxes 6
Charges for State Premium and Other
Applicable Taxes 6
Equitable Life 6
PART 2: THE GUARANTEED PERIOD ACCOUNT PAGE 7
Guarantee Periods 7
Market Value Adjustment for
Transfers, Withdrawals or Surrender
Prior to the Expiration Date 8
Investments 8
PART 3:PROVISIONS OF THE CERTIFICATES
AND SERVICES WE PROVIDE PAGE 10
Availability of the Certificates 10
Contributions Under the Certificates 10
Methods of Payment 10
Allocation of Contributions 10
Free Look Period 11
Annuity Account Value 11
Transfers 11
Options at Expiration Date of a Guarantee
Period 11
Withdrawals 12
Death Benefit 13
When the Certificate Owner Dies Before
the Annuitant 13
Cash Value 13
Surrendering the Certificates to Receive
the Cash Value 13
Income Annuity Options 13
When Payments Are Made 15
Assignment 15
Distribution of the Certificates 15
Withdrawal Charge 15
Charges for State Premium and Other
Applicable Taxes 16
Group or Sponsored Arrangements 16
Other Distribution Arrangements 16
PART 4: TAX ASPECTS OF THE CERTIFICATES PAGE 17
Tax Changes 17
Taxation of Non-Qualified Annuities 17
Federal and State Income Tax
Withholding 18
Other Withholding 18
Special Rules for Certificates Issued in
Puerto Rico 18
Transfers Among Guarantee Periods 19
PART 5:INDEPENDENT ACCOUNTANTS PAGE 20
APPENDIX: MARKET VALUE ADJUSTMENT
EXAMPLE PAGE 21
</TABLE>
3
<PAGE>
GENERAL TERMS
ANNUITANT--The individual who is the measuring life for determining annuity
benefits.
ANNUITY ACCOUNT VALUE--The sum of the present value of the Maturity Value in
each Guarantee Period. See "Annuity Account Value" in Part 3.
ANNUITY COMMENCEMENT DATE--The date on which amounts will be applied to
provide an annuity benefit.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
CASH VALUE--The Annuity Account Value minus any applicable charges.
CERTIFICATE--The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER--The person who owns an Assured Growth Plan Certificate and
has the right to exercise all rights under the Certificate.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT DATE--The date on which the Annuitant is enrolled under the group
annuity contract, or the effective date of the individual contract. This is
usually the Business Day we receive the initial contribution at our
Processing Office.
CONTRACT YEAR--The 12-month period beginning on your Contract Date and each
anniversary of that date.
EXPIRATION DATE--The date on which a Guarantee Period ends.
GUARANTEE PERIOD--Any of the periods of time ending on an Expiration Date
that are available for investment under the Certificate.
GUARANTEED PERIOD ACCOUNT--The Account that contains the Guarantee Periods.
GUARANTEED PERIOD AMOUNT--The term used to refer to the amount allocated to
and accumulated in each Guarantee Period.
GUARANTEED RATE--The annual interest rate established for each allocation to
a Guarantee Period.
MATURITY VALUE--The amount in a Guarantee Period on its Expiration Date.
PROCESSING OFFICE--The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 1.
TRANSACTION DATE--The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If
your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day. Transaction requests must be made in a form
acceptable to us.
4
<PAGE>
PART 1: SUMMARY
The following Summary is qualified in its entirety by the terms of the
Certificate when issued and the more detailed information appearing elsewhere
in this prospectus (see "Prospectus Table of Contents").
WHAT IS THE INCOME MANAGER?
The INCOME MANAGER is a family of annuities designed to provide for
retirement income. The Assured Growth Plan is a non-qualified deferred
annuity designed to provide retirement income at a future date through the
investment of funds on an after-tax basis. The Assured Growth Plan features a
series of Guarantee Periods providing guaranteed interest. The Assured Growth
Plan may not be available in all states.
You design your own program by selecting one or more of the Guarantee Periods
and allocating your contributions among them. Amounts accumulate on a
tax-deferred basis until amounts are withdrawn or distributions become
payable. You can decide when and if to apply amounts to the INCOME MANAGER
Assured Payment Plan annuity or to elect a fixed income annuity option.
GUARANTEE PERIODS
Guarantee Periods maturing on February 15th in each of calendar years 1997
through 2006 are available.
CONTRIBUTIONS
To put a Certificate into effect, you must make a contribution of at least
$10,000. You may make subsequent contributions of at least $1,000.
TRANSFERS
Prior to the Annuity Commencement Date, you may transfer funds among the
Guarantee Periods once per quarter during each Contract Year. Transfers may
result in a market value adjustment. Transfers among Guarantee Periods are
not taxable.
WITHDRAWALS
o Lump Sum Withdrawals--After the first Contract Year, before the Annuity
Commencement Date while the Certificate is in effect, you may take a
Lump Sum Withdrawal from your Certificate once per Contract Year at any
time during such Contract Year. The minimum withdrawal amount is $1,000.
o Principal Assurance Withdrawals--Principal Assurance Withdrawals are
designed to provide you with (i) level annual withdrawals in the
calendar years that you select, plus (ii) a Maturity Value equal to your
original contribution in the last calendar year that you select. You
select a calendar year in which you wish to receive the last withdrawal.
Such year must not be later than ten years nor earlier than seven years
after the year of election. You also select the year in which the
withdrawals will begin. Such withdrawals must be for a period of at
least five consecutive years.
Lump Sum Withdrawals may be subject to a withdrawal charge and may result in
a market value adjustment. Both Lump Sum Withdrawals and Principal Assurance
Withdrawals may be taxable and if you are under age 59 1/2 , subject to tax
penalty.
DEATH BENEFIT
If the Annuitant and successor Annuitant, if any, die before the Annuity
Commencement Date, the Certificate provides a death benefit. The beneficiary
will be paid the death benefit which is the greater of the Annuity Account
Value and the sum of the Guaranteed Period Amounts in each Guarantee Period.
WITHDRAWAL CHARGE
A withdrawal charge is imposed as a percentage of each contribution made to
the extent that a Lump Sum Withdrawal exceeds the 10% free corridor amount,
or if the Certificate is surrendered to receive its Cash Value. While
Principal Assurance Withdrawals are in effect, a withdrawal charge, if any,
will apply to all Lump Sum Withdrawals. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
<PAGE>
<TABLE>
<CAPTION>
CONTRACT YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn
or surrendered. For each contribution the Contract Year in which we receive
that contribution is "Contract Year 1."
FREE LOOK PERIOD
You have the right to examine the Assured Growth Plan Certificate for a
period of 10 days after you receive it, and to return it to us for a refund.
You may cancel it by sending it to our Processing Office. Your refund will
equal the Annuity Account Value reflect-
5
<PAGE>
ing any positive or negative market value adjustment, through the date we
receive your Certificate at our Processing Office.
SERVICES WE PROVIDE
O REGULAR REPORTS
o Statement of your Certificate values as of the last day of the
calendar year;
o Three additional reports of your Certificate values each year;
o Written confirmation of financial transactions.
O TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Guaranteed Rates
applicable to the Guarantee Periods. Also call during our regular
business hours to speak to one of our customer service
representatives.
O PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
Post Office Box 13014
Newark, NJ 07188-0014
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS,
WITHDRAWALS) SENT BY REGULAR MAIL:
Equitable Life
Income Management Group
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUEST FOR TRANSFERS,
WITHDRAWALS) SENT BY EXPRESS MAIL:
Equitable Life
Income Management Group
200 Plaza Drive
Secaucus, NJ 07096
SURRENDERING THE CERTIFICATES
You may surrender a Certificate and receive the Cash Value at any time while
the Annuitant is living and the Certificate is in effect. Withdrawal charges
and a market value adjustment may apply. A surrender may also be subject to
income tax and tax penalty.
INCOME ANNUITY OPTIONS
The Assured Growth Plan Certificates provide the INCOME MANAGER Assured
Payment Plan annuities and income annuity options to which amounts may be
applied at the Annuity Commencement Date. The income annuity options, and the
Assured Payment Plan, are offered on a fixed basis. The Assured Payment Plan
Certificates are described in another prospectus of ours.
TAXES
Generally, earnings on contributions made to the Certificate will not be
included in your taxable income until distributions are made from the
Certificate. Distributions prior to your attaining age 59 1/2 may be subject
to tax penalty.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
Generally, we deduct a charge for premium or other applicable taxes from the
Annuity Account Value on the Annuity Commencement Date. The current tax
charge that might be imposed varies by state and ranges from 0 to 3.5% (the
rate is 1% in Puerto Rico and 5% in the Virgin Islands).
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our home office is located
at 787 Seventh Avenue, New York, New York 10019. We are authorized to sell
life insurance and annuities in all fifty states, the District of Columbia,
Puerto Rico and the Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding shares of
common stock of the Holding Company plus convertible preferred stock. Under
its investment arrangements with Equitable Life 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
Life. AXA, a French company, is a holding company for an international group
of insurance and related financial service companies.
6
<PAGE>
PART 2: THE GUARANTEED PERIOD ACCOUNT
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's
Expiration Date accumulates interest at a Guaranteed Rate. We may establish
different Guaranteed Rates under different classes of Certificates. The
Guaranteed Rate for each allocation is the annual interest rate applicable to
new allocations to that Guarantee Period, which was in effect on the
Transaction Date for the allocation. We use the term Guaranteed Period Amount
to refer to the amount allocated to and accumulated in each Guarantee Period.
The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you
have allocated Annuity Account Value. On the Expiration Date of a Guarantee
Period, its Guaranteed Period Amount and its value in the Guaranteed Period
Account are equal. We call the Guaranteed Period Amount on an Expiration Date
the Guarantee Period's Maturity Value. We report the Annuity Account Value in
your Guaranteed Period Account to reflect any market value adjustment that
would apply if all Guaranteed Period Amounts were withdrawn as of the
calculation date. The Annuity Account Value in the Guaranteed Period Account
on any Business Day, therefore, will be the sum of the present value of the
Maturity Value in each Guarantee Period, using the Guaranteed Rate in effect
for new allocations to such Guarantee Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1997 through 2006. As Guarantee Periods expire, we expect to
add maturity years so that generally 10 are available at any time.
See "Allocation Restrictions" in Part 3 for limitations on allocation to
Guarantee Periods based on Annuitant's age.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period
fall within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period
can be determined at the time it is made, you can determine the amount
required to be allocated to a Guarantee Period in order to produce a target
Maturity Value (assuming no transfers or withdrawals are made). The required
amount is the present value of that Maturity Value at the Guaranteed Rate on
the Transaction Date for the contribution, which may also be expressed as the
price per $100 of Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of May 1, 1996 and the related price
per $100 of Maturity Value for each currently available Guarantee Period were
as follows:
<TABLE>
<CAPTION>
GUARANTEE
PERIODS WITH
EXPIRATION DATE GUARANTEED PRICE PER $100
FEBRUARY 15TH OF RATE AS OF OF MATURITY
MATURITY YEAR MAY 1, 1996 VALUE
- ---------------- ------------ --------------
<S> <C> <C>
1997 4.54% $96.53
1998 5.16 91.37
1999 5.37 86.40
2000 5.51 81.59
2001 5.62 76.93
2002 5.75 72.32
2003 5.88 67.82
2004 5.85 64.19
2005 5.98 59.98
2006 6.08 56.08
</TABLE>
Allocation Among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create
a series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of
years 1997 through 2001, then according to the above table the lump sum
contribution you would have to make as of May 1, 1996 would be $432.82 (i.e.,
the sum of the price per $100 of Maturity Value for each maturity year from
1997 through 2001).
7
<PAGE>
The above table is provided to illustrate the use of present value
calculations. It does not take into account withdrawals and withdrawal
charges or transfers among Guarantee Periods. Actual calculations will also
be based on Guaranteed Rates on each actual Transaction Date, which may
differ.
MARKET VALUE ADJUSTMENT FOR
TRANSFERS, WITHDRAWALS OR SURRENDER
PRIOR TO THE EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a
Guarantee Period prior to its Expiration Date will cause any remaining
Guaranteed Period Amount for that Guarantee Period to be increased or
decreased by a market value adjustment. The amount of the adjustment will
depend on two factors: (a) the difference between the Guaranteed Rate
applicable to the amount being withdrawn and the Guaranteed Rate on the
Transaction Date for new allocations to a Guarantee Period with the same
Expiration Date, and (b) the length of time remaining until the Expiration
Date. In general, if interest rates have risen between the time when an
amount was originally allocated to a Guarantee Period and the time it is
withdrawn, the market value adjustment will be negative, and vice versa; and
the longer the period of time remaining until the Expiration Date, the
greater the impact of the interest rate difference. Therefore, it is possible
that a significant rise in interest rates could result in a substantial
reduction in your Annuity Account Value related to longer term Guarantee
Periods.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Guarantee Period will be determined for each
contribution allocated to that Guarantee Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction
Date as follows:
(a) We determine the Guaranteed Period Amount that would be payable on
the Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365 day year. For example three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount
payable at the Expiration Date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market
value adjustment applicable to such Guarantee Period, which may be
positive or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal of a portion of the amount in a Guarantee Period will be a
percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds from a Guarantee Period. This percentage is
determined by (i) dividing the amount of the withdrawal or transfer from the
Guarantee Period by (ii) the Annuity Account Value in such Guarantee Period
prior to the withdrawal or transfer. See the Appendix for an example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee
Period would not be accepted at the time. This rate will not be less than 3%.
If we do not have a Guaranteed Rate in effect for a Guarantee Period to which
the "current Guaranteed Rate" in (1)(c) would apply, we will use the rate at
the next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with
our procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate
in (1)(c) above.
INVESTMENTS
Amounts allocated to Guarantee Periods will be held in a "nonunitized"
separate account established by Equitable Life under the laws of New York.
This separate account provides an additional measure of assurance that full
payment of amounts due under the Guarantee Periods will be made. Under the
New York Insurance Law, the portions of the separate account's assets equal
to the reserves and other contract liabilities relating to the Certificates
are not chargeable with liabilities arising out of any other business we may
conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
are the property of Equitable Life. Any favorable investment performance on
the assets held in the separate account accrues solely to Equitable Life's
benefit. Certificate Owners do not participate in the performance of the
assets held in this separate account. Equitable Life
8
<PAGE>
may, subject to applicable state law, transfer all assets allocated to the
separate account to its general account. Regardless of whether assets
supporting Guaranteed Period Accounts are held in a separate account or our
general account, all benefits relating to the Annuity Account Value in the
Guaranteed Period Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates
for the Guarantee Periods. Equitable Life expects the rates to be influenced
by, but not necessarily correspond to, among other things, the yields on the
fixed income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for
investing the assets supporting Equitable Life's obligations under the fixed
portion of the Certificates, Equitable Life is not obligated to invest those
assets according to any particular plan except as may be required by state
insurance laws, nor will the Guaranteed Rates Equitable Life establishes be
determined by the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees
including those applicable to the Guaranteed Period Account, as well as our
general obligations.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
applicable exemptions and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933 (1933 Act),
nor is the general account an investment company under the 1940 Act.
Accordingly, the general account is not subject to regulation under the 1933
Act or the 1940 Act. However, the market value adjustment interests under the
Certificates are registered under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in this prospectus for your information that
relates to the general account (other than market value adjustment
interests). The disclosure, however, may be subject to certain generally
applicable provisions of the Federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
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PART 3: PROVISIONS OF THE CERTIFICATES AND SERVICES WE PROVIDE
The provisions of your Certificate may be restricted by applicable laws and
regulations.
AVAILABILITY OF THE CERTIFICATES
The Certificates are available for Annuitant issue ages 20 to 78. The
Certificates may not be available in all states.
CONTRIBUTIONS UNDER THE CERTIFICATES
Your initial contribution must be at least $10,000. You may make subsequent
contributions in an amount of at least $1,000. Subsequent contributions may
no longer be made once the Annuitant reaches age 78.
We may refuse to accept any contribution if the sum of all contributions
received under a Certificate would then total more than $1,500,000. We may
also refuse to accept any contribution if the sum of all contributions under
all Equitable annuity accumulation certificates/contracts that you own would
then total more than $2,500,000.
METHODS OF PAYMENT
Except as indicated below, all contributions must be made by check. All
contributions made by check must be drawn on a bank or credit union in the
U.S., in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. All contributions should be sent to Equitable
Life at our Processing Office address designated for contributions.
Contributions are credited as of the Transaction Date.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to
the Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will receive the Guaranteed Rate(s) in
effect for the applicable Guarantee Period(s) on the date contributions are
received. Wire orders not accompanied by complete information may be retained
for a period not exceeding five Business Days while an attempt is made to
obtain the required information. If the required information cannot be
obtained within those five Business Days, the Processing Office will inform
the broker-dealer, on behalf of the applicant, of the reasons for the delay
and return the contribution immediately to the applicant, unless the
applicant specifically consents to our retaining the contribution until the
required information is received by the Processing Office.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate will not be issued until the receipt and
acceptance of a properly completed application. During the time from receipt
of the initial contribution until a signed application is received from the
Certificate Owner, no other financial transactions may be requested.
If an application is not received within ten days of receipt of the initial
contribution via wire order, or if an incomplete application is received and
cannot be completed within ten days of receipt of the initial contribution,
the amount of the initial contribution will be returned to the applicant with
immediate notification to the broker-dealer.
After your Certificate has been issued, subsequent contributions may be
transmitted by wire.
ALLOCATION OF CONTRIBUTIONS
You have two options from which to choose for allocation of your
contributions: Self-Directed Allocation and Principal Assurance Withdrawals
Allocation.
Self-Directed Allocation
You design your own investment program by allocating your contributions among
the Guarantee Periods in any way you choose. We allocate your initial
contribution among the Guarantee Periods according to your instructions. You
must provide allocation instructions for each subsequent contribution. If we
do not receive subsequent instructions from you, your entire subsequent
contribution will be allocated to the Guarantee Period with the earliest
Expiration Date. You may choose to invest in one or up to all available
Guarantee Periods at the same time. Allocations must be in whole percentages,
and are subject to the restrictions under "Guarantee Periods and Expiration
Dates" in Part 2 and other restrictions described below.
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Principal Assurance Withdrawals Allocation
If you elect this option, we will allocate your initial contribution for you
among serially maturing Guarantee Periods based on selections that you make.
See "Principal Assurance Withdrawals" below.
Allocation Restrictions
Allocations to Guarantee Periods are limited for Annuitants ages 71 and above
as follows: For ages 71 through 74, allocations may not be made to a
Guarantee Period with a maturity year that would exceed the year in which the
Annuitant will attain age 80. For Annuitants ages 75 and above, allocations
may be made only to Guarantee Periods with maturities of five years or less;
however, in no event may allocations be made to Guarantee Periods with
maturities beyond the February 15th immediately following the Annuity
Commencement Date.
FREE LOOK PERIOD
You have the right to examine the Assured Growth Plan Certificate for a
period of 10 days after you receive it, and to return it to us for a refund.
You cancel it by sending it to our Processing Office. The free look is
extended if your state requires a refund period of longer than 10 days. This
right applies only to the initial owner of a Certificate.
Your refund will equal the Annuity Account Value reflecting any positive or
negative market value adjustment, through the date we receive your
Certificate at our Processing Office. Some states may require that we
calculate the refund differently.
We follow these same procedures if you change your mind before a Certificate
has been issued, but after a contribution has been made. See "Part 4: Tax
Aspects of the Certificates" for possible consequences of canceling your
Certificate during the free look period.
If you cancel your Certificate during the free look period, we may require
that you wait six months before you may apply for a Certificate with us
again.
ANNUITY ACCOUNT VALUE
The Annuity Account Value in the Guaranteed Period Account on any Business
Day will be the sum of the present value of the Maturity Value in each
Guarantee Period, using the Guaranteed Rate in effect for new allocations to
such Guarantee Period on such date. (This is equivalent to the Guaranteed
Period Amount increased or decreased by the full market value adjustment.)
The Annuity Account Value, therefore, may be higher or lower than the
contributions (less withdrawals) accumulated at the Guaranteed Rate. At the
Expiration Date the Annuity Account Value in the Guaranteed Period Account
will equal the Maturity Value. See "Part 2: The Guaranteed Period Account."
TRANSFERS
Prior to the Annuity Commencement Date, you may transfer funds among the
Guarantee Periods once per quarter during each Contract Year. Such transfers
may be made at any time during each quarter. Transfers are subject to the
restrictions above and as set forth under "Guarantee Periods and Expiration
Dates" in Part 2.
A transfer request will be effective on the Transaction Date and transfers
from a Guarantee Period, other than on the Expiration Date, will result in a
market value adjustment (either positive or negative) as of the Transaction
Date. All transfers among the Guarantee Periods will be confirmed in writing.
Transfer requests must be made directly to our Processing Office. Your
request for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Guarantee Period(s) to and from which
the amounts are to be transferred. Your transfer request may be in writing or
by telephone.
For telephone transfer requests, procedures have been established by
Equitable Life that are considered to be reasonable and are designed to
confirm that instructions communicated by telephone are genuine. Such
procedures include requiring certain personal identification information
prior to acting on telephone instructions and providing written confirmation.
In light of the procedures established, Equitable Life will not be liable for
following telephone instructions that it reasonably believes to be genuine.
OPTIONS AT EXPIRATION DATE OF A
GUARANTEE PERIOD
We will notify you on or before December 31st prior to the Expiration Date of
each Guarantee Period in which you have any Guaranteed Period Amount. You may
elect one of the following options to be effective at the Expiration Date,
subject to the restrictions set forth under "Guarantee Periods and Expiration
Dates" in Part 2 and "Allocation Restrictions" above:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges
which may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired
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Guarantee Period will be transferred into the Guarantee Period with the
earliest Expiration Date.
WITHDRAWALS
The Assured Growth Plan is an annuity contract, even though you may elect to
receive your benefits in a non-annuity form. You may withdraw funds from your
Certificate before the Annuity Commencement Date and while the Annuitant is
alive. You may withdraw an amount equal to the 10% free corridor amount
without incurring a withdrawal charge.
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration
Date" in Part 2.
Withdrawals may be taxable and subject to tax penalty (as a deterrent to
early withdrawal, generally prior to age 59 1/2 ). We may also be required to
withhold income taxes from the amount distributed. See "Part 4: Tax Aspects
of the Certificates."
The methods for withdrawing funds under the Assured Growth Plan are listed
below.
o LUMP SUM WITHDRAWALS--After the first Contract Year, you may take one
Lump Sum Withdrawal per Contract Year at any time during such Contract
Year in an amount of at least $1,000.
A request to withdraw more than 90% of the Cash Value as of the Transaction
Date will result in the termination of the Certificate and will be treated
as a surrender of the Certificate for its Cash Value. See "Surrendering the
Certificates to Receive the Cash Value" below.
To make a Lump Sum Withdrawal, you must submit a request in a form
satisfactory to us which specifies the Guarantee Periods from which the
Lump Sum Withdrawal will be taken. If we have received the information we
require, the requested withdrawal will become effective on the Transaction
Date and proceeds will usually be mailed within seven calendar days
thereafter, but we may delay payment as described below in "When Payments
Are Made." If we receive only partially completed information, our
Processing Office will contact you for specific instructions before your
request can be processed.
o PRINCIPAL ASSURANCE WITHDRAWALS--This option is designed to provide you
with (i) level annual withdrawals for calendar years that you select,
plus (ii) a Maturity Value equal to your original contribution in the
last calendar year that you select. To achieve this result, you select a
calendar year in which you wish to receive the last withdrawal. Such
year must not be later than ten years nor earlier than seven years from
the year of your election. You also select the year in which the
withdrawals will begin. However, such withdrawals must be for a period
of at least five consecutive years. Principal Assurance Withdrawals are
not available where the Annuitant's age is 74 or above.
If Principal Assurance Withdrawals are elected at issue of the Certificate,
based on the above information and the amount of your initial contribution,
your entire contribution will be allocated by us. A portion of such
contribution will be allocated among Guarantee Periods serially maturing in
the years you select, including the last year. The level annual withdrawals
represent distributions of the Maturity Values of these serially maturing
Guarantee Periods on their Expiration Dates. An additional amount is
allocated to the Guarantee Period with an Expiration Date in the last
calendar year. This represents the balance of your initial contribution.
The Maturity Value in this Guarantee Period on the Expiration Date will
equal your initial contribution plus your final level annual withdrawal.
You have the option of withdrawing or transferring the amount which is
equal to your initial contribution to another Guarantee Period available at
that time.
If Principal Assurance Withdrawals are elected at any time after issue of
the Certificate, based on the information you provide as described above,
your entire Annuity Account Value will be allocated by us among the
Guarantee Periods.
You may elect Principal Assurance Withdrawals at any time by submitting a
request satisfactory to us. Principal Assurance Withdrawals will be
terminated if: (i) you cancel these withdrawals at any time by sending a
written request satisfactory to us; (ii) you request a transfer of your
Annuity Account Value which was allocated under the Principal Assurance
Withdrawals option; or (iii) you make a Lump Sum Withdrawal.
Any subsequent contributions you make while under Principal Assurance
Withdrawals will be allocated to the Guarantee Period with the latest
Expiration Date you have elected. Alternatively, you may elect to have your
subsequent contributions allocated to any one or more Guarantee Periods
with Expiration Dates beyond the last calendar year you selected for your
Principal Assurance Withdrawals. For any subsequent contribution equal to
$10,000 or more, you may request to have your Principal Assurance
Withdrawals redesigned.
Principal Assurance Withdrawals are not subject to a withdrawal charge.
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DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of proof satisfactory to us of the Annuitant's death
before the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the
time you apply for the Certificate. While the Certificate is in effect, you
may change your beneficiary by writing to our Processing Office. The change
will be effective on the date the written submission was signed. The death
benefit payable will be determined as of the date we receive such proof of
death and any required instructions as to the method of payment. See "How
Payment is Made" below.
The death benefit is equal to the Annuity Account Value, or if greater, the
sum of the Guaranteed Period Amounts in each Guarantee Period. See "Guarantee
Periods" in Part 2.
How Payment is Made
We will pay the death benefit to the beneficiary in the form of the income
annuity option you have chosen under your Certificate. If no income annuity
option has been chosen at the time of the Annuitant's death, the beneficiary
will receive the death benefit in a lump sum. However, subject to certain
exceptions in the Certificate, Equitable Life's rules then in effect and any
other applicable requirements under the Code, the beneficiary may elect to
apply the death benefit to one of our Assured Payment Plans or to one or more
income annuity options offered by Equitable Life. See "Income Annuity
Options" below. Such an election when made on a timely basis, can defer
otherwise taxable income. See "Death Benefits" in Part 4. Note that if you
are both the Certificate Owner and the Annuitant, only a life annuity or an
annuity that does not extend beyond the life expectancy of the beneficiary
may be elected.
Successor Annuitant
If you are both the Certificate Owner and the Annuitant and you elect your
spouse to be the sole primary beneficiary and to be the successor
Annuitant/Certificate Owner, then no death benefit is payable until your
surviving spouse's death.
WHEN THE CERTIFICATE OWNER DIES
BEFORE THE ANNUITANT
If you are the Certificate Owner but not the Annuitant and you die before the
Annuity Commencement Date, the beneficiary named to receive the death benefit
upon the Annuitant's death will automatically succeed as Certificate Owner
(unless you name a different person as successor Owner in a written form
acceptable to us and send it to our Processing Office). The Certificate
provides that the original Certificate Owner's entire interest in the
Certificate be completely distributed to the named beneficiary by the fifth
anniversary of such Owner's death (unless an income annuity option is elected
and payments begin within one year after the Certificate Owner's death and
are made over the beneficiary's life or over a period not to exceed the
beneficiary's life expectancy). If an income annuity option has not been
elected, as described above, on the fifth anniversary of your death we will
pay any Annuity Account Value remaining on such date, less any applicable
withdrawal charge. If the successor Certificate Owner is your surviving
spouse, no distributions are required as long as both the surviving spouse
and the Annuitant are living.
CASH VALUE
The Cash Value under the Certificate reflects any upward or downward market
value adjustment. See "Part 2: The Guaranteed Period Account." On any date
while the Certificate is in effect, the Cash Value is equal to the Annuity
Account Value less any withdrawal charge. The free corridor amount will not
apply when calculating the withdrawal charge applicable upon a surrender. See
"Surrendering the Certificates to Receive the Cash Value," and "Withdrawal
Charge" below.
SURRENDERING THE CERTIFICATES TO
RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while
the Annuitant is living and before the Annuity Commencement Date.
For a surrender to be effective, we must receive your written request and the
Certificate at our Processing Office. The Cash Value will be determined on
the Transaction Date. All benefits under the Certificate will be terminated
as of that date. You may receive the Cash Value in a single sum payment or
apply it under one or more income annuity options. See "Income Annuity
Options" below. We will usually pay the Cash Value within seven calendar
days, but we may delay payment as described in "When Payments are Made"
below.
For the tax consequences of surrenders, see "Part 4: Tax Aspects of the
Certificates." The 10% free corridor amount is not applicable to a surrender.
INCOME ANNUITY OPTIONS
Income annuity options provide periodic payments over a specified period of
time which may be fixed or
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may be based on the Annuitant's life. Annuitization payments are calculated
as of the Annuity Commencement Date, which is on file with our Processing
Office. You can change the Annuity Commencement Date by writing to our
Processing Office any time before the Annuity Commencement Date. However, you
may not choose a date later than the 28th day of any month. Also, no Annuity
Commencement Date will be later than the February 15th which follows the
Contract Date anniversary following the Annuitant's 85th birthday.
Before the Annuity Commencement Date, we will send a letter advising that
annuity benefits may be elected. Unless you otherwise elect, we will pay
fixed annuity benefits on the "normal form" indicated for your Certificate as
of the Annuity Commencement Date. The amount applied to provide the annuity
benefit will be (1) the Annuity Account Value for any life annuity form or
(2) the Cash Value for any period certain only annuity form except that if
the period certain is more than five years, the amount applied will be no
less than 95% of the Annuity Account Value.
Amounts in the Guarantee Periods that are applied to an income annuity option
prior to an Expiration Date will result in a market value adjustment. See
"Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to the
Expiration Date" in Part 2.
Annuity Forms
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with
this annuity form, it provides the highest monthly payment of any of the
life income annuity options, so long as the Annuitant is living.
o Life Annuity-Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before a specified period of time (the "certain period") has ended,
payments will continue to the beneficiary for the balance of the certain
period. Certain periods may be 5, 10, 15 or 20 years. A life annuity
with a certain period of 10 years is the normal form of annuity under
the Certificates.
o Life Annuity-Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
o Period Certain Annuity: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies.
o Joint and Survivor Life Annuity: This annuity form guarantees life
income to you and, after your death, continuation of income to the
survivor.
The life annuity-period certain and the life annuity- refund certain are
available on either a single life or joint and survivor life basis.
The Certificate offers the income annuity options outlined above in fixed
form. Fixed annuity payments are guaranteed by us and will be based on the
tables of guaranteed annuity payments in your Certificate or on our then
current annuity rates, whichever is more favorable for the Annuitant.
For all Annuitants, the normal form of annuity provides for fixed payments.
We may offer other forms not outlined here.
For each income annuity option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Certificate.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and, in the case of a life
income annuity option, the Annuitant's age (or the Annuitant's and joint
Annuitant's ages) and in certain instances, the sex of the Annuitant(s). Once
an income annuity option is chosen and payments have commenced, no change can
be made.
If, at the time you elect an income annuity option, the amount to be applied
is less than $2,000 or the initial payment under the option elected is less
than $20 monthly, we reserve the right to pay the Annuity Account Value in a
single sum rather than as payments under the annuity form chosen.
ASSURED PAYMENT PLAN
The Assured Payment is one of the series of INCOME MANAGER annuities which
offers both income and access to the Cash Value. If you are the Owner and
Annuitant of an Assured Growth Plan Certificate, you may at any time apply
your Annuity Account Value to purchase the Assured Payment Plan (Life Annuity
with a Period Certain), provided you meet the issue age and payment
restrictions for an Assured Payment Plan. If the Annuity Account Value is
applied from an Assured Growth Plan Certificate to purchase the Assured
Payment Plan at a time when the dollar amount of the withdrawal charge is
greater than 2% of remaining contributions (after withdrawals), such
withdrawal charge
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will not be deducted. However, a new withdrawal charge schedule will apply
under the Assured Payment Plan. For purposes of the Assured Payment Plan
withdrawal charge schedule, the year in which your Annuity Account Value is
applied under the Assured Payment Plan will be "Contract Year 1." If the
Annuity Account Value is applied from the Assured Growth Plan when the dollar
amount of the withdrawal charge is 2% or less, there will be no withdrawal
charge schedule under the Assured Payment Plan. You should consider the
timing of your purchase as it relates to the potential for withdrawal charges
under the Assured Payment Plan. No subsequent contributions will be permitted
under the Assured Payment Plan Certificate.
You may also apply your Annuity Account Value to purchase the Assured Payment
Plan (Period Certain) once withdrawal charges under the Assured Growth Plan
are no longer in effect. This version of the Assured Payment Plan provides
for annual payments for a specified period. No withdrawal charges will apply
under the Assured Payment Plan Certificate.
The Assured Payment Plan (Life Annuity with a Period Certain) and Assured
Payment Plan (Period Certain) are described in our Prospectus for the Assured
Payment Plan, dated May 1, 1996. Copies are available from your registered
representative.
To purchase an Assured Payment Plan we require the return of your Assured
Growth Plan Certificate. An Assured Payment Plan Certificate will be issued
putting the Assured Payment Plan into effect.
Depending upon your circumstances, this may be accomplished on a tax-free
basis. Consult your tax adviser.
WHEN PAYMENTS ARE MADE
We can defer payment of any portion of the Annuity Account Value (other than
for death benefits) for up to six months while you are living. We may also
defer payments for any amount attributable to a contribution made in the form
of a check for a reasonable amount of time (not to exceed 15 days) to permit
the check to clear.
ASSIGNMENT
The Certificates may be assigned at any time before the Annuity Commencement
Date and for any purpose other than as collateral or security for a loan.
Equitable Life will not be bound by an assignment unless it is in writing and
we have received it at our Processing Office. In some cases, an assignment
may have adverse tax consequences. See "Part 4: Tax Aspects of the
Certificates."
DISTRIBUTION OF THE CERTIFICATES
Equitable Distributors, Inc. (EDI), an indirect wholly owned subsidiary of
Equitable Life, has responsibility for sales and marketing functions and may
be deemed to be the distributor of the Certificates. EDI is registered with
the SEC as a broker-dealer under the Exchange Act and is a member of the
National Association of Securities Dealers, Inc. EDI's principal business
address is 787 Seventh Avenue, New York, New York 10019. For 1995, EDI was
paid a fee of $126,914 for its services under its "Distribution Agreement"
with Equitable Life.
The Certificates will be sold by registered representatives of EDI and its
affiliates, who are also our licensed insurance agents, as well as by
unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation (including for EDI and its
affiliates) will not exceed five percent of total contributions made under a
Certificate. EDI may also receive compensation and reimbursement for its
marketing services under the terms of its distribution agreement with
Equitable Life. Broker-dealers receiving sales compensation will generally
pay a portion thereof to their registered representatives as commission
related to sales of the Certificates. The offering of the Certificates is
intended to be continuous.
WITHDRAWAL CHARGE
A withdrawal charge will be imposed as a percentage of each contribution made
to the extent that a Lump Sum Withdrawal exceeds the free corridor amount, or
if the Certificate is surrendered to receive its Cash Value. While Principal
Assurance Withdrawals are in effect, a withdrawal charge, if any, will apply
to all Lump Sum Withdrawals. We determine the withdrawal charge separately
for each contribution in accordance with the table below.
<PAGE>
<TABLE>
<CAPTION>
CONTRACT YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7 8+
------ ------ ------ ------ ------ ------ ------ -----
Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract
Year in which the Lump Sum Withdrawal is made or the Certificate is
surrendered, beginning with "Contract Year 1" with respect to each
contribution withdrawn or surrendered. For each contribution, the Contract
Year in which we receive that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Guarantee Periods from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Guarantee Period.
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Free Corridor Amount
The free corridor amount is 10% of the Annuity Account Value at the
beginning of the Contract Year.
The 10% free corridor amount is not applicable to a surrender. Principal
Assurance Withdrawals are not subject to a withdrawal charge.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn on a first-in first-out basis, and (2) amounts withdrawn
up to the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge, for purposes of
calculating taxable income the Federal income tax law treats earnings as
withdrawn first. See "Part 4: Tax Aspects of the Certificates."
The withdrawal charge is to help cover sales expenses. This charge will not
be increased for the life of the Certificates. We may reduce this charge
under group or sponsored arrangements. See "Group or Sponsored Arrangements"
below.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
We deduct a charge for applicable taxes, such as state or local premium
taxes, that might be imposed in your state. Generally we deduct this charge
from the amount applied to provide an income annuity option. In certain
states, however, we may deduct the charge for taxes from contributions. The
current tax charge that might be imposed varies by state and ranges from 0%
to 3.5% (the rate is 1% in Puerto Rico and 5% in the Virgin Islands).
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal
charge or change the minimum initial contribution requirements. Group
arrangements include those in which a trustee or an employer, for example,
purchases contracts covering a group of individuals on a group basis.
Sponsored arrangements include those in which an employer allows us to sell
Certificates to its employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these
factors into account when reducing charges. To qualify for reduced charges, a
group or sponsored arrangement must meet certain requirements, including our
requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy Certificates or that have
been in existence less than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in
effect when a Certificate is approved for issue. We may change these rules
from time to time. Any variation in the withdrawal charge will reflect
differences in costs or services and will not be unfairly discriminatory.
Group and sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR
MAKING CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE
ADVICE OF THEIR OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
The withdrawal charge may be reduced or eliminated when sales are made in a
manner that results in savings of sales and administrative expenses, such as
sales through persons who are compensated by clients for recommending
investments and receive no commission or reduced commissions in connection
with the sale of the Certificates. In no event will a reduction or
elimination of the withdrawal charge be permitted where it would be unfairly
discriminatory.
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PART 4: TAX ASPECTS OF THE CERTIFICATES
This prospectus generally covers our understanding of the current Federal
income tax rules that apply to an annuity purchased with after-tax dollars
(non- qualified annuity).
This prospectus does not provide detailed tax information and does not
address issues such as state income and other taxes or Federal gift and
estate taxes. Please consult a tax adviser when considering the tax aspects
of the Assured Growth Plan Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities. In addition, the Treasury Department may amend
existing regulations, issue new regulations, or adopt new interpretations of
existing laws. State tax laws or, if you are not a United States resident,
foreign tax laws, may affect the tax consequences to you or the beneficiary.
These laws may change from time to time without notice and, as a result, the
tax consequences may be altered. There is no way of predicting whether, when
or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
TAXATION OF NON-QUALIFIED ANNUITIES
Equitable Life has designed the Assured Growth Plan Certificates to qualify
as an "annuity" for purposes of Federal income tax law. Annuity contract
payments are taxable as ordinary income and are subject to income tax
withholding. See "Federal and State Income Tax Withholding" below. Gains in
the Annuity Account Value of the Certificate generally will not be taxable to
an individual until a distribution occurs, either by a withdrawal of part or
all of its value or as a series of periodic payments. However, there are some
exceptions to this rule: (1) if an individual transfers a Certificate as a
gift to someone other than a spouse (or divorced spouse), any gain in its
Annuity Account Value will be taxed at the time of transfer; (2) the
assignment or pledge of any portion of the value of a Certificate will be
treated as a distribution of that portion of the Certificate; and (3) when an
insurance company (or its affiliate) issues more than one non-qualified
deferred annuity certificate or contract during any calendar year to the same
taxpayer, the certificates or contracts are required to be aggregated in
computing the taxable amount of any distribution.
Corporations, partnerships, trusts and other non- natural persons generally
cannot defer the taxation of current income credited to the Certificate
unless an exception under the Code applies.
Withdrawals
Prior to the Annuity Commencement Date, any withdrawals (withdrawals which do
not terminate your total interest in the Certificate) are taxable to you as
ordinary income to the extent there has been a gain in the Annuity Account
Value. The balance of the distribution is treated as a return of the
"investment" or "basis" in the Certificate and is not taxable. Generally, the
investment or basis in the Certificate equals the contributions made, less
any amounts previously withdrawn which were not taxable. Special rules may
apply if contributions made to another annuity certificate or contract prior
to August 14, 1982 are transferred to a Certificate in a tax-free exchange.
To take advantage of these rules, you should notify us prior to such an
exchange.
If you surrender or cancel the Certificate, the distribution is taxable to
the extent it exceeds the investment in the Certificate.
Annuity Payments
Once annuity payments begin, a portion of each payment is considered to be a
tax-free recovery of investment based on the ratio of the investment to the
expected return under the Certificate. The remainder of each payment will be
taxable. In the case of a life annuity, after the total investment in the
contract has been recovered, future payments are fully taxable. If payments
cease as a result of death, a deduction for any unrecovered investment will
be allowed.
Penalty Tax
In addition to income tax, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date you attain age 59 1/2 , (2) made on or after your death, (3)
attributable to your disability, (4) is part of a series of substantially
equal installments as an annuity for your life (or life expectancy) or the
joint lives (or joint life expectancies) of you and a beneficiary, (5) with
respect to income allocable to amounts contributed to an annuity certificate
or contract prior to August 14, 1982 which are transferred to the Certificate
in a tax-free exchange, or (6) payments under an immediate annuity. An
immediate annuity is generally an annuity which commences payments within one
year from purchase and provides for a series of substantially equal periodic
payments made at least annually.
17
<PAGE>
Death Benefits
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 3, the beneficiary is generally
subject to the same tax treatment as would apply to you. If the beneficiary
takes the death benefit in a single sum, the beneficiary is treated as if the
Certificate had been surrendered. The tax computation will reflect your
investment in the Certificate.
If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a single sum death benefit first becomes payable and
before any benefit is actually paid. The taxable income that would otherwise
occur on a deemed surrender of the Certificate, will be deferred, and
payments will be taxed as described above under "Annuity Payments."
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax on the taxable
portion of annuity payments, unless the recipient elects not to be subject to
income tax withholding. The rate of withholding will depend on the type of
distribution and, in certain cases, the amount of the distribution. Special
withholding rules apply to foreign recipients and United States citizens
residing outside the United States. If a recipient does not have sufficient
income tax withheld or does not make sufficient estimated income tax
payments, however, the recipient may incur penalties under the estimated
income tax rules. Recipients should consult their tax advisers to determine
whether they should elect out of withholding. Requests not to withhold
Federal income tax must be made in writing prior to receiving benefits under
the Certificate. Our Processing Office will provide forms for this purpose.
No election out of withholding is valid unless the recipient provides us with
the correct taxpayer identification number and a United States residence
address.
Certain states have indicated that annuity income tax withholding will apply
to payments from the Certificates made to residents. In some states, a
recipient may elect out of state withholding. Generally, an election out of
Federal withholding will also be considered an election out of state
withholding. If you need more information concerning a particular state or
any required forms, call our Processing Office at the toll-free number and
consult your tax adviser.
Periodic payments are generally subject to wage- bracket type withholding (as
if such payments were payments of wages by an employer to an employee) unless
the recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic annuity payments which is exempt from
withholding based on this assumption. For 1996, a recipient of periodic
payments (e.g., monthly or annual payments) which total less than a $14,075
taxable amount will generally be exempt from Federal income tax withholding,
unless the recipient specifies a different choice of withholding exemption. A
withholding election may be revoked at any time and remains effective until
revoked. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally
be subject to withholding at a flat 10% rate. A recipient who provides a
United States residence address and a correct taxpayer identification number
will generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make
withholding elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than you, a Federal generation skipping tax may be
payable with respect to the benefit at rates similar to the maximum estate
tax rate in effect at the time. The generation skipping tax provisions
generally apply to transfers which would also be subject to the gift and
estate tax rules. Individuals are generally allowed an aggregate generation
skipping tax exemption of $1 million. Because these rules are complex, you
should consult with your tax adviser for specific information, especially
where benefits are passing to younger generations, as opposed to a spouse or
child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
SPECIAL RULES FOR CERTIFICATES ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from Assured Growth Plan
Certificates as U.S.- source. A Puerto Rico resident is subject to U.S.
taxation on such U.S.-source income. Only Puerto Rico-source income of Puerto
Rico residents is ex-
18
<PAGE>
cludable from U.S. taxation. Income from Assured Growth Plan Certificates is
also subject to Puerto Rico tax. The computation of the taxable portion of
amounts distributed from a Certificate may differ in the two jurisdictions.
Therefore, an individual might have to file both U.S. and Puerto Rico tax
returns, showing different amounts of income for each. Puerto Rico generally
provides a credit against Puerto Rico tax for U.S. tax paid. Depending on an
individual's personal situation and the timing of the different tax
liabilities, an individual may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
TRANSFERS AMONG GUARANTEE PERIODS
Transfers among the Guarantee Periods are not taxable.
19
<PAGE>
PART 5: INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life for the years ended December 31, 1995 and 1994
included in Equitable Life's Annual Report on Form 10-K, incorporated by
reference in the prospectus, have been examined by Price Waterhouse LLP,
independent accountants, whose reports thereon are incorporated herein by
reference. Such consolidated financial statements and consolidated financial
statement schedules have been incorporated herein by reference in reliance
upon the reports of Price Waterhouse LLP given upon their authority as
experts in accounting and auditing.
20
<PAGE>
APPENDIX: MARKET VALUE ADJUSTMENT EXAMPLE
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 were
allocated on February 15, 1997 to a Guarantee Period with an Expiration Date
of February 15, 2006 at a Guaranteed Rate of 7.00% resulting in a Maturity
Value at the Expiration Date of $183,846, and further assuming that a
withdrawal of $50,000 were made on February 15, 2001.
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON
FEBRUARY 15, 2001
----------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of February 15, 2001 (Before Withdrawal)
- -------------------------------------------
(1) Present Value of Maturity Value, also
Annuity Account Value .................. $144,048 $119,487
(2) Guaranteed Period Amount ............... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) ...... 12,968 (11,593)
February 15, 2001 (After Withdrawal)
- -------------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000 / (1)] . $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000-(4)] ........... 45,499 54,851
(6) Guaranteed Period Amount: (2)-(5) ..... 85,581 76,229
(7) Maturity Value ......................... 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value .................. 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased (from 7.00% to 9.00% in the example), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is
made when rates have decreased (from 7.00% to 5.00% in the example), a
portion of a positive market value adjustment is realized.
21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of issuance and distribution of the
certificates are as follows:
Amount
------
Securities and Exchange Commission Registration Fee $60,606.06
Printing Expenses $200,000
Accounting Fees and Expenses $100,000
Legal Fees and Expenses $10,000
Miscellaneous Expenses $35,000
Total Expenses $405,606.06
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The by-laws of The Equitable Life Assurance Society of the United
States ("Equitable Life") provide, in Article VII, as follows:
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 (sections) 721 -726; Insurance Law (section) 1216}
The directors and officers of Equitable Life are insured under
policies issued by Lloyd's of London, X. L. Insurance Company and ACE Insurance
Company. The annual limit on such policies is $100 million, and the policies
insure the officers and directors against certain liabilities arising out of
their conduct in such capacities.
<PAGE>
ITEM 16. EXHIBITS
Exhibits No.
------------
(1) (a) Form of Distribution Agreement by and among
Equitable Distributors, Inc., Separate Account Nos.
45 and 49 of Equitable Life and Equitable Life
Assurance Society of the United States,
incorporated by reference to Exhibit 1(a) to the
Registration Statement on Form S-3 (File No. 33-
88456).
(b) Form of Sales Agreement among Equitable
Distributors, Inc. as Distributor, a Broker-Dealer
(to be named) and a General Agent (to be named),
incorporated by reference to Exhibit 1(b) to the
Registration Statement on Form S-3 (File No.
33-88456).
(c) Form of The Hudson River Trust Sales Agreement by
and among Equico Securities, Inc., The Equitable
Life Assurance Society of the United States,
Equitable Distributors, Inc. and Separate Account
No. 49 of The Equitable Life Assurance Society of
the United States, incorporated by reference to
Exhibit 1(c) to the Registration Statement on Form
S-3 (File No. 33-88456).
(4) (a) Form of group annuity contract no. 1050-94IC,
incorporated by reference to Exhibit 4(a) to the
Registration Statement on Form S-3 (File No.
33-88456).
(b) Form of group annuity certificate nos. 94ICA and
94ICB, incorporated by reference to Exhibit 4(b) to
the Registration Statement on Form S-3 (File No.
33-88456).
(c) Forms of endorsement nos. 94ENIRAI, 94ENNQI and
94ENMVAI to contract no. 1050-94IC and data pages
no. 94ICA/BIM(IRA), (NQ), (NQ Plan A) and (NQ Plan
B), incorporated by reference to Exhibit 4(c) to
the Registration Statement on Form S-3 (File No.
33-88456).
(d) Forms of application used with the IRA, NQ and
Fixed Annuity Markets, incorporated by reference to
Exhibit 4(d) to the Registration Statement on Form
S-3 (File No. 33-88456).
(e) Form of endorsement no. 95ENLCAI to contract no.
1050-94IC and data pages no. 94ICA/BLCA,
incorporated by reference to Exhibit 4(e) to the
Registration Statement on Form S-3 (File No.
33-88456).
(f) Forms of data pages for Rollover IRA, IRA Assured
Payment Option, IRA Assured Payment Option Plus,
Accumulator, Assured Growth Plan, Assured Growth
Plan (Flexible Income Program), Assured Payment
Plan (Period Certain) and Assured Payment Plan
(Life with a Period Certain), incorporated by
reference to Exhibit 4(f) to the Registration
Statement on Form S-3 (File No. 33-88456).
<PAGE>
Exhibits No.
------------
(g) Forms of data pages for Rollover IRA, IRA Assured
Payment Option, IRA Assured Payment Option Plus,
Accumulator, Assured Growth Plan and Assured
Payment Plan (Life Annuity with a Period Certain),
incorporated by reference to Exhibit 4(g) to the
Registration Statement on Form S-3 (File No.
33-88456).
(h) Form of Separate Account Insulation Endorsement for
the Endorsement Applicable to Market Value
Adjustment Terms, incorporated by reference to
Exhibit 4(h) to the Registration Statement on Form
S-3 (File No. 33-88456).
(i) Forms of Guaranteed Minimum Income Benefit
Endorsements (and applicable data page for Rollover
IRA) for Endorsement Applicable to Market Value
Adjustment Terms and for the Life Contingent
Annuity Endorsement, incorporated by reference to
Exhibit 4(i) to the Registration Statement on Form
S-3 (File No. 33-88456).
(j) Forms of Enrollment Form/Application for Rollover
IRA, Choice Income Plan, Assured Growth Plan,
Accumulator and Assured Payment Plan, incorporated
by reference to Exhibit 4(j) to the Registration
Statement on Form S-3 (File No. 33-88456).
(k) Forms of data pages for the Accumulator,
incorporated by reference to Exhibit 4(k) to the
Registration Statement on Form S-3 (File No. 33-
88456).
(l) Forms of data pages for the Rollover IRA,
incorporated by reference to Exhibit 4(l) to the
Registration Statement on Form S-3 (File No.
33-88456).
(m) Forms of data pages for the Accumulator and
Rollover IRA, incorporated by reference to Exhibit
4(m) to the Registration Statement on Form S-3
(File No. 33-88456).
(n) Forms of data pages for Accumulator and Rollover
IRA, incorporated by reference to Exhibit 4(n) to
the Registration Statement on Form S-3 (File No.
33-88456).
(o) Forms of data pages for the Income Manager
Accumulator, Income Manager Rollover IRA, Equitable
Accumulator, Income Manager (IRA and NQ) and MVA
Annuity (IRA and NQ).
(p) Forms of Enrollment Form/Application for Income
Manager Accumulator, Income Manager Rollover IRA,
Equitable Accumulator, Income Manager (IRA and NQ)
and MVA Annuity (IRA and NQ).
(5) (a) Opinion and Consent of Jonathan E. Gaines, Esq.,
Vice President and Associate General Counsel of
Equitable, as to the legality of the securities
being registered.
(b) Copy of the Internal Revenue Service determination
letter regarding qualification under Section 401 of
the Internal Revenue Code, incorporated by
reference to Exhibit 5(b) to the Registration
Statement on Form S-3 (File No. 33-88456).
<PAGE>
Exhibits No.
------------
(10) Form of Participation Agreement among EQ Advisors Trust,
Equitable, Equitable Distributors, Inc. and EQ Financial
Consultants, Inc., incorporated by reference to the
Registration Statement of EQ Advisors Trust on Form N-1A
(File Nos. 333-17217 and 811-07953).
(23) Consent of Price Waterhouse LLP.
(24) Powers of Attorney, previously filed with this Registration
Statement No. 333-24009 on March 26, 1997.
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by
section 10(a)(3) of the Securities Act of
1933;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate
represent a fundamental change in the
information set forth in the registration
statement;
(iii) to include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Securities Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a
new registration statement relating to the
securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
<PAGE>
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City and State of New York, on
April 29, 1997.
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
(Registrant)
By: /s/ Jerome S. Golden
Jerome S. Golden
President
Income Management Group
A Division of The Equitable Life Assurance
Society of the United States
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed by or on behalf of
the following persons in the capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICERS:
James M. Benson President and Director
William T. McCaffrey Senior Executive Vice President, Chief Operating
Officer and Director
Joseph J. Melone Chairman of the Board, Chief Executive Officer
and Director
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 29, 1997
DIRECTORS:
Claude Bebear Jean-Rene Foutou Winthrop Knowlton
James M. Benson Norman C. Francis Arthur L. Liman
Christopher 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 W. Edwin Jarmain Didier Pineau-Valencienne
William T. Esrey G. Donald Johnston, Jr. George J. Sella, Jr.
Dave H. Williams
By: /s/Jerome S. Golden
--------------------------
Jerome S. Golden
Attorney-in-Fact
April 29, 1997
<PAGE>
EXHIBIT INDEX
Exhibit No. Page
- ----------- ----
4(o) Forms of data pages for the Income Manager Accumulator,
Income Manager Rollover IRA, Equitable Accumulator, Income
Manager (IRA and NQ) and MVA Annuity (IRA and NQ).
4(p) Forms of Enrollment Form/Application for Income Manager
Accumulator, Income Manager Rollover IRA, Equitable
Accumulator, Income Manager (IRA and NQ) and MVA Annuity
(IRA and NQ).
5(a) Opinion and Consent of Jonathan E. Gaines, Esq., Vice
President and Associate General Counsel of Equitable,
as to the legality of the securities being registered.
(23) Consent of Price Waterhouse LLP.
<PAGE>
ACCUMULATOR [(COMBINED GUARANTEED MINIMUM DEATH BENEFIT AND
GUARANTEED MINIMUM INCOME BENEFIT - PLAN A) OR
(GUARANTEED MINIMUM DEATH BENEFIT ONLY BENEFIT - PLAN B)]
DATA
PART A -- THIS PART LISTS YOUR PERSONAL DATA.
OWNER: [JOHN DOE]
ANNUITANT: [JOHN DOE] Age: [60] Sex: [Male]
CONTRACT: GROUP ANNUITY CONTRACT NO. AC 7625
CERTIFICATE NUMBER: [00000]
ENDORSEMENTS ATTACHED: [Minimum Income Benefit Endorsement]
Endorsement Applicable to Non-Qualified
Certificates
Endorsement Applicable to Market Value
Adjustment Terms
Rider to Endorsement Applicable to Market Value
Adjustment Terms
ISSUE DATE: [May 1, 1997]
CONTRACT DATE: [May 1, 1997]
ANNUITY COMMENCEMENT DATE: [August 22, 2027]
THE MAXIMUM MATURITY AGE IS AGE [90] -- SEE SECTION 7.03.
The Annuity Commencement Date may not be later than the Processing Date
which follows the Annuitant's [90th] birthday.
BENEFICIARY: [JANE DOE]
SUCCESSOR OWNER/ANNUITANT: [Applicable if the Owner and Annuitant are the
same person and the spouse is the beneficiary at
the time of election and time of Owner/Annuitant's
death] [JANE DOE]
<PAGE>
DATA PAGES (CONT'D)
PART B -- THIS PART DESCRIBES CERTAIN PROVISIONS OF YOUR CERTIFICATE.
INITIAL CONTRIBUTION RECEIVED (SEE SECTION 3.02): [$10,000.00]
INVESTMENT OPTIONS AVAILABLE (SEE PART II); YOUR ALLOCATION IS ALSO SHOWN.
INVESTMENT OPTIONS ALLOCATION (SEE SECTION 3.01)
- ------------------ -----------------------------
o ALLIANCE CONSERVATIVE INVESTORS FUND
o ALLIANCE GROWTH INVESTORS FUND
o ALLIANCE GROWTH AND INCOME FUND
o ALLIANCE COMMON STOCK FUND $10,000.00
o ALLIANCE GLOBAL FUND
o ALLIANCE INTERNATIONAL FUND
o ALLIANCE AGGRESSIVE STOCK FUND
o ALLIANCE SMALL CAP GROWTH FUND
o ALLIANCE MONEY MARKET FUND
o ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND
o ALLIANCE HIGH YIELD FUND
o EQ/PUTNAM BALANCED FUND
o EQ/PUTNAM GROWTH & INCOME VALUE FUND
o MFS EMERGING GROWTH COMPANIES FUND
o MFS RESEARCH FUND
o MERRILL LYNCH BASIC VALUE EQUITY FUND
o MERRILL LYNCH WORLD STRATEGY FUND
o MORGAN STANLEY EMERGING MARKETS EQUITY FUND
o T. ROWE PRICE EQUITY INCOME FUND
o T. ROWE PRICE INTERNATIONAL STOCK FUND
o WARBURG PINCUS SMALL COMPANY VALUE FUND
o GUARANTEE PERIODS (CLASS I)
EXPIRATION DATE AND GUARANTEED RATE
FEBRUARY 15, 1998
FEBRUARY 15, 1999
FEBRUARY 15, 2000
FEBRUARY 15, 2001
FEBRUARY 15, 2002
FEBRUARY 15, 2003
FEBRUARY 15, 2004
FEBRUARY 15, 2005
FEBRUARY 15, 2006
FEBRUARY 15, 2007
-------------------
TOTAL: [$10,000.00]
Investment Options shown are Investment Funds of our Separate Account No. 45
and Guarantee Periods shown are in the Guaranteed Period Account. See
Endorsement Applicable to Market Value Adjustment Terms.
"TYPES" OF INVESTMENT OPTIONS (SEE SECTION 4.02): Not applicable
GUARANTEED INTEREST ACCOUNT (SEE SECTION 2.01): Not available under this
Certificate
No. 94ICB Data page 2 (5/97)
<PAGE>
DATA PAGES (CONT'D)
BUSINESS DAY (SEE SECTION 1.05): A Business Day for this Certificate will mean
any day on which the New York Stock Exchange is open for trading.
PROCESSING DATES (SEE SECTION 1.20): A Processing Date is each Contract Date
anniversary.
AVAILABILITY OF INVESTMENT OPTIONS (SEE SECTION 2.04): (See Data pages, Part
C; Allocation Restrictions)
ALLOCATION OF CONTRIBUTIONS (SEE SECTION 3.01): Except as indicated below, your
initial and any subsequent Contributions are allocated according to your
instructions.
If you have elected Principal Assurance in the application then a portion of
your initial Contribution is allocated by us to a Guarantee Period you have
selected. The remaining portion of your initial Contribution is allocated to
the Investment Funds according to your instructions. Any subsequent
Contributions will be allocated according to your instructions. (See Data
pages, Part C; Allocation Restrictions)
CONTRIBUTION LIMITS (SEE SECTION 3.02): Initial Contribution minimum: $5,000.
Subsequent Contribution minimum: $1,000. Subsequent Contributions can be made
at any time up until the Annuitant attains age 84. We may refuse to accept any
Contribution if the sum of all Contributions under your Certificate would then
total more than $1,500,000. We reserve the right to limit aggregate
Contributions made after the first Contract Year to 150% of first year
Contributions. We may also refuse to accept any Contribution if the sum of all
Contributions under all Equitable Life annuity accumulation
certificates/contracts that you own would then total more than $2,500,000.
TRANSFER RULES (SEE SECTION 4.02): Transfers among Investment Options may be
made at any time during the Contract Year.
ALLOCATION OF WITHDRAWALS (SEE SECTION 5.01): Lump Sum Withdrawals - You must
provide withdrawal instructions indicating from which Investment Options the
Lump Sum Withdrawal and any withdrawal charge will be taken; Systematic
Withdrawals - Unless you specify otherwise, Systematic Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the Investment
Funds. If there is insufficient value or no value in the Investment Funds, any
additional amount required or the total amount of the withdrawal, as
applicable, will be withdrawn from the Guarantee Periods in order of the
earliest Expiration Date(s) first.
WITHDRAWAL RESTRICTIONS (SEE SECTION 5.01): Systematic Withdrawals - May not
start sooner than 28 days after issue of this Certificate. You may elect to
receive Systematic Withdrawals on a monthly, quarterly or annual basis subject
to a maximum of 1.2% monthly, 3.6% quarterly and 15.0% annually of the Annuity
Account Value as of the Transaction Date.
No. 94ICB Data page 3 (5/97)
<PAGE>
DATA PAGES (CONT'D)
MINIMUM WITHDRAWAL AMOUNT (SEE SECTION 5.01): Lump Sum Withdrawals minimum -
$1,000; Systematic Withdrawals minimum - $250.
MINIMUM AMOUNT OF ANNUITY ACCOUNT VALUE AFTER A WITHDRAWAL (SEE SECTION 5.02):
Requests for a withdrawal must be for either (a) 90% or less of the Cash Value
or (b) 100% of the Cash Value (surrender of the Certificate).
We will NOT exercise our rights, described in Sections 5.02(b) and 5.02(c), to
terminate the Certificate.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01):
The sum of:
(1) The Annuity Account Value in the Investment Funds, or, if greater,
the Guaranteed Minimum Death Benefit defined below; and
(2) The death benefit amount provided with respect to the Endorsement
Applicable to Market Value Adjustment Terms. (See Data pages,
Part C)
Guaranteed Minimum Death Benefit
[APPLICABLE TO RESIDENTS IN ALL STATES EXCEPT NEW YORK]
[6% to Age 80 Benefit - On the Contract Date, the Guaranteed Minimum
Death Benefit is equal to the portion of the initial Contribution
allocated to the Investment Funds. Thereafter, the Guaranteed Minimum
Death Benefit is credited with interest at 6% (3% for amounts in the
Alliance Money Market and Alliance Intermediate Government Securities
Funds) on each Contract Date anniversary through the Annuitant's age 80
(or on the date of the Annuitant's death, if earlier), and 0% thereafter
and is adjusted for any subsequent contributions, transfers into the
Investment Funds and transfers and withdrawals from such Funds.]
[APPLICABLE TO NEW YORK RESIDENTS ONLY - ANNUITANT ISSUE AGES 20 THROUGH
79] [On the Contract Date, the Guaranteed Minimum Death Benefit is equal
to the initial Contribution. Thereafter, the Guaranteed Minimum Death
Benefit is reset through the Annuitant's age 80 to the Annuity Account
Value on a Contract Date anniversary if higher than the current
Guaranteed Minimum Death Benefit, and is adjusted for any subsequent
Contributions and withdrawals.
Upon your death, the Guaranteed Minimum Death Benefit will be reset to
the Annuity Account Value in the Investment funds, plus the sum of the
Guaranteed Period Amounts in each Guarantee Period, if greater than the
Guaranteed Minimum Death Benefit determined above.]
No. 94ICB Data page 4 (5/97)
<PAGE>
DATA PAGES (CONT'D)
[APPLICABLE TO NEW YORK RESIDENTS ONLY - ANNUITANT ISSUE AGES 80 THROUGH
83]
[On the Contract Date, the Guaranteed Minimum Death Benefit is equal to
the portion of the initial Contribution allocated to the Investment
Funds. Thereafter, the Guaranteed Minimum Death Benefit is equal to such
portion of the initial Contribution plus (a) any subsequent Contributions
and transfers into the Investment Funds, less (b) any transfers and
withdrawals from such Funds
[IF A SUCCESSOR OWNER/ANNUITANT IS ELECTED]
[On the Processing Date following your death, if the successor
Owner/Annuitant election is in effect at your death, the Guaranteed
Minimum Death Benefit will be reset at the greater of the current
Guaranteed Minimum Death Benefit and the current Annuity Account Value
in the Investment Funds. In determining whether the Guaranteed Minimum
Death Benefit will continue to grow, we can use the age (as of the
Processing Date) of the successor Owner/Annuitant.]
Withdrawals and transfers will cause a reduction in the Guaranteed
Minimum Death Benefit (described above) [and Guaranteed Minimum Income
Benefit benefit base (described below)] on a pro rata basis.
NORMAL FORM OF ANNUITY (SEE SECTION 7.04): Life Annuity 10 Year Period
Certain
AMOUNT OF ANNUITY BENEFIT (SEE SECTION 7.05): The amount applied to provide the
Annuity Benefit will be (1) the Annuity Account Value for any life annuity form
or (2) the Cash Value for any period certain only annuity form except that if
the period certain is more than five years the amount applied will be no less
than 95% of the Annuity Account Value.
INTEREST RATE TO BE APPLIED IN ADJUSTING FOR MISSTATEMENT OF AGE OR SEX (SEE
SECTION 7.06):
6% per year
MINIMUM AMOUNT TO BE APPLIED TO AN ANNUITY (SEE SECTION 7.06): $2,000, as well
as minimum of $20 for initial monthly annuity payment.
[APPLICABLE TO PLAN A]
[GUARANTEED MINIMUM INCOME BENEFIT (SEE SECTION 7.08): You may apply your
Annuity Account Value in the Investment Funds during the period of time
indicated below to purchase a minimum amount of guaranteed lifetime income
under our Income Manager (Life Annuity with a Period Certain) Certificate. The
Income Manager (Life Annuity with a Period Certain) provides payments during a
period certain with payments continuing for life thereafter. The period certain
is based on the Annuitant's age at the time the Income Manager (Life Annuity
with a Period Certain) is elected. The period certain is 10 years for Annuitant
ages 60 through 80; 9 years for Annuitant age 81; 8 years for Annuitant age 82;
and 7 years for Annuitant age 83.
No. 94ICB Data page 5 (5/97)
<PAGE>
DATA PAGES (CONT'D)
The Guaranteed Minimum Income Benefit is available only if it is exercised
within 30 days following the 7th or later Contract Date anniversary under this
Certificate. However, it may not be exercised earlier than the Annuitant's age
60, nor later than the Annuitant's age 83 [Applicable to Annuitant issue ages
20 to 44 - except that for Annuitant's issue ages 20 to 44, it may be exercised
following the 15th or later Contract Date anniversary].
On the Transaction Date that you exercise the Guaranteed Minimum Income
Benefit, your periodic lifetime income that will be provided under the Income
Manager (Life Annuity with a Period Certain) will be the greater of (i) your
Guaranteed Minimum Income Benefit, and (ii) the amount of income that would be
provided based on your Annuity Account Value in the Investment Funds as of the
Transaction Date and our then current annuity purchase factors.
If you have Annuity Account Value in the Guaranteed Period Account under your
Accumulator Certificate as of the Transaction Date that you exercise the
Guaranteed Minimum Income Benefit, such Annuity Account Value will also be
applied (at current annuity purchase factors) towards the purchase of payments
under the Income Manager (Life Annuity with a Period Certain). Such Annuity
Account Value will increase the payments provided by Guaranteed Minimum Income
Benefit.
Guaranteed Minimum Income Benefit Benefit Base - The Guaranteed Minimum Income
Benefit benefit base is equal to the portion of the initial contribution
allocated to the Investment Funds on the Contract Date. Thereafter, the
Guaranteed Minimum Income Benefit benefit base is credited with interest at 6%
(3% for amounts in the Alliance Money Market and Alliance Intermediate
Government Securities Funds) on each Contract Date anniversary through the
Annuitant's age 80, and 0% thereafter, and is adjusted for any subsequent
contributions and transfers into the Investment Funds and transfers and
withdrawals from such Funds. The Guaranteed Minimum Income Benefit benefit base
will also be reduced by any withdrawal charge remaining on the Transaction Date
that you exercise Guaranteed Minimum Income Benefit.
Your Guaranteed Minimum Income Benefit benefit base is applied to guaranteed
minimum annuity purchase factors to determine the Guaranteed Minimum Income
Benefit. The guaranteed minimum annuity purchase factors are based on (i)
interest at 2.5% if Guaranteed Minimum Income Benefit is exercised within 30
days following a Contract Date anniversary in years 7 through 9 and at 3% if
exercised within 30 days following the 10th or later Contract Date anniversary
and (ii) mortality tables that assume increasing longevity. The minimum amount
of periodic lifetime income to be purchased under the Income Manager (Life
Annuity with a Period Certain) is set forth in the "Table of Guaranteed Minimum
Income Benefit Income Amounts."
Your Guaranteed Minimum Income Benefit benefit base does not create an Annuity
Account Value or a Cash Value and is used solely for purposes of calculating
Guaranteed Minimum Income Benefit.
No. 94ICB Data page 6 (5/97)
<PAGE>
DATA PAGES (CONT'D)
The timing of your withdrawals can have a significant impact on your Guaranteed
Minimum Death Benefit or Guaranteed Minimum Income Benefit as described above.
[IF A SUCCESSOR OWNER/ANNUITANT IS ELECTED]
[If the successor Owner/Annuitant election is in effect at your death, the
Guaranteed Minimum Income Benefit will continue to be available on Contract
Date anniversaries seven and later based on the Contract Date, provided
Guaranteed Minimum Income Benefit is exercise as specified above based on
the age of the successor Owner/Annuitant.]]
WITHDRAWAL CHARGES (SEE SECTION 8.01): A withdrawal charge will be imposed as a
percentage of each Contribution made to the extent that a withdrawal exceeds
the Free Corridor Amount as discussed in Section 8.01 or, if the Certificate is
surrendered to receive the Cash Value. We determine the withdrawal charge
separately for each Contribution in accordance with the table below.
Current and Maximum
Percentage of
Contract Year Contributions
------------- -------------
1 7.00%
2 6.00%
3 5.00%
4 4.00%
5 3.00%
6 2.00%
7 1.00%
8 and later 0.00%
The applicable withdrawal charge percentage is determined by the Contract Year
in which the withdrawal is made or the Certificate is surrendered, beginning
with "Contract Year 1" with respect to each Contribution withdrawn or
surrendered. For purposes of the table, for each Contribution, the Contract
Year in which we receive that Contribution is "Contract Year 1."
Withdrawal charges will be deducted from the Investment Options from which each
withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
FREE CORRIDOR AMOUNT (SEE SECTION 8.01): 15% of Annuity Account Value at the
beginning of the Contract Year minus any amount previously withdrawn during the
Contract Year. Amounts withdrawn up to the Free Corridor Amount will not be
deemed a withdrawal of Contributions.
Withdrawals in excess of the Free Corridor Amount will be deemed withdrawals of
Contributions in the order in which they were made (that is, the first-in,
first-out basis will apply).
No. 94ICB Data page 7 (5/97)
<PAGE>
DATA PAGES (CONT'D)
The Free Corridor Amount does not apply when calculating the withdrawal charge
applicable upon a surrender.
CHARGES DEDUCTED FROM ANNUITY ACCOUNT VALUE (SEE SECTION 8.02):
[APPLICABLE TO PLAN A]
[(a) Combined Guaranteed Minimum Death Benefit and Guaranteed Minimum
Income Benefit Charge: For the Combined Guaranteed Minimum Death
Benefit and Guaranteed Minimum Income Benefit, we will deduct
annually on each Processing Date an amount equal to 0.45% of the
guaranteed minimum death benefit in effect on such Processing
Date. 0.45% is the maximum we will charge. This charge will
always be deducted from the Annuity Account Value in the
Investment Funds on a pro rata basis.]
[APPLICABLE TO PLAN B]
[(a) Guaranteed Minimum Death Benefit Only Benefit Charge: For the
Guaranteed Minimum Death Benefit, we will deduct annually on each
Processing Date an amount equal to 0.20% of the Guaranteed Minimum
Death Benefit in effect on such Processing Date. 0.20% is the
maximum we will charge. This charge will always be deducted from
the Annuity Account Value in the Investment Funds on a pro rata
basis.]
(b) Charges for State Premium and Other Applicable Taxes: A charge
for applicable taxes, such as state or local premium taxes
generally will be deducted from the amount applied to provide an
Annuity Benefit under Section 7.02. In certain states, however,
we may deduct the charge from Contributions rather than at the
Annuity Commencement Date. This charge will be deducted from the
Annuity Account Value in the Investment Funds on a pro rata
basis. If there is insufficient value in the Investment Funds,
all or a portion of the charge will be deducted from the Annuity
Account Value with respect to the Guarantee Periods in order of
the earliest Expiration Date(s) first.
NUMBER OF FREE TRANSFERS (SEE SECTION 8.03): Unlimited
DAILY SEPARATE ACCOUNT CHARGES (SEE SECTION 8.04):
Mortality and Expense Risks Charge:
Current and Maximum Annual rate of 0.90% (equivalent
to a daily rate of 0.002477%).
Administration Charge:
Current and Maximum Annual rate of 0.25% (equivalent
to a daily rate of 0.000692%). We
reserve the right to increase this
charge to an annual rate of 0.35%.
No. 94ICB Data page 8 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART C -- THIS PART LISTS THE TERMS WHICH APPLY TO THE ENDORSEMENT APPLICABLE
TO MARKET VALUE ADJUSTMENT TERMS (MVA ENDORSEMENT).
ALLOCATION RESTRICTIONS (SEE SECTION 3.01): If the Annuitant is age 76 or
older, allocations may be made only to Guarantee Periods with maturities of
five years or less; however, in no event may allocations be made to Guarantee
Periods with maturities beyond the February 15th immediately following the
Annuity Commencement Date.
TRANSFERS AT EXPIRATION DATE (SEE ITEM 1 OF MVA ENDORSEMENT): If no election is
made with respect to amounts in the Guaranteed Period Account as of the
Expiration Date, such amounts will be transferred into the Guarantee Period
with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT (MVA) ON TRANSFERS AND WITHDRAWALS (SEE ITEM 2 OF MVA
ENDORSEMENT): The MVA (positive or negative) resulting from a withdrawal or
transfer of a portion of the amount in a Guarantee Period will be a percentage
of the MVA that would be applicable upon a withdrawal of all the Annuity
Account Value from a Guarantee Period. This percentage is determined by (i)
dividing the amount of the withdrawal or transfer from the Guarantee Period by
(ii) the Annuity Account Value in such Guarantee Period prior to the withdrawal
or transfer.
MVA FORMULA (SEE ITEM 3 OF MVA ENDORSEMENT): The Guaranteed Rate for new
allocations to a Guarantee Period is the rate we have in effect for this
purpose even if new allocations to that Guarantee Period would not be accepted
at the time. This rate will not be less than 3%.
The current rate percentage we use in item (c) of the formula is 0.00%. For
purposes of calculating the MVA only, we reserve the right to add up to 0.25%
to such current rate percentage.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01): The larger of (a) the Annuity Account
Value in the Guaranteed Period Account and (b) the sum of the Guaranteed Period
Amounts in each Guarantee Period.
SEPARATE ACCOUNT (SEE ITEM 5 OF THE MVA ENDORSEMENT): The portion of the assets
of Separate Account No. 46 equal to the reserves and other contract liabilities
will not be chargeable with liabilities which arise out of any other business
we conduct.
No. 94ICBMVA Data page 9 (5/97)
<PAGE>
DATA PAGES (CONT'D)
[APPLICABLE TO PLAN A]
[TABLE OF GUARANTEED MINIMUM INCOME BENEFIT INCOME AMOUNTS
FOR INITIAL LEVEL ANNUAL INCOME (10 YEAR PERIOD CERTAIN)
SINGLE LIFE - [MALE]
AGE INCOME AMOUNT
--- -------------
[67 $ 899.21
68 976.62
69 1,061.17
70 1,215.45
71 1,319.07
72 1,432.00
73 1,555.07
74 1,689.18
75 1,835.29
76 1,994.44
77 2,167.75
78 2,356.45
79 2,561.89
80 2,785.58]
Interest Basis: 2.5% on Contract Date anniversaries 7 through 9
and 3% on Contract Date anniversaries 10 and
later
Non-participating
Mortality: 1983 Individual Annuity Mortality Table "a"
for [Male] projected with modified Scale G.
Factors required for annuity forms not shown in the above table will be
calculated by us on the same actuarial basis.]
No. 94ICB Data page 10 (5/97)
<PAGE>
ROLLOVER IRA [(COMBINED GUARANTEED MINIMUM DEATH BENEFIT AND
GUARANTEED MINIMUM INCOME BENEFIT - PLAN A) OR
(GUARANTEED MINIMUM DEATH BENEFIT ONLY BENEFIT - PLAN B)]
DATA
PART A -- THIS PART LISTS YOUR PERSONAL DATA.
OWNER: [JOHN DOE] [Owner must be the Annuitant]
ANNUITANT: [JOHN DOE] Age: [60] Sex: [Male]
CONTRACT: GROUP ANNUITY CONTRACT NO. AC 7627
CERTIFICATE NUMBER: [00000]
ENDORSEMENTS ATTACHED: Endorsement Applicable to IRA Certificates
Endorsement Applicable to Market Value
Adjustment Terms
Rider[s] to Endorsement Applicable to Market
Value Adjustment Terms
Endorsement Applicable to Life Contingent Annuity
[Rider to Endorsement Applicable to Life
Contingent Annuity]
ISSUE DATE: [May 1, 1997]
CONTRACT DATE: [May 1, 1997]
ANNUITY COMMENCEMENT DATE: [August 22, 2027]
THE MAXIMUM MATURITY AGE IS AGE [90] -- SEE SECTION 7.03.
The Annuity Commencement Date may not be later than the Processing Date
which follows your [90th] birthday.
However, if you choose a date later than age 70 1/2, distribution of at
least the minimum payments required must commence by April 1 of the
calendar year following the calendar year in which you attain age 70 1/2
(see item 2 of the Endorsement Applicable to IRA Certificates).
BENEFICIARY: [JANE DOE]
SUCCESSOR OWNER/ANNUITANT: [Applicable if the beneficiary is the spouse at
the time of election and time of Owner/Annuitant's
death] [JANE DOE]
No. 94ICB Data page 1 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART B -- THIS PART DESCRIBES CERTAIN PROVISIONS OF YOUR CERTIFICATE.
INITIAL CONTRIBUTION RECEIVED (SEE SECTION 3.02): [$10,000.00]
INVESTMENT OPTIONS AVAILABLE (SEE PART II); YOUR ALLOCATION IS ALSO SHOWN.
INVESTMENT OPTIONS ALLOCATION (SEE SECTION 3.01)
- ------------------ -----------------------------
o ALLIANCE CONSERVATIVE INVESTORS FUND
o ALLIANCE GROWTH INVESTORS FUND
o ALLIANCE GROWTH AND INCOME FUND
o ALLIANCE COMMON STOCK FUND $10,000.00
o ALLIANCE GLOBAL FUND
o ALLIANCE INTERNATIONAL FUND
o ALLIANCE AGGRESSIVE STOCK FUND
o ALLIANCE SMALL CAP GROWTH FUND
o ALLIANCE MONEY MARKET FUND
o ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND
o ALLIANCE HIGH YIELD FUND
o EQ/PUTNAM BALANCED FUND
o EQ/PUTNAM GROWTH & INCOME VALUE FUND
o MFS EMERGING GROWTH COMPANIES FUND
o MFS RESEARCH FUND
o MERRILL LYNCH BASIC VALUE EQUITY FUND
o MERRILL LYNCH WORLD STRATEGY FUND
o MORGAN STANLEY EMERGING MARKETS EQUITY FUND
o T. ROWE PRICE EQUITY INCOME FUND
o T. ROWE PRICE INTERNATIONAL STOCK FUND
o WARBURG PINCUS SMALL COMPANY VALUE FUND
o GUARANTEE PERIODS (CLASS I)
EXPIRATION DATE AND GUARANTEED RATE
FEBRUARY 15, 1998
FEBRUARY 15, 1999
FEBRUARY 15, 2000
FEBRUARY 15, 2001
FEBRUARY 15, 2002
FEBRUARY 15, 2003
FEBRUARY 15, 2004
FEBRUARY 15, 2005
FEBRUARY 15, 2006
FEBRUARY 15, 2007
FEBRUARY 15, 2008*
FEBRUARY 15, 2009*
FEBRUARY 15, 2010*
FEBRUARY 15, 2011*
FEBRUARY 15, 2012*
-------------------
TOTAL: [$10,000.00]
* Only available under the Assured Payment Option and APO Plus.
Investment Options shown are Investment Funds of our Separate Account No. 45
and Guarantee Periods shown are in the Guaranteed Period Account. See
Endorsement Applicable to Market Value Adjustment Terms.
"TYPES" OF INVESTMENT OPTIONS (SEE SECTION 4.02): Not applicable
GUARANTEED INTEREST ACCOUNT (SEE SECTION 2.01): Not available under this
Certificate
No. 94ICB Data page 2 (5/97)
<PAGE>
DATA PAGES (CONT'D)
BUSINESS DAY (SEE SECTION 1.05): A Business Day for this Certificate will mean
any day on which the New York Stock Exchange is open for trading.
PROCESSING DATES (SEE SECTION 1.20): A Processing Date is each Contract Date
anniversary.
AVAILABILITY OF INVESTMENT OPTIONS (SEE SECTION 2.04): (See Data pages, Part
C; Allocation Restrictions)
ALLOCATION OF CONTRIBUTIONS (SEE SECTION 3.01): Except as indicated below, your
initial and any subsequent Contributions are allocated according to your
instructions.
If you have elected Principal Assurance in the application, then a portion of
your initial Contribution is allocated by us to a Guarantee Period you have
selected. The remaining portion of your initial Contribution is allocated to
the Investment Funds according to your instructions. Any subsequent
Contributions will be allocated according to your instructions. (See Data
pages, Part C; Allocation Restrictions)
If you elect the Assured Payment Option after issue of the Certificate, your
Annuity Account Value and any subsequent Contributions will be allocated by us
to the Guaranteed Period Account and the Life Contingent Annuity and no amounts
may be allocated to the Investment Funds. (See Data pages, Part C; Allocation
Restrictions)
If you elect APO Plus after issue of the Certificate, a portion of your Annuity
Account Value is allocated by us to the Guaranteed Period Account and the Life
Contingent Annuity. The remaining Annuity Account Value is allocated to the
Alliance Common Stock Fund or the Alliance Equity Index Fund as you select,
until transferred by us. (See Data pages, Part C; Allocation Restrictions)
CONTRIBUTION LIMITS (SEE SECTION 3.02): We will only accept initial
Contributions of at least $5,000 in the form of either a rollover Contribution
or a direct custodian-to-custodian transfer from other individual retirement
arrangements. Subsequent Contributions may be made in an amount of at least
$1,000. Subsequent Contributions may be "regular" IRA Contributions (limited to
a maximum of $2,000 a year), rollover Contributions or direct transfers.
Rollover Contributions and direct transfers are not subject to the $2,000
annual limit. "Regular" IRA Contributions may not be made for the taxable year
in which you attain age 70 1/2 and thereafter. Rollover and direct transfer
Contributions may be made until you attain age 79. However, any amount
contributed after you attain age 70 1/2 must be net of your minimum
distribution for the year in which the rollover or direct transfer Contribution
is made (see item 2 Annuity Commencement Date in Endorsement Applicable to IRA
Certificates). We may refuse to accept any Contribution if the sum of all
Contributions under your Certificate would then total more than $1,500,000. We
reserve the right to limit aggregate Contributions made after the first
Contract Year to 150% of first year Contributions. We may also refuse to accept
any Contribution if the sum of all Contributions under all Equitable Life
annuity accumulation certificates/contracts that you own would then total more
than $2,500,000.
No. 94ICB Data page 3 (5/97)
<PAGE>
DATA PAGES (CONT'D)
A minimum Annuity Account Value of $10,000 is required to elect the Assured
Payment Option or APO Plus.
TRANSFER RULES (SEE SECTION 4.02): Transfers among the Investment Options may
be made at any time during the Contract Year.
ALLOCATION OF WITHDRAWALS (SEE SECTION 5.01): Lump Sum Withdrawals - You must
provide withdrawal instructions indicating from which Investment Options the
Lump Sum Withdrawal and any withdrawal charge will be taken; Minimum
Distribution Withdrawals - Unless you specify otherwise, Minimum Distribution
Withdrawals will be withdrawn on a pro rata basis from your Annuity Account
Value in the Investment Funds. If there is insufficient value or no value in
the Investment Funds, any additional amount of the withdrawal required or the
total amount of the withdrawal, as applicable, will be withdrawn from the
Guarantee Periods in order of the earliest Expiration Date(s) first.
WITHDRAWAL RESTRICTIONS (SEE SECTION 5.01): Minimum Distribution Withdrawals -
May be elected in the year in which you attain age 70 1/2 or at a later date.
Minimum Distribution Withdrawals will be made annually.
Minimum Distribution Withdrawals may not be elected while the Assured Payment
Option or APO Plus is in effect.
MINIMUM WITHDRAWAL AMOUNT (SEE SECTION 5.01): Lump Sum Withdrawals minimum -
$1,000; Minimum Distribution Withdrawals minimum - $250.
MINIMUM AMOUNT OF ANNUITY ACCOUNT VALUE AFTER A WITHDRAWAL (SEE SECTION 5.02):
Requests for a withdrawal must be for either (a) 90% or less of the Cash Value
or (b) 100% of the Cash Value (surrender of the Certificate).
We will NOT exercise our rights, described in Sections 5.02(b) and 5.02(c), to
terminate the Certificate.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01):
The sum of:
(1) The Annuity Account Value in the Investment Funds, or, if greater,
the Guaranteed Minimum Death Benefit defined below; and
(2) The death benefit amount provided with respect to the Endorsement
Applicable to Market Value Adjustment Terms. (See Data pages,
Part C)
No. 94ICB Data page 4 (5/97)
<PAGE>
DATA PAGES (CONT'D)
Guaranteed Minimum Death Benefit
[APPLICABLE TO RESIDENTS IN ALL STATES EXCEPT NEW YORK]
[6% to Age 80 Benefit - On the Contract Date, the Guaranteed Minimum
Death Benefit is equal to the portion of the initial Contribution
allocated to the Investment Funds. Thereafter, the Guaranteed Minimum
Death Benefit is credited with interest at 6% (3% for amounts in the
Alliance Money Market and Alliance Intermediate Government Securities
Funds) on each Contract Date anniversary through the Annuitant's age 80
(or on the date of the Annuitant's death, if earlier), and 0% thereafter
and is adjusted for any subsequent contributions, transfers into the
Investment Funds and transfers and withdrawals from such Funds.]
[OPTIONAL FOR PLAN A - ANNUITANT ISSUE AGES 20 THROUGH 65]
[6% to Age 70 Benefit - On the Contract Date, the Guaranteed Minimum
Death Benefit is equal to the portion of the initial Contribution
allocated to the Investment Funds. Thereafter, the Guaranteed Minimum
Death Benefit is credited with interest at 6% (3% for amounts in the
Alliance Money Market and Alliance Intermediate Government Securities
Funds) on each Contract Date anniversary through the Annuitant's age
70 (or on the date of the Annuitant's death, if earlier), and 0%
thereafter and is adjusted for any subsequent contributions, transfers
into the Investment Funds and transfers and withdrawals from such
Funds.]
[APPLICABLE TO NEW YORK RESIDENTS ONLY]
[On the Contract Date, the Guaranteed Minimum Death Benefit is equal to
the initial Contribution. Thereafter, the Guaranteed Minimum Death
Benefit is reset through the Annuitant's age 80 to the Annuity Account
Value on a Contract Date anniversary if higher than the current
Guaranteed Minimum Death Benefit, and is adjusted for any subsequent
Contributions and withdrawals.
Upon your death, the Guaranteed Minimum Death Benefit will be reset to
the Annuity Account Value in the Investment funds, plus the sum of the
Guaranteed Period Amounts in each Guarantee Period, if greater than the
Guaranteed Minimum Death Benefit determined above.]
[IF A SUCCESSOR OWNER/ANNUITANT IS ELECTED]
[On the Processing Date following your death, if the successor
Owner/Annuitant election is in effect at your death, the Guaranteed
Minimum Death Benefit will be reset at the greater of the current
Guaranteed Minimum Death Benefit and the current Annuity Account Value
in the Investment Funds. In determining whether the Guaranteed Minimum
Death Benefit will continue to grow, we can use the age (as of the
Processing Date) of the successor Owner/Annuitant.]
Withdrawals and transfers will cause a reduction in the Guaranteed
Minimum Death Benefit (described above) [and Guaranteed Minimum Income
Benefit benefit base (described below)] on a pro rata basis.
No. 94ICB Data page 5 (5/97)
<PAGE>
DATA PAGES (CONT'D)
NORMAL FORM OF ANNUITY (SEE SECTION 7.04): Life Annuity 10 Year Period
Certain
AMOUNT OF ANNUITY BENEFIT (SEE SECTION 7.05): The amount applied to provide the
Annuity Benefit will be (1) the Annuity Account Value for any life annuity form
or (2) the Cash Value for any period certain only annuity form except that if
the period certain is more than five years the amount applied will be no less
than 95% of the Annuity Account Value.
INTEREST RATE TO BE APPLIED IN ADJUSTING FOR MISSTATEMENT OF AGE OR SEX (SEE
SECTION 7.06): 6% per year
MINIMUM AMOUNT TO BE APPLIED TO AN ANNUITY (SEE SECTION 7.06): $2,000, as well
as minimum of $20 for initial monthly annuity payment.
WITHDRAWAL CHARGES (SEE SECTION 8.01): A withdrawal charge will be imposed as a
percentage of each Contribution made to the extent that (i) any withdrawals
during a Contract Year exceed the Free Corridor Amount as discussed in Section
8.01 or, (ii) the Certificate is surrendered to receive the Cash Value. We
determine the withdrawal charge separately for each Contribution in accordance
with the table below.
Current and Maximum
Percentage of
Contract Year Contributions
------------- -------------
1 7.00%
2 6.00%
3 5.00%
4 4.00%
5 3.00%
6 2.00%
7 1.00%
8 and later 0.00%
The applicable withdrawal charge percentage is determined by the Contract Year
in which the withdrawal is made or the Certificate is surrendered, beginning
with "Contract Year 1" with respect to each Contribution withdrawn or
surrendered. For purposes of the table, for each Contribution, the Contract
Year in which we receive that Contribution is "Contract Year 1."
Withdrawal charges will be deducted from the Annuity Account Value in the
Investment Options from which each withdrawal is made in proportion to the
amount being withdrawn from each Investment Option.
No. 94ICB Data page 6 (5/97)
<PAGE>
DATA PAGES (CONT'D)
FREE CORRIDOR AMOUNT (SEE SECTION 8.01): 15% of Annuity Account Value at the
beginning of the Contract Year, minus any amount previously withdrawn during
the Contract Year. Amounts withdrawn up to the Free Corridor Amount will not be
deemed a withdrawal of Contributions. In any Contract Year when a Minimum
Distribution Withdrawal is the only withdrawal taken, no withdrawal charge will
apply.
Lump Sum Withdrawals in excess of the Free Corridor Amount or a Minimum
Distribution Withdrawal when added to a Lump Sum Withdrawal previously taken in
the same Contract Year, which exceeds the Free Corridor Amount will be deemed
withdrawals of Contributions in the order in which they were made (that is, the
first-in, first-out basis will apply).
The Free Corridor Amount does not apply when calculating the withdrawal charge
applicable upon a surrender.
If the Assured Payment Option or APO Plus is in effect a 10% Free Corridor
Amount will apply for Lump Sum Withdrawals.
CHARGES DEDUCTED FROM ANNUITY ACCOUNT VALUE (SEE SECTION 8.02):
[APPLICABLE TO PLAN A - 6% TO AGE 80 BENEFIT]
[(a) Combined Guaranteed Minimum Death Benefit and Guaranteed Minimum
Income Benefit Charge: For the Combined Guaranteed Minimum Death
Benefit and Guaranteed Minimum Income Benefit, we will deduct
annually on each Processing Date an amount equal to 0.45% of the
guaranteed minimum death benefit in effect on such Processing
Date. 0.45% is the maximum we will charge. This charge will
always be deducted from the Annuity Account Value in the
Investment Funds on a pro rata basis.]
[APPLICABLE TO PLAN A - 6% TO AGE 70 BENEFIT]
[(a) Combined Guaranteed Minimum Death Benefit and Guaranteed Minimum
Income Benefit Charge: For the Combined Guaranteed Minimum Death
Benefit and Guaranteed Minimum Income Benefit, we will deduct
annually on each Processing Date an amount equal to 0.30% of the
guaranteed minimum death benefit in effect on such Processing
Date. 0.30% is the maximum we will charge. This charge will
always be deducted from the Annuity Account Value in the
Investment Funds on a pro rata basis.]
[APPLICABLE TO PLAN B]
[(a) Guaranteed Minimum Death Benefit Only Benefit Charge: For the
Guaranteed Minimum Death Benefit, we will deduct annually on each
Processing Date an amount equal to 0.20% of the Guaranteed Minimum
Death Benefit in effect on such Processing Date. 0.20% is the
maximum we will charge. This charge will always be deducted from
the Annuity Account Value in the Investment Funds on a pro rata
basis.]
No. 94ICB Data page 7 (5/97)
<PAGE>
DATA PAGES (CONT'D)
(b) Charges for State Premium and Other Applicable Taxes: A charge
for applicable taxes, such as state or local premium taxes
generally will be deducted from the amount applied to provide an
Annuity Benefit under Section 7.02. In certain states, however,
we may deduct the charge from Contributions rather than at the
Annuity Commencement Date. This charge will be deducted from the
Annuity Account Value in the Investment Funds on a pro rata
basis. If there is insufficient value in the Investment Funds,
all or a portion of the charge will be deducted from the Annuity
Account Value with respect to the Guarantee Periods in order of
the earliest Expiration Date(s) first.
NUMBER OF FREE TRANSFERS (SEE SECTION 8.03): Unlimited
DAILY SEPARATE ACCOUNT CHARGES (SEE SECTION 8.04):
Mortality and Expense Risks Charge:
Current and Maximum Annual rate of 0.90% (equivalent to a
daily rate of 0.002477%).
Administration Charge:
Current and Maximum Annual rate of 0.25% (equivalent to a
daily rate of 0.000692%). We reserve
the right to increase this charge to
an annual rate of 0.35%.
No. 94ICB Data page 8 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART C -- THIS PART LISTS THE TERMS WHICH APPLY TO THE ENDORSEMENT APPLICABLE
TO MARKET VALUE ADJUSTMENT TERMS (MVA ENDORSEMENT).
ALLOCATION RESTRICTIONS (SEE SECTION 3.01): Except as indicated below, if you
are age 76 or older, allocations may be made only to Guarantee Periods with
maturities of five years or less; however, in no event may allocations be made
to Guarantee Periods with maturities beyond the February 15th immediately
following the Annuity Commencement Date.
If you elect the Assured Payment Option, your Contributions and Annuity Account
Value will be allocated by us to serially maturing Guarantee Periods having
Expiration Dates in annual sequence and the Modal Payment portion of the
Guaranteed Period Account, if applicable, and applied to the Life Contingent
Annuity, so as to provide substantially equal or increasing withdrawal payments
during a fixed period followed by annuity payments for life under the Life
Contingent Annuity. The fixed period payments consist of payments described
under Transfers at Expiration Date, below. When amounts are applied under the
Life Contingent Annuity, Data pages, Part D will be issued.
If you elect the APO Plus, a portion of your Annuity Account Value is allocated
by us to serially maturing Guarantee Periods having Expiration Dates in annual
sequence and the Modal Payment portion of the Guaranteed Period Account, if
applicable, and applied to the Life Contingent Annuity, so as to provide
substantially equal withdrawal payments during a fixed period followed by
annuity payments for life under the Life Contingent Annuity. Fixed period
payments are described under Transfers at Expiration Date, below. The remaining
Annuity Account Value is allocated to the Alliance Common Stock Fund or
Alliance Equity Index Fund as you select. Any subsequent Contributions will
also be allocated to the Alliance Common Stock Fund or Alliance Equity Index
Fund and then will be periodically transferred by us to the Guarantee Periods
and the Life Contingent Annuity. When amounts are applied under the Life
Contingent Annuity, Data pages, Part D will be issued.
TRANSFERS AT EXPIRATION DATE (SEE ITEM 1 OF MVA ENDORSEMENT): Except as
indicated below, if no election is made with respect to amounts in the
Guaranteed Period Account as of the Expiration Date, such amounts will be
transferred into the Guarantee Period with the earliest Expiration Date.
If the Assured Payment Option or APO Plus is in effect, upon the expiration of
a Guarantee Period, the Guaranteed Period Amount will be paid to you in full,
if annual payments are to be made on an Expiration Date in each calendar year.
Otherwise, the Guaranteed Period Amount will be transferred into the Modal
Payment portion of the Guaranteed Period Account. You may not transfer these
amounts into any other Investment Options. These withdrawals will not be
subject to a withdrawal charge.
No. 94ICBMVA Data page 9 (5/97)
<PAGE>
DATA PAGES (CONT'D)
[APPLICABLE TO PLAN A]
[GUARANTEED MINIMUM INCOME BENEFIT (SEE ITEM 1 OF MVA ENDORSEMENT): When you
elect the Assured Payment Option (described above) during the period of time
indicated below, the Guaranteed Minimum Income Benefit provides a minimum
amount of guaranteed lifetime income under such option. The fixed period is
based on your age at the time of election. The fixed period is 10 years for
ages 60 through 75; 9 years for age 76; 8 years for age 77; and 7 years for
ages 78 through 83.
The Guaranteed Minimum Income Benefit is available only if it is exercised
within 30 days following the 7th or later Contract Date anniversary under this
Certificate. However, it may not be exercised earlier than your age 60, nor
later than age 83 [Applicable to issue ages 20 to 44 - except that for issue
ages 20 to 44, it may be exercised following the 15th or later Contract Date
anniversary].
On the Transaction Date that you exercise Guaranteed Minimum Income Benefit,
your periodic lifetime income that will be provided under the Assured Payment
Option will be the greater of (i) your Guaranteed Minimum Income Benefit, and
(ii) the amount of income that would be provided based on your Annuity Account
Value in the Investment Funds as of the Transaction Date and our then current
annuity purchase factors.
If you have Annuity Account Value in the Guaranteed Period Account under your
Certificate as of the Transaction Date that you exercise the Guaranteed Minimum
Income Benefit, such Annuity Account Value will also be applied (at current
annuity purchase factors) toward providing payments under the Assured Payment
Option. Such Annuity Account Value will increase the payments provided by
Guaranteed Minimum Income Benefit.
Guaranteed Minimum Income Benefit Benefit Base - The Guaranteed Minimum Income
Benefit benefit base is equal to the portion of the initial contribution
allocated to the Investment Funds on the Contract Date. Thereafter, the
Guaranteed Minimum Income Benefit benefit base is credited with interest at 6%
(3% for amounts in the Alliance Money Market Fund and Alliance Intermediate
Government Securities Fund) on each Contract Date anniversary through age
[80][70], and 0% thereafter, and is adjusted for any subsequent contributions
and transfers into the Investment Funds and transfers and withdrawals from such
Funds. The Guaranteed Minimum Income Benefit benefit base will also be reduced
by any withdrawal charge remaining on the Transaction Date that you exercise
Guaranteed Minimum Income Benefit.
Your Guaranteed Minimum Income Benefit benefit base is applied to guaranteed
minimum annuity purchase factors to determine the Guaranteed Minimum Income
Benefit. The guaranteed minimum annuity purchase factors are based on (i)
interest at 2.5% if Guaranteed Minimum Income Benefit is exercised within 30
days following a Contract Date anniversary in years 7 through 9 and at 3% if
exercised within 30 days following the 10th or later Contract Date anniversary
and (ii) mortality based on the 1983 Individual Annuity Mortality Table "a"
projected with modified Scale G. The minimum amount of periodic lifetime income
to be purchased under the Assured Payment Option is set forth in the "Table of
Guaranteed Minimum Income Benefit Income Amounts."
No. 94ICBMVA Data page 10 (5/97)
<PAGE>
DATA PAGES (CONT'D)
Your Guaranteed Minimum Income Benefit benefit base does not create an Annuity
Account Value or a Cash Value and is used solely for purposes of calculating
the Guaranteed Minimum Income Benefit.
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your Guaranteed Minimum Death
Benefit or Guaranteed Minimum Income Benefit.
[IF A SUCCESSOR OWNER/ANNUITANT IS ELECTED]
[If the successor Owner/Annuitant election is in effect at your death,
the Guaranteed Minimum Income Benefit will continue to be available on
Contract Date anniversaries seven and later based on the Contract Date,
provided Guaranteed Minimum Income Benefit is exercise as specified above
based on the age of the successor Owner/Annuitant.]]
MARKET VALUE ADJUSTMENT (MVA) ON TRANSFERS AND WITHDRAWALS (SEE ITEM 2 OF MVA
ENDORSEMENT): The MVA (positive or negative) resulting from a withdrawal or
transfer of a portion of the amount in a Guarantee Period will be a percentage
of the MVA that would be applicable upon a withdrawal of all of the Annuity
Account Value from a Guarantee Period. This percentage is determined by (i)
dividing the amount of the withdrawal or transfer from the Guarantee Period by
(ii) the Annuity Account Value in such Guarantee Period prior to the withdrawal
or transfer.
MVA FORMULA (SEE ITEM 3 OF MVA ENDORSEMENT): The Guaranteed Rate for new
allocations to a Guarantee Period is the rate we have in effect for this
purpose even if new allocations to that Guarantee Period would not be accepted
at the time. This rate will not be less than 3%.
The current rate percentage we use in item (c) of the formula is 0.00%. For
purposes of calculating the MVA only, we reserve the right to add up to 0.25%
to such current rate percentage.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01): The larger of (a) the Annuity Account
Value in the Guaranteed Period Account and (b) the sum of the Guaranteed Period
Amounts in each Guarantee Period.
SEPARATE ACCOUNT (SEE ITEM 5 OF MVA ENDORSEMENT): The portion of the assets of
Separate Account No. 46 equal to the reserves and other contract liabilities
will not be chargeable with liabilities which arise out of any other business
we conduct.
No. 94ICBMVA Data page 11 (5/97)
<PAGE>
DATA PAGES (CONT'D)
[APPLICABLE TO PLAN A]
[TABLE OF GUARANTEED MINIMUM INCOME BENEFIT INCOME AMOUNTS
FOR INITIAL LEVEL ANNUAL INCOME (10 YEAR PERIOD CERTAIN)
SINGLE LIFE - [MALE]
AGE INCOME AMOUNT
--- -------------
[67 $ 899.21
68 976.62
69 1,061.17
70 1,215.45
71 1,319.07
72 1,432.00
73 1,555.07
74 1,689.18
75 1,835.29
76 2,026.01
77 2,240.90
78 2,483.43
79 2,714.14
80 2,967.73]
Interest Basis: 2.5% on Contract Date anniversaries 7 through 9
and 3% on Contract Date anniversaries 10 and
later Non-participating
Mortality: 1983 Individual Annuity Mortality Table "a"
for [Male] projected with modified Scale G.
Factors required for annuity forms not shown in the above table will be
calculated by us on the same actuarial basis.]
No. 94ICBMVA Data page 12 (5/97)
<PAGE>
ACCUMULATOR - IRA [(baseBUILDER COMBINED GUARANTEED MINIMUM INCOME BENEFIT
AND GUARANTEED MINIMUM DEATH BENEFIT)]
DATA
PART A -- THIS PART LISTS YOUR PERSONAL DATA.
OWNER: [JOHN DOE] [Owner must be the Annuitant]
ANNUITANT: [JOHN DOE] Age: [60] Sex: [Male]
CONTRACT: GROUP ANNUITY CONTRACT NO. AC 7627
CERTIFICATE NUMBER: [00000]
ENDORSEMENTS ATTACHED: Endorsement Applicable to IRA Certificates
Endorsement Applicable to Market Value Adjustment
Terms
Rider[s] to Endorsement Applicable to Market
Value Adjustment Terms
Endorsement Applicable to Life Contingent Annuity
[Rider to Endorsement Applicable to Life
Contingent Annuity]
ISSUE DATE: [May 1, 1997]
CONTRACT DATE: [May 1, 1997]
ANNUITY COMMENCEMENT DATE: [August 22, 2027]
THE MAXIMUM MATURITY AGE IS AGE [90] -- SEE SECTION 7.03.
The Annuity Commencement Date may not be later than the Processing
Date which follows your [90th] birthday.
However, if you choose a date later than age 70 1/2, distribution of
at least the minimum payments required must commence by April 1 of
the calendar year following the calendar year in which you attain age
70 1/2 (see item 2 of the Endorsement Applicable to IRA
Certificates).
BENEFICIARY: [JANE DOE]
SUCCESSOR OWNER/ANNUITANT: [Applicable if the beneficiary is the spouse at
the time of election and time of Owner/Annuitant's
death] [JANE DOE]
No. 94ICB Data page 1 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART B -- THIS PART DESCRIBES CERTAIN PROVISIONS OF YOUR CERTIFICATE.
INITIAL CONTRIBUTION RECEIVED (SEE SECTION 3.02): [$10,000.00]
INVESTMENT OPTIONS AVAILABLE (SEE PART II); YOUR ALLOCATION IS ALSO SHOWN.
<TABLE>
<CAPTION>
INVESTMENT OPTIONS ALLOCATION (SEE SECTION 3.01)
- ------------------ -----------------------------
<S> <C>
[EQ/PUTNAM GROWTH & INCOME FUND
EQ/PUTNAM INVESTORS GROWTH FUND
EQ/PUTNAM INTERNATIONAL EQUITY FUND
MFS RESEARCH FUND
MFS EMERGING GROWTH COMPANIES FUND
MERRILL LYNCH BASIC VALUE EQUITY FUND
MERRILL LYNCH WORLD STRATEGY FUND
ALLIANCE MONEY MARKET FUND
ALLIANCE HIGH YIELD FUND
ALLIANCE COMMON STOCK FUND $10,000.00
ALLIANCE AGGRESSIVE STOCK FUND
ALLIANCE SMALL CAP GROWTH FUND
GUARANTEE PERIODS (CLASS I)
EXPIRATION DATE AND GUARANTEED RATE
FEBRUARY 15, 1998
FEBRUARY 15, 1999 FEBRUARY 15, 2000 FEBRUARY 15, 2001 FEBRUARY 15, 2002
FEBRUARY 15, 2003 FEBRUARY 15, 2004 FEBRUARY 15, 2005 FEBRUARY 15, 2006
FEBRUARY 15, 2007]
---------------------------
TOTAL: [$10,000.00]
</TABLE>
Investment Options shown are Investment Funds of our Separate Account No. 49
and Guarantee Periods shown are in the Guaranteed Period Account. See
Endorsement Applicable to Market Value Adjustment Terms.
"TYPES" OF INVESTMENT OPTIONS (SEE SECTION 4.02): Not applicable
GUARANTEED INTEREST ACCOUNT (SEE SECTION 2.01): Not available under this
Certificate
No. 94ICB Data page 2 (5/97)
<PAGE>
DATA PAGES (CONT'D)
BUSINESS DAY (SEE SECTION 1.05): A Business Day for this Certificate will mean
any day on which the New York Stock Exchange is open for trading.
PROCESSING DATES (SEE SECTION 1.20): A Processing Date is each Contract Date
anniversary.
AVAILABILITY OF INVESTMENT OPTIONS (SEE SECTION 2.04): (See Data pages, Part
C; Allocation Restrictions)
ALLOCATION OF CONTRIBUTIONS (SEE SECTION 3.01): Except as indicated below,
your initial and any subsequent Contributions are allocated according to your
instructions.
If you have elected Principal Assurance, then a portion of your initial
Contribution is allocated by us to a Guarantee Period you have selected. The
remaining portion of your initial Contribution is allocated to the Investment
Funds according to your instructions. Any subsequent Contributions will be
allocated according to your instructions. (See Data pages, Part C; Allocation
Restrictions)
CONTRIBUTION LIMITS (SEE SECTION 3.02): We will only accept initial
Contributions of at least $5,000 in the form of either a rollover Contribution
or a direct custodian-to-custodian transfer from other individual retirement
arrangements. Subsequent Contributions may be made in an amount of at least
$1,000. Subsequent Contributions may be "regular" IRA Contributions (limited
to a maximum of $2,000 a year), rollover Contributions or direct transfers.
Rollover Contributions and direct transfers are not subject to the $2,000
annual limit. "Regular" IRA Contributions may not be made for the taxable year
in which you attain age 70 1/2 and thereafter. Rollover and direct transfer
Contributions may be made until you attain age 79. However, any amount
contributed after you attain age 70 1/2 must be net of your minimum
distribution for the year in which the rollover or direct transfer
Contribution is made (see item 2 Annuity Commencement Date in Endorsement
Applicable to IRA Certificates). We may refuse to accept any Contribution if
the sum of all Contributions under your Certificate would then total more than
$1,500,000. We reserve the right to limit aggregate Contributions made after
the first Contract Year to 150% of first year Contributions. We may also
refuse to accept any Contribution if the sum of all Contributions under all
Equitable Life annuity accumulation certificates/contracts that you own would
then total more than $2,500,000.
TRANSFER RULES (SEE SECTION 4.02): Transfers among Investment Options may be
made at any time during the Contract Year.
No. 94ICB Data page 3 (5/97)
<PAGE>
DATA PAGES (CONT'D)
ALLOCATION OF WITHDRAWALS (SEE SECTION 5.01): Lump Sum Withdrawals - You must
provide withdrawal instructions indicating from which Investment Options the
Lump Sum Withdrawal and any withdrawal charge will be taken; Minimum
Distribution Withdrawals - Unless you specify otherwise, Minimum Distribution
Withdrawals will be withdrawn on a pro rata basis from your Annuity Account
Value in the Investment Funds. If there is insufficient value or no value in
the Investment Funds, any additional amount of the withdrawal required or the
total amount of the withdrawal, as applicable, will be withdrawn from the
Guarantee Periods in order of the earliest Expiration Date(s) first.
WITHDRAWAL RESTRICTIONS (SEE SECTION 5.01): Minimum Distribution Withdrawals -
May be elected in the year in which you attain age 70 1/2 or at a later date.
Minimum Distribution Withdrawals will be made annually.
MINIMUM WITHDRAWAL AMOUNT (SEE SECTION 5.01): Lump Sum Withdrawals minimum -
$1,000; Minimum Distribution Withdrawals minimum - $250.
MINIMUM AMOUNT OF ANNUITY ACCOUNT VALUE AFTER A WITHDRAWAL (SEE SECTION 5.02):
Requests for a withdrawal must be for either (a) 90% or less of the Cash Value
or (b) 100% of the Cash Value (surrender of the Certificate).
We will NOT exercise our rights, described in Sections 5.02(b) and 5.02(c), to
terminate the Certificate.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01):
The Annuity Account Value, or, if greater, the Guaranteed Minimum Death
Benefit defined below.
Guaranteed Minimum Death Benefit
[APPLICABLE TO RESIDENTS IN ALL STATES EXCEPT NEW YORK]
[6% to Age 80 Roll Up - On the Contract Date, the Guaranteed
Minimum Death Benefit is equal to the initial Contribution.
Thereafter, the Guaranteed Minimum Death Benefit is credited
with interest at 6% (4% for amounts in the Alliance Money Market
Fund and the Guarantee Periods) on each Contract Date
anniversary through the Annuitant's age 80, and 0% thereafter,
and is adjusted for any subsequent contributions and
withdrawals.]
[Annual Ratchet to Age 80 - On the Contract Date, the Guaranteed
Minimum Death Benefit is equal to the initial Contribution.
Thereafter, the Guaranteed Minimum Death Benefit is reset
through the Annuitant's age 80 to the Annuity Account Value on a
Contract Date anniversary if higher than the current Guaranteed
Minimum Death Benefit through the Annuitant's age 80, and is
adjusted for any subsequent contributions and withdrawals.]
No. 94ICB Data page 4 (5/97)
<PAGE>
DATA PAGES (CONT'D)
[APPLICABLE TO NEW YORK RESIDENTS ONLY]
[On the Contract Date, the Guaranteed Minimum Death Benefit is equal
to the initial Contribution. Thereafter, the Guaranteed Minimum Death
Benefit is reset through the Annuitant's age 80 to the Annuity
Account Value on a Contract Date anniversary if higher than the
current Guaranteed Minimum Death Benefit, and is adjusted for any
subsequent Contributions and withdrawals.
Upon your death, the Guaranteed Minimum Death Benefit will be reset
to the Annuity Account Value in the Investment funds, plus the sum of
the Guaranteed Period Amounts in each Guarantee Period, if greater
than the Guaranteed Minimum Death Benefit determined above.]
[IF A SUCCESSOR OWNER/ANNUITANT IS ELECTED]
[On the Processing Date following your death, if the successor
Owner/Annuitant election is in effect at your death, the Guaranteed
Minimum Death Benefit will be reset at the greater of the current
Guaranteed Minimum Death Benefit and the current Annuity Account
Value in the Investment Funds. In determining whether the Guaranteed
Minimum Death Benefit will continue to grow, we can use the age (as
of the Processing Date) of the successor Owner/Annuitant.]
[IF 6% TO AGE 80 ROLL UP GUARANTEED MINIMUM DEATH BENEFIT OR
GUARANTEED MINIMUM INCOME BENEFIT IS ELECTED - Withdrawals greater
than 6% of the Annuity Account Value] [IF ANNUAL RATCHET TO AGE 80
GUARANTEED MINIMUM DEATH BENEFIT IS ELECTED - Any withdrawal] will
cause a reduction in the Guaranteed Minimum Death Benefit on a pro
rata basis.
Withdrawals of 6% or less will cause a dollar-for-dollar reduction in
the Guaranteed Minimum Death Benefit [and Guaranteed Minimum Income
Benefit Base].]
NORMAL FORM OF ANNUITY (SEE SECTION 7.04): Life Annuity 10 Year Period Certain
AMOUNT OF ANNUITY BENEFIT (SEE SECTION 7.05): The amount applied to provide
the Annuity Benefit will be (1) the Annuity Account Value for any life annuity
form or (2) the Cash Value for any period certain only annuity form except
that if the period certain is more than five years the amount applied will be
no less than 95% of the Annuity Account Value.
INTEREST RATE TO BE APPLIED IN ADJUSTING FOR MISSTATEMENT OF AGE OR SEX (SEE
SECTION 7.06): 6% per year
MINIMUM AMOUNT TO BE APPLIED TO AN ANNUITY (SEE SECTION 7.06): $2,000, as well
as minimum of $20 for initial monthly annuity payment.
No. 94ICB Data page 5 (5/97)
<PAGE>
DATA PAGES (CONT'D)
[IF GUARANTEED MINIMUM INCOME BENEFIT IS ELECTED]
[GUARANTEED MINIMUM INCOME BENEFIT (SEE SECTION 7.08): You may apply your
Annuity Account Value in the Investment Funds during the period of time
indicated below to purchase a minimum amount of guaranteed lifetime income
under our Income Manager (Life Annuity with a Period Certain) Certificate. The
Income Manager (Life Annuity with a Period Certain) provides payments during a
period certain with payments continuing for life thereafter. The period
certain is based on the Annuitant's age at the time the Income Manager (Life
Annuity with a Period Certain) is elected. The period certain is 10 years for
Annuitant ages 60 through 75; 9 years for Annuitant age 76; 8 years for
Annuitant age 77; and 7 years for Annuitant ages 78 through 83.
The Guaranteed Minimum Income Benefit is available only if it is exercised
within 30 days following the 7th or later Contract Date anniversary under this
Certificate. However, it may not be exercised earlier than the Annuitant's age
60, nor later than the Annuitant's age 83 [Applicable to Annuitant issue ages
20 to 44 - except that for Annuitant's issue ages 20 to 44, it may be
exercised following the 15th or later Contract Date anniversary].
On the Transaction Date that you exercise Guaranteed Minimum Income Benefit,
your periodic lifetime income that will be provided under the Income Manager
(Life Annuity with a Period Certain) will be the greater of (i) your
Guaranteed Minimum Income Benefit, and (ii) the amount of income that would be
provided based on your Annuity Account Value in the Investment Funds as of the
Transaction Date and our then current annuity purchase factors.
If you have Annuity Account Value in the Guaranteed Period Account under your
Accumulator Certificate as of the Transaction Date that you exercise the
Guaranteed Minimum Income Benefit, such Annuity Account Value will also be
applied (at current annuity purchase factors) towards the purchase of payments
under the Income Manager (Life Annuity with a Period Certain). Such Annuity
Account Value will increase the payments provided by Guaranteed Minimum Income
Benefit.
Guaranteed Minimum Income Benefit Benefit Base - The Guaranteed Minimum Income
Benefit benefit base is equal to the initial contribution on the Contract
Date. Thereafter, the Guaranteed Minimum Income Benefit benefit base is
credited with interest at 6% (4% for amounts in the Alliance Money Market Fund
and Guarantee Periods) on each Contract Date anniversary through the
Annuitant's age 80, and 0% thereafter, and is adjusted for any subsequent
contributions and withdrawals. The Guaranteed Minimum Income benefit base will
also be reduced by any withdrawal charge remaining on the Transaction Date
that you exercise Guaranteed Minimum Income Benefit.
No. 94ICB Data page 6 (5/97)
<PAGE>
DATA PAGES (CONT'D)
Your Guaranteed Minimum Income Benefit benefit base is applied to guaranteed
minimum annuity purchase factors to determine the Guaranteed Minimum Income
Benefit. The guaranteed minimum annuity purchase factors are based on (i)
interest at 2.5% if Guaranteed Minimum Income Benefit is exercised within 30
days following a Contract Date anniversary in years 7 through 9 and at 3% if
exercised within 30 days following the 10th or later Contract Date anniversary
and (ii) mortality based on the 1983 Individual Annuity Mortality Table "a"
projected with modified Scale G. The minimum amount of periodic lifetime
income to be purchased under the Income Manager is set forth in the "Table of
Guaranteed Minimum Income Benefit Amounts."
Your Guaranteed Minimum Income Benefit benefit base does not create an Annuity
Account Value or a Cash Value and is used solely for purposes of calculating
Guaranteed Minimum Income Benefit.
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your Guaranteed Minimum Death
Benefit or Guaranteed Minimum Income Benefit.
[IF A SUCCESSOR OWNER/ANNUITANT IS ELECTED]
[If the successor Owner/Annuitant election is in effect at your death,
the Guaranteed Minimum Income Benefit will continue to be available on
Contract Date anniversaries seven and later based on the Contract Date,
provided Guaranteed Minimum Income Benefit is exercise as specified above
based on the age of the successor Owner/Annuitant.]]
WITHDRAWAL CHARGE (SEE SECTION 8.01): A withdrawal charge will be imposed as a
percentage of each Contribution made to the extent that (i) any withdrawals
during a Contract Year exceed the Free Corridor Amount as discussed in Section
8.01 or, (ii) the Certificate is surrendered to receive the Cash Value. We
determine the withdrawal charge separately for each Contribution in accordance
with the table below.
Current and Maximum
Percentage of
Contract Year Contributions
------------- -------------
1 7.00%
2 6.00%
3 5.00%
4 4.00%
5 3.00%
6 2.00%
7 1.00%
8 and later 0.00%
No. 94ICB Data page 7 (5/97)
<PAGE>
DATA PAGES (CONT'D)
The applicable withdrawal charge percentage is determined by the Contract Year
in which the withdrawal is made or the Certificate is surrendered, beginning
with "Contract Year 1" with respect to each Contribution withdrawn or
surrendered. For purposes of the table, for each Contribution, the Contract
Year in which we receive that Contribution is "Contract Year 1."
Withdrawal charges will be deducted from the Annuity Account Value in the
Investment Options from which each withdrawal is made in proportion to the
amount being withdrawn from each Investment Option.
FREE CORRIDOR AMOUNT (SEE SECTION 8.01): 15% of Annuity Account Value at the
beginning of the Contract Year, minus any amount previously withdrawn during
the Contract Year. Amounts withdrawn up to the Free Corridor Amount will not
be deemed a withdrawal of Contributions. In any Contract Year when a Minimum
Distribution Withdrawal is the only withdrawal taken, no withdrawal charge
will apply.
Lump Sum Withdrawals in excess of the Free Corridor Amount or a Minimum
Distribution Withdrawal when added to a Lump Sum Withdrawal previously taken
in the same Contract Year, which exceeds the Free Corridor Amount will be
deemed withdrawals of Contributions in the order in which they were made (that
is, the first-in, first-out basis will apply).
The Free Corridor Amount does not apply when calculating the withdrawal charge
applicable upon a surrender.
CHARGES DEDUCTED FROM ANNUITY ACCOUNT VALUE (SEE SECTION 8.02):
[APPLICABLE TO GUARANTEED MINIMUM INCOME BENEFIT]
[(a) baseBUILDER Combined Guaranteed Minimum Income Benefit and
Guaranteed Minimum Death Benefit Charge: For the combined
Guaranteed Minimum Income Benefit and Guaranteed Minimum
Death Benefit, we will deduct annually on each Processing
Date an amount equal to 0.30% of the Guaranteed Minimum
Income Benefit Base in effect on such Processing Date. 0.30%
is the maximum we will charge.]
[(b)] Charges for State Premium and Other Applicable Taxes: A
charge for applicable taxes, such as state or local premium
taxes generally will be deducted from the amount applied to
provide an Annuity Benefit under Section 7.02. In certain
states, however, we may deduct the charge from Contributions
rather than at the Annuity Commencement Date.
The above charge[s] will be deducted from the Annuity Account Value in the
Investment Funds on a pro rata basis. If there is insufficient value in the
Investment Funds, all or a portion of the charge[s] will be deducted from the
Annuity Account Value with respect to the Guarantee Periods in order of the
earliest Expiration Date(s) first.
No. 94ICB Data page 8 (5/97)
<PAGE>
DATA PAGES (CONT'D)
NUMBER OF FREE TRANSFERS (SEE SECTION 8.03): Unlimited
DAILY SEPARATE ACCOUNT CHARGES (SEE SECTION 8.04):
Mortality and Expense Risks Charge:
Current and Maximum Annual rate of 1.10% (equivalent
to a daily rate of 0.003032%).
Administration Charge:
Current and Maximum Annual rate of 0.25%
(equivalent to a daily rate of
0.000692%). We reserve the right
to increase this charge to an
annual rate of 0.35%.
No. 94ICB Data page 9 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART C -- THIS PART LISTS THE TERMS WHICH APPLY TO THE ENDORSEMENT APPLICABLE
TO MARKET VALUE ADJUSTMENT TERMS (MVA ENDORSEMENT).
ALLOCATION RESTRICTIONS (SEE SECTION 3.01): Except as indicated below, if you
are age 76 or older, allocations may be made only to Guarantee Periods with
maturities of five years or less; however, in no event may allocations be made
to Guarantee Periods with maturities beyond the February 15th immediately
following the Annuity Commencement Date.
TRANSFERS AT EXPIRATION DATE (SEE ITEM 1 OF MVA ENDORSEMENT): Except as
indicated below, if no election is made with respect to amounts in the
Guaranteed Period Account as of the Expiration Date, such amounts will be
transferred into the Guarantee Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT (MVA) ON TRANSFERS AND WITHDRAWALS (SEE ITEM 2 OF MVA
ENDORSEMENT): The MVA (positive or negative) resulting from a withdrawal or
transfer of a portion of the amount in a Guarantee Period will be a percentage
of the MVA that would be applicable upon a withdrawal of all of the Annuity
Account Value from a Guarantee Period. This percentage is determined by (i)
dividing the amount of the withdrawal or transfer from the Guarantee Period by
(ii) the Annuity Account Value in such Guarantee Period prior to the
withdrawal or transfer.
TRANSFER RULES (SEE SECTION 4.02): Transfers may not be made to a Guarantee
Period maturing in the current calendar year. Guarantee Periods to which
transfers may be made are limited based on your attained age (see Allocation
Restrictions above).
MVA FORMULA (SEE ITEM 3 OF MVA ENDORSEMENT): The Guaranteed Rate for new
allocations to a Guarantee Period is the rate we have in effect for this
purpose even if new allocations to that Guarantee Period would not be accepted
at the time. This rate will not be less than 3%.
The current rate percentage we use in item (c) of the formula is 0.00%. For
purposes of calculating the MVA only, we reserve the right to add up to 0.25%
to such current rate percentage.
SEPARATE ACCOUNT (SEE ITEM 5 OF MVA ENDORSEMENT): The portion of the assets of
Separate Account No. 46 equal to the reserves and other contract liabilities
will not be chargeable with liabilities which arise out of any other business
we conduct.
No. 94ICBMVA Data page 10 (5/97)
<PAGE>
DATA PAGES (CONT'D)
[IF GUARANTEED MINIMUM INCOME BENEFIT IS ELECTED]
[TABLE OF GUARANTEED MINIMUM INCOME BENEFIT INCOME AMOUNTS
FOR INITIAL LEVEL ANNUAL INCOME (10 YEAR PERIOD CERTAIN)
SINGLE LIFE - [MALE]
AGE INCOME AMOUNT
--- -------------
[67 $ 899.21
68 976.62
69 1,061.17
70 1,215.45
71 1,319.07
72 1,432.00
73 1,555.07
74 1,689.18
75 1,835.29
76 2,026.01
77 2,240.90
78 2,483.43
79 2,714.14
80 2,967.73]
Interest Basis: 2.5% on Contract Date anniversaries 7 through 9
and 3% on Contract Date anniversaries 10 and
later Non-participating
Mortality: 1983 Individual Annuity Mortality Table "a" for
[Male] projected with modified Scale G.
Factors required for annuity forms not shown in the above table will be
calculated by us on the same actuarial basis.]
No. 94ICB Data page 11 (5/97)
<PAGE>
ACCUMULATOR - NQ [(baseBUILDER COMBINED GUARANTEED MINIMUM INCOME BENEFIT
AND GUARANTEED MINIMUM DEATH BENEFIT)]
DATA
PART A -- THIS PART LISTS YOUR PERSONAL DATA.
OWNER: [JOHN DOE]
ANNUITANT: [JOHN DOE] Age: [60] Sex: [Male]
CONTRACT: GROUP ANNUITY CONTRACT NO. AC 7625
CERTIFICATE NUMBER: [00000]
ENDORSEMENTS ATTACHED: [Minimum Income Benefit Endorsement]
Endorsement Applicable to Non-Qualified
Certificates
Endorsement Applicable to Market Value
Adjustment Terms
Rider to Endorsement Applicable to Market
Value Adjustment Terms
ISSUE DATE: [May 1, 1997]
CONTRACT DATE: [May 1, 1997]
ANNUITY COMMENCEMENT DATE: [August 22, 2027]
THE MAXIMUM MATURITY AGE IS AGE [90] -- SEE SECTION 7.03.
The Annuity Commencement Date may not be later than the Processing
Date which follows the Annuitant's [90th] birthday.
BENEFICIARY: [JANE DOE]
SUCCESSOR OWNER/ANNUITANT: [Applicable if the Owner and Annuitant are the same
person and the spouse is the beneficiary at the
time of election and time of Owner/Annuitant's
death] [JANE DOE]
No. 94ICB Data page 1 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART B - -THIS PART DESCRIBES CERTAIN PROVISIONS OF YOUR CERTIFICATE.
INITIAL CONTRIBUTION RECEIVED (SEE SECTION 3.02): [$10,000.00]
INVESTMENT OPTIONS AVAILABLE (SEE PART II); YOUR ALLOCATION IS ALSO SHOWN.
<TABLE>
<CAPTION>
INVESTMENT OPTIONS ALLOCATION (SEE SECTION 3.01)
- ------------------ -----------------------------
<S> <C>
[EQ/PUTNAM GROWTH & INCOME FUND
EQ/PUTNAM INVESTORS GROWTH FUND
EQ/PUTNAM INTERNATIONAL EQUITY FUND
MFS RESEARCH FUND
MFS EMERGING GROWTH COMPANIES FUND
MERRILL LYNCH BASIC VALUE EQUITY FUND
MERRILL LYNCH WORLD STRATEGY FUND
ALLIANCE MONEY MARKET FUND
ALLIANCE HIGH YIELD FUND
ALLIANCE COMMON STOCK FUND $10,000.00
ALLIANCE AGGRESSIVE STOCK FUND
ALLIANCE SMALL CAP GROWTH FUND
GUARANTEE PERIODS (CLASS I)
EXPIRATION DATE AND GUARANTEED RATE
FEBRUARY 15, 1998
FEBRUARY 15, 1999 FEBRUARY 15, 2000 FEBRUARY 15, 2001 FEBRUARY 15, 2002
FEBRUARY 15, 2003 FEBRUARY 15, 2004 FEBRUARY 15, 2005 FEBRUARY 15, 2006
FEBRUARY 15, 2007]
---------------------------
TOTAL: [$10,000.00]
</TABLE>
Investment Options shown are Investment Funds of our Separate Account No. 49
and Guarantee Periods shown are in the Guaranteed Period Account. See
Endorsement Applicable to Market Value Adjustment Terms.
"TYPES" OF INVESTMENT OPTIONS (SEE SECTION 4.02): Not applicable
GUARANTEED INTEREST ACCOUNT (SEE SECTION 2.01): Not available under this
Certificate
No. 94ICB Data page 2 (5/97)
<PAGE>
DATA PAGES (CONT'D)
BUSINESS DAY (SEE SECTION 1.05): A Business Day for this Certificate will mean
any day on which the New York Stock Exchange is open for trading.
PROCESSING DATES (SEE SECTION 1.20): A Processing Date is each Contract Date
anniversary.
AVAILABILITY OF INVESTMENT OPTIONS (SEE SECTION 2.04): (See Data pages, Part
C; Allocation Restrictions)
ALLOCATION OF CONTRIBUTIONS (SEE SECTION 3.01): Except as indicated below,
your initial and any subsequent Contributions are allocated according to your
instructions.
If you have elected Principal Assurance then a portion of your initial
Contribution is allocated by us to a Guarantee Period you have selected. The
remaining portion of your initial Contribution is allocated to the Investment
Funds according to your instructions. Any subsequent Contributions will be
allocated according to your instructions. (See Data pages, Part C; Allocation
Restrictions)
CONTRIBUTION LIMITS (SEE SECTION 3.02): Initial Contribution minimum: $5,000.
Subsequent Contribution minimum: $1,000. Subsequent Contributions can be made
at any time up until the Annuitant attains age 84. We may refuse to accept any
Contribution if the sum of all Contributions under your Certificate would then
total more than $1,500,000. We reserve the right to limit aggregate
Contributions made after the first Contract Year to 150% of first year
Contributions. We may also refuse to accept any Contribution if the sum of all
Contributions under all Equitable Life annuity accumulation
certificates/contracts that you own would then total more than $2,500,000.
TRANSFER RULES (SEE SECTION 4.02): Transfers among Investment Options may be
made at any time during the Contract Year.
ALLOCATION OF WITHDRAWALS (SEE SECTION 5.01): Lump Sum Withdrawals - You must
provide withdrawal instructions indicating from which Investment Options the
Lump Sum Withdrawal and any withdrawal charge will be taken; Systematic
Withdrawals - Unless you specify otherwise, Systematic Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the
Investment Funds. If there is insufficient value or no value in the Investment
Funds, any additional amount required or the total amount of the withdrawal,
as applicable, will be withdrawn from the Guarantee Periods in order of the
earliest Expiration Date(s) first.
WITHDRAWAL RESTRICTIONS (SEE SECTION 5.01): Systematic Withdrawals - May not
start sooner than 28 days after issue of this Certificate. You may elect to
receive Systematic Withdrawals on a monthly, quarterly or annual basis subject
to a maximum of 1.2% monthly, 3.6% quarterly and 15.0% annually of the Annuity
Account Value as of the Transaction Date.
No. 94ICB Data page 3 (5/97)
<PAGE>
DATA PAGES (CONT'D)
MINIMUM WITHDRAWAL AMOUNT (SEE SECTION 5.01): Lump Sum Withdrawals minimum -
$1,000; Systematic Withdrawals minimum - $250.
MINIMUM AMOUNT OF ANNUITY ACCOUNT VALUE AFTER A WITHDRAWAL (SEE SECTION 5.02):
Requests for a withdrawal must be for either (a) 90% or less of the Cash Value
or (b) 100% of the Cash Value (surrender of the Certificate).
We will NOT exercise our rights, described in Sections 5.02(b) and 5.02(c), to
terminate the Certificate.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01):
The Annuity Account Value, or, if greater, the Guaranteed Minimum Death
Benefit defined below.
Guaranteed Minimum Death Benefit
[APPLICABLE TO RESIDENTS IN ALL STATES EXCEPT NEW YORK]
[6% to Age 80 Roll Up - On the Contract Date, the Guaranteed
Minimum Death Benefit is equal to the initial Contribution.
Thereafter, the Guaranteed Minimum Death Benefit is credited
with interest at 6% (4% for amounts in the Alliance Money Market
Fund and the Guarantee Periods) on each Contract Date
anniversary through the Annuitant's age 80, and 0% thereafter,
and is adjusted for any subsequent contributions and
withdrawals.]
[Annual Ratchet to Age 80 - On the Contract Date, the Guaranteed
Minimum Death Benefit is equal to the initial Contribution.
Thereafter, the Guaranteed Minimum Death Benefit is reset
through the Annuitant's age 80 to the Annuity Account Value on a
Contract Date anniversary if higher than the current Guaranteed
Minimum Death Benefit through the Annuitant's age 80, and is
adjusted for any subsequent contributions and withdrawals.]
[APPLICABLE TO NEW YORK RESIDENTS ONLY]
[On the Contract Date, the Guaranteed Minimum Death Benefit is equal
to the initial Contribution. Thereafter, the Guaranteed Minimum Death
Benefit is reset through the Annuitant's age 80 to the Annuity
Account Value on a Contract Date anniversary if higher than the
current Guaranteed Minimum Death Benefit, and is adjusted for any
subsequent Contributions and withdrawals.
Upon your death, the Guaranteed Minimum Death Benefit will be reset
to the Annuity Account Value in the Investment funds, plus the sum of
the Guaranteed Period Amounts in each Guarantee Period, if greater
than the Guaranteed Minimum Death Benefit determined above.]
No. 94ICB Data page 4 (5/97)
<PAGE>
DATA PAGES (CONT'D)
[IF A SUCCESSOR OWNER/ANNUITANT IS ELECTED]
[On the Processing Date following your death, if the successor
Owner/Annuitant election is in effect at your death, the Guaranteed
Minimum Death Benefit will be reset at the greater of the current
Guaranteed Minimum Death Benefit and the current Annuity Account
Value in the Investment Funds. In determining whether the Guaranteed
Minimum Death Benefit will continue to grow, we can use the age (as
of the Processing Date) of the successor Owner/Annuitant.]
[IF 6% TO AGE 80 ROLL UP GUARANTEED MINIMUM DEATH BENEFIT OR
GUARANTEED MINIMUM INCOME BENEFIT IS ELECTED - Withdrawals greater
than 6% of the Annuity Account Value] [IF ANNUAL RATCHET TO AGE 80
GUARANTEED MINIMUM DEATH BENEFIT IS ELECTED - Any withdrawal] will
cause a reduction in the Guaranteed Minimum Death Benefit on a pro
rata basis.
Withdrawals of 6% or less will cause a dollar-for-dollar reduction in
the Guaranteed Minimum Death Benefit [and Guaranteed Minimum Income
Benefit Base].]
NORMAL FORM OF ANNUITY (SEE SECTION 7.04): Life Annuity 10 Year Period Certain
AMOUNT OF ANNUITY BENEFIT (SEE SECTION 7.05): The amount applied to provide
the Annuity Benefit will be (1) the Annuity Account Value for any life annuity
form or (2) the Cash Value for any period certain only annuity form except
that if the period certain is more than five years the amount applied will be
no less than 95% of the Annuity Account Value.
INTEREST RATE TO BE APPLIED IN ADJUSTING FOR MISSTATEMENT OF AGE OR SEX (SEE
SECTION 7.06): 6% per year
MINIMUM AMOUNT TO BE APPLIED TO AN ANNUITY (SEE SECTION 7.06): $2,000, as well
as minimum of $20 for initial monthly annuity payment.
[IF GUARANTEED MINIMUM INCOME BENEFIT IS ELECTED]
[GUARANTEED MINIMUM INCOME BENEFIT (SEE SECTION 7.08): You may apply your
Annuity Account Value in the Investment Funds during the period of time
indicated below to purchase a minimum amount of guaranteed lifetime income
under our Income Manager (Life Annuity with a Period Certain) Certificate. The
Income Manager (Life Annuity with a Period Certain) provides payments during a
period certain with payments continuing for life thereafter. The period
certain is based on the Annuitant's age at the time the Income Manager (Life
Annuity with a Period Certain) is elected. The period certain is 10 years for
Annuitant ages 60 through 80; 9 years for Annuitant age 81; 8 years for
Annuitant age 82; and 7 years for Annuitant age 83.
The Guaranteed Minimum Income Benefit is available only if it is exercised
within 30 days following the 7th or later Contract Date anniversary under this
Certificate. However, it may not be exercised earlier than the Annuitant's age
60, nor later than the Annuitant's age 83 [Applicable to Annuitant issue ages
20 to 44 - except that for Annuitant's issue ages 20 to 44, it may be
exercised following the 15th or later Contract Date anniversary].
No. 94ICB Data page 5 (5/97)
<PAGE>
DATA PAGES (CONT'D)
On the Transaction Date that you exercise Guaranteed Minimum Income Benefit,
your periodic lifetime income that will be provided under the Income Manager
(Life Annuity with a Period Certain) will be the greater of (i) your
Guaranteed Minimum Income Benefit, and (ii) the amount of income that would be
provided based on your Annuity Account Value in the Investment Funds as of the
Transaction Date and our then current annuity purchase factors.
If you have Annuity Account Value in the Guaranteed Period Account under your
Accumulator Certificate as of the Transaction Date that you exercise the
Guaranteed Minimum Income Benefit, such Annuity Account Value will also be
applied (at current annuity purchase factors) towards the purchase of payments
under the Income Manager (Life Annuity with a Period Certain). Such Annuity
Account Value will increase the payments provided by Guaranteed Minimum Income
Benefit.
Guaranteed Minimum Income Benefit Base - The Guaranteed Minimum Income Benefit
Base is equal to the initial contribution on the Contract Date. Thereafter,
the Guaranteed Minimum Income Benefit Base is credited with interest at 6% (4%
for amounts in the Alliance Money Market Fund and Guarantee Periods) on each
Contract Date anniversary through the Annuitant's age 80, and 0% thereafter,
and is adjusted for any subsequent contributions and withdrawals. The
Guaranteed Minimum Income Benefit Base will also be reduced by any withdrawal
charge remaining on the Transaction Date that you exercise Guaranteed Minimum
Income Benefit.
Your Guaranteed Minimum Income Benefit Base is applied to guaranteed minimum
annuity purchase factors to determine the Guaranteed Minimum Income Benefit.
The guaranteed minimum annuity purchase factors are based on (i) interest at
2.5% if Guaranteed Minimum Income Benefit is exercised within 30 days
following a Contract Date anniversary in years 7 through 9 and at 3% if
exercised within 30 days following the 10th or later Contract Date anniversary
and (ii) mortality based on the 1983 Individual Annuity Mortality Table "a"
projected with modified Scale G. The minimum amount of periodic lifetime
income to be purchased under the Income Manager is set forth in the "Table of
Guaranteed Minimum Income Benefit Amounts."
Your Guaranteed Minimum Income Benefit Base does not create an Annuity Account
Value or a Cash Value and is used solely for purposes of calculating
Guaranteed Minimum Income Benefit.
No. 94ICB Data page 6 (5/97)
<PAGE>
DATA PAGES (CONT'D)
WITHDRAWAL CHARGES (SEE SECTION 8.01): A withdrawal charge will be imposed as
a percentage of each Contribution made to the extent that a withdrawal exceeds
the Free Corridor Amount as discussed in Section 8.01 or, if the Certificate
is surrendered to receive the Cash Value. We determine the withdrawal charge
separately for each Contribution in accordance with the table below.
Current and Maximum
Percentage of
Contract Year Contributions
------------- -------------
1 7.00%
2 6.00%
3 5.00%
4 4.00%
5 3.00%
6 2.00%
7 1.00%
8 and later 0.00%
The applicable withdrawal charge percentage is determined by the Contract Year
in which the withdrawal is made or the Certificate is surrendered, beginning
with "Contract Year 1" with respect to each Contribution withdrawn or
surrendered. For purposes of the table, for each Contribution, the Contract
Year in which we receive that Contribution is "Contract Year 1."
Withdrawal charges will be deducted from the Investment Options from which
each withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
FREE CORRIDOR AMOUNT (SEE SECTION 8.01): 15% of Annuity Account Value at the
beginning of the Contract Year minus any amount previously withdrawn during
the Contract Year. Amounts withdrawn up to the Free Corridor Amount will not
be deemed a withdrawal of Contributions.
Withdrawals in excess of the Free Corridor Amount will be deemed withdrawals
of Contributions in the order in which they were made (that is, the first-in,
first-out basis will apply).
The Free Corridor Amount does not apply when calculating the withdrawal charge
applicable upon a surrender.
No. 94ICB Data page 7 (5/97)
<PAGE>
DATA PAGES (CONT'D)
CHARGES DEDUCTED FROM ANNUITY ACCOUNT VALUE (SEE SECTION 8.02):
[APPLICABLE TO GUARANTEED MINIMUM INCOME BENEFIT]
[(a) baseBUILDER Combined Guaranteed Minimum Income Benefit
and Guaranteed Minimum Death Benefit Charge: For the
combined Guaranteed Minimum Income Benefit and
Guaranteed Minimum Death Benefit, we will deduct
annually on each Processing Date an amount equal to
0.30% of the Guaranteed Minimum Income Benefit Base in
effect on such Processing Date. 0.30% is the maximum we
will charge.]
[(b)] Charges for State Premium and Other Applicable Taxes: A
charge for applicable taxes, such as state or local
premium taxes generally will be deducted from the amount
applied to provide an Annuity Benefit under Section 7.02.
In certain states, however, we may deduct the charge from
Contributions rather than at the Annuity Commencement
Date.
The above charge[s] will be deducted from the Annuity Account Value in the
Investment Funds on a pro rata basis. If there is insufficient value in the
Investment Funds, all or a portion of the charge[s] will be deducted from the
Annuity Account Value with respect to the Guarantee Periods in order of the
earliest Expiration Date(s) first.
NUMBER OF FREE TRANSFERS (SEE SECTION 8.03): Unlimited
DAILY SEPARATE ACCOUNT CHARGES (SEE SECTION 8.04):
Mortality and Expense Risks Charge:
Current and Maximum Annual rate of 1.10% (equivalent to
a daily rate of 0.003032%).
Administration Charge:
Current and Maximum Annual rate of 0.25%
(equivalent to a daily rate of
0.000692%). We reserve the right
to increase this charge to an
annual rate of 0.35%.
No. 94ICB Data page 8 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART C -- THIS PART LISTS THE TERMS WHICH APPLY TO THE ENDORSEMENT APPLICABLE
TO MARKET VALUE ADJUSTMENT TERMS (MVA ENDORSEMENT).
ALLOCATION RESTRICTIONS (SEE SECTION 3.01): If the Annuitant is age 76 or
older, allocations may be made only to Guarantee Periods with maturities of
five years or less; however, in no event may allocations be made to Guarantee
Periods with maturities beyond the February 15th immediately following the
Annuity Commencement Date.
TRANSFERS AT EXPIRATION DATE (SEE ITEM 1 OF MVA ENDORSEMENT): If no election
is made with respect to amounts in the Guaranteed Period Account as of the
Expiration Date, such amounts will be transferred into the Guarantee Period
with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT (MVA) ON TRANSFERS AND WITHDRAWALS (SEE ITEM 2 OF MVA
ENDORSEMENT): The MVA (positive or negative) resulting from a withdrawal or
transfer of a portion of the amount in a Guarantee Period will be a percentage
of the MVA that would be applicable upon a withdrawal of all the Annuity
Account Value from a Guarantee Period. This percentage is determined by (i)
dividing the amount of the withdrawal or transfer from the Guarantee Period by
(ii) the Annuity Account Value in such Guarantee Period prior to the
withdrawal or transfer.
TRANSFER RULES (SEE SECTION 4.02): Transfers may not be made to a Guarantee
Period maturing in the current calendar year. Guarantee Periods to which
transfers may be made are limited based on your attained age (see Allocation
Restrictions above).
MVA FORMULA (SEE ITEM 3 OF MVA ENDORSEMENT): The Guaranteed Rate for new
allocations to a Guarantee Period is the rate we have in effect for this
purpose even if new allocations to that Guarantee Period would not be accepted
at the time. This rate will not be less than 3%.
The current rate percentage we use in item (c) of the formula is 0.00%. For
purposes of calculating the MVA only, we reserve the right to add up to 0.25%
to such current rate percentage.
SEPARATE ACCOUNT (SEE ITEM 5 OF THE MVA ENDORSEMENT): The portion of the
assets of Separate Account No. 46 equal to the reserves and other contract
liabilities will not be chargeable with liabilities which arise out of any
other business we conduct.
No. 94ICBMVA Data page 9 (5/97)
<PAGE>
DATA PAGES (CONT'D)
[IF GUARANTEED MINIMUM INCOME BENEFIT IS ELECTED]
[TABLE OF GUARANTEED MINIMUM INCOME BENEFIT AMOUNTS
FOR INITIAL LEVEL ANNUAL INCOME (10 YEAR PERIOD CERTAIN)
SINGLE LIFE - [MALE]
AGE AMOUNT
[67 $ 899.21
68 976.62
69 1,061.17
70 1,215.45
71 1,319.07
72 1,432.00
73 1,555.07
74 1,689.18
75 1,835.29
76 1,994.44
77 2,167.75
78 2,356.45
79 2,561.89
80 2,785.58]
Interest Basis: 2.5% on Contract Date anniversaries 7 through 9
and 3% on Contract Date anniversaries 10 and later
Non-participating
Mortality: 1983 Individual Annuity Mortality Table "a" for
[Male] projected with modified Scale G.
Factors required for annuity forms not shown in the above table will be
calculated by us on the same actuarial basis.]
No. 94ICB Data page 10 (5/97)
<PAGE>
INCOME MANAGER [(IRA)] OR [(NQ)]
(LIFE WITH A PERIOD CERTAIN) - LEVEL PAYMENTS
DATA
PART A -- THIS PART LISTS YOUR PERSONAL DATA.
OWNER: [JOHN DOE] [Owner must be Annuitant]
ANNUITANT: [JOHN DOE] Age: [70] Sex: [Male]
CONTRACT: GROUP ANNUITY CONTRACT NO. AC [7625] [7627]
CERTIFICATE NUMBER: [00000]
ENDORSEMENTS ATTACHED: [Endorsement Applicable to IRA
Certificates]
[Endorsement Applicable to
Non-Qualified Certificates]
Endorsement Applicable to Market
Value Adjustment
Terms
Rider to Endorsement Applicable to
Market Value Adjustment Terms
Endorsement Applicable to Life
Contingent Annuity
ISSUE DATE: [May 1, 1997]
CONTRACT DATE: [May 1, 1997]
ANNUITY COMMENCEMENT DATE: [June 15, 1997].
This date may not be changed.
INITIAL [MONTHLY] PAYMENT: [$657.91]
MAXIMUM MATURITY AGE (SEE SECTION 7.03): Not applicable
BENEFICIARY: [JANE DOE]
SUCCESSOR OWNER/ANNUITANT: [Applicable if the beneficiary is the spouse at
the time of election and time of Owner/Annuitant's
death] [JANE DOE]
No. 94ICB Data page 1 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART B - -THIS PART DESCRIBES CERTAIN PROVISIONS OF YOUR CERTIFICATE.
- ------
INITIAL CONTRIBUTION RECEIVED (SEE SECTION 3.02): [$100,000.00]
Amount allocated to Guaranteed Period Account: [$85,014.33]
Amount applied to Life Contingent Annuity: [$14,985.67]
ALLOCATION OF AMOUNTS TO GUARANTEED PERIOD ACCOUNT:
<TABLE>
<CAPTION>
GUARANTEED AMOUNT
RATE ALLOCATED
---- ---------
<S> <C> <C>
o [INITIAL MODAL PAYMENT PORTION 3.50% $3,922.56
o GUARANTEE PERIODS (CLASS I)
EXPIRATION DATE
---------------
FEBRUARY 15, 1998 4.00% $7,607.58
FEBRUARY 15, 1999 4.10% 7,300.65
FEBRUARY 15, 2000 4.20% 6,992.67
FEBRUARY 15, 2001 4.30% 6,684.15
FEBRUARY 15, 2002 4.40% 6,377.62
FEBRUARY 15, 2003 4.50% 6,073.60
FEBRUARY 15, 2004 4.60% 5,773.03
FEBRUARY 15, 2005 4.70% 5,476.27
FEBRUARY 15, 2006 4.80% 5,185.41
FEBRUARY 15, 2007 4.90% 4,900.74
FEBRUARY 15, 2008 5.00% 4,622.91
FEBRUARY 15, 2009 5.10% 4,352.03
FEBRUARY 15, 2010 5.20% 4,089.74
FEBRUARY 15, 2011 5.30% 3,836.04
FEBRUARY 15, 2012 5.40% 1,819.34]
------------
SUB-TOTAL: [$85,014.33]
</TABLE>
The Modal Payment portion and Guarantee Periods shown are in the Guaranteed
Period Account. See Endorsement Applicable to Market Value Adjustment Terms.
After the period certain, payments continue for life under the Life Contingent
Annuity with level [monthly] payments of [$657.91] beginning on [June 15,
2012] and on the [15th] of each [month] thereafter. (See Data pages, Part D)
"TYPES" OF INVESTMENT OPTIONS (SEE SECTION 4.02): Not applicable
GUARANTEED INTEREST ACCOUNT (SEE SECTION 2.01): Not available under this
Certificate
SEPARATE ACCOUNT (SEE SECTION 2.02, 2.03 AND 2.05): Not applicable
No. 94ICB Data page 2 (5/97)
<PAGE>
BUSINESS DAY (SEE SECTION 1.05): A Business Day for this Certificate will mean
any day on which the New York Stock Exchange is open for trading.
INVESTMENT OPTIONS (SEE SECTION 1.16): "Investment Option" also means the
Modal Payment portion of the Guaranteed Period Account. This is the portion of
the Guaranteed Period Account from which payments, other than payments due on
an Expiration Date, are made. See Data pages, Part C.
PROCESSING DATES (SEE SECTION 1.20): Not applicable
AVAILABILITY OF INVESTMENT OPTIONS (SEE SECTION 2.04): The only Investment
Options available under this Certificate are the Guarantee Periods and the
Modal Payment portion of the Guaranteed Period Account. (See Data pages, Part
C; Allocation Restrictions)
ALLOCATION OF CONTRIBUTIONS (SEE SECTION 3.01): Contributions are allocated by
us to the Guaranteed Period Account and the Life Contingent Annuity. (See Data
pages, Part C; Allocation Restrictions)
CONTRIBUTION LIMITS (SEE SECTION 3.02): [Applicable to IRA Certificates] [We
will only accept initial Contributions of at least [$10,000] in the form of
either a rollover Contribution or a direct custodian-to-custodian transfer
from other individual retirement arrangements. Subsequent Contributions may be
made in an amount of at least [$1,000]. Subsequent Contributions may be
"regular" IRA Contributions (limited to a maximum of $2,000 a year), rollover
Contributions or direct transfers. Rollover Contributions and direct transfers
are not subject to the $2,000 annual limit. "Regular" IRA Contributions may
not be made for the taxable year in which you attain age 70 1/2 and
thereafter.]
[Applicable to NQ Certificates]
[Initial Contribution minimum: [$10,000]. Subsequent Contribution minimum:
[$1,000].]
Subsequent Contributions can be made at any time prior to [15] days before the
Annuity Commencement Date. However, subsequent Contributions are not permitted
after you attain age 78 except for Contributions made within the first
Contract Year. If your Income Manager resulted from application of proceeds
from any other annuity contract\certificate we have issued, no subsequent
Contributions are permitted. We may refuse to accept any Contribution if the
sum of all Contributions under your Certificate would then total more than
[$1,500,000]. We may also refuse to accept any Contribution if the sum of all
Contributions under all Equitable Life annuity distribution
certificates/contracts that you own would then total more than [$2,500,000].
TRANSFER RULES (SEE SECTION 4.02): You may not make transfer requests.
ALLOCATION OF WITHDRAWALS (SEE SECTION 5.01): (See Data pages, Part C;
Withdrawals)
No. 94ICB Data page 3 (5/97)
<PAGE>
WITHDRAWAL RESTRICTIONS (SEE SECTION 5.01): After the first Contract Year, you
may take one Lump Sum Withdrawal during a Contract Year at any time during
such Contract Year.
MINIMUM WITHDRAWAL AMOUNT (SEE SECTION 5.01): Lump Sum Withdrawals minimum -
$1,000
MINIMUM AMOUNT OF ANNUITY ACCOUNT VALUE AFTER A WITHDRAWAL (SEE SECTION 5.02):
Requests for a Lump Sum Withdrawal must be for either (a) 90% or less of the
Cash Value or (b) 100% of the Cash Value (surrender of the Certificate).
We will NOT exercise our rights, described in Sections 5.02(b) and 5.02(c), to
terminate the Certificate.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01): (See Data pages, Part C)
ANNUITY BENEFIT (SEE SECTION 7.01): Annuity benefit payments will be made
[monthly] as described under Benefit Payment Selected, below.
BENEFIT PAYMENT SELECTED (SEE SECTION 7.02): Income Manager (Life Annuity with
a Period Certain) pursuant to Section 7.02 (iii), with level payments. The
Income Manager consists of payment of Guaranteed Period Amounts upon
expiration of each Guarantee Period in installments as described in Data
pages, Part C for a period certain of [15] years and annuity benefits under
the Endorsement Applicable to Life Contingent Annuity as described in Data
pages, Part D. Payments during the period certain to be made on dates other
than February 15th of each calendar year are made from amounts transferred or
allocated to the Modal Payment portion of the Guaranteed Period Account.
Amounts may not be applied under any other Annuity Benefit.
NORMAL FORM OF ANNUITY (SEE SECTION 7.04): [Life Annuity 10 Year Period
Certain]
AMOUNT OF ANNUITY BENEFIT (SEE SECTION 7.05): The amount applied to provide
the Annuity Benefit will be (1) the Annuity Account Value for any life annuity
form or (2) the Cash Value for any period certain only annuity form except
that if the period certain is more than five years the amount applied will be
no less than 95% of the Annuity Account Value.
INTEREST RATE TO BE APPLIED IN ADJUSTING FOR MISSTATEMENT OF AGE OR SEX (SEE
SECTION 7.06): [6% per year]
MINIMUM AMOUNT TO BE APPLIED TO AN ANNUITY (SEE SECTION 7.06): [$2,000]
WITHDRAWAL CHARGES (SEE SECTION 8.01): A withdrawal charge will be imposed as
a percentage of the portion of each Contribution allocated to the Guaranteed
Period Account, when a Lump Sum Withdrawal exceeds the Free Corridor Amount as
discussed in Section 8.01, or if the Certificate is surrendered to receive the
Cash Value. The withdrawal charge is determined in accordance with the table
below.
No. 94ICB Data page 4 (5/97)
<PAGE>
<TABLE>
<CAPTION>
Current and Maximum
Percentage of
Contract Year Contributions
------------- --------------------
<S> <C> <C>
[1 7.00%
2 6.00%
3 5.00%
4 4.00%
5 3.00%
6 2.00%
7 1.00%
8 and later 0.00%]
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract Year
in which the Lump Sum Withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each Contribution withdrawn
or surrendered. For purposes of the table, for each Contribution, the Contract
Year in which we receive that Contribution is "Contract Year 1."
Withdrawal charges will be deducted from the Annuity Account Value in the
Guaranteed Period Account in proportion to the amount being withdrawn from
each Guarantee Period and the Modal Payment portion of the Guaranteed Period
Account.
FREE CORRIDOR AMOUNT (SEE SECTION 8.01): Not applicable
CHARGES DEDUCTED FROM ANNUITY ACCOUNT VALUE (SEE SECTION 8.02):
Premium Taxes: A charge for any applicable premium tax will be deducted no
later than the Annuity Commencement Date.
TRANSFER CHARGE (SEE SECTION 8.03): Not applicable
DAILY SEPARATE ACCOUNT CHARGES (SEE SECTION 8.04): Not applicable
SURRENDERING THE CERTIFICATE: You may surrender the Certificate for its Cash
Value at any time, and thereafter receive the lifetime income provided under
the Endorsement Applicable to Life Contingent Annuity. Once your Certificate
has been surrendered, it will be returned to you with a notation that the Life
Contingent Annuity is still in effect. (See Data pages, Part D; Change in
Initial Benefit Payment Date)
No. 94ICB Data page 5 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART C -- THIS PART LISTS THE TERMS WHICH APPLY TO THE ENDORSEMENT APPLICABLE
TO MARKET VALUE ADJUSTMENT TERMS (MVA ENDORSEMENT).
ALLOCATION RESTRICTIONS (SEE SECTION 3.01): The entire amount of the initial
Contribution after applicable charges, must be allocated to Guarantee Periods
having Expiration Dates in annual sequence, and the Modal Payment portion of
the Guaranteed Period Account, if applicable, and also applied to the Life
Contingent Annuity (see Data pages, Part D), so as to provide level [monthly]
payments for life, with a period certain consisting of payments as described
under Payments at Expiration Date below. Any subsequent Contributions will be
allocated by us to the Guarantee Periods and the Life Contingent Annuity.
MODAL PAYMENT PORTION OF THE GUARANTEED PERIOD ACCOUNT: Each amount we
allocate to the Modal Payment portion of the Guaranteed Period Account for
payments to be made prior to the Expiration Date of the earliest Guarantee
Period we then offer, accumulates interest beginning on the date such amounts
are allocated at the interest rate specified in Data pages, Part B. Interest
will be credited daily. Such rate will not be less than 3%.
Each amount transferred to the Modal Payment portion of the Guaranteed Period
Account from an expired Guarantee Period will be credited with interest at a
rate equal to the Guaranteed Rate applicable to the expired Guarantee Period,
beginning on the Expiration Date of such Guarantee Period. See Payments at
Expiration Date, below.
WITHDRAWALS (SEE SECTION 5.01): Lump Sum Withdrawals will be taken from the
Modal Payment portion of the Guaranteed Period Account and all remaining
Guarantee Periods to which your Annuity Account Value is allocated such that
the amount of the [monthly] payments and the length of the period certain will
be reduced and the Initial Benefit Payment Date for the Life Contingent
Annuity (see Data pages, Part D) will be accelerated. Additional amounts above
the amount of the requested withdrawal may be withdrawn from the Guaranteed
Period Account and applied to the Life Contingent Annuity to the extent
necessary to achieve this result. As a result, the same pattern of payments
will continue in reduced amounts for your life, and if applicable, the life of
your joint Annuitant. See Endorsement Applicable to Life Contingent Annuity.
PAYMENTS AT EXPIRATION DATE (SEE ITEM 1 OF MVA ENDORSEMENT): Upon the
expiration of a Guarantee Period, the Guaranteed Period Amount will be paid to
you in full, if annual payments are to be made on February 15th of each
calendar year. Otherwise, the Guaranteed Period Amount (less one Modal Payment
if due on that date) will be transferred into the Modal Payment portion of the
Guaranteed Period Account. You may not transfer these amounts into any other
Guarantee Periods or apply such amounts under any other Annuity Benefit.
These payments are not deemed to be withdrawals and are therefore not subject
to withdrawal charges.
No. 94ICBMVA Data page 6 (5/97)
<PAGE>
MARKET VALUE ADJUSTMENT (MVA) ON WITHDRAWALS (SEE ITEM 2 OF MVA ENDORSEMENT):
The MVA (positive or negative) resulting from a withdrawal of a portion of the
amount in a Guarantee Period prior to the Expiration Date will be a percentage
of the MVA that would be applicable upon a withdrawal of all the Annuity
Account Value from a Guarantee Period. This percentage is determined by (i)
dividing the amount of the withdrawal from the Guarantee Period by, (ii) the
Annuity Account Value in such Guarantee Period prior to the withdrawal. There
will be no MVA resulting from a withdrawal of amounts in the Modal Payment
portion of the Guaranteed Period Account.
MVA FORMULA (SEE ITEM 3 OF MVA ENDORSEMENT): The Guaranteed Rate for new
allocations to a Guarantee Period is the rate we have in effect for this
purpose even if new allocations to that Guarantee Period would not be accepted
at the time. This rate will not be less than 3%.
The current rate percentage we use in item (c) of the formula is [0.00%]. For
purposes of calculating the MVA only, we reserve the right to add up to
[0.25%] to such current rate percentage.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01): Prior to the Annuity Commencement
Date, the death benefit amount is equal to the larger of (a) the Annuity
Account Value and (b) the sum of the Guaranteed Period Amounts in each
Guarantee Period and any amounts in the Modal Payment portion of the
Guaranteed Period Account.
If you die after the Annuity Commencement Date, payments will continue to be
made to the designated beneficiary on the same basis that was in effect prior
to the death. At the beneficiary's option, payments may be discontinued and
paid in a single sum. If the single sum is elected within one year of death,
the single sum will be equal to the larger of (a) the Annuity Account Value
and (b) the sum of the Guaranteed Period Amounts in each Guarantee Period and
any amounts in the Modal Payment portion of the Guaranteed Period Account.
After the one year period the beneficiary may surrender the Certificate and
receive the Cash Value.
No. 94ICBMVA Data page 7 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART D -- THIS PART LISTS THE TERMS WHICH APPLY TO THE ENDORSEMENT APPLICABLE
TO LIFE CONTINGENT ANNUITY (LCA ENDORSEMENT).
ISSUE DATE FOR DATA PAGES, PART D: [May 1, 1997]
INITIAL PURCHASE PAYMENT (SEE ITEM 2 OF LCA ENDORSEMENT): [$14,985.67]
SUBSEQUENT PURCHASE PAYMENTS: Subsequent purchase payments may be
made up until [15] days before the Annuity Commencement Date under
the Certificate. However, subsequent purchase payments are not
permitted after you attain age 78 except for purchase payments made
within the first Contract Year. (See Data pages, Part B). Thereafter,
subsequent purchase payments may only be applied as provided in
Withdrawals in Data pages, Part C.
PURCHASE PAYMENT RULES (SEE ITEM 2 OF LCA ENDORSEMENT): The amount applied is
determined by us in accordance with the Allocation Restrictions in Data pages,
Part C.
If the Certificate to which the LCA Endorsement is attached is surrendered to
receive the Cash Value, thereafter, no subsequent purchase payments may be
applied under the LCA Endorsement (See Data pages, Part B; Surrendering the
Certificate)
MINIMUM PURCHASE PAYMENT: Not applicable
FREQUENCY: Not applicable
CHARGES DEDUCTED FROM PURCHASE PAYMENTS (SEE ITEM 2 OF LCA ENDORSEMENT): Any
applicable charge for premium tax.
ANNUITY BENEFIT PAYEE (SEE ITEM 3 OF LCA ENDORSEMENT): [JOHN DOE]
[Must be Owner]
INITIAL BENEFIT PAYMENT DATE (SEE ITEM 3 OF LCA ENDORSEMENT): [June 15, 2012]
ANNUITY BENEFIT FORM (SEE ITEM 3 OF LCA ENDORSEMENT): [Single Life]
FREQUENCY OF ANNUITY BENEFIT PAYMENTS (SEE ITEM 3 OF LCA ENDORSEMENT):
[Monthly] on the 15th of each month.
MINIMUM BENEFIT PAYMENT RULES (SEE ITEM 3 OF LCA ENDORSEMENT): Not applicable
No. 94ICBLCA Data page 8 (5/97)
<PAGE>
ANNUITY BENEFIT PURCHASED BY INITIAL PURCHASE PAYMENT: [$657.91]
GUARANTEED ANNUITY PURCHASE RATES (SEE ITEM 4 OF LCA ENDORSEMENT): Not
applicable
CHANGE IN INITIAL BENEFIT PAYMENT DATE (SEE ITEM 5 OF LCA ENDORSEMENT): This
date will be accelerated if a Lump Sum Withdrawal is taken as described under
Withdrawals in Data pages, Part C.
If you surrender the Certificate to which the LCA Endorsement is attached to
receive the Cash Value, the Initial Benefit Payment Date under the Life
Contingent Annuity will be accelerated to the date when the next payment was
to be received under the period certain. Payments under the Life Contingent
Annuity will then be made in reduced amounts.
N. 94ICBLCA Data page 9 (5/97)
<PAGE>
INCOME MANAGER (NQ) (LIFE WITH A PERIOD CERTAIN)
- INCREASING PAYMENTS
DATA
PART A -- THIS PART LISTS YOUR PERSONAL DATA.
OWNER: [JOHN DOE]
ANNUITANT: [JOHN DOE] Age: [70] Sex: [Male]
[Owner must be Annuitant]
CONTRACT: GROUP ANNUITY CONTRACT NO. AC 7625
CERTIFICATE NUMBER: [00000]
ENDORSEMENTS ATTACHED: Endorsement Applicable to
Non-Qualified Certificates
Endorsement Applicable to Market
Value Adjustment
Terms
Rider to Endorsement Applicable to
Market Value Adjustment Terms
Endorsement Applicable to Life
Contingent Annuity
ISSUE DATE: [May 1, 1997]
CONTRACT DATE: [May 1, 1997]
ANNUITY COMMENCEMENT DATE: [June 1, 1997]. This date may not be changed.
INITIAL [MONTHLY] PAYMENT: [$515.30]
MAXIMUM MATURITY AGE (SEE SECTION 7.03): Not applicable
BENEFICIARY: [JANE DOE]
SUCCESSOR OWNER/ANNUITANT: [Applicable if the beneficiary is the spouse at
the time of election and time of Owner/
Annuitant's death] [JANE DOE]
No. 94ICB Data page 1 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART B -- THIS PART DESCRIBES CERTAIN PROVISIONS OF YOUR CERTIFICATE.
- ------
INITIAL CONTRIBUTION RECEIVED (SEE SECTION 3.02): [$100,000.00]
Amount allocated to Guaranteed Period Account: [$79,007.04]
Amount applied to Life Contingent Annuity: [$20,992.96]
ALLOCATION OF AMOUNTS TO GUARANTEED PERIOD ACCOUNT:
<TABLE>
<CAPTION>
GUARANTEED AMOUNT
RATE ALLOCATED
---- ---------
<S> <C> <C>
[INITIAL MODAL PAYMENT PORTION 3.50% $3,075.51
GUARANTEE PERIODS (CLASS I)
EXPIRATION DATE
FEBRUARY 15, 1998 4.00% $5,964.76
FEBRUARY 15, 1999 4.10% 5,724.11
FEBRUARY 15, 2000 4.20% 5,753.94
FEBRUARY 15, 2001 4.30% 5,764.82
FEBRUARY 15, 2002 4.40% 5,500.45
FEBRUARY 15, 2003 4.50% 5,497.26
FEBRUARY 15, 2004 4.60% 5,476.92
FEBRUARY 15, 2005 4.70% 5,195.38
FEBRUARY 15, 2006 4.80% 5,162.52
FEBRUARY 15, 2007 4.90% 5,114.30
FEBRUARY 15, 2008 5.00% 4,824.36
FEBRUARY 15, 2009 5.10% 4,765.93
FEBRUARY 15, 2010 5.20% 4,694.76
FEBRUARY 15, 2011 5.30% 4,403.53
FEBRUARY 15, 2012 5.40% 2,088.49
------------
SUB-TOTAL: [$79,007.04]
</TABLE>
The Modal Payment portion and Guarantee Periods shown are in the Guaranteed
Period Account. See Endorsement Applicable to Market Value Adjustment Terms.
PERIOD CERTAIN SCHEDULE OF MONTHLY PAYMENTS
[JUNE 15TH THROUGH MAY 15TH]
OF THE YEARS INDICATED:
----------------------
[1997 - 2000 $515.30
2000 - 2003 $567.08
2003 - 2006 $624.04
2006 - 2009 $686.69
2009 - 2012 $755.61]
After the period certain, payments continue for life under the Life Contingent
Annuity with an initial [monthly] payment of [$831.42] on [June 15, 2012]
increasing annually thereafter as described in Data pages, Part D. In no event
will the increase be greater than 3% in any year nor less than 0%.
"TYPES" OF INVESTMENT OPTIONS (SEE SECTION 4.02): Not applicable
GUARANTEED INTEREST ACCOUNT (SEE SECTION 2.01): Not available under this
Certificate
SEPARATE ACCOUNT (SEE SECTION 2.02, 2.03 AND 2.05): Not applicable
No. 94ICB Data page 2 (5/97)
<PAGE>
DATA PAGES (CONT'D)
BUSINESS DAY (SEE SECTION 1.05): A Business Day for this Certificate will
mean any day on which the New York Stock Exchange is open for trading.
INVESTMENT OPTIONS (SEE SECTION 1.16): "Investment Option" also means the
Modal Payment portion of the Guaranteed Period Account. This is the portion of
the Guaranteed Period Account from which payments, other than payments due on
an Expiration Date, are made. See Data pages, Part C.
PROCESSING DATES (SEE SECTION 1.20): Not applicable
AVAILABILITY OF INVESTMENT OPTIONS (SEE SECTION 2.04): The only Investment
Options available under this Certificate are the Guarantee Periods and the
Modal Payment portion of the Guaranteed Period Account. (See Data pages,
Part C; Allocation Restrictions)
ALLOCATION OF CONTRIBUTIONS (SEE SECTION 3.01): Contributions are allocated
by us to the Guaranteed Period Account and the Life Contingent Annuity.
(See Data pages, Part C; Allocation Restrictions)
CONTRIBUTION LIMITS (SEE SECTION 3.02): Initial Contribution minimum:
[$10,000]. Subsequent Contribution minimum: [$1,000]. Subsequent Contributions
can be made at any time prior to [15] days before the Annuity Commencement
Date. However, subsequent Contributions are not permitted after you attain age
78 except for Contributions made within the first Contract Year. If your
Income Manager resulted from application of proceeds from any other annuity
contract\certificate we have issued, no subsequent Contributions are
permitted. We may refuse to accept any Contribution if the sum of all
Contributions under your Certificate would then total more than [$1,500,000].
We may also refuse to accept any Contribution if the sum of all Contributions
under all Equitable Life annuity distribution certificates/contracts that you
own would then total more than [$2,500,000].
TRANSFER RULES (SEE SECTION 4.02): You may not make transfer requests.
ALLOCATION OF WITHDRAWALS (SEE SECTION 5.01): (See Data pages, Part C;
Withdrawals)
WITHDRAWAL RESTRICTIONS (SEE SECTION 5.01): After the first Contract Year, you
may take one Lump Sum Withdrawal during a Contract Year at any time during
such Contract Year.
MINIMUM WITHDRAWAL AMOUNT (SEE SECTION 5.01): Lump Sum Withdrawals minimum -
$1,000
MINIMUM AMOUNT OF ANNUITY ACCOUNT VALUE AFTER A WITHDRAWAL (SEE SECTION 5.02):
Requests for a Lump Sum Withdrawal must be for either (a) [90%] or less of the
Cash Value or (b) 100% of the Cash Value (surrender of the Certificate).
No. 94ICB Data page 3 (5/97)
<PAGE>
DATA PAGES (CONT'D)
We will NOT exercise our rights, described in Sections 5.02(b) and 5.02(c), to
terminate the Certificate.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01): (See Data pages, Part C)
ANNUITY BENEFIT (SEE SECTION 7.01): Annuity benefit payments will be made
[monthly] as described under Benefit Payment Selected, below.
BENEFIT PAYMENT SELECTED (SEE SECTION 7.02): Income Manager (Life Annuity with
a Period Certain) pursuant to Section 7.02 (iii), with payments increasing by
10% every three years during the period certain. The first payment after the
period certain will be 10% greater than the final payment under the period
certain. Thereafter, such payments will increase annually (see Data pages,
Part D). The Income Manager consists of payment of Guaranteed Period Amounts
upon expiration of each Guarantee Period in installments as described in Data
pages, Part C for a period certain of [15] years and annuity benefits under
the Endorsement Applicable to Life Contingent Annuity as described in Data
pages, Part D. Payments during the period certain to be made on dates other
than February 15th of each calendar year are made from amounts transferred or
allocated to the Modal Payment portion of the Guaranteed Period Account.
Amounts may not be applied under any other Annuity Benefit.
NORMAL FORM OF ANNUITY (SEE SECTION 7.04): [Life Annuity 10 Year Period
Certain]
AMOUNT OF ANNUITY BENEFIT (SEE SECTION 7.05): The amount applied to provide
the Annuity Benefit will be (1) the Annuity Account Value for any life annuity
form or (2) the Cash Value for any period certain only annuity form except
that if the period certain is more than five years the amount applied will be
no less than 95% of the Annuity Account Value.
INTEREST RATE TO BE APPLIED IN ADJUSTING FOR MISSTATEMENT OF AGE OR SEX (SEE
SECTION 7.06): [6% per year]
MINIMUM AMOUNT TO BE APPLIED TO AN ANNUITY (SEE SECTION 7.06): [$2,000]
WITHDRAWAL CHARGES (SEE SECTION 8.01): A withdrawal charge will be imposed as
a percentage of the portion of each Contribution allocated to the Guaranteed
Period Account, when a Lump Sum Withdrawal exceeds the Free Corridor Amount as
discussed in Section 8.01, or if the Certificate is surrendered to receive the
Cash Value. The withdrawal charge is determined in accordance with the table
below.
No. 94ICB Data page 4 (5/97)
<PAGE>
DATA PAGES (CONT'D)
<TABLE>
<CAPTION>
Current and Maximum
Percentage of
Contract Year Contributions
------------- -------------------
<S> <C>
[1 7.00%
2 6.00%
3 5.00%
4 4.00%
5 3.00%
6 2.00%
7 1.00%
8 and later 0.00%]
</TABLE>
The applicable withdrawal charge percentage is determined by the Contract Year
in which the Lump Sum Withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each Contribution withdrawn
or surrendered. For purposes of the table, for each Contribution, the Contract
Year in which we receive that Contribution is "Contract Year 1."
Withdrawal charges will be deducted from the Annuity Account Value in the
Guaranteed Period Account in proportion to the amount being withdrawn from
each Guarantee Period and the Modal Payment portion of the Guaranteed Period
Account.
FREE CORRIDOR AMOUNT (SEE SECTION 8.01): [10%] of the Annuity Account Value
at the beginning of the Contract Year. Amounts withdrawn up to the Free
Corridor Amount will not be deemed a withdrawal of Contributions.
Withdrawals in excess of the Free Corridor Amount will be deemed withdrawals
of Contributions in the order in which they were made (that is, the first-in,
first-out basis will apply).
The Free Corridor Amount does not apply when calculating the withdrawal charge
applicable upon a surrender.
CHARGES DEDUCTED FROM ANNUITY ACCOUNT VALUE (SEE SECTION 8.02):
Premium Taxes: A charge for any applicable premium tax will be deducted no
later than the Annuity Commencement Date.
TRANSFER CHARGE (SEE SECTION 8.03): Not applicable
DAILY SEPARATE ACCOUNT CHARGES (SEE SECTION 8.04): Not applicable
No. 94ICB Data page 5 (5/97)
<PAGE>
SURRENDERING THE CERTIFICATE: You may surrender the Certificate for its Cash
Value at any time, and thereafter receive the lifetime income provided under
the Endorsement Applicable to Life Contingent Annuity. Once your Certificate
has been surrendered, it will be returned to you with a notation that the Life
Contingent Annuity is still in effect. (See Data pages, Part D; Change in
Initial Benefit Payment Date)
No. 94ICB Data page 6 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART C -- THIS PART LISTS THE TERMS WHICH APPLY TO THE ENDORSEMENT APPLICABLE
TO MARKET VALUE ADJUSTMENT TERMS (MVA ENDORSEMENT).
ALLOCATION RESTRICTIONS (SEE SECTION 3.01): The entire amount of the initial
Contribution after applicable charges, must be allocated to Guarantee Periods
having Expiration Dates in annual sequence, and the Modal Payment portion of
the Guaranteed Period Account, if applicable, and also applied to the Life
Contingent Annuity (see Data pages, Part D), so as to provide increasing
[monthly] payments for life, with a period certain consisting of payments as
described under Payments at Expiration Date below. Any subsequent
Contributions will be allocated by us to the Guarantee Periods and the Life
Contingent Annuity.
MODAL PAYMENT PORTION OF THE GUARANTEED PERIOD ACCOUNT: Each amount we
allocate to the Modal Payment portion of the Guaranteed Period Account for
payments to be made prior to the Expiration Date of the earliest Guarantee
Period we then offer, accumulates interest beginning on the date such amounts
are allocated at the interest rate specified in Data pages, Part B. Interest
will be credited daily. Such rate will not be less than 3%.
Each amount transferred to the Modal Payment portion of the Guaranteed Period
Account from an expired Guarantee Period will be credited with interest at a
rate equal to the Guaranteed Rate applicable to the expired Guarantee Period,
beginning on the Expiration Date of such Guarantee Period. See Payments at
Expiration Date, below.
WITHDRAWALS (SEE SECTION 5.01): Lump Sum Withdrawals will be taken from the
Modal Payment portion of the Guaranteed Period Account and all remaining
Guarantee Periods to which your Annuity Account Value is allocated such that
the amount of the [monthly] payments and the length of the period certain will
be reduced and the Initial Benefit Payment Date for the Life Contingent
Annuity (see Data pages, Part D) will be accelerated. Additional amounts above
the amount of the requested withdrawal may be withdrawn from the Guaranteed
Period Account and applied to the Life Contingent Annuity to the extent
necessary to achieve this result. As a result, the same pattern of payments
will continue in reduced amounts for your life, and if applicable, the life of
your joint Annuitant. The first reduction in your payments will take place no
later than the date of the next planned increase. See Endorsement Applicable
to Life Contingent Annuity.
PAYMENTS AT EXPIRATION DATE (SEE ITEM 1 OF MVA ENDORSEMENT): Upon the
expiration of a Guarantee Period, the Guaranteed Period Amount will be paid to
you in full, if annual payments are to be made on February 15th of each
calendar year. Otherwise, the Guaranteed Period Amount (less one Modal Payment
if due on that date) will be transferred into the Modal Payment portion of the
Guaranteed Period Account. You may not transfer these amounts into any other
Guarantee Periods or apply such amounts under any other Annuity Benefit.
These payments are not deemed to be withdrawals and are therefore not subject
to withdrawal charges.
No. 94ICBMVA Data page 7 (5/97)
<PAGE>
MARKET VALUE ADJUSTMENT (MVA) ON WITHDRAWALS (SEE ITEM 2 OF MVA ENDORSEMENT):
The MVA (positive or negative) resulting from a withdrawal of a portion of the
amount in a Guarantee Period prior to the Expiration Date will be a percentage
of the MVA that would be applicable upon a withdrawal of all the Annuity
Account Value from a Guarantee Period. This percentage is determined by (i)
dividing the amount of the withdrawal from the Guarantee Period by, (ii) the
Annuity Account Value in such Guarantee Period prior to the withdrawal. There
will be no MVA resulting from a withdrawal of amounts in the Modal Payment
portion of the Guaranteed Period Account.
MVA FORMULA (SEE ITEM 3 OF MVA ENDORSEMENT): The Guaranteed Rate for new
allocations to a Guarantee Period is the rate we have in effect for this
purpose even if new allocations to that Guarantee Period would not be accepted
at the time. This rate will not be less than 3%.
The current rate percentage we use in item (c) of the formula is [0.00%]. For
purposes of calculating the MVA only, we reserve the right to add up to
[0.25%] to such current rate percentage.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01): Prior to the Annuity Commencement
Date, the death benefit amount is equal to the larger of (a) the Annuity
Account Value and (b) the sum of the Guaranteed Period Amounts in each
Guarantee Period and any amounts in the Modal Payment portion of the
Guaranteed Period Account.
If you die after the Annuity Commencement Date, payments will continue to be
made to the designated beneficiary on the same basis that was in effect prior
to the death. At the beneficiary's option, payments may be discontinued and
paid in a single sum. If the single sum is elected within one year of death,
the single sum will be equal to the larger of (a) the Annuity Account Value
and (b) the sum of the Guaranteed Period Amounts in each Guarantee Period and
any amounts in the Modal Payment portion of the Guaranteed Period Account.
After the one year period the beneficiary may surrender the Certificate and
receive the Cash Value.
No. 94ICBMVA Data page 8 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART D -- THIS PART LISTS THE TERMS WHICH APPLY TO THE ENDORSEMENT APPLICABLE
TO LIFE CONTINGENT ANNUITY (LCA ENDORSEMENT).
ISSUE DATE FOR DATA PAGES, PART D: [May 1, 1997]
INITIAL PURCHASE PAYMENT (SEE ITEM 2 OF LCA ENDORSEMENT): [$20,992.96]
SUBSEQUENT PURCHASE PAYMENTS: Subsequent purchase payments may be
made up until [15] days before the Annuity Commencement Date under
the Certificate. However, subsequent purchase payments are not
permitted after you attain age 78 except for purchase payments made
within the first Contract Year. (See Data pages, Part B). Thereafter,
subsequent purchase payments may only be applied as provided in
Withdrawals in Data pages, Part C.
PURCHASE PAYMENT RULES (SEE ITEM 2 OF LCA ENDORSEMENT): The amount applied is
determined by us in accordance with the Allocation Restrictions in Data pages,
Part C.
If the Certificate to which the LCA Endorsement is attached is surrendered to
receive the Cash Value, thereafter, no subsequent purchase payments may be
applied under the LCA Endorsement (See Data pages, Part B; Surrendering the
Certificate)
MINIMUM PURCHASE PAYMENT: Not applicable
FREQUENCY: Not applicable
CHARGES DEDUCTED FROM PURCHASE PAYMENTS (SEE ITEM 2 OF LCA ENDORSEMENT): Any
applicable charge for premium tax.
ANNUITY BENEFIT PAYEE (SEE ITEM 3 OF LCA ENDORSEMENT): [JOHN DOE]
[Must be Owner]
INITIAL BENEFIT PAYMENT DATE (SEE ITEM 3 OF LCA ENDORSEMENT): [June 15, 2012]
ANNUITY BENEFIT FORM (SEE ITEM 3 OF LCA ENDORSEMENT): [Single Life]
FREQUENCY OF ANNUITY BENEFIT PAYMENTS (SEE ITEM 3 OF LCA ENDORSEMENT):
[Monthly] on the 15th of each month.
MINIMUM BENEFIT PAYMENT RULES (SEE ITEM 3 OF LCA ENDORSEMENT): Not applicable
No. 94ICBLCA Data page 9 (5/97)
<PAGE>
ANNUITY BENEFIT PURCHASED BY INITIAL PURCHASE PAYMENT: [$831.42]
After the initial payment, payments will increase annually on each anniversary
of the Initial Benefit Payment Date, as determined by us, by an amount
corresponding to the applicable rate of change in the Consumer Price Index
each year. The increase will never be greater than 3% in any year nor less
than 0%.
"Consumer Price Index" means the Consumer Price Index for All Urban Consumers
("CPI-U"). The applicable rate of change in the CPI-U will be equal to a
fraction (a) whose numerator is the difference between the CPI-U applicable to
the immediately preceding calendar year and the CPI-U applicable to the
current calendar year, and (b) whose denominator is the CPI-U applicable to
the immediately preceding calendar year.
GUARANTEED ANNUITY PURCHASE RATES (SEE ITEM 4 OF LCA ENDORSEMENT): Not
applicable
CHANGE IN INITIAL BENEFIT PAYMENT DATE (SEE ITEM 5 OF LCA ENDORSEMENT): This
date will be accelerated if a Lump Sum Withdrawal is taken as described under
Withdrawals in Data pages, Part C.
If you surrender the Certificate to which the LCA Endorsement is attached to
receive the Cash Value, the Initial Benefit Payment Date under the Life
Contingent Annuity will be accelerated to the date when the next payment was
to be received under the period certain. Payments under the Life Contingent
Annuity will then be made in reduced amounts.
No. 94ICBLCA Data page 10 (5/97)
<PAGE>
MVA ANNUITY [(IRA)] OR [(NQ)]
DATA
PART A -- THIS PART LISTS YOUR PERSONAL DATA.
OWNER: [JOHN DOE] [Under IRA Certificates Owner must be the Annuitant]
ANNUITANT: [JOHN DOE] Age: [45] Sex: [Male]
CONTRACT: GROUP ANNUITY CONTRACT NO. AC [7625] [7627]
CERTIFICATE NUMBER: [00000]
ENDORSEMENTS ATTACHED: [Endorsement Applicable to IRA
Certificates]
[Endorsement Applicable to
Non-Qualified Certificates]
Endorsement Applicable to Market
Value Adjustment Terms
Rider to Endorsement Applicable to
Market Value Adjustment Terms
ISSUE DATE: [May 1, 1997]
CONTRACT DATE: [May 1, 1997]
ANNUITY COMMENCEMENT DATE: [August 22, 2142]
THE MAXIMUM MATURITY AGE IS AGE [90] -- SEE SECTION 7.03
The Annuity Commencement Date may not be later than the earliest
Expiration Date which follows the Contract Date anniversary following
the Annuitant's [90th] birthday.
[Applicable to IRA Certificates]
[However, if you choose a date later than age 70 1/2, distribution of
at least the minimum payments required must commence by April 1 of the
calendar year following the calendar year in which you attain age
70 1/2 (see item 2 of the Endorsement Applicable to IRA
Certificates).]
BENEFICIARY: [JANE DOE]
SUCCESSOR OWNER/ANNUITANT: [Applicable if the Owner and Annuitant are the same
person and the spouse is the beneficiary at the
time of election and time of Owner/Annuitant's
death] [JANE DOE]
No. 94ICB Data page 1 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART B - -THIS PART DESCRIBES CERTAIN PROVISIONS OF YOUR CERTIFICATE.
- ------
CONTRIBUTION RECEIVED (SEE SECTION 3.02): [$10,000.00]
INITIAL GUARANTEE PERIOD (CLASS I)
EXPIRATION DATE AND GUARANTEED RATE
FEBRUARY 15, 1998 - 5.00%
The Guarantee Period shown is in the Guaranteed Period Account. See
Endorsement Applicable to Market Value Adjustment Terms.
"TYPES" OF INVESTMENT OPTIONS (SEE SECTION 4.02): Not applicable
GUARANTEED INTEREST ACCOUNT (SEE SECTION 2.01): Not available under this
Certificate
SEPARATE ACCOUNT (SEE SECTION 2.02, 2.03 AND 2.05): Not applicable
BUSINESS DAY (SEE SECTION 1.05): A Business Day for this Certificate will mean
any day on which the New York Stock Exchange is open for trading.
PROCESSING DATES (SEE SECTION 1.20): Not applicable
AVAILABILITY OF INVESTMENT OPTIONS (SEE SECTION 2.04): The only Investment
Option available under this Certificate is the Guarantee Period you have
selected as set forth above. (See Date pages, Part C; Allocation Restrictions)
ALLOCATION OF CONTRIBUTION (SEE SECTION 3.01): Your Contributions is allocated
to the Guarantee Period as set forth above.
CONTRIBUTION LIMIT (SEE SECTION 3.02): [Applicable to NQ Certificates] ($5,000.
Subsequent Contributions are not permitted.]
[Applicable to IRA Certificates] [We will only accept a Contribution of at
least $5,000 in the form of either a rollover Contribution or a direct
custodian-to-custodian transfer from other individual retirement arrangements.
Subsequent Contributions are not permitted. Rollover Contributions and direct
transfers are not subject to the $2,000 annual limit. "Regular" IRA
Contributions may not be made for the taxable year in which you attain 70 1/2
and thereafter. However, any amount contributed after you attain age 70 1/2
must be net of your minimum distribution for the year in which the rollover
or direct transfer Contribution is made (see item 2 Annuity Commencement Date
in Endorsement Applicable to IRA Certificates).]
No. 94ICB Data page 2 (5/97)
<PAGE>
We may refuse to accept any Contribution if the sum of all Contributions
received under Certificates with the same Annuitant would then total more
than [$1,500,000]. We may also refuse to accept any contribution if the
sum of all contributions under all Equitable annuity accumulation
certificates/contracts you own would then total more than [$2,500,000].
TRANSFER RULES (SEE SECTION 4.02): Transfers are not permitted.
WITHDRAWAL RESTRICTIONS (SEE SECTION 5.01): Lump Sum Withdrawal - May not be
taken until after the first Contract Year, and only one Lump Sum Withdrawal
may be taken during a Contract Year thereafter at any time during such
Contract Year. Systematic Withdrawals - May not start sooner than 28 days
after issue of this Certificate. You may elect to receive Systematic
Withdrawals on a monthly, quarterly or annual basis subject to a maximum of
0.8% monthly, 2.5% quarter and 10.0% annually.
MINIMUM WITHDRAWAL AMOUNT (SEE SECTION 5.01): Lump Sum Withdrawals minimum -
$1,000; Systematic Withdrawals minimum - $250.
MINIMUM AMOUNT OF ANNUITY ACCOUNT VALUE AFTER A WITHDRAWAL (SEE SECTION 5.02):
Requests for a withdrawal must be for either (a) [90%] or less of the Cash
Value or (b) 100% of the Cash Value (surrender of the Certificate).
We will NOT exercise our rights, described in Sections 5.02(b) and 5.02(c), to
terminate the Certificate.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01): (See Data pages, Part C)
NORMAL FORM OF ANNUITY (SEE SECTION 7.04): [Life Annuity 10 Year Period
Certain]
AMOUNT OF ANNUITY BENEFIT (SEE SECTION 7.05): The amount applied to provide
the Annuity Benefit will be (1) the Annuity Account Value for any life annuity
form or (2) the Cash Value for any period certain only annuity form except
that if the period certain is more than five years the amount applied will be
no less than 95% of the Annuity Account Value.
INTEREST RATE TO BE APPLIED IN ADJUSTING FOR MISSTATEMENT OF AGE OR SEX (SEE
SECTION 7.06): [6% per year]
MINIMUM AMOUNT TO BE APPLIED TO AN ANNUITY (SEE SECTION 7.06): [$2,000, as well
as minimum of $20 for initial monthly annuity payment.]
WITHDRAWAL CHARGES (SEE SECTION 8.01): A withdrawal charge will be imposed as a
percentage of your Contribution to the extent that a withdrawal exceed the Free
Corridor Amount as discussed in Section 8.01 or, if the Certificate is
surrendered to receive the Cash Value.
No. 94ICB Data page 3 (5/97)
<PAGE>
DATA PAGES (CONT'D)
The withdrawal charge percentage initially equals the number of years to
maturity of the Guarantee Period you select. A partial year will be considered
a full year for this purpose, however, in no event will a withdrawal charge
percentage exceed 7% nor will the withdrawal charge period exceed 7 years. The
percentage is subsequently reduced by 1% on each Contract Date anniversary.
FREE CORRIDOR AMOUNT (SEE SECTION 8.01): 10% of Annuity Account Value at the
beginning of the Contract Year, minus any amount previously withdrawn during
the Contract Year. Amounts withdrawn up to the Free Corridor Amount will not
be deemed a withdrawal of the Contribution.]
Withdrawals in excess of the Free Corridor Amount will be deemed a withdrawal
of the Contribution in the order in which they were made (that is, the
first-in, first-out basis will apply).
The Free Corridor Amount does not apply when calculating the withdrawal charge
applicable upon a surrender.
CHARGES DEDUCTED FROM ANNUITY ACCOUNT VALUE (SEE SECTION 8.02):
Premium Taxes: A charge for any applicable premium tax generally will be
deducted from the amount applied to provide an Annuity Benefit or any other
form of benefit payment under Section 7.02. In certain states, however, we
may deduct the charge from Contributions rather than at the Annuity
Commencement Date.
TRANSFER CHARGE (SEE SECTION 8.03): Not applicable
DAILY SEPARATE ACCOUNT CHARGES (SEE SECTION 8.04): Not applicable
No. 94ICB Data page 4 (5/97)
<PAGE>
DATA PAGES (CONT'D)
PART C -- THIS PART LISTS THE TERMS WHICH APPLY TO THE ENDORSEMENT APPLICABLE
TO MARKET VALUE ADJUSTMENT TERMS (MVA ENDORSEMENT).
ALLOCATION RESTRICTIONS (SEE SECTION 3.01): Allocations may not be made to
a Guarantee Period with an Expiration Date beyond the earliest available
Expiration Date immediately following the Annuity Commencement Date.
TRANSFERS AT EXPIRATION DATE (SEE ITEM 1 of MVA ENDORSEMENT): If no election
is made as of the Expiration Date, the Maturity Value in the expired
Guarantee Period will be transferred into the Guarantee Period with the same
duration as the expired Guarantee Period.
MARKET VALUE ADJUSTMENT (MVA) ON TRANSFERS AND WITHDRAWALS (SEE ITEM 2 OF MVA
ENDORSEMENT): The MVA (positive or negative) resulting from a withdrawal of a
portion of the amount in a Guarantee Period will be a percentage of the MVA
that would be applicable upon a withdrawal of all the Annuity Account Value
from a Guarantee Period. This percentage is determined by (i) dividing the
amount of the withdrawal from the Guarantee Period by (ii) the Annuity Account
Value in such Guarantee Period prior to the withdrawal.
MVA FORMULA (SEE ITEM 3 OF MVA ENDORSEMENT): The Guaranteed Rate for new
allocations to a Guarantee Period is the rate we have in effect for this
purpose even if new allocations to that Guarantee Period would not be accepted
at the time. This rate will not be less than 3%.
The current rate percentage we use in item (c) of the formula is [0.00%]. For
purposes of calculating the MVA only, we reserve the right to add up to
[0.25%] to such current rate percentage.
DEATH BENEFIT AMOUNT (SEE SECTION 6.01): The larger of (a) the Annuity Account
Value and (b) your Contribution minus any withdrawals and withdrawal charges.
No. 94ICBMVA Data page 5 (5/97)
<PAGE>
INCOME MANAGER(SM) ACCUMULATOR
[INSERT EQ LOGO] COMBINATION VARIABLE AND FIXED DEFERRED
ANNUITY (NON-QUALIFIED)
Enrollment Form under Group Annuity Contract No. AC 7625
and Application for Individual Contract
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
- -------------------------------------------------------------------------------
- --------
1. OWNER [ ] Individual [ ] Trustee (for an individual)
- --------
- ------------------------------------------- -------------------------------
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
- ------------------------------------------- -------------------------------
Address (Street, City, State, Zip Code) Social Security No./TIN
- ---------------------- ---------------------------- [ ] Male [ ] Female
Home Phone Number Office Phone Number
- --------------------------------------
2. ANNUITANT IF OTHER THAN OWNER
- --------------------------------------
- ------------------------------------------- -------------------------------
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
- ------------------------------------------- -------------------------------
Address (Street, City, State, Zip Code) Social Security No.
- ---------------------- ---------------------------- [ ] Male [ ] Female
Home Phone Number Office Phone Number
- ---------------------------------------------------------------------------
3. BENEFICIARY(IES) IF MORE THAN ONE - INDICATE %. TOTAL MUST EQUAL 100%.
- ---------------------------------------------------------------------------
- ------------------------------ ------------------------------- ------------
Name (First, Middle, Last) Relationship to Annuitant %
- ------------------------------ ------------------------------- ------------
Name (First, Middle, Last) Relationship to Annuitant %
- ------------------------------ ------------------------------- ------------
Name (First, Middle, Last) Relationship to Annuitant %
- ------------------------------ ------------------------------- ------------
Name (First, Middle, Last) Relationship to Annuitant %
[ ] Check this box to designate your spouse as the Successor Owner/Annuitant
and complete the following information. Your spouse must also be named as
the sole primary beneficiary.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ----------------------------------- ------------------------------------------- [ ] Male [ ] Female
Spouse's Social Security No. Spouse's Date of Birth (Month/Day/Year)
</TABLE>
- ---------------------------
4. ANNUITY COMMENCEMENT AGE
- ---------------------------
SPECIFY AGE:__________________ (Annuitant's age 90 if not indicated)
- -----------------------------------
5. INITIAL CONTRIBUTION INFORMATION
- -----------------------------------
TOTAL INITIAL CONTRIBUTION: $______________________
METHOD OF PAYMENT: [ ] By check payable to Equitable Life [ ] By wire
[ ] 1035 Exchange
- -------------------------------------------------------------------------------
INCOME MANAGEMENT GROUP, P.O. BOX 1547, SECAUCUS, N.J. 07096-1547
(800) 338-3434
(5/97) PART OF INCOME MANAGER PORTFOLIO cat. no. 126737
<PAGE>
- ------------------------------------------------------------------------------
6. BASEBUILDER GUARANTEED BENEFIT ELECTION (NOT APPLICABLE FOR NEW YORK
RESIDENTS) ANNUITANT ISSUE AGES 20 THROUGH 75 MUST SELECT PLAN A OR PLAN B.
FOR ANNUITANT ISSUE AGES 76 THROUGH 83, PLAN B WILL APPLY.
- ------------------------------------------------------------------------------
[ ] PLAN A (baseBUILDER Combined Guaranteed Minimum Death Benefit
and Guaranteed Minimum Income Benefit)
[ ] PLAN B (Guaranteed Minimum Death Benefit only)
- ------------------------------------
7. SYSTEMATIC WITHDRAWALS (OPTIONAL)
- ------------------------------------
FREQUENCY: [ ] Monthly [ ] Quarterly [ ]
Annually Start Date: ________________ (Month, Day)
AMOUNT OF WITHDRAWAL: $_______________ or _______________%
WITHHOLDING ELECTION INFORMATION (Please refer to enrollment form/application
instructions before completing)
A. [ ] I do not want to have Federal income tax withheld. (U.S. residence
address and Social Security No./TIN required)
B. [ ] I want to have Federal income tax withheld from each payment.
- ----------------------------------------------------------------------------
8. SUCCESSOR OWNER (OPTIONAL) AVAILABLE ONLY IF THE OWNER AND ANNUITANT ARE
DIFFERENT PERSONS
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------ -------------------------------- [ ] Male [ ] Female
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
- ------------------------------------------ --------------------------------
Address (Street, City, State, Zip Code) Social Security No./TIN
</TABLE>
- --------------
9. SUITABILITY
- --------------
A. Did you receive the INCOME MANAGER ACCUMULATOR prospectus? [ ] Yes [ ] No
- ------------------------------- ------------------------------------------
Date of Prospectus Date(s) of any Supplement(s) to Prospectus
B. Will any existing life insurance or annuity be (or has it been) surrendered,
withdrawn from, loaned against, changed or otherwise reduced in value, or
replaced in connection with this transaction assuming the Certificate/
Contract applied for will be issued? [ ] Yes [ ] No If Yes, complete the
following:
- ----------------- ------------------ ------------- ---------------------------
Year Issued Type of Plan Company Certificate/Contract Number
C. National Association of Securities Dealers, Inc. (NASD) information (as
required by the NASD)
- --------------------------------------- -----------------------------------
Employer's Name & Address Owner's Occupation
- --------------------------------------- -----------------------------------
Estimated Annual Family Income Estimated Net Worth
Investment Objective: [ ] Income [ ] Income & Growth [ ] Growth
[ ] Aggressive Growth [ ] Safety of Principal
Is Owner or Annuitant associated with or employed by a member of the NASD?
[ ] Yes [ ] No
- --------------------------------
10. SPECIAL INSTRUCTIONS
- --------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Accumulator page 2
(5/97) cat. no 126737
<PAGE>
- ---------------------------------------------------------
11. ALLOCATION AMONG INVESTMENT OPTIONS CHOOSE A, B OR C
- ---------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(1) GUARANTEE PERIODS
February 15, 1998... %
- --------------------------- February 15, 1999... %
A. [ ] SELF-DIRECTED February 15, 2000... %
ALLOCATION February 15, 2001... %
Allocate initial February 15, 2002... %
contribution between February 15, 2003... %
"(1) GUARANTEE PERIODS" February 15, 2004... %
and "(2) INVESTMENT FUNDS." February 15, 2005... %
The total of (1) and (2) February 15, 2006... %
must equal 100%. February 15, 2007... %
- ---------------------------
- ---------------------------
B. [ ] PRINCIPAL ASSURANCE SUBTOTAL...... %(1)
Under Principal (2) INVESTMENT FUNDS
Assurance, an EQUITY SERIES:
amount is allocated to a DOMESTIC EQUITY
Guarantee Alliance Common Stock............ %
Period so that the Alliance Growth & Income......... %
maturity value EQ/Putnam Growth & Income Value.. %
will equal the initial MFS Research..................... %
contribution Merrill Lynch Basic Value %
in the year selected. Equity.........................
T. Rowe Price Equity Income...... %
SELECT MATURITY YEAR: INTERNATIONAL EQUITY
[ ] 2004 [ ] 2005 Alliance Global.................. %
[ ] 2006 [ ] 2007 Alliance International........... %
Morgan Stanley Emerging %
Allocate the remaining Markets Equity*..................
amount of the initial T. Rowe Price International %
contribution only to Stock............................
"(2) INVESTMENT FUNDS." AGGRESSIVE EQUITY
The total must equal 100%. Alliance Aggressive Stock........ %
___________________________ Alliance Small Cap Growth........ %
- ---------------------------
C. [ ] SPECIAL DOLLAR COST MFS Emerging Growth Companies.... %
AVERAGING Warburg Pincus Small Company %
Value............................
The initial contribution ASSET ALLOCATION SERIES:
is allocated to the Alliance Conservative Investors %
Alliance Money Market Fund. Alliance Growth Investors........ %
Thereafter, amounts are EQ/Putnam Balanced............... %
transferred over a twelve Merrill Lynch World Strategy..... %
month period from the FIXED INCOME SERIES:
Alliance Money Market AGGRESSIVE FIXED INCOME
Fund to the other Alliance High Yield.............. %
Investment Funds DOMESTIC FIXED INCOME
based on the percentages Alliance Intermediate Gov't. %
you indicate under Securities.......................
"(2) INVESTMENT FUNDS." Alliance Money Market............ %
The total must equal 100%.
Do not indicate a
percentage for the
Alliance Money Market Fund.
- --------------------------
SUBTOTAL..... %(2)
TOTAL.... 100%
</TABLE>
* Will become available on or about September 2, 1997.
Accumulator page 3
(5/97) cat. no 126737
<PAGE>
- -------------
12. AGREEMENT
- -------------
All information and statements furnished in this enrollment form/application
are true and complete to the best of my knowledge and belief. I understand and
acknowledge that no agent has the authority to make or modify any
Certificate/Contract on behalf of Equitable Life, or to waive or alter any of
Equitable Life's rights and regulations. I understand that the Annuity Account
Value attributable to allocations to the Investment Funds and variable annuity
benefit payments, if a variable settlement option has been elected, may
increase or decrease and are not guaranteed as to dollar amount. I understand
that amounts allocated to the Guaranteed Period Account may increase or
decrease in accordance with a market value adjustment until the Expiration
Date. Equitable Life may accept amendments to this enrollment form/application
provided by me or under my authority. I understand that any change in benefits
applied for or age at issue must be agreed to in writing on an amendment.
<TABLE>
<CAPTION>
<S> <C> <C>
X
- ---------------------------------------------------- -------- ------------------------
Proposed Annuitant's Signature Date Signed at: City, State
X
- ---------------------------------------------------- -------- ------------------------
Proposed Owner's Signature (If other than Annuitant) Date Signed at: City, State
</TABLE>
(NEW YORK AND OREGON RESIDENTS SIGN ABOVE, ALL OTHER RESIDENTS SIGN BELOW.)
COLORADO: IT IS UNLAWFUL TO KNOWINGLY PROVIDE FALSE, INCOMPLETE, OR MISLEADING
FACTS OR INFORMATION TO AN INSURANCE COMPANY FOR THE PURPOSE OF DEFRAUDING OR
ATTEMPTING TO DEFRAUD THE COMPANY. PENALTIES MAY INCLUDE IMPRISONMENT, FINES,
DENIAL OF INSURANCE, AND CIVIL DAMAGES. ANY INSURANCE COMPANY OR AGENT OF AN
INSURANCE COMPANY WHO KNOWINGLY PROVIDES FALSE, INCOMPLETE OR MISLEADING FACTS
OR INFORMATION TO A CONTRACTOWNER OR CLAIMANT WITH REGARD TO A SETTLEMENT OR
AWARD PAYABLE FROM INSURANCE PROCEEDS SHALL BE REPORTED TO THE COLORADO
DIVISION OF INSURANCE WITHIN THE DEPARTMENT OF REGULATORY AGENCIES.
FLORIDA: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO INJURE, DEFRAUD OR DECEIVE
AN INSURER FILES A STATEMENT OF CLAIM OR AN APPLICATION CONTAINING ANY FALSE,
INCOMPLETE OR MISLEADING INFORMATION IS GUILTY OF A FELONY OF THE THIRD DEGREE.
NEW JERSEY: ANY PERSON WHO KNOWINGLY FILES A STATEMENT OF CLAIM OR AN
ENROLLMENT FORM CONTAINING ANY FALSE, OR MISLEADING INFORMATION IS SUBJECT TO
CRIMINAL AND CIVIL PENALTIES.
KENTUCKY: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE
COMPANY OR OTHER PERSON FILES AN ENROLLMENT FORM FOR INSURANCE OR STATEMENT OF
CLAIM CONTAINING ANY MATERIALLY FALSE INFORMATION OR CONCEALS FOR THE PURPOSE
OF MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND SUBJECTS SUCH PERSON TO CRIMINAL
AND CIVIL PENALTIES.
ALL OTHER STATES: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY FILES AN ENROLLMENT FORM/APPLICATION OR STATEMENT OF CLAIM
CONTAINING ANY MATERIALLY FALSE, MISLEADING OR INCOMPLETE INFORMATION IS GUILTY
OF A CRIME WHICH MAY BE PUNISHABLE UNDER STATE OR FEDERAL LAW.
<TABLE>
<CAPTION>
<S> <C> <C>
X
- ---------------------------------------------------- -------- ------------------------
Proposed Annuitant's Signature Date Signed at: City, State
X
- ---------------------------------------------------- -------- ------------------------
Proposed Owner's Signature (If other than Annuitant) Date Signed at: City, State
</TABLE>
Do you have reason to believe that any existing life insurance or annuity has
been surrendered, withdrawn from, loaned against, changed or otherwise reduced
in value, or replaced in connection with this transaction assuming the
Certificate/Contract applied for will be issued on the life of the Annuitant?
[ ] Yes [ ] No
Florida License ID No(s). ________________________________________
1)
----------------------------------------------------------------------------
Agent Signature Print Name & No. of Agent
----------------------------------------------------------------------------
Agent Soc. Sec. No. Agency Code %
2)
----------------------------------------------------------------------------
Agent Signature Print Name & No. of Agent
----------------------------------------------------------------------------
Agent Soc. Sec. No. Agency Code %
Accumulator page 4
(5/97) cat. no 126737
<PAGE>
INCOME MANAGER(SM) ROLLOVER IRA
[INSERT EQ LOGO] COMBINATION VARIABLE AND FIXED DEFERRED
ANNUITY (QUALIFIED)
Enrollment Form under Group Annuity Contract No. AC 7627
and Application for Individual Contract
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
- -------------------------------------------------------------------------------
- ------------------
1. OWNER/ANNUITANT
- ------------------
- --------------------------------------- -----------------------------------
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
- --------------------------------------- -----------------------------------
Address (Street, City, State, Zip Code) Social Security No.
- --------------------- -------------------------- [ ] Male [ ] Female
Home Phone Number Office Phone Number
- ---------------------------------------------------------------------------
2. BENEFICIARY(IES) IF MORE THAN ONE - INDICATE %. TOTAL MUST EQUAL 100%.
- ---------------------------------------------------------------------------
- ------------------------------- --------------------------------- --------
Name (First, Middle, Last) Relationship to Annuitant %
- ------------------------------- --------------------------------- --------
Name (First, Middle, Last) Relationship to Annuitant %
- ------------------------------- --------------------------------- --------
Name (First, Middle, Last) Relationship to Annuitant %
- ------------------------------- --------------------------------- --------
Name (First, Middle, Last) Relationship to Annuitant %
[ ] Check this box to designate your spouse as the Successor Owner/Annuitant
and complete the following information. Your spouse must also be named as
the sole primary beneficiary.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ---------------------------- --------------------------------------- [ ] Male [ ] Female
Spouse's Social Security No. Spouse's Date of Birth (Month/Day/Year)
</TABLE>
- ---------------------------
3. ANNUITY COMMENCEMENT AGE
- ---------------------------
SPECIFY AGE:__________________ (Age 90 if not indicated)
- -----------------------------------
4. INITIAL CONTRIBUTION INFORMATION
- -----------------------------------
TOTAL INITIAL CONTRIBUTION: $__________________________
METHOD OF PAYMENT: [ ] By check payable to Equitable Life [ ] By wire
SOURCE OF FUNDS: [ ] Rollover from other IRA [ ] Direct Rollover from
qualified plan or TSA [ ] Direct Transfer from other IRA
- ------------------------------------------------------------------------
5. BASEBUILDER GUARANTEED BENEFIT ELECTION (NOT APPLICABLE FOR NEW YORK
RESIDENTS) ISSUE AGES 20 THROUGH 75 MUST SELECT PLAN A OR PLAN B. FOR
ISSUE AGES 76 THROUGH 78, PLAN B WILL APPLY.
- ------------------------------------------------------------------------
[ ] PLAN A* (baseBUILDER Combined Guaranteed Minimum Death Benefit and
Guaranteed Minimum Income Benefit)
[ ] 6% to Age 80 Benefit OR [ ] 6% to Age 70 Benefit (Issue ages 65 and under)
*6% to Age 80 Benefit will apply if no benefit is selected.
[ ] PLAN B (Guaranteed Minimum Death Benefit only)
- -------------------------------------------------------------------------------
INCOME MANAGEMENT GROUP, P.O. BOX 1547, SECAUCUS, N.J. 07096-1547
(800) 338-3434
(5/97) PART OF INCOME MANAGER PORTFOLIO cat. no. 126736
<PAGE>
- -------------------------
6. WITHDRAWALS (OPTIONAL)
- -------------------------
A. [ ] SUBSTANTIALLY EQUAL PAYMENT WITHDRAWALS. Available only if you are
below age 59 1/2.
Frequency: [ ] Monthly [ ] Quarterly [ ] Annually
Start Date: ________________ (Month, Day)
Calculation Basis: [ ] Single Life [ ] Joint and 100% to Survivor
B. [ ] SYSTEMATIC WITHDRAWALS. Available only if you are age 59 1/2 to 70 1/2.
Frequency: [ ] Monthly [ ] Quarterly [ ] Annually
Start Date: ________________ (Month, Day)
Amount of Withdrawal: $_______________ or __________%
C. [ ] MINIMUM DISTRIBUTION WITHDRAWALS. Available only if you have elected
Self-Directed Allocation and you are age 70 1/2 or older.
Minimum Distribution Withdrawals based on the period of:
[ ] Owner/Annuitant's life expectancy only [ ] joint life expectancies of
Owner/Annuitant and spouse
[ ] joint life expectancies of Owner/Annuitant and non-spouse
beneficiary
If joint life, indicate joint Annuitant's date of birth: ______________
Do you want your life expectancy recalculated? [ ] yes [ ] no
If you elected joint life expectancies, do you want your life expectancies
recalculated? [ ] yes [ ] no
WITHHOLDING ELECTION INFORMATION (Please refer to enrollment form/application
instructions before completing)
A. [ ] I do not want to have Federal income tax withheld. (U.S. residence
address and Social Security No. required)
B. [ ] I want to have Federal income tax withheld from each payment.
- --------------
7. SUITABILITY
- --------------
A. Did you receive the INCOME MANAGER ROLLOVER IRA prospectus? [ ] Yes [ ] No
- ---------------------------- ---------------------------------------------
Date of Prospectus Date(s) of any Supplement(s) to Prospectus
B. Will any existing life insurance or annuity be (or has it been)
surrendered, withdrawn from, loaned against, changed or otherwise reduced in
value, or replaced in connection with this transaction assuming the
Certificate/ Contract applied for will be issued? [ ] Yes [ ] No If Yes,
complete the following:
- ---------------- ----------------- ------------ ----------------------------
Year Issued Type of Plan Company Certificate/Contract Number
C. National Association of Securities Dealers, Inc. (NASD) information (as
required by the NASD)
- -------------------------------------------------------------------------------
Employer's Name & Address Owner/Annuitant's Occupation
- ---------------------------------------- ---------------------------------
Estimated Annual Family Income Estimated Net Worth
Investment Objective: [ ] Income [ ] Income & Growth [ ] Growth
[ ] Aggressive Growth [ ] Safety of Principal
Is Owner/Annuitant associated with or employed by a member of the NASD?
[ ] Yes [ ] No
- -----------------------
8. SPECIAL INSTRUCTIONS
- -----------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Rollover IRA page 3
(5/97) cat. no 126736
<PAGE>
- --------------------------------------------------------
9. ALLOCATION AMONG INVESTMENT OPTIONS CHOOSE A, B OR C
- --------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(1) GUARANTEE PERIODS
February 15, 1998... %
- --------------------------- February 15, 1999... %
A. [ ] SELF-DIRECTED February 15, 2000... %
ALLOCATION February 15, 2001... %
Allocate initial February 15, 2002... %
contribution between February 15, 2003... %
"(1) GUARANTEE PERIODS" February 15, 2004... %
and "(2) INVESTMENT FUNDS." February 15, 2005... %
The total of (1) and (2) February 15, 2006... %
must equal 100%. February 15, 2007... %
- ---------------------------
- ---------------------------
B. [ ] PRINCIPAL ASSURANCE SUBTOTAL...... %(1)
Under Principal (2) INVESTMENT FUNDS
Assurance, an EQUITY SERIES:
amount is allocated to a DOMESTIC EQUITY
Guarantee Alliance Common Stock............ %
Period so that the Alliance Growth & Income......... %
maturity value EQ/Putnam Growth & Income Value %
will equal the initial MFS Research..................... %
contribution Merrill Lynch Basic Value Equity. %
in the year selected.
T. Rowe Price Equity Income...... %
SELECT MATURITY YEAR: INTERNATIONAL EQUITY
[ ] 2004 [ ] 2005 Alliance Global.................. %
[ ] 2006 [ ] 2007 Alliance International........... %
Morgan Stanley Emerging %
Allocate the remaining Markets Equity*..................
amount of the initial T. Rowe Price International %
contribution only to Stock............................
"(2) INVESTMENT FUNDS." AGGRESSIVE EQUITY
The total must equal 100%. Alliance Aggressive Stock........ %
- --------------------------- Alliance Small Cap Growth........ %
MFS Emerging Growth Companies.... %
- ---------------------------
C. [ ] SPECIAL DOLLAR COST
AVERAGING Warburg Pincus Small Company %
Value............................
The initial contribution ASSET ALLOCATION SERIES:
is allocated to the Alliance Conservative Investors %
Alliance Money Market Fund. Alliance Growth Investors........ %
Thereafter, amounts are EQ/Putnam Balanced............... %
transferred over a twelve Merrill Lynch World Strategy..... %
month period from the FIXED INCOME SERIES:
Alliance Money Market AGGRESSIVE FIXED INCOME
Fund to the other Alliance High Yield.............. %
Investment Funds DOMESTIC FIXED INCOME
based on the percentages Alliance Intermediate Gov't. %
you indicate under Securities.......................
"(2) INVESTMENT FUNDS." Alliance Money Market............ %
The total must equal 100%.
Do not indicate a
percentage for the
Alliance Money Market
- ---------------------------
SUBTOTAL..... %(2)
TOTAL.... 100%
</TABLE>
* Will become available on or about September 2, 1997.
Rollover IRA page 4
(5/97) cat. no 126736
<PAGE>
- -------------
10. AGREEMENT
- -------------
All information and statements furnished in this enrollment form/application
are true and complete to the best of my knowledge and belief. I understand and
acknowledge that no agent has the authority to make or modify any
Certificate/Contract on behalf of Equitable Life, or to waive or alter any of
Equitable Life's rights and regulations. I understand that the Annuity Account
Value attributable to allocations to the Investment Funds and variable annuity
benefit payments, if a variable settlement option has been elected, may
increase or decrease and are not guaranteed as to dollar amount. I understand
that amounts allocated to the Guaranteed Period Account may increase or
decrease in accordance with a market value adjustment until the Expiration
Date. Equitable Life may accept amendments to this enrollment form/application
provided by me or under my authority. I understand that any change in benefits
applied for or age at issue must be agreed to in writing on an amendment.
X
- ------------------------------------- ------------ -----------------------
Proposed Owner /Annuitant's Signature Date Signed at: City, State
(NEW YORK AND OREGON RESIDENTS SIGN ABOVE, ALL OTHER RESIDENTS SIGN BELOW.)
COLORADO: IT IS UNLAWFUL TO KNOWINGLY PROVIDE FALSE, INCOMPLETE, OR MISLEADING
FACTS OR INFORMATION TO AN INSURANCE COMPANY FOR THE PURPOSE OF DEFRAUDING OR
ATTEMPTING TO DEFRAUD THE COMPANY. PENALTIES MAY INCLUDE IMPRISONMENT, FINES,
DENIAL OF INSURANCE, AND CIVIL DAMAGES. ANY INSURANCE COMPANY OR AGENT OF AN
INSURANCE COMPANY WHO KNOWINGLY PROVIDES FALSE, INCOMPLETE OR MISLEADING FACTS
OR INFORMATION TO A CONTRACTOWNER OR CLAIMANT WITH REGARD TO A SETTLEMENT OR
AWARD PAYABLE FROM INSURANCE PROCEEDS SHALL BE REPORTED TO THE COLORADO
DIVISION OF INSURANCE WITHIN THE DEPARTMENT OF REGULATORY AGENCIES.
FLORIDA: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO INJURE, DEFRAUD OR DECEIVE
AN INSURER FILES A STATEMENT OF CLAIM OR AN APPLICATION CONTAINING ANY FALSE,
INCOMPLETE OR MISLEADING INFORMATION IS GUILTY OF A FELONY OF THE THIRD DEGREE.
NEW JERSEY: ANY PERSON WHO KNOWINGLY FILES A STATEMENT OF CLAIM OR AN
ENROLLMENT FORM CONTAINING ANY FALSE, OR MISLEADING INFORMATION IS SUBJECT TO
CRIMINAL AND CIVIL PENALTIES.
KENTUCKY: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE
COMPANY OR OTHER PERSON FILES AN ENROLLMENT FORM FOR INSURANCE OR STATEMENT OF
CLAIM CONTAINING ANY MATERIALLY FALSE INFORMATION OR CONCEALS FOR THE PURPOSE
OF MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND SUBJECTS SUCH PERSON TO CRIMINAL
AND CIVIL PENALTIES.
ALL OTHER STATES: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY FILES AN ENROLLMENT FORM/APPLICATION OR STATEMENT OF CLAIM
CONTAINING ANY MATERIALLY FALSE, MISLEADING OR INCOMPLETE INFORMATION IS GUILTY
OF A CRIME WHICH MAY BE PUNISHABLE UNDER STATE OR FEDERAL LAW.
X
- ------------------------------------- ------------ -----------------------
Proposed Owner /Annuitant's Signature Date Signed at: City, State
Do you have reason to believe that any existing life insurance or annuity has
been surrendered, withdrawn from, loaned against, changed or otherwise reduced
in value, or replaced in connection with this transaction assuming the
Certificate/Contract applied for will be issued on the life of the Annuitant?
[ ] Yes [ ] No
Florida License ID No(s). ________________________________________
1)
-----------------------------------------------------------------------------
Agent Signature Print Name & No. of Agent
-----------------------------------------------------------------------------
Agent Soc. Sec. No. Agency Code %
2)
-----------------------------------------------------------------------------
Agent Signature Print Name & No. of Agent
-----------------------------------------------------------------------------
Agent Soc. Sec. No. Agency Code %
<PAGE>
EQUITABLE ACCUMULATOR
[INSERT EQ LOGO] COMBINATION VARIABLE AND FIXED DEFERRED
ANNUITY
Enrollment Form under Group Annuity Contract
THE EQUITABLE LIFE ASSURANCE No. AC7625, AC7627 and Application for
SOCIETY OF THE UNITED STATES Individual Contract
1. PROGRAM [ ] IRA (Individual) [ ] IRA (Custodial Retirement Account)
[ ] Non-Qualified (NQ)
2. OWNER [ ] Individual [ ] Custodian (under Custodial Retirement Account)
[ ] Trustee (for an individual)
- --------------------------------------- ------------------------------------
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
- --------------------------------------- ------------------------------------
Address (Street, City, State, Zip Code) Social Security No./TIN
- --------------------------------------- ------------------------------------
Home Phone Number Office Phone Number
[ ] Male [ ] Female
3. ANNUITANT IF OTHER THAN OWNER
- --------------------------------------- ------------------------------------
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
- --------------------------------------- ------------------------------------
Address (Street, City, State, Zip Code) Social Security No./TIN
- -------------------- -------------------- --------------------
Home Phone Number Office Phone Number Relationship to Owner
[ ] Male [ ] Female
4. BENEFICIARY(IES) IF MORE THAN ONE - INDICATE %. TOTAL MUST EQUAL 100%.
- ----------------------------- ----------------------------- --------
Name (First, Middle, Last) Relationship to Annuitant %
- ----------------------------- ----------------------------- --------
Name (First, Middle, Last) Relationship to Annuitant %
- ----------------------------- ----------------------------- --------
Name (First, Middle, Last) Relationship to Annuitant %
- ----------------------------- ----------------------------- --------
Name (First, Middle, Last) Relationship to Annuitant %
[ ] Check this box to designate your spouse as the Successor Owner/Annuitant
and complete the following information.
Your spouse must also be named as the sole primary beneficiary.
- -------------------------------- --------------------------------
Spouse's Social Security No. Spouse's Date of Birth (Month/Day/Year)
[ ] Male [ ] Female
5. ANNUITY COMMENCEMENT AGE
SPECIFY AGE:__________________ (Annuitant age 90 if not indicated)
6. INITIAL CONTRIBUTION INFORMATION
TOTAL INITIAL CONTRIBUTION: $ ________________
METHOD OF PAYMENT: [ ] By check payable to Equitable Life [ ] By wire
SOURCE OF FUNDS: [ ] Rollover from other IRA
[ ] Direct Rollover from qualified plan or TSA
[ ] Direct Transfer from other IRA
[ ] 1035 Exchange
- -------------------------------------------------------------------------------
INCOME MANAGEMENT GROUP, P.O. BOX 1547, SECAUCUS, N.J. 07096-1547
(800) 338-3434
(5/97)
<PAGE>
7. baseBUILDER GUARANTEE ELECTION (NOT APPLICABLE FOR NEW YORK RESIDENTS)
[ ] I choose to elect the baseBUILDER guarantee.
Select a death benefit option: [ ] 6% to Age 80 Roll Up OR
[ ]Annual Ratchet to Age 80
[ ] I choose to elect the Guaranteed Minimum Death Benefit Only.
Select a death benefit option: [ ] 6% to Age 80 Roll Up OR
[ ]Annual Ratchet to Age 80
8. WITHDRAWALS (OPTIONAL) OPTIONS A AND C CAN BE ELECTED ONLY UNDER IRA
A. [ ] SUBSTANTIALLY EQUAL PAYMENT WITHDRAWALS. Available only under IRA if
you are below age 59 1/2.
Frequency: [ ] Monthly [ ] Quarterly [ ] Annually
Start Date: ________________ (Month, Day)
Calculation Basis: [ ] Single Life [ ] Joint and 100% to Survivor
B. [ ] SYSTEMATIC WITHDRAWALS. Under IRA, available only if you are age
59 1/2 to 70 1/2.
Frequency: [ ] Monthly [ ] Quarterly [ ] Annually
Start Date: ________________ (Month, Day)
Amount of Withdrawal: $_______________ or __________%
C. [ ] MINIMUM DISTRIBUTION WITHDRAWALS. Available only if you have elected
Self-Directed Allocation under IRA and you are age 70 1/2 or older.
Minimum Distribution Withdrawals based on the period of:
[ ] Owner/Annuitant's life expectancy only
[ ] joint life expectancies of Owner/Annuitant and spouse
[ ] joint life expectancies of Owner/Annuitant and non-spouse beneficiary
If joint life, indicate joint Annuitant's date of birth: __________________
Do you want your life expectancy recalculated? [ ] yes [ ] no
If you elected joint life expectancies, do you want your life expectancies
recalculated? [ ] yes [ ] no
WITHHOLDING ELECTION INFORMATION (Please refer to enrollment form/application
instructions before completing)
A. [ ] I do not want to have Federal income tax withheld. (U.S. residence
address and Social Security No./TIN required)
B. [ ] I want to have Federal income tax withheld from each payment.
9. SUITABILITY
A. Did you receive the EQUITABLE ACCUMULATOR prospectus? [ ] Yes [ ] No
- ----------------------------- ------------------------------------------
Date of Prospectus Date(s) of any Supplement(s) to Prospectus
B. Will any existing life insurance or annuity be (or has it been)
surrendered, withdrawn from, loaned against, changed or otherwise reduced
in value, or replaced in connection with this transaction assuming the
Certificate/Contract applied for will be issued? [ ] Yes [ ] No
If Yes, complete the following:
- ------------- -------------- --------- ----------------------------
Year Issued Type of Plan Company Certificate/Contract Number
10. SPECIAL INSTRUCTIONS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(5/97) Accumulator page 2
<PAGE>
<TABLE>
<S> <C> <C>
11. ALLOCATION AMONG INVESTMENT OPTIONS CHOOSE A, B OR C
(1) GUARANTEE PERIODS
-----------------
February 15, 1998............._______%
A. [ ] SELF-DIRECTED ALLOCATION February 15, 1999............._______%
Allocate initial contribution
Allocate initial contribution between February 15, 2000............._______%
"(1) GUARANTEE PERIODS" and
"(2) INVESTMENT FUNDS." The February 15, 2001............._______%
total of (1) and (2) must equal 100%.
February 15, 2002............._______%
February 15, 2003............._______%
February 15, 2004............._______%
February 15, 2005............._______%
February 15, 2006............._______%
February 15, 2007............._______%
SUBTOTAL............ ________% (1)
B. [ ] PRINCIPAL ASSURANCE
Under Principal Assurance, an (2) INVESTMENT FUNDS
amount is allocated to a Guarantee ----------------
Period so that the maturity value EQ/Putnam Growth & Income Value.............. _________________ %
will equal the initial contribution
in the year selected. EQ/Putnam Investors Growth................... _________________ %
SELECT MATURITY YEAR: EQ/Putnam International Equity............... _________________ %
[ ] 2004 [ ] 2005 [ ] 2006 [ ] 2007 MFS Research................................. _________________ %
MFS Emerging Growth Companies................ _________________ %
Allocate the remaining amount of
the initial contribution only to Merrill Lynch Basic Value Equity............. _________________ %
"(2) INVESTMENT FUNDS."
Merrill Lynch World Strategy................. _________________
The total must equal 100%.
Alliance Money Market........................ _________________ %
Alliance High Yield.......................... _________________ %
Alliance Common Stock........................ _________________ %
Alliance Aggressive Stock.................... _________________ %
Alliance Small Cap Growth.................... _________________ %
SUBTOTAL........... _______________% (2)
C. [ ] SPECIAL DOLLAR COST
TOTAL........ 100%
AVERAGING The initial contribution is allocated to the
Alliance Money Market Fund. Thereafter, amounts are transferred over a
twelve month period from the Alliance Money Market Fund to the other
Investment Funds based on the percentages you indicate under "(2)
INVESTMENT FUNDS." The total must equal 100%. Do not indicate a
percentage for the Alliance Money Market Fund.
</TABLE>
(5/97) Accumulator page 3
<PAGE>
12. AGREEMENT
All information and statements furnished in this enrollment
form/application are true and complete to the best of my knowledge and
belief. I understand and acknowledge that no registered representative
has the authority to make or modify any Certificate/Contract on behalf of
Equitable Life, or to waive or alter any of Equitable Life's rights and
regulations. I understand that the Annuity Account Value attributable to
allocations to the Investment Funds and variable annuity benefit
payments, if a variable settlement option has been elected, may increase
or decrease and are not guaranteed as to dollar amount. I understand that
amounts allocated to the Guaranteed Period Account may increase or
decrease in accordance with a market value adjustment until the
Expiration Date. Equitable Life may accept amendments to this enrollment
form/application provided by me or under my authority. I understand that
any change in benefits applied for or age at issue must be agreed to in
writing on an amendment.
X
----------------------------- -------------- ----------------------------
Proposed Annuitant's Signature Date Signed at: City, State
X
----------------------------- -------------- ----------------------------
Proposed Owner's Signature Date Signed at: City, State
(If other than Annuitant)
(NEW YORK AND OREGON RESIDENTS SIGN ABOVE, ALL RESIDENTS SIGN BELOW.)
COLORADO: IT IS UNLAWFUL TO KNOWINGLY PROVIDE FALSE, INCOMPLETE, OR
MISLEADING FACTS OR INFORMATION TO AN INSURANCE COMPANY FOR THE PURPOSE
OF DEFRAUDING OR ATTEMPTING TO DEFRAUD THE COMPANY. PENALTIES MAY INCLUDE
IMPRISONMENT, FINES, DENIAL OF INSURANCE, AND CIVIL DAMAGES. ANY
INSURANCE COMPANY OR REGISTERED REPRESENTATIVE OF AN INSURANCE COMPANY
WHO KNOWINGLY PROVIDES FALSE, INCOMPLETE OR MISLEADING FACTS OR
INFORMATION TO A CONTRACTOWNER OR CLAIMANT WITH REGARD TO A SETTLEMENT OR
AWARD PAYABLE FROM INSURANCE PROCEEDS SHALL BE REPORTED TO THE COLORADO
DIVISION OF INSURANCE WITHIN THE DEPARTMENT OF REGULATORY AGENCIES.
FLORIDA: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO INJURE, DEFRAUD OR
DECEIVE AN INSURER FILES A STATEMENT OF CLAIM OR AN APPLICATION
CONTAINING ANY FALSE, INCOMPLETE OR MISLEADING INFORMATION IS GUILTY OF A
FELONY OF THE THIRD DEGREE.
NEW JERSEY: ANY PERSON WHO KNOWINGLY FILES A STATEMENT OF CLAIM OR AN
ENROLLMENT FORM CONTAINING ANY FALSE, OR MISLEADING INFORMATION IS
SUBJECT TO CRIMINAL AND CIVIL PENALTIES.
KENTUCKY: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY OR OTHER PERSON FILES AN ENROLLMENT FORM FOR INSURANCE
OR STATEMENT OF CLAIM CONTAINING ANY MATERIALLY FALSE INFORMATION OR
CONCEALS FOR THE PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY FACT
MATERIAL THERETO COMMITS A FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND
SUBJECTS SUCH PERSON TO CRIMINAL AND CIVIL PENALTIES.
ALL OTHER STATES: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY FILES AN ENROLLMENT FORM/APPLICATION OR STATEMENT OF
CLAIM CONTAINING ANY MATERIALLY FALSE, MISLEADING OR INCOMPLETE
INFORMATION IS GUILTY OF A CRIME WHICH MAY BE PUNISHABLE UNDER STATE OR
FEDERAL LAW.
X
----------------------------- -------------- ----------------------------
Proposed Annuitant's Signature Date Signed at: City, State
X
----------------------------- -------------- ----------------------------
Proposed Owner's Signature Date Signed at: City, State
(If other than Annuitant)
...............................................................................
Do you have reason to believe that any existing life insurance or annuity
has been surrendered, withdrawn from, loaned against, changed or
otherwise reduced in value, or replaced in connection with this
transaction assuming the Certificate/Contract applied for will be issued
on the life of the Annuitant? [ ] Yes [ ] No
Florida License ID No(s). ________________________________________
- -------------------------------------------------------------------------------
Registered Representative Signature Print Name & No. of Registered
Representative
- -------------------------------------------------------------------------------
Registered Representative Broker-Dealer/Branch Client Account No.
Soc. Sec. No./TIN
(5/97) Accumulator page 4
<PAGE>
INCOME MANAGER(SM) (IRA AND NQ)
[INSERT EQ LOGO] Enrollment Form under Group Annuity Contract
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
No. AC7625, AC7627 and Application for
Individual Contract
- ------------------------------------------------------------------------------
1. PROGRAM |_| IRA |_| Non-Qualified (NQ)
2. OWNER/ANNUITANT
------------------------------------- --------------------------------
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
------------------------------------- --------------------------------
Address (Street, City, State, Zip Code) Social Security No.
----------------- ------------------ |_| Male |_| Female
Home Phone Number Office Phone Number
3. BENEFICIARY(IES) IF MORE THAN ONE - INDICATE %. TOTAL MUST EQUAL 100%.
----------------------------------- -------------------------- ----------
Name (First, Middle, Last) Relationship to Annuitant %
----------------------------------- -------------------------- ----------
Name (First, Middle, Last) Relationship to Annuitant %
----------------------------------- -------------------------- ----------
Name (First, Middle, Last) Relationship to Annuitant %
----------------------------------- -------------------------- ----------
Name (First, Middle, Last) Relationship to Annuitant %
|_| You may designate your spouse as the Successor Owner/Annuitant by
checking the box and completing the following information. Your spouse
must also be named as the sole primary beneficiary.
--------------------------- ------------------------ [ ] Male [ ] Female
Spouse's Social Security No. Spouse's Date of Birth (Month/Day/Year)
4. INITIAL CONTRIBUTION INFORMATION
TOTAL INITIAL CONTRIBUTION: $______________________________
METHOD OF PAYMENT: |_| By check payable to Equitable Life |_| By wire
SOURCE OF FUNDS: |_| Rollover from other IRA
|_| Direct Rollover from qualified plan or TSA
|_| Direct Transfer from other IRA
|_| 1035 Exchange
5. INCOME MANAGER CHOOSE A OR B
^ A. |_| LIFE ANNUITY WITH A PERIOD CERTAIN.
I. PATTERN OF PAYMENTS:
(A) |_| Guaranteed Level Period Certain: __________ years
Payment Start Date: ________________(month, year)
(B) |_| Guaranteed Increasing (Not available for IRA Certificates/
Contracts) Payment Start Date: _____________(month, year)
II. PAYMENT MODE: |_| Monthly |_| Quarterly |_| Annually
III. FORM OF ANNUITY: |_| Single Life |_| Joint and Survivor
(Joint Annuitant must be sole primary beneficiary named
in Section 3.)
If Joint and Survivor, select payout to survivor:
|_| 100% |_| 66.67% |_| 50%
---------------------------------------------------------------------
Joint Annuitant Name (First, Middle, Last)
---------------------------------------------
Date of Birth (Month/Day/Year)
---------------------------------------
Social Security No.
----------------------------------------------- |_| Male |_| Female
Address (Street, City, State, Zip Code)
^ B. |_| PERIOD CERTAIN. Period Certain: __________ years
Payment Mode: |_| Monthly |_| Quarterly |_| Annually in ___(month)
______________________________________________________________________________
INCOME MANAGEMENT GROUP, P.O. BOX 1547, SECAUCUS, N.J. 07096-1547
(800) 338-3434
PART OF INCOME MANAGER PORTFOLIO
<PAGE>
6. WITHHOLDING ELECTION INFORMATION PLEASE REFER TO ENROLLMENT
FORM/APPLICATION INSTRUCTIONS BEFORE COMPLETING
A. |_| I do not want to have Federal income tax withheld. (U.S.
residence address and Social Security No. required)
B. |_| I want to have Federal income tax withheld from each payment.
(You may also designate an additional amount in line "C.")
Number of Allowances: _________: |_| Single |_| Married
|_| Married, but withhold at a higher single rate.
C. |_| I want the following additional amount withheld from each
payment $______________. (You must also complete line "B.")
7. SUITABILITY
A. Did you receive the INCOME MANAGER (IRA and NQ) prospectus?
|_| Yes |_| No
-------------------------------------------------------------------------
Date of Prospectus Date(s) of any Supplement(s) to Prospectus
B. Will any existing life insurance or annuity be (or has it been)
surrendered, withdrawn from, loaned against, changed or otherwise
reduced in value, or replaced in connection with this transaction
assuming the Certificate/Contract applied for will be issued? |_| Yes
|_| No If Yes, complete the following:
------------ ---------------- --------------- ---------------------------
Year Issued Type of Plan Company Certificate/Contract Number
C. National Association of Securities Dealers, Inc. (NASD) information
(as required by the NASD)
------------------------------------------- ----------------------------
Employer's Name & Address Owner/Annuitant's Occupation
------------------------------ ------------------------
Estimated Annual Family Income Estimated Net Worth
Investment Objective: |_| Income |_| Income & Growth |_| Growth
|_| Aggressive Growth |_| Safety of Principal
Is Owner/Annuitant associated with or employed by a member of the NASD?
|_| Yes |_| No
8. SPECIAL INSTRUCTIONS
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
<PAGE>
9. AGREEMENT
All information and statements furnished in this enrollment
form/application are true and complete to the best of my knowledge and
belief. I understand and acknowledge that no agent has the authority to
make or modify any Certificate/Contract on behalf of Equitable Life, or
to waive or alter any of Equitable Life's rights and regulations. I
understand that the Annuity Account Value may increase or decrease to
reflect any market value adjustment until the Expiration Date. Equitable
Life may accept amendments to this enrollment form/application provided
by me or under my authority. I understand that any change in benefits
applied for or age at issue must be agreed to in writing on an amendment.
X
------------------------------------ --------- --------------------------
Proposed Owner/Annuitant's Signature Date Signed at: City, State
(NEW YORK AND OREGON RESIDENTS SIGN ABOVE, ALL OTHER RESIDENTS SIGN BELOW.)
COLORADO: IT IS UNLAWFUL TO KNOWINGLY PROVIDE FALSE, INCOMPLETE, OR
MISLEADING FACTS OR INFORMATION TO AN INSURANCE COMPANY FOR THE PURPOSE
OF DEFRAUDING OR ATTEMPTING TO DEFRAUD THE COMPANY. PENALTIES MAY INCLUDE
IMPRISONMENT, FINES, DENIAL OF INSURANCE, AND CIVIL DAMAGES. ANY
INSURANCE COMPANY OR AGENT OF AN INSURANCE COMPANY WHO KNOWINGLY PROVIDES
FALSE, INCOMPLETE OR MISLEADING FACTS OR INFORMATION TO A CONTRACTOWNER
OR CLAIMANT WITH REGARD TO A SETTLEMENT OR AWARD PAYABLE FROM INSURANCE
PROCEEDS SHALL BE REPORTED TO THE COLORADO DIVISION OF INSURANCE WITHIN
THE DEPARTMENT OF REGULATORY AGENCIES.
FLORIDA: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO INJURE, DEFRAUD OR
DECEIVE AN INSURER FILES A STATEMENT OF CLAIM OR AN APPLICATION
CONTAINING ANY FALSE, INCOMPLETE OR MISLEADING INFORMATION IS GUILTY OF A
FELONY OF THE THIRD DEGREE.
NEW JERSEY: ANY PERSON WHO KNOWINGLY FILES A STATEMENT OF CLAIM OR AN
ENROLLMENT FORM CONTAINING ANY FALSE, OR MISLEADING INFORMATION IS
SUBJECT TO CRIMINAL AND CIVIL PENALTIES.
KENTUCKY: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY OR OTHER PERSON FILES AN ENROLLMENT FORM FOR INSURANCE
OR STATEMENT OF CLAIM CONTAINING ANY MATERIALLY FALSE INFORMATION OR
CONCEALS FOR THE PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY FACT
MATERIAL THERETO COMMITS A FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND
SUBJECTS SUCH PERSON TO CRIMINAL AND CIVIL PENALTIES.
ALL OTHER STATES: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY FILES AN ENROLLMENT FORM/APPLICATION OR STATEMENT OF
CLAIM CONTAINING ANY MATERIALLY FALSE, MISLEADING OR INCOMPLETE
INFORMATION IS GUILTY OF A CRIME WHICH MAY BE PUNISHABLE UNDER STATE OR
FEDERAL LAW.
X
------------------------------------ -------------- --------------------
Proposed Owner/Annuitant's Signature Date Signed at: City, State
Do you have reason to believe that any existing life insurance or annuity
has been surrendered, withdrawn from, loaned against, changed or
otherwise reduced in value, or replaced in connection with this
transaction assuming the Certificate/Contract applied for will be issued
on the life of the Annuitant? |_| Yes |_| No
Florida License ID No(s). ________________________________________
1) ______________________________________________________________________
Agent Signature Print Name & No. of Agent
______________________________________________________________________
Agent Soc. Sec. No. Agency Code %
2) ______________________________________________________________________
Agent Signature Print Name & No. of Agent
______________________________________________________________________
Agent Soc. Sec. No. Agency Code %
<PAGE>
MVA ANNUITY (IRA AND NQ)
[INSERT EQ LOGO] Enrollment Form under Group Annuity Contract
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
No. AC7625, AC7627 and Application for
Individual Contract
- ------------------------------------------------------------------------------
1. PROGRAM |_| IRA |_| Non-Qualified (NQ)
2. OWNER |_| Individual |_| Trustee (for an individual)
------------------------------------------ ------------------------------
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
------------------------------------------ ------------------------------
Address (Street, City, State, Zip Code) Social Security No./TIN
-------------------- -------------------- |_| Male |_| Female
Home Phone Number Office Phone Number
3. ANNUITANT IF OTHER THAN OWNER
------------------------------------------ ------------------------------
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
------------------------------------------ ------------------------------
Address (Street, City, State, Zip Code) Social Security No.
----------------- ------------------- --------------- |_| Male |_| Female
Home Phone Number Office Phone Number Relationship to Owner
4. BENEFICIARY(IES) IF MORE THAN ONE - INDICATE %. TOTAL MUST EQUAL 100%.
---------------------------------------- --------------------------------
Name (First, Middle, Last) Relationship to Annuitant %
---------------------------------------- --------------------------------
Name (First, Middle, Last) Relationship to Annuitant %
---------------------------------------- --------------------------------
Name (First, Middle, Last) Relationship to Annuitant %
---------------------------------------- --------------------------------
Name (First, Middle, Last) Relationship to Annuitant %
|_| Check this box to designate your spouse as the Successor
Owner/Annuitant and complete the following information. Your spouse must
also be named as the sole primary beneficiary.
---------------------------- ------------------------- |_| Male|_| Female
Spouse's Social Security No. Spouse's Date of Birth (Month/Day/Year)
5. ANNUITY COMMENCEMENT AGE
SPECIFY AGE:__________________ (Annuitant's age 90 if not indicated)
6. CONTRIBUTION INFORMATION
TOTAL CONTRIBUTION: $ _____________________
METHOD OF PAYMENT: [ ] By check payable to Equitable Life |_| By wire
SOURCE OF FUNDS: [ ] Rollover from other IRA
[ ] Direct Rollover from qualified plan or TSA
[ ] Direct Transfer from other IRA
[ ] 1035 Exchange
______________________________________________________________________________
INCOME MANAGEMENT GROUP, P.O. BOX 1547, SECAUCUS, N.J. 07096-1547
(800) 338-3434
PART OF INCOME MANAGER PORTFOLIO
<PAGE>
7. ALLOCATION TO INITIAL GUARANTEE PERIOD
Your contribution will be allocated to a Guarantee Period you select
below. In years 1998 through 2006, the Guarantee Periods will mature on
February 15th of the year selected. In the year 2007 there are two
Guarantee Periods available with Expiration Dates of February 15th and
May 15th. You may not select a Guarantee Period with a maturity beyond
the earliest available Expiration Date immediately following the Annuity
Commencement Date.
|_| 1998 |_| 1999 |_| 2000 |_| 2001 |_| 2002
|_| 2003 |_| 2004 |_| 2005 |_| 2006
|_| February 15, 2007 |_| May 15, 2007
8. SYSTEMATIC WITHDRAWALS (OPTIONAL)
FREQUENCY: |_| Monthly |_| Quarterly |_| Annually
Start Date: ________________ (Month, Day)
AMOUNT OF WITHDRAWAL: $_______________ or _______________%
WITHHOLDING ELECTION INFORMATION (Please refer to enrollment
form/application instructions before completing)
A. |_| I do not want to have Federal income tax withheld. (U.S. residence
address and Social Security No./TIN required)
B. |_| I want to have Federal income tax withheld from each payment.
9. SUCCESSOR OWNER (OPTIONAL FOR NQ) AVAILABLE ONLY IF THE OWNER AND
ANNUITANT ARE DIFFERENT PERSONS
-------------------------------- -------------------- [ ] Male [ ] Female
Name (First, Middle, Last) Date of Birth (Month/Day/Year)
------------------------------------------------ ------------------------
Address (Street, City, State, Zip Code) Social Security No./TIN
10. SUITABILITY
A. Did you receive the MVA ANNUITY (IRA and NQ) prospectus?
|_| Yes |_| No
------------------------------- -----------------------------------
Date of Prospectus Date(s) of any Supplement(s) to Prospectus
B. Will any existing life insurance or annuity be (or has it been)
surrendered, withdrawn from, loaned against, changed or otherwise
reduced in value, or replaced in connection with this transaction
assuming the Certificate/Contract applied for will be issued? |_| Yes
|_| No If Yes, complete the following:
----------- -------------------- ----------- ---------------------------
Year Issued Type of Plan Company Certificate/Contract Number
C. National Association of Securities Dealers, Inc. (NASD) information
(as required by the NASD)
_________________________________________________________________________
Employer's Name & Address Owner/Annuitant's Occupation
__________________________________ ______________________
Estimated Annual Family Income Estimated Net Worth
Investment Objective: |_| Income |_| Income & Growth
|_| Growth |_| Aggressive Growth
|_| Safety of Principal
Is Owner or Annuitant associated with or employed by a member of
the NASD? |_| Yes |_| No
11. SPECIAL INSTRUCTIONS
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
<PAGE>
12. AGREEMENT
All information and statements furnished in this enrollment
form/application are true and complete to the best of my knowledge and
belief. I understand and acknowledge that no agent has the authority to
make or modify any Certificate/Contract on behalf of Equitable Life, or
to waive or alter any of Equitable Life's rights and regulations. I
understand that the Annuity Account Value may increase or decrease to
reflect any market value adjustment until the Expiration Date. Equitable
Life may accept amendments to this enrollment form/application provided
by me or under my authority. I understand that any change in benefits
applied for or age at issue must be agreed to in writing on an amendment.
X
_______________________________ _______________ _______________________
Proposed Annuitant's Signature Date Signed at: City, State
X
_______________________________ _______________ _______________________
Owner's Signature (If other than
Proposed Annuitant) Date Signed at: City, State
(NEW YORK AND OREGON RESIDENTS SIGN ABOVE, ALL OTHER RESIDENTS SIGN BELOW.)
COLORADO: IT IS UNLAWFUL TO KNOWINGLY PROVIDE FALSE, INCOMPLETE, OR
MISLEADING FACTS OR INFORMATION TO AN INSURANCE COMPANY FOR THE PURPOSE
OF DEFRAUDING OR ATTEMPTING TO DEFRAUD THE COMPANY. PENALTIES MAY INCLUDE
IMPRISONMENT, FINES, DENIAL OF INSURANCE, AND CIVIL DAMAGES. ANY
INSURANCE COMPANY OR AGENT OF AN INSURANCE COMPANY WHO KNOWINGLY PROVIDES
FALSE, INCOMPLETE OR MISLEADING FACTS OR INFORMATION TO A CONTRACTOWNER
OR CLAIMANT WITH REGARD TO A SETTLEMENT OR AWARD PAYABLE FROM INSURANCE
PROCEEDS SHALL BE REPORTED TO THE COLORADO DIVISION OF INSURANCE WITHIN
THE DEPARTMENT OF REGULATORY AGENCIES.
FLORIDA: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO INJURE, DEFRAUD OR
DECEIVE AN INSURER FILES A STATEMENT OF CLAIM OR AN APPLICATION
CONTAINING ANY FALSE, INCOMPLETE OR MISLEADING INFORMATION IS GUILTY OF A
FELONY OF THE THIRD DEGREE.
NEW JERSEY: ANY PERSON WHO KNOWINGLY FILES A STATEMENT OF CLAIM OR AN
ENROLLMENT FORM CONTAINING ANY FALSE, OR MISLEADING INFORMATION IS
SUBJECT TO CRIMINAL AND CIVIL PENALTIES.
KENTUCKY: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY OR OTHER PERSON FILES AN ENROLLMENT FORM FOR INSURANCE
OR STATEMENT OF CLAIM CONTAINING ANY MATERIALLY FALSE INFORMATION OR
CONCEALS FOR THE PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY FACT
MATERIAL THERETO COMMITS A FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND
SUBJECTS SUCH PERSON TO CRIMINAL AND CIVIL PENALTIES.
ALL OTHER STATES: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY FILES AN ENROLLMENT FORM/APPLICATION OR STATEMENT OF
CLAIM CONTAINING ANY MATERIALLY FALSE, MISLEADING OR INCOMPLETE
INFORMATION IS GUILTY OF A CRIME WHICH MAY BE PUNISHABLE UNDER STATE OR
FEDERAL LAW.
X
------------------------------ ------------------- ----------------------
Proposed Annuitant's Signature Date Signed at: City, State
X
------------------------------ ------------------- ----------------------
Proposed Owner's Signature
(If other than Annuitant) Date Signed at: City, State
-------------------------------------------------------------------------
Do you have reason to believe that any existing life insurance or annuity
has been surrendered, withdrawn from, loaned against, changed or
otherwise reduced in value, or replaced in connection with this
transaction assuming the Certificate/Contract applied for will
be issued on the life of the Annuitant? |_| Yes |_| No
Florida License ID No(s). ________________________________________
1) _____________________________________________________________________
Agent Signature Print Name & No. of Agent
_____________________________________________________________________
Agent Soc. Sec. No. Agency Code %
2) _____________________________________________________________________
Agent Signature Print Name & No. of Agent
_____________________________________________________________________
Agent Soc. Sec. No. Agency Code %
<PAGE>
April 29, 1997
The Equitable Life Assurance Society
of the United States
1290 Avenue of the Americas
New York, New York 10104
Dear Sirs:
This opinion is furnished in connection with the filing by The Equitable
Life Assurance Society of the United States ("Equitable Life") of a Form S-3
Registration Statement of Equitable Life for the purpose of registering Market
Value Adjustment Interests under Flexible Premium Annuity Contracts
("Interests") under the Securities Act of 1933. The Interests are purchased
with contributions received under individual annuity contracts and certificates
Equitable Life offers under a group annuity contract (collectively, the
"Certificates"). As described in the prospectuses included in the Registration
Statement, the Certificates are designed to provide for retirement income
benefits.
I have examined such corporate records of Equitable Life and provisions of
the New York insurance law as are relevant to authorization and issuance of the
Certificates and such other documents and laws as I consider appropriate. On
the basis of such examination, it is my opinion that:
1. Equitable Life is a corporation duly organized and validly existing under
the laws of the State of New York.
2. The Certificates (including any Interests credited thereunder) will be
duly authorized and when issued in accordance with applicable regulatory
approvals will represent validly issued and binding obligations of
Equitable Life.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/Jonathan E. Gaines
-----------------------
Jonathan E. Gaines
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in each Prospectus
and Prospectus Supplement constituting part of this Amendment No. 1 to the
Registration Statement No. 333-24009 on Form S-3 of our report dated
February 10, 1997 appearing on page F-1 of The Equitable Life Assurance
Society of the United States' Annual Report on Form 10-K for the year ended
December 31, 1996. We also consent to the incorporation by reference of our
report on the Consolidated Financial Statement Schedules dated February 10,
1997 which appears on page F-41 of such Annual Report on Form 10-K. We also
consent to the references to us under the heading "Independent Accountants"
in each Prospectus.
Price Waterhouse LLP
New York, New York
April 29, 1997
