Incentive Life Plus(TM) (94-300)
Champion 2000(TM)(90-400) Issued by
Incentive Life 2000(TM)(90-300) EQUITABLE VARIABLE
Survivorship 2000(TM)(92-500) LIFE INSURANCE COMPANY
Incentive Life(TM)(85-300 & 88-300)
SP-Flex(TM)(87-500)
The Champion(TM)(85-11)
SP-1(TM)(85-09)
Basic Policy(TM)(85-01)
Expanded Policy(TM)(85-02)
PROSPECTUS SUPPLEMENT DATED FEBRUARY 28, 1996
This supplement updates the Prospectus you received for your variable life
insurance policy, as previously supplemented. Please read this supplement
carefully. This supplement should be attached to your Prospectus and you should
retain both for future reference. Terms used in this supplement have the same
meaning as in the Prospectus.
TELEPHONE TRANSFERS. Effective immediately, we are extending the deadline for
making telephone transfers to 4:00 p.m. Eastern Time. All other conditions for
making telephone transfers remain unchanged.
VM-516
- --------------------------------------------------------------------------------
This Supplement Should be Retained for Future Reference.
Copyright 1996
Equitable Variable Life Insurance Company
All rights reserved.
37431
<PAGE>
VARIABLE LIFE INSURANCE POLICIES
FUNDED THROUGH SEPARATE ACCOUNT FP
PROSPECTUS SUPPLEMENT DATED MAY 1, 1995
Champion 2000(TM) Survivorship 2000(TM)
Incentive Life 2000(TM) Incentive Life Plus(TM)
SP-Flex(TM) Incentive Life(TM)
Issued By
EQUITABLE VARIABLE
LIFE INSURANCE COMPANY
Principal Office Located at:
787 Seventh Avenue
New York, NY 10019
VM 501
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST
PROSPECTUS DATED MAY 1, 1995
HRT 103 (5/95)
- --------------------------------------------------------------------------------
<PAGE>
VARIABLE LIFE INSURANCE POLICIES
FUNDED THROUGH SEPARATE ACCOUNT FP
INCENTIVE LIFE PLUS (94300)
CHAMPION 2000(TM) (90400) ISSUED BY
INCENTIVE LIFE 2000(TM) (90300) EQUITABLE VARIABLE
SURVIVORSHIP 2000(TM) (92500) LIFE INSURANCE COMPANY
INCENTIVE LIFE(TM) (85-300 & 88300)
SP-FLEX(TM) (87500)
PROSPECTUS SUPPLEMENT DATED MAY 1, 1995
INTRODUCTION. This Supplement updates certain information contained in the
prospectuses for:
o INCENTIVE LIFE PLUS dated December 19, 1994, as previously supplemented;
o CHAMPION 2000 dated May 1, 1994, May 1, 1993, and November 27, 1991, as
previously supplemented;
o INCENTIVE LIFE 2000 dated May 1, 1994, May 1, 1993, and November 27,
1991, as previously supplemented;
o SURVIVORSHIP 2000 dated May 1, 1994, May 1, 1993, and August 18, 1992,
as previously supplemented;
o INCENTIVE LIFE dated May 1, 1994, May 1, 1993, February 27, 1991,
May 1, 1990 and August 29, 1989, each as previously supplemented; and
o SP-FLEX dated September 30, 1987 and August 24, 1987, each as previously
supplemented.
Please read this Supplement carefully. You should attach this Supplement to your
prospectus and any supplements thereto (which are listed in Appendix A) and
retain them for future reference. Equitable Variable Life Insurance Company
(Equitable Variable) will send you an additional copy of any prospectus or
supplement, without charge, on written request.
HUDSON RIVER TRUST INVESTMENT POLICIES. Net premiums can be allocated to the
investment divisions of our Separate Account FP or to the Guaranteed Interest
Division (except for SP-Flex policyowners). From now on, we will refer to the
Guaranteed Interest Division as the Guaranteed Interest Account and to divisions
of Separate Account FP as "Funds." The funds of Separate Account FP in turn
invest those net premiums in corresponding portfolios of The Hudson River Trust,
a mutual fund. Each portfolio has a different investment objective which it
tries to achieve by following separate investment policies. The objectives and
policies of each portfolio will affect its return and its risks. 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>
MONEY MARKET............ Primarily high quality short-term money market High level of current income while
instruments. preserving assets and maintaining
liquidity.
INTERMEDIATE............ Primarily debt securities issued or guaranteed High current income consistent with
GOVERNMENT by the U.S. Government, its agencies and relative stability of principal.
SECURITIES instrumentalities. Each investment will have a
final maturity of not more than 10 years or a
duration not exceeding that of a 10-year
Treasury note.
QUALITY BOND............ Primarily investment grade fixed-income High current income consistent with
securities. preservation of capital.
HIGH YIELD.............. Primarily a diversified mix of high yield, High return by maximizing current
fixed-income securities involving greater income and, to the extent consistent
volatility of price and risk of principal and with that objective, capital appreciation.
income than high quality fixed-income
securities. The medium and lower quality debt
securities in which the Portfolio may invest are
know as "junk bonds."
GROWTH & INCOME......... Primarily common stocks and securities High return through a combination of
convertible into common stocks. current income and capital appreciation.
EQUITY INDEX............ Selected securities in the S&P's 500 Index (the Total return performance (before trust
"Index") which the adviser believes will, in the expenses) that approximates the
aggregate, approximate the performance results investment performance of the Index
of the Index. (including reinvestment of dividends)
at a risk level consist with that of
the Index
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS SUPPLEMENT SHOULD BE RETAINED FOR FURTHER REFERENCE. THE CURRENT HUDSON
RIVER TRUST PROSPECTUS IS ATTACHED.
VM 501
Copyright 1995 Equitable Variable Life Insurance Company. All rights reserved.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT OBJECTIVE
--------- ---------- ---------
<S> <C> <C>
COMMON STOCK............... Primarily common stock and other equity-type Long-term growth of capital and
instruments. increasing income.
GLOBAL..................... Primarily equity securities of non-United Long-term growth of capital.
States as well as United States companies.
INTERNATIONAL.............. Primarily equity securities selected Long-term growth of captial.
principally to 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.
ASSET ALLOCATION SERIES:
CONSERVATIVE............... Diversified mix of publicly-traded, High total return without, in the
INVESTORS fixed-income and equity securities; asset mix adviser's opinion, undue risk to
and security selection are primarily based prinicipal.
upon factors expected to reduce risk. The
Portfolio is generally expected to hold
approxiamtely 70% of its assets in fixed
income securiites and 30% in equity securities.
BALANCED................... Primarily common stocks, publicly-traded debt High return through a combination of
securities and high quality money market current income and capital
instruments. The Portfolio is generally appreciation.
expected to hold 50% of its assets in equity
securities and 50% in fixed income securities.
GROWTH INVESTORS........... Diverisfied mix of publicly-traded, High total return consistent with the
fixed-income and equity securities; asset mix adviser's determination of reasonable
and securitiy selection based upon factors 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.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EQUITABLE VARIABLE. The information under the heading EQUITABLE VARIABLE is
updated as follows: Equitable Variable was organized in 1972 in New York State
as a stock life insurance company. We are licensed to do business in all 50
states, Puerto Rico, the Virgin Islands and the District of Columbia. At
December 31, 1994, we had approximately $125.8 billion face amount of variable
life insurance in force.
EQUITABLE. The information under the heading OUR PARENT, EQUITABLE is updated as
follows: Equitable is a wholly-owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA, a French insurance holding company. AXA beneficially owns 60.5%
of the outstanding shares of common stock of the Holding Company plus
convertible preferred stock. Under its investment arrangements with Equitable
and the Holding Company, AXA is able to exercise significant influence over the
operations and capital structure of the Holding Company, Equitable and their
subsidiaries. AXA is the principal holding company for most of the companies in
one of the largest insurance groups in Europe. The majority of AXA's stock is
controlled by a group of five French mutual insurance companies. Equitable, the
Holding Company and their subsidiaries managed approximately $174.5 billion in
assets as of December 31, 1994.
THE TRUST'S INVESTMENT ADVISER. The information about Alliance Capital
Management L.P., the Trust's investment adviser, is updated as follows: As of
December 31, 1994, Alliance was managing approximately $121.3 billion in assets.
Alliance, a publicly traded limited partnership, is indirectly majority-owned by
Equitable.
2
<PAGE>
For your convenience, we are restating that the advisory fee, payable by the
Trust to Alliance, is based on the following annual percentages of the value of
each portfolio's daily average net assets:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DAILY AVERAGE NET ASSETS
---------------------------------------------
FIRST NEXT OVER
PORTFOLIO $350 MILLION $400 MILLION $750 MILLION
--------- ------------ ------------ ------------
<S> <C> <C> <C>
Common Stock, Money Market and Balanced...................................... .400% .375% .350%
Aggressive Stock and Intermediate Government Securities...................... .500% .475% .450%
High Yield, Global, Conservative Investors and
Growth Investors........................................................... .550% .525% .500%
- ------------------------------------------------------------------------------------------------------------------------------------
FIRST NEXT OVER
PORTFOLIO $500 MILLION $500 MILLION $1 BILLION
--------- ------------ ------------ ----------
Quality Bond and Growth & Income............................................. .550% .525% .500%
- ------------------------------------------------------------------------------------------------------------------------------------
FIRST NEXT OVER
PORTFOLIO $750 MILLION $750 MILLION $1.5 BILLION
--------- ------------ ------------ ------------
Equity Index................................................................. .350% .300% .250%
- ------------------------------------------------------------------------------------------------------------------------------------
FIRST NEXT OVER
PORTFOLIO $500 MILLION $1 BILLION $1.5 BILLION
--------- ------------ ---------- ------------
International................................................................ .900% .850% .800%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TAX CHANGES. The United States Congress may in the future enact legislation that
could change the tax treatment of life insurance policies. In addition, the
Treasury Department may amend existing regulations, issue new regulations, or
adopt new interpretations of existing laws. There is no way of predicting
whether, when or in what form any such change would be adopted. Any such change
could have retroactive effect regardless of the date of enactment. State tax
laws or, if you are not a United States resident, foreign tax laws, may affect
the tax consequences to you, the insured person or your beneficiary. These laws
may change from time to time without notice.
The discussion of the tax effects contained in your prospectus or supplements is
based on our current understanding of Federal income tax laws as currently
interpreted as they apply to U.S. resident individual taxpayers. This discussion
should not be considered tax advice. We suggest you consult your legal or tax
adviser.
DISTRIBUTION. Equico Securities, Inc. ("Equico"), a wholly-owned subsidiary of
Equitable, is the principal underwriter of the Trust under a Distribution
Agreement. Equico is also the distributor of our variable life insurance
policies and Equitable's variable annuity contracts under a Distribution and
Servicing Agreement. Equico is registered with the SEC as a broker-dealer under
the Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. Equico's principal business address is 1755
Broadway, New York, N.Y. 10019. Equico is paid a fee for its services as
distributor of our policies. For 1994, Equico was paid a fee of $216,920 for its
services under the Distribution and Servicing Agreement.
The amounts paid and accrued to Equitable by us under our sales and services
agreements with Equitable totalled approximately $380.50 million in 1994, $355.7
million in 1993 and $374.9 million in 1992.
MANAGEMENT. A list of our directors and principal officers and a brief statement
of their business experience for the past five years is contained in Appendix B.
LONG-TERM MARKET TRENDS. Appendix C to this Supplement presents historical
return trends for various types of securities which may be useful for
understanding how different investment strategies may affect long-term results.
FINANCIAL STATEMENTS. The financial statements of Equitable Variable included in
this supplement have been audited for the years ended December 31, 1994 and
1993, by Price Waterhouse LLP, and for the year ended December 31, 1992 by
Deloitte & Touche LLP, as stated in their respective reports. The financial
statements of Equitable Variable for the years ended December 31, 1994 and 1993
included in this supplement have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of such
firm as experts in accounting and auditing. The financial statements of
Equitable Variable for the year ended December 31, 1992 included in this
supplement have been so included in reliance on the report of Deloitte & Touche
LLP, independent accountants, given upon the authority of such firm as experts
in accounting and auditing. The financial statements of the Separate Account
have been previously provided to you by the prospectus supplement dated February
14, 1995.
The financial statements of Equitable Variable included in this supplement
should be considered only as bearing upon the ability of Equitable Variable to
meet its obligations under the policies. They should not be considered as
bearing upon the investment experience of the investment funds of the Separate
Account.
3
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT HIGH COMMON EQUITY
MARKET SECURITIES YIELD BALANCED STOCK INDEX
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
------------ ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of The
Hudson River Trust -- at
market value (Notes 2 and 9)
Cost: $138,079,624 .............. $138,112,384
31,003,727 .............. $28,266,864
50,877,692 .............. $50,004,589
341,928,746 .............. $339,049,871
814,398,039 .............. $812,349,390
31,724,933 .............. $31,325,647
Receivable (payable) for
policy related
transactions ................. 4,109,267 49,140 (10,836) (18,276) 622,866 21,063
------------ ----------- ----------- ------------ ------------ -----------
Total Assets .................... 142,221,651 28,316,004 49,993,753 339,031,595 812,972,256 31,346,710
------------ ----------- ----------- ------------ ------------ -----------
LIABILITIES
Payable (receivable) for
purchases (sales) of shares of
The Hudson River Trust ....... 3,997,965 52,945 15,230 122,383 705,098 21,172
Amount retained by Equitable
Variable in Separate Account
FP (Note 6) .................. 727,601 608,984 523,622 493,647 1,260,957 200,135
------------ ----------- ----------- ------------ ------------ -----------
Total Liabilities ............... 4,725,566 661,929 538,852 616,030 1,966,055 221,307
------------ ----------- ----------- ------------ ------------ -----------
NET ASSETS ATTRIBUTABLE
TO POLICYOWNERS .............. $137,496,085 $27,654,075 $49,454,901 $338,415,565 $811,006,201 $31,125,403
============ =========== =========== ============ ============ ===========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
----------------------------
AGGRESSIVE GROWTH & QUALITY CONSERVATIVE GROWTH
GLOBAL STOCK INCOME BOND INVESTORS INVESTORS
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
------------ ------------ ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of The
Hudson River Trust -- at
market value (Notes 2 and 9)
Cost: $239,147,145 .............. $242,277,425
325,633,174 .............. $356,394,492
7,040,082 .............. $6,898,497
137,464,263 .............. $121,943,063
139,172,881 .............. $130,405,184
368,555,840 .............. $367,785,147
Receivable (payable) for
policy related
transactions ................. 693,092 (1,580,927) 191,538 (6,487) 102,625 410,514
------------ ------------ ---------- ------------ ------------ ------------
Total Assets .................... 242,970,517 354,813,565 7,090,035 121,936,576 130,507,809 368,195,661
------------ ------------ ---------- ------------ ------------ ------------
LIABILITIES
Payable (receivable) for
purchases (sales) of shares of
The Hudson River Trust ....... 592,036 (1,539,689) 191,896 (6,195) 91,960 493,712
Amount retained by Equitable
Variable in Separate Account
FP (Note 6) .................. 540,010 681,389 989,756 4,706,299 475,351 482,395
------------ ------------ ---------- ------------ ------------ ------------
Total Liabilities ............... 1,132,046 (858,300) 1,181,652 4,700,104 567,311 976,107
------------ ------------ ---------- ------------ ------------ ------------
NET ASSETS ATTRIBUTABLE
TO POLICYOWNERS .............. $241,838,471 $355,671,865 $5,908,383 $117,236,472 $129,940,498 $367,219,554
============ ============ ========== ============ ============ ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-1
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONEY MARKET DIVISION
----------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $5,368,883 $4,163,389 $4,686,996
Expenses (Note 3):
Mortality and expense risk charges ................. 826,379 834,113 778,018
---------- ---------- ----------
NET INVESTMENT INCOME ................................... 4,542,504 3,329,276 3,908,978
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments ................ 95,530 (339,754) (136,115)
Realized gain distribution from
The Hudson River Trust ........................... -- -- --
---------- ---------- ----------
NET REALIZED GAIN (LOSS) ................................ 95,530 (339,754) (136,115)
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ (14,267) (224,885) (178,161)
End of period ...................................... 32,760 (14,267) (224,885)
---------- ---------- ----------
Change in unrealized appreciation (depreciation)
during the period .................................. 47,027 210,618 (46,724)
---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... 142,557 (129,136) (182,839)
---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $4,685,061 $3,200,140 $3,726,139
========== ========== ==========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT SECURITIES DIVISION
--------------------------------------------
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 5,671,984 $14,930,827 $14,839,013
Expenses (Note 3):
Mortality and expense risk charges ................. 527,675 1,470,325 1,569,627
------------ ----------- -----------
NET INVESTMENT INCOME ................................... 5,144,309 13,460,502 13,269,386
------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments ................ (10,163,976) 3,999,846 (196,985)
Realized gain distribution from
The Hudson River Trust ........................... -- 11,449,074 4,721,432
------------ ----------- -----------
NET REALIZED GAIN (LOSS) ................................ (10,163,976) 15,448,920 4,524,447
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ (1,617,237) 1,966,231 6,448,937
End of period ...................................... (2,736,863) (1,617,237) 1,966,231
------------ ----------- -----------
Change in unrealized appreciation (depreciation)
during the period .................................. (1,119,626) (3,583,468) (4,482,706)
------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (11,283,602) 11,865,452 41,741
------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $ (6,139,293) $25,325,954 $13,311,127
============ =========== ===========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM WORLD INCOME DIVISION
---------------------------------------
1994* 1993 1992
--------- --------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 81,851 $ 504,768 $ 687,929
Expenses (Note 3):
Mortality and expense risk charges ................. 2,373 27,415 33,520
--------- --------- -----------
NET INVESTMENT INCOME ................................... 79,478 477,353 654,409
--------- --------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments ................ (115,812) (645,029) (347,915)
Realized gain distribution from
The Hudson River Trust ........................... -- -- --
--------- --------- -----------
NET REALIZED GAIN (LOSS) ................................ (115,812) (645,029) (347,915)
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ (76,633) (676,871) (5,422)
End of period ...................................... -- (76,633) (676,871)
--------- --------- -----------
Change in unrealized appreciation (depreciation)
during the period .................................. 76,633 600,238 (671,449)
--------- --------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (39,179) (44,791) (1,019,364)
--------- --------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $ 40,299 $ 432,562 $ (364,955)
========= ========= ===========
<FN>
See Notes to Financial Statements.
*For the period January 1, 1994 through February 22, 1994 (date of
substitution).
</FN>
</TABLE>
FSA-2
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
HIGH YIELD DIVISION
----------------------------------------
1994 1993 1992
----------- ---------- ----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 4,578,946 $4,488,259 $4,025,728
Expenses (Note 3):
Mortality and expense risk charges ................. 305,522 285,992 248,485
----------- ---------- ----------
NET INVESTMENT INCOME ................................... 4,273,424 4,202,267 3,777,243
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments .................. (328,199) 107,852 (813,039)
Realized gain distribution from
The Hudson River Trust ............................. -- 1,030,687 --
----------- ---------- ----------
NET REALIZED GAIN (LOSS) ................................ (328,199) 1,138,539 (813,039)
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ 4,734,999 763,746 (772,587)
End of period ...................................... (873,103) 4,734,999 763,746
----------- ---------- ----------
Change in unrealized appreciation (depreciation)
during the period .................................. (5,608,102) 3,971,253 1,536,333
----------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (5,936,301) 5,109,792 723,294
----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $(1,662,877) $9,312,059 $4,500,537
=========== ========== ==========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
BALANCED DIVISION
--------------------------------------------
1994 1993 1992
------------ ----------- ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 10,557,487 $10,062,862 $ 9,484,792
Expenses (Note 3):
Mortality and expense risk charges ................. 2,103,510 2,047,811 1,728,449
------------ ----------- ------------
NET INVESTMENT INCOME ................................... 8,453,977 8,015,051 7,756,343
------------ ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments .................. 858,164 1,446,919 870,777
Realized gain distribution from
The Hudson River Trust ............................. -- 20,280,817 21,249,123
------------ ----------- ------------
NET REALIZED GAIN (LOSS) ................................ 858,164 21,727,736 22,119,900
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ 37,960,661 30,072,900 68,832,284
End of period ...................................... (2,878,875) 37,960,661 30,072,900
------------ ----------- ------------
Change in unrealized appreciation (depreciation)
during the period .................................. (40,839,536) 7,887,761 (38,759,384)
------------ ----------- ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (39,981,372) 29,615,497 (16,639,484)
------------ ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $(31,527,395) $37,630,548 $ (8,883,141)
============ =========== ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK DIVISION
---------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 11,755,355 $ 10,311,886 $ 8,962,566
Expenses (Note 3):
Mortality and expense risk charges ................. 4,741,008 4,005,102 3,127,993
------------ ------------ ------------
NET INVESTMENT INCOME ................................... 7,014,347 6,306,784 5,834,573
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments .................. 292,144 4,176,629 (2,382,465)
Realized gain distribution from
The Hudson River Trust ............................. 43,936,280 85,777,775 34,335,116
------------ ------------ ------------
NET REALIZED GAIN (LOSS) ................................ 44,228,424 89,954,404 31,952,651
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ 71,350,568 22,647,989 46,299,874
End of period ...................................... (2,048,649) 71,350,568 22,647,989
------------ ------------ ------------
Change in unrealized appreciation (depreciation)
during the period .................................. (73,399,217) 48,702,579 (23,651,885)
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (29,170,793) 138,656,983 8,300,766
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $(22,156,446) $144,963,767 $ 14,135,339
============ ============ ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-3
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY
INDEX
DIVISION GLOBAL DIVISION
--------- -----------------------------------------
1994* 1994 1993 1992
--------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 596,180 $ 2,768,605 $ 1,060,406 $ 392,650
Expenses (Note 3):
Mortality and expense risk charges ................. 152,789 1,211,620 466,897 216,472
--------- ----------- ----------- ----------
NET INVESTMENT INCOME ................................... 443,391 1,556,985 593,509 176,178
--------- ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments .................. (6,949) 3,347,704 1,333,766 (31,023)
Realized gain distribution from
The Hudson River Trust ............................. 134,154 4,821,242 11,642,904 267,304
--------- ----------- ----------- ----------
NET REALIZED GAIN (LOSS) ................................ 127,205 8,168,946 12,976,670 236,281
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ -- 7,062,877 2,783,724 3,523,568
End of period ...................................... (399,286) 3,130,280 7,062,877 2,783,724
--------- ----------- ----------- ----------
Change in unrealized appreciation (depreciation)
during the period .................................. (399,286) (3,932,597) 4,279,153 (739,844)
--------- ----------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (272,081) 4,236,349 17,255,823 (503,563)
--------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $ 171,310 $ 5,793,334 $17,849,332 $ (327,385)
========= =========== =========== ==========
<FN>
See Notes to Financial Statements.
*Commencement of operations on April 1.
</FN>
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME
AGGRESSIVE STOCK DIVISION DIVISION
---------------------------------------------- ---------------------
1994 1993 1992 1994 1993**
------------ ------------ ------------ --------- -------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 400,102 $ 766,228 $ 1,550,129 $ 108,492 $ 3,394
Expenses (Note 3):
Mortality and expense risk charges ................. 1,944,639 1,757,109 1,620,545 19,204 1,833
------------ ------------ ------------ --------- -------
NET INVESTMENT INCOME ................................... (1,544,537) (990,881) (70,416) 89,288 1,561
------------ ------------ ------------ --------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments .................. (6,075,250) 35,696,507 8,236,284 (11,709) (134)
Realized gain distribution from
The Hudson River Trust ............................. -- 25,339,962 25,704,106 -- --
------------ ------------ ------------ --------- -------
NET REALIZED GAIN (LOSS) ................................ (6,075,250) 61,036,469 33,940,390 (11,709) (134)
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ 35,185,988 53,885,737 96,740,910 (904) --
End of period ...................................... 30,761,318 35,185,988 53,885,737 (141,585) (904)
------------ ------------ ------------ --------- -------
Change in unrealized appreciation (depreciation)
during the period .................................. (4,424,670) (18,699,749) (42,855,173) (140,681) (904)
------------ ------------ ------------ --------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (10,499,920) 42,336,720 (8,914,783) (152,390) (1,038)
------------ ------------ ------------ --------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $(12,044,457) $ 41,345,839 $ (8,985,199) $ (63,102) $ 523
============ ============ ============ ========= =======
<FN>
See Notes to Financial Statements.
**Commencement of operations on October 1.
</FN>
</TABLE>
FSA-4
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
QUALITY BOND DIVISION
----------------------------
1994 1993*
------------ -----------
<S> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 8,123,722 $ 1,221,840
Expenses (Note 3):
Mortality and expense risk charges ................. 689,178 163,308
------------ -----------
NET INVESTMENT INCOME ................................... 7,434,544 1,058,532
------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments .................. (410,697) (106)
Realized gain distribution from
The Hudson River Trust ............................. -- 130,973
------------ -----------
NET REALIZED GAIN (LOSS) ................................ (410,697) 130,867
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ (1,886,621) --
End of period ...................................... (15,521,200) (1,886,621)
------------ -----------
Change in unrealized appreciation (depreciation)
during the period .................................. (13,634,579) (1,886,621)
------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (14,045,276) (1,755,754)
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $ (6,610,732) $ (697,222)
============ ===========
<FN>
See Notes to Financial Statements.
*Commencement of operations on October 1.
</FN>
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
-------------------------------------------
CONSERVATIVE INVESTORS DIVISION
-------------------------------------------
1994 1993 1992
------------ ---------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 6,205,574 $4,088,977 $ 3,499,270
Expenses (Note 3):
Mortality and expense risk charges ................. 750,164 551,610 345,819
------------ ---------- -----------
NET INVESTMENT INCOME ................................... 5,455,410 3,537,367 3,153,451
------------ ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments .................. (421,502) 91,739 (10,094)
Realized gain distribution from
The Hudson River Trust ............................. -- 4,651,717 2,200,535
------------ ---------- -----------
NET REALIZED GAIN (LOSS) ................................ (421,502) 4,743,456 2,190,441
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ 1,915,037 2,223,612 4,140,474
End of period ...................................... (8,767,697) 1,915,037 2,223,612
------------ ---------- -----------
Change in unrealized appreciation (depreciation)
during the period .................................. (10,682,734) (308,575) (1,916,862)
------------ ---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (11,104,236) 4,434,881 273,579
------------ ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $ (5,648,826) $7,972,248 $ 3,427,030
============ ========== ===========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
--------------------------------------------
GROWTH INVESTORS DIVISION
--------------------------------------------
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust .............. $ 10,663,204 $ 5,922,228 $ 3,386,842
Expenses (Note 3):
Mortality and expense risk charges ................. 1,995,747 1,274,117 670,800
------------ ----------- -----------
NET INVESTMENT INCOME ................................... 8,667,457 4,648,111 2,716,042
------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) on investments .................. 241,591 52,392 187,420
Realized gain distribution from
The Hudson River Trust ............................. -- 14,624,517 7,569,846
------------ ----------- -----------
NET REALIZED GAIN (LOSS) ................................ 241,591 14,676,909 7,757,266
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ 20,567,604 12,746,740 15,687,285
End of period ...................................... (770,693) 20,567,604 12,746,740
------------ ----------- -----------
Change in unrealized appreciation (depreciation)
during the period .................................. (21,338,297) 7,820,864 (2,940,545)
------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ....................................... (21,096,706) 22,497,773 4,816,721
------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $(12,429,249) $27,145,884 $ 7,532,763
============ =========== ===========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-5
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONEY MARKET DIVISION
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ 4,542,504 $ 3,329,276 $ 3,908,978
Net realized gain (loss) ........ 95,530 (339,754) (136,115)
Change in unrealized appreciation
(depreciation) on investments . 47,027 210,618 (46,724)
------------ ------------ ------------
Net increase (decrease)
from operations ............... 4,685,061 3,200,140 3,726,139
------------ ------------ ------------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... 82,536,703 64,845,505 88,068,896
Benefits and other policy related
transactions (Note 5).......... (32,432,771) (31,747,197) (38,311,621)
Net transfers among divisions ... (25,466,044) (50,510,704) (67,793,471)
------------ ------------ ------------
Net increase (decrease) from
policy related transactions ... 24,637,888 (17,412,396) (18,036,196)
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 6) .... (24,067) 92,890 (203,598)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS .. 29,298,882 (14,119,366) (14,513,655)
NET ASSETS, BEGINNING OF PERIOD .... 108,197,203 122,316,569 136,830,224
------------ ------------ ------------
NET ASSETS, END OF PERIOD .......... $137,496,085 $108,197,203 $122,316,569
============ ============ ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT SECURITIES DIVISION
------------------------------------------------
1994 1993 1992
------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ 5,144,309 $ 13,460,502 $ 13,269,386
Net realized gain (loss) ........ (10,163,976) 15,448,920 4,524,447
Change in unrealized appreciation
(depreciation) on investments . (1,119,626) (3,583,468) (4,482,706)
------------- ------------- ------------
Net increase (decrease)
from operations ............... (6,139,293) 25,325,954 13,311,127
------------- ------------- ------------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... 18,915,140 26,598,113 22,081,588
Benefits and other policy related
transactions (Note 5).......... (5,813,181) (7,539,335) (8,121,103)
Net transfers among divisions ... (125,116,319) (180,916,946) 26,878,651
------------- ------------- ------------
Net increase (decrease) from
policy related transactions ... (112,014,360) (161,858,168) 40,839,136
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 6) .... 15,335 (69,330) (127,134)
------------- ------------- ------------
INCREASE (DECREASE) IN NET ASSETS .. (118,138,318) (136,601,544) 54,023,129
NET ASSETS, BEGINNING OF PERIOD .... 145,792,393 282,393,937 228,370,808
------------- ------------- ------------
NET ASSETS, END OF PERIOD .......... $ 27,654,075 $ 145,792,393 $282,393,937
============= ============= ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM WORLD INCOME DIVISION
-------------------------------------------
1994* 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ 79,478 $ 477,353 $ 654,409
Net realized gain (loss) ........ (115,812) (645,029) (347,915)
Change in unrealized appreciation
(depreciation) on investments . 76,633 600,238 (671,449)
----------- ----------- -----------
Net increase (decrease)
from operations ............... 40,299 432,562 (364,955)
----------- ----------- -----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... 82,255 1,240,219 2,627,349
Benefits and other policy related
transactions (Note 5).......... (139,016) (822,325) (1,006,650)
Net transfers among divisions ... (2,976,927) (2,708,004) (1,657,362)
----------- ----------- -----------
Net increase (decrease) from
policy related transactions ... (3,033,688) (2,290,110) (36,663)
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 6) .... (20,398) (234,973) 149,435
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS .. (3,013,787) (2,092,521) (252,183)
NET ASSETS, BEGINNING OF PERIOD .... 3,013,787 5,106,308 5,358,491
----------- ----------- -----------
NET ASSETS, END OF PERIOD .......... $ -- $ 3,013,787 $ 5,106,308
=========== =========== ===========
<FN>
See Notes to Financial Statements.
*For the period January 1, 1994 through February 22, 1994 (date of
substitution).
</FN>
</TABLE>
FSA-6
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
HIGH YIELD DIVISION
--------------------------------------------
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ 4,273,424 $ 4,202,267 $ 3,777,243
Net realized gain (loss) ........ (328,199) 1,138,539 (813,039)
Change in unrealized appreciation
(depreciation) on investments . (5,608,102) 3,971,253 1,536,333
------------ ----------- -----------
Net increase (decrease)
from operations ............... (1,662,877) 9,312,059 4,500,537
------------ ----------- -----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... 14,287,345 10,787,763 5,370,452
Benefits and other policy related
transactions (Note 5) ......... (7,162,537) (5,179,424) (3,291,125)
Net transfers among divisions ... (11,048,174) 1,006,671 (3,898,127)
------------ ----------- -----------
Net increase (decrease) from
policy related transactions ... (3,923,366) 6,615,010 (1,818,800)
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 6) .... 16,028 (31,889) (248,594)
------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS .. (5,570,215) 15,895,180 2,433,143
NET ASSETS, BEGINNING OF PERIOD .... 55,025,116 39,129,936 36,696,793
------------ ----------- -----------
NET ASSETS, END OF PERIOD .......... $ 49,454,901 $55,025,116 $39,129,936
============ =========== ===========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
BALANCED DIVISION
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ 8,453,977 $ 8,015,051 $ 7,756,343
Net realized gain (loss) ........ 858,164 21,727,736 22,119,900
Change in unrealized appreciation
(depreciation) on investments . (40,839,536) 7,887,761 (38,759,384)
------------ ------------ ------------
Net increase (decrease)
from operations ............... (31,527,395) 37,630,548 (8,883,141)
------------ ------------ ------------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... 70,116,900 67,351,402 63,379,628
Benefits and other policy related
transactions (Note 5) ......... (45,655,363) (44,497,967) (40,544,283)
Net transfers among divisions ... (19,954,097) (6,834,099) 6,188,919
------------ ------------ ------------
Net increase (decrease) from
policy related transactions ... 4,507,440 16,019,336 29,024,264
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 6) .... 47,322 256,506 (357,962)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS .. (26,972,633) 53,906,390 19,783,161
NET ASSETS, BEGINNING OF PERIOD .... 365,388,198 311,481,808 291,698,647
------------ ------------ ------------
NET ASSETS, END OF PERIOD .......... $338,415,565 $365,388,198 $311,481,808
============ ============ ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK DIVISION
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ 7,014,347 $ 6,306,784 $ 5,834,573
Net realized gain (loss) ........ 44,228,424 89,954,404 31,952,651
Change in unrealized appreciation
(depreciation) on investments . (73,399,217) 48,702,579 (23,651,885)
------------ ------------ ------------
Net increase (decrease)
from operations ............... (22,156,446) 144,963,767 14,135,339
------------ ------------ ------------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... 171,525,812 124,210,476 108,161,996
Benefits and other policy related
transactions (Note 5) ......... (93,481,219) (77,837,895) (67,400,166)
Net transfers among divisions ... 19,730,410 (9,498,455) (7,520,965)
------------ ------------ ------------
Net increase (decrease) from
policy related transactions ... 97,775,003 36,874,126 33,240,865
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 6) .... 44,948 (124,376) (264,131)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS .. 75,663,505 181,713,517 47,112,073
NET ASSETS, BEGINNING OF PERIOD .... 735,342,696 553,629,179 506,517,107
------------ ------------ ------------
NET ASSETS, END OF PERIOD .......... $811,006,201 $735,342,696 $553,629,179
============ ============ ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-7
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY
INDEX
DIVISION GLOBAL DIVISION
----------- ---------------------------------------------
1994* 1994 1993 1992
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ 443,391 $ 1,556,985 $ 593,509 $ 176,178
Net realized gain (loss) ........ 127,205 8,168,946 12,976,670 236,281
Change in unrealized appreciation
(depreciation) on investments . (399,286) (3,932,597) 4,279,153 (739,844)
----------- ------------ ------------ -----------
Net increase (decrease)
from operations ............... 171,310 5,793,334 17,849,332 (327,385)
----------- ------------ ------------ -----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... 690,540 77,766,997 25,508,452 13,671,349
Benefits and other policy related
transactions (Note 5) ......... (472,818) (23,371,745) (8,931,159) (6,376,660)
Net transfers among divisions ... 30,736,505 47,610,957 59,544,080 2,213,524
----------- ------------ ------------ -----------
Net increase (decrease) from
policy related transactions ... 30,954,227 102,006,209 76,121,373 9,508,213
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 6) .... (134) (17,737) 4,085 10,523
----------- ------------ ------------ -----------
INCREASE (DECREASE) IN NET ASSETS .. 31,125,403 107,781,806 93,974,790 9,191,351
NET ASSETS, BEGINNING OF PERIOD .... -- 134,056,665 40,081,875 30,890,524
----------- ------------ ------------ -----------
NET ASSETS, END OF PERIOD .......... $31,125,403 $241,838,471 $134,056,665 $40,081,875
=========== ============ ============ ===========
<FN>
See Notes to Financial Statements.
*Commencement of operations on April 1.
</FN>
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME
AGGRESSIVE STOCK DIVISION DIVISION
---------------------------------------------- -----------------------
1994 1993 1992 1994 1993**
------------ ------------ ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ (1,544,537) $ (990,881) $ (70,416) $ 89,288 $ 1,561
Net realized gain (loss) ........ (6,075,250) 61,036,469 33,940,390 (11,709) (134)
Change in unrealized appreciation
(depreciation) on investments . (4,424,670) (18,699,749) (42,855,173) (140,681) (904)
------------ ------------ ------------ ---------- --------
Net increase (decrease)
from operations ............... (12,044,457) 41,345,839 (8,985,199) (63,102) 523
------------ ------------ ------------ ---------- --------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... 101,932,221 77,930,596 67,361,634 2,953,965 182,381
Benefits and other policy related
transactions (Note 5) ......... (48,604,650) (39,462,340) (33,003,929) (481,430) (6,581)
Net transfers among divisions ... 4,346,636 (73,890,214) 12,011,802 3,033,230 279,153
------------ ------------ ------------ ---------- --------
Net increase (decrease) from
policy related transactions ... 57,674,207 (35,421,958) 46,369,507 5,505,765 454,953
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 6) .... 35,791 (2,220) (34,456) 6,113 4,131
------------ ------------ ------------ ---------- --------
INCREASE (DECREASE) IN NET ASSETS .. 45,665,541 5,921,661 37,349,852 5,448,776 459,607
NET ASSETS, BEGINNING OF PERIOD .... 310,006,324 304,084,663 266,734,811 459,607 --
------------ ------------ ------------ ---------- --------
NET ASSETS, END OF PERIOD .......... $355,671,865 $310,006,324 $304,084,663 $5,908,383 $459,607
============ ============ ============ ========== ========
<FN>
See Notes to Financial Statements.
**Commencement of operations on October 1.
</FN>
</TABLE>
FSA-8
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
---------------------------------------------
QUALITY BOND DIVISION CONSERVATIVE INVESTORS DIVISION
----------------------------- ---------------------------------------------
1994 1993* 1994 1993 1992
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ 7,434,544 $ 1,058,532 $ 5,455,410 $ 3,537,367 $ 3,153,451
Net realized gain (loss) ........ (410,697) 130,867 (421,502) 4,743,456 2,190,441
Change in unrealized appreciation
(depreciation) on investments . (13,634,579) (1,886,621) (10,682,734) (308,575) (1,916,862)
------------ ------------ ------------ ------------ -----------
Net increase (decrease)
from operations ............... (6,610,732) (697,222) (5,648,826) 7,972,248 3,427,030
------------ ------------ ------------ ------------ -----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... (850,240) 181,283 48,492,315 43,782,002 22,620,423
Benefits and other policy related
transactions (Note 5) ......... (2,891,278) (441,626) (21,612,430) (17,644,077) (9,193,400)
Net transfers among divisions ... 25,765,197 100,786,909 (2,076,793) 6,165,330 6,845,573
------------ ------------ ------------ ------------ -----------
Net increase (decrease) from
policy related transactions ... 23,724,159 100,526,566 24,803,092 32,303,255 20,272,596
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE
IN SEPARATE ACCOUNT FP (Note 6) . 255,654 38,047 22,600 18,535 (201,980)
------------ ------------ ------------ ------------ -----------
INCREASE (DECREASE) IN NET ASSETS .. 17,369,081 99,867,391 19,176,866 40,294,038 23,497,646
NET ASSETS, BEGINNING OF PERIOD .... 99,867,391 -- 110,763,632 70,469,594 46,971,948
------------ ------------ ------------ ------------ -----------
NET ASSETS, END OF PERIOD .......... $117,236,472 $ 99,867,391 $129,940,498 $110,763,632 $70,469,594
============ ============ ============ ============ ===========
<FN>
See Notes to Financial Statements.
*Commencement of operations on October 1.
</FN>
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
----------------------------------------------
GROWTH INVESTORS DIVISION
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........... $ 8,667,457 $ 4,648,111 $ 2,716,042
Net realized gain (loss) ........ 241,591 14,676,909 7,757,266
Change in unrealized appreciation
(depreciation) on investments . (21,338,297) 7,820,864 (2,940,545)
------------ ------------ ------------
Net increase (decrease)
from operations ............... (12,429,249) 27,145,884 7,532,763
------------ ------------ ------------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ........... 139,140,391 105,136,825 58,021,833
Benefits and other policy related
transactions (Note 5) ......... (54,863,821) (36,431,873) (20,773,734)
Net transfers among divisions ... 20,294,785 30,908,183 21,968,817
------------ ------------ ------------
Net increase (decrease) from
policy related transactions ... 104,571,355 99,613,135 59,216,916
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE
IN SEPARATE ACCOUNT FP (Note 6) . 15,372 (27,455) (145,201)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS .. 92,157,478 126,731,564 66,604,478
NET ASSETS, BEGINNING OF PERIOD .... 275,062,076 148,330,512 81,726,034
------------ ------------ ------------
NET ASSETS, END OF PERIOD .......... $367,219,554 $275,062,076 $148,330,512
============ ============ ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-9
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS
1. Equitable Variable Life Insurance Company (Equitable Variable), a
wholly-owned subsidiary of The Equitable Life Assurance Society of the
United States (Equitable), established Separate Account FP (Account) as a
unit investment trust registered with the Securities and Exchange Commission
under the Investment Company Act of 1940. The Account consists of twelve
investment divisions: the Money Market Division, the Intermediate Government
Securities Division, the High Yield Division, the Balanced Division, the
Common Stock Division, the Global Division, the Aggressive Stock Division,
the Conservative Investors Division, the Growth Investors Division, the
Growth & Income Division, the Quality Bond Division and the Equity Index
Division. The assets in each Division are invested in shares of a designated
portfolio (Portfolio) of a mutual fund, The Hudson River Trust (the Trust).
Each Portfolio has separate investment objectives.
The Account supports the operations of Incentive Life(TM), flexible premium
variable life insurance policies, Incentive Life 2000(TM), flexible premium
variable life insurance policies, Champion 2000(TM), modified premium
variable whole life insurance policies, Survivorship 2000(TM), flexible
premium joint survivorship variable life insurance policies and SP-Flex(TM),
variable life insurance policies with additional premium option,
collectively, the Policies, and the Incentive Life 2000, Champion 2000 and
Survivorship 2000 policies are referred to as the Series 2000 Policies. All
Policies are issued by Equitable Variable. The assets of the Account are the
property of Equitable Variable. However, the portion of the Account's assets
attributable to the Policies will not be chargeable with liabilities arising
out of any other business Equitable Variable may conduct.
Under the Policies, policyowners may allocate amounts in their individual
accounts to the Divisions of the Account. Some policies permit amounts to be
allocated to options other than the Account. Net transfers out of the
Account of $35,120,632, $125,668,098 and $4,762,639 for 1994, 1993 and 1992,
respectively, are included in Net Transfers Among Divisions. The net assets
of any Division of the Account may not be less than the aggregate of the
policyowners' accounts allocated to that Division. Additional assets are set
aside in Equitable Variable's General Account to provide for (1) the
unearned portion of the monthly charges for mortality costs, and (2) other
policy benefits, as required under the state insurance law.
2. The significant accounting policies of the Account are as follows:
Investments are made in shares of the Trust and are valued at the net asset
values per share of the respective Portfolios. The net asset value is
determined by the Trust using the market or fair value of the underlying
assets of the Portfolio.
Investment transactions are recorded on the trade date. Realized gains and
losses include gains and losses on redemptions of the Trust's shares
(determined on the identified cost basis) and Trust distributions
representing the net realized gains on Trust investment transactions.
The operations of the Account are included in the consolidated Federal
income tax return of Equitable. Under the provisions of the Policies,
Equitable Variable has the right to charge the Account for Federal income
tax attributable to the Account. No charge is currently being made against
the Account for such tax since, under current tax law, Equitable Variable
pays no tax on investment income and capital gains reflected in variable
life insurance policy reserves. However, Equitable Variable retains the
right to charge for any Federal income tax incurred which is attributable to
the Account if the law is changed. Charges for state and local taxes, if
any, attributable to the Account also may be made.
Dividends are recorded as income at the end of each quarter on the
ex-dividend date. Capital gains are distributed by the Trust at the end of
each year.
3. Under the Policies, Equitable Variable assumes mortality and expense risks
and, to cover these risks, deducts charges from the assets of the Account
currently at annual rates of 0.60% of the net assets attributable to
Incentive Life, Incentive Life 2000 and Champion 2000 policyowners, 0.90% of
net assets attributable to Survivorship 2000 policyowners, and 0.85% for
SP-Flex policyowners. Under SP-Flex, Equitable Variable also deducts charges
from the assets of the Account for mortality and administrative costs of
0.60% and 0.35%, respectively, of net assets attributable to SP-Flex
policies.
Under Incentive Life and the Series 2000 Policies, mortality and
administrative costs are charged in a different manner than SP-Flex policies
(see Notes 4 and 5).
4. Before amounts are allocated to the Account for Incentive Life and the
Series 2000 Policies, Equitable Variable deducts state and local premium
taxes and either an initial policy fee (Incentive Life) or a premium sales
charge (Series 2000 Policies) from premiums. Under SP-Flex, the entire
initial premium is allocated to the Account. However, before any additional
premiums under SP-Flex are allocated to the Account, an administrative
charge is deducted.
FSA-10
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. The amounts attributable to Incentive Life and the Series 2000 policyowners'
accounts are charged monthly by Equitable Variable for mortality and
administrative costs. These charges are withdrawn from the Account along
with amounts for additional benefits. Under the Policies, amounts for
certain policy-related transactions (such as policy loans and surrenders)
are transferred out of the Separate Account.
6. The amount retained by Equitable Variable in the Account arise principally
from (1) contributions from Equitable Variable, and (2) that portion,
determined ratably, of the Account's investment results applicable to those
assets in the Account in excess of the net assets for the Policies. Amounts
retained by Equitable Variable are not subject to charges for mortality and
expense risks or mortality and administrative costs.
Amounts retained by Equitable Variable in the Account may be transferred at
any time by Equitable Variable to its General Account.
The following table shows the surplus contributions (withdrawals) by
investment division:
INVESTMENT DIVISION 1994 1993
------------------- ---- ----
Common Stock -- --
Money Market -- $ 1,145,000
Balanced -- --
Aggressive Stock -- --
High Yield -- 330,000
Global -- (6,895,000)
Conservative Investors -- 575,000
Growth Investors -- 130,000
Short-Term World Income $(5,165,329) --
Intermediate Government Securities -- --
Growth & Income -- 1,000,000
Quality Bond -- 5,000,000
Equity Index 200,000 --
----------- -----------
$(4,965,329) $ 1,285,000
=========== ===========
There were net withdrawals of $14,970,000 by Equitable Variable in 1992.
7. Equitable Variable has entered into a Distribution and Servicing Agreement
with Equitable and Equico Securities Inc. (Equico), whereby registered
representatives of Equico, authorized as variable life insurance agents
under applicable state insurance laws, sell the Policies. The registered
representatives are compensated on a commission basis by Equitable.
Equitable Variable also has entered into an agreement with Equitable under
which Equitable performs the administrative services related to the
Policies, including underwriting and issuance, billings and collections, and
policyowner services. There is no charge to the Account related to this
agreement.
8. On February 22, 1994, Equitable Variable, the Account and the Trust
substituted shares of the Trust's Intermediate Government Securities
Portfolio for shares of the Trust's Short-Term World Income Portfolio. The
amount transferred to Intermediate Government Securities Portfolio was
$2,192,109. The 1994 Short-Term World Income Division statement of
operations and statement of changes in net assets relate to the period from
January 1, 1994 to February 22, 1994 (date of substitution). The Short-Term
World Income Division is not available for future investments.
9. The Separate Account rates of return attributable to Incentive Life,
Incentive Life 2000 and Champion 2000 policyowners are different to
Survivorship 2000 and to SP-Flex policyowners because asset charges are
deducted at different rates under each policy (see Note 3).
The tables on the following pages show the gross and net investment returns
with respect to the Divisions for the periods shown. The net return for each
Division is based upon net assets for a policy which commences with the
beginning date of such period and is not based on the average net assets in
the Division during such period. Gross return is equal to the total return
earned by the underlying Trust investment.
FSA-11
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
RATES OF RETURN:
INCENTIVE LIFE,
- ---------------
INCENTIVE LIFE 2000
- -------------------
AND CHAMPION 2000*
- -----------------
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------ JANUARY 26(a) TO
MONEY MARKET DIVISION 1994 1993 1992 1991 1990 1989 1988 1987 DECEMBER 31, 1986
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 4.02 % 3.00 % 3.56 % 6.18 % 8.24 % 9.18 % 7.32 % 6.63 % 6.05 %
Net return................ 3.39 % 2.35 % 2.94 % 5.55 % 7.59 % 8.53 % 6.68 % 5.99 % 5.47 %
</TABLE>
INTERMEDIATE
GOVERNMENT YEARS ENDED DECEMBER 31,
SECURITIES ------------------------------- APRIL 1(a) TO
DIVISION 1994 1993 1992 DECEMBER 31, 1991
- ----------- ---- ---- ---- -----------------
Gross return..... (4.37)% 10.58 % 5.60 % 12.26 %
Net return....... (4.95)% 9.88 % 4.96 % 11.60 %
SHORT-TERM YEARS ENDED DECEMBER 31,
WORLD INCOME ------------------------------- APRIL 1(a) TO
DIVISION 1994 1993 1992 DECEMBER 31, 1991
- -------- ---- ---- ---- -----------------
Gross return... -- 4.81 % (2.96)% 3.19 %
Net return..... -- 4.14 % (3.54)% 2.74 %
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------- JANUARY 26(a) TO
HIGH YIELD DIVISION 1994 1993 1992 1991 1990 1989 1988 1987 DECEMBER 31, 1986
- ------------------- ---- ---- ---- ---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (2.79)% 23.15 % 12.31 % 24.46 % (1.12)% 5.13 % 9.73 % 4.68 % --
Net return................ (3.37)% 22.41 % 11.64 % 23.72 % (1.71)% 4.50 % 9.08 % 4.05 % --
BALANCED DIVISION
- -----------------
Gross return.............. (8.02)% 12.28 % (2.84)% 41.26 % 0.24 % 25.83 % 13.27 % (0.85)% 29.07 %
Net return................ (8.57)% 11.64 % (3.42)% 40.42 % (0.36)% 25.08 % 12.59 % (1.45)% 28.34 %
COMMON STOCK DIVISION
- ---------------------
Gross return.............. (2.14)% 24.84 % 3.22 % 37.88 % (8.12)% 25.59 % 22.43 % 7.49 % 15.65 %
Net return................ (2.73)% 24.08 % 2.60 % 37.06 % (8.67)% 24.84 % 21.70 % 6.84 % 15.01 %
</TABLE>
MARCH 31(a) TO
EQUITY INDEX DIVISION DECEMBER 31, 1994
- --------------------- ------------------
Gross return.............. 1.08 %
Net return................ 0.58 %
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------- AUGUST 31(a) TO
GLOBAL DIVISION 1994 1993 1992 1991 1990 1989 1988 DECEMBER 31, 1987
- --------------- ---- ---- ---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 5.23 % 32.09 % (0.50)% 30.55 % (6.07)% 26.93 % 10.88 % (13.27)%
Net return................ 4.60 % 31.33 % (1.10)% 29.77 % (6.63)% 26.17 % 10.22 % (13.45)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------- JANUARY 26(a) TO
AGGRESSIVE STOCK DIVISION 1994 1993 1992 1991 1990 1989 1988 1987 DECEMBER 31, 1986
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (3.81)% 16.77 % (3.16)% 86.86 % 8.17 % 43.50 % 1.17 % 7.31 % 35.88 %
Net return................ (4.39)% 16.05 % (3.74)% 85.75 % 7.51 % 42.64 % 0.53 % 6.66 % 35.13 %
</TABLE>
YEAR ENDED OCTOBER 1(a) TO
GROWTH & INCOME DIVISION DECEMBER 31, 1994 DECEMBER 31, 1993
- ------------------------ ------------------ ------------------
Gross return.............. (0.58)% (0.25)%
Net return................ (1.17)% (0.41)%
YEAR ENDED OCTOBER 1(a) TO
QUALITY BOND DIVISION DECEMBER 31, 1994 DECEMBER 31, 1993
- --------------------- ----------------- -----------------
Gross return.............. (5.10)% (0.51)%
Net return................ (5.67)% (0.66)%
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
- ----------------------- YEARS ENDED DECEMBER 31,
CONSERVATIVE ------------------------------------------------- OCTOBER 2(a) TO
INVESTORS DIVISION 1994 1993 1992 1991 1990 DECEMBER 31, 1989
- ------------------ ---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. (4.10)% 10.76 % 5.72 % 19.87 % 6.37 % 3.09 %
Net return................ (4.67)% 10.15 % 5.09 % 19.16 % 5.73 % 2.94 %
GROWTH INVESTORS DIVISION
- -------------------------
Gross return.............. (3.15)% 15.26 % 4.90 % 48.89 % 10.66 % 3.98 %
Net return................ (3.73)% 14.58 % 4.27 % 48.01 % 10.00 % 3.82 %
<FN>
*Sales of Incentive Life 2000 and Champion 2000 commenced on March 2, 1992.
(a) Date as of which net premiums under the policies were first allocated to the
Division. The gross return and the net return for the periods indicated are
not annual rates of return.
</FN>
</TABLE>
FSA-12
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
RATES OF RETURN:
SP-FLEX
- -------
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------ AUGUST 31(a) TO
MONEY MARKET DIVISION 1994 1993 1992 1991 1990 1989 1988 DECEMBER 31, 1987
- --------------------- ---- ---- ---- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 4.02 % 3.00 % 3.56 % 6.17 % 8.24 % 9.18 % 7.32 % 2.15 %
Net return................ 2.17 % 1.13 % 1.71 % 4.29 % 6.30 % 7.24 % 5.41 % 1.62 %
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
INTERMEDIATE GOVERNMENT ----------------------------------- APRIL 1(a) TO
SECURITIES DIVISION 1994 1993 1992 DECEMBER 31, 1991
- ------------------- ---- ---- ---- ------------------
<S> <C> <C> <C> <C>
Gross return.............. (4.37)% 10.58 % 5.60 % 12.10 %
Net return................ (6.08)% 8.57 % 3.71 % 10.59 %
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
SHORT-TERM ---------------------------------- APRIL 1(a) TO
WORLD INCOME DIVISION 1994 1993 1992 DECEMBER 31, 1991
- --------------------- ---- ---- ---- ------------------
<S> <C> <C> <C> <C>
Gross return.............. -- 4.81 % (2.95)% 3.20 %
Net return................ -- 2.90 % (4.69)% 1.81 %
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------- AUGUST 31(a) TO
1994 1993 1992 1991 1990 1989 1988 DECEMBER 31, 1987
---- ---- ---- ---- ---- ---- ---- -----------------
HIGH YIELD DIVISION
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (2.79)% 23.15 % 12.31 % 24.46 % (1.12)% 5.13 % 9.73 % 1.95 %
Net return................ (4.52)% 20.96 % 10.30 % 22.25 % (2.89)% 3.26 % 7.78 % 1.39 %
BALANCED DIVISION
- -----------------
Gross return.............. (8.02)% 12.28 % (2.83)% 41.27 % 0.24 % 25.83 % 13.27 % (20.26)%
Net return................ (9.66)% 10.31 % (4.57)% 38.75 % (1.56)% 23.59 % 11.25 % (20.71)%
COMMON STOCK DIVISION
- ---------------------
Gross return.............. (2.14)% 24.84 % 3.23 % 37.87 % (8.12)% 25.59 % 22.43 % (22.57)%
Net return................ (3.88)% 22.60 % 1.38 % 35.43 % (9.76)% 23.36 % 20.26 % (23.00)%
GLOBAL DIVISION
- ---------------
Gross return.............. 5.23 % 32.09 % (0.50)% 30.55 % (6.07)% 26.93 % 10.88 % (11.40)%
Net return................ 3.36 % 29.77 % (2.28)% 28.23 % (7.75)% 24.67 % 8.90 % (11.86)%
AGGRESSIVE STOCK DIVISION
- -------------------------
Gross return.............. (3.81)% 16.77 % (3.16)% 86.86 % 8.17 % 43.50 % 1.17 % (24.28)%
Net return................ (5.53)% 14.67 % (4.89)% 83.54 % 6.23 % 40.95 % (0.66)% (24.68)%
</TABLE>
SEPTEMBER 1(a) TO
GROWTH & INCOME DIVISION DECEMBER 31, 1994
- ------------------------ ------------------
Gross return.............. (3.40)%
Net return................ (3.55)%
QUALITY BOND DIVISION
- ---------------------
Gross return.............. (2.20)%
Net return................ (2.35)%
EQUITY INDEX DIVISION
- ---------------------
Gross return.............. (2.54)%
Net return................ (2.69)%
ASSET ALLOCATION SERIES
- ----------------------- SEPTEMBER 1(a) TO
CONSERVATIVE INVESTORS DIVISION DECEMBER 31, 1994
- ------------------------------- -------------------
Gross return.................. (1.83)%
Net return.................... (1.98)%
GROWTH INVESTORS DIVISION
- -------------------------
Gross return.................. (3.16)%
Net return.................... (3.31)%
(a) Date as of which net premiums under the policies were first allocated to the
Division. The gross return and the net return for the periods indicated are
not annual rates of return.
FSA-13
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
RATES OF RETURN:
SURVIVORSHIP 2000
- -----------------
YEARS ENDED DECEMBER 31, AUGUST 17(a) TO
------------------------- DECEMBER 31,
MONEY MARKET DIVISION 1994 1993 1992
- --------------------- ---- ---- ----
Gross return.............. 4.02 % 3.00 % 1.11 %
Net return................ 3.08 % 2.04 % 0.77 %
INTERMEDIATE GOVERNMENT
SECURITIES DIVISION
- -------------------
Gross return.............. (4.37)% 10.58 % 0.90 %
Net return................ (5.23)% 9.55 % 0.56 %
SHORT-TERM
WORLD INCOME DIVISION
- ---------------------
Gross return.............. -- 4.81 % (4.34)%
Net return................ -- 3.83 % (4.66)%
HIGH YIELD DIVISION
- -------------------
Gross return.............. (2.79)% 23.15 % 1.84 %
Net return................ (3.66)% 22.04 % 1.50 %
BALANCED DIVISION
- -----------------
Gross return.............. (8.02)% 12.28 % 5.37 %
Net return................ (8.84)% 11.30 % 5.02 %
COMMON STOCK DIVISION
- ---------------------
Gross return.............. (2.14)% 24.84 % 5.28 %
Net return................ (3.02)% 23.70 % 4.93 %
GLOBAL DIVISION
- ---------------
Gross return.............. 5.23 % 32.09 % 4.87 %
Net return................ 4.29 % 30.93 % 4.52 %
AGGRESSIVE STOCK DIVISION
- -------------------------
Gross return.............. (3.81)% 16.77 % 11.49 %
Net return................ (4.68)% 15.70 % 11.11 %
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
GROWTH & INCOME DIVISION 1994 1993
- ------------------------ ---- ----
Gross return.............. (0.58)% (0.25)%
Net return................ (1.47)% (0.48)%
QUALITY BOND DIVISION
- ---------------------
Gross return.............. (5.10)% (0.51)%
Net return................ (5.95)% (0.73)%
MARCH 1(a) TO
DECEMBER 31,
-------------
EQUITY INDEX DIVISION 1994
- --------------------- ----
Gross return.............. 1.08 %
Net return................ 0.33 %
ASSET ALLOCATION SERIES
- ----------------------- YEARS ENDED DECEMBER 31, AUGUST 17(a) TO
CONSERVATIVE ------------------------- DECEMBER 31,
INVESTORS DIVISION 1994 1993 1992
- ------------------ ---- ---- ----
Gross return.............. (4.10)% 10.76 % 1.38 %
Net return................ (4.96)% 9.81 % 1.04 %
GROWTH INVESTORS DIVISION
- -------------------------
Gross return.............. (3.15)% 15.26 % 6.89 %
Net return................ (4.02)% 14.24 % 6.53 %
(a) Date as of which net premiums under the policies were first allocated to the
Division. The gross return and the net return for the periods indicated are
not annual rates of return.
FSA-14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Equitable Variable Life Insurance Company
and Policyowners of Separate Account FP
of Equitable Variable Life Insurance Company
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of Money Market Division,
Intermediate Government Securities Division, High Yield Division, Balanced
Division, Common Stock Division, Equity Index Division, Global Division,
Aggressive Stock Division, Growth & Income Division, Quality Bond Division,
Conservative Investors Division and Growth Investors Division, separate
investment divisions of Equitable Variable Life Insurance Company (the
"Company") Separate Account FP at December 31, 1994 and the results of each of
their operations and the changes in each of their net assets for each of the two
years in the period then ended (for Growth & Income Division for the year then
ended and for the period October 1, 1993 (commencement of operations) through
December 31, 1993, for Short-Term World Income Division for the period January
1, 1994 through February 22, 1994 (date of substitution) and the year ended
December 31, 1993 and for Equity Index Division for the period April 1, 1994
(commencement of operations) through December 31, 1994), in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of shares in The Hudson River Trust at
December 31, 1994 with the transfer agent, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
New York, NY
February 8, 1995
FSA-15
<PAGE>
INDEPENDENT AUDITORS' REPORT
Equitable Variable Life Insurance Company:
We have audited the statements of operations and changes in net assets for the
year ended December 31, 1992 of the Aggressive Stock, High Yield, Global, Common
Stock, Balanced, Money Market, Conservative Investors, Growth Investors,
Intermediate Government Securities, and Short-Term World Income Divisions of
Separate Account FP of Equitable Variable Life Insurance Company. These
financial statements are the responsibility of Equitable Variable Life Insurance
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and the changes in net assets of the
Divisions of Separate Account FP of Equitable Variable Life Insurance Company
for the year ended December 31, 1992 in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
February 16, 1993
FSA-16
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Held to maturity, at amortized cost ...................................... $ 2,008.5 $ 2,229.9
Available for sale, at estimated fair value .............................. 2,138.8 2,402.3
Policy loans ............................................................... 1,185.2 1,087.3
Mortgage loans on real estate .............................................. 888.5 1,059.5
Equity real estate ......................................................... 641.0 613.6
Other equity investments ................................................... 239.1 307.3
Other invested assets ...................................................... 107.8 87.6
--------- ---------
Total investments ........................................................ 7,208.9 7,787.5
Cash and cash equivalents ..................................................... 182.3 98.0
Deferred policy acquisition costs ............................................. 2,077.1 1,946.7
Other assets .................................................................. 240.7 214.0
Separate Accounts assets ...................................................... 3,345.3 3,048.7
--------- ---------
TOTAL ASSETS .................................................................. $13,054.3 $13,094.9
========= =========
LIABILITIES
Policyholders' account balances ............................................... $ 7,340.0 $ 7,614.7
Future policy benefits and other policyholders' liabilities ................... 509.4 475.2
Other liabilities ............................................................. 441.1 540.7
Separate Accounts liabilities ................................................. 3,314.9 3,011.6
--------- ---------
Total liabilities ........................................................ 11,605.4 11,642.2
--------- ---------
Commitments and contingencies (Notes 7, 9, 10 and 11)
SHAREHOLDER'S EQUITY
Common stock, par value $1 per share;
5.0 million shares authorized, 1.5 million shares issued and outstanding.... 1.5 1.5
Capital in excess of par value ................................................ 1,355.7 1,305.7
Retained earnings ............................................................. 165.5 129.5
Net unrealized investment (losses) gains ...................................... (72.6) 22.3
Minimum pension liability ..................................................... (1.2) (6.3)
--------- ---------
Total shareholder's equity ............................................... 1,448.9 1,452.7
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY .................................... $13,054.3 $13,094.9
========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-1
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee income ........ $ 552.6 $ 485.2 $ 425.0
Premiums ............................................................ 40.1 46.9 50.8
Net investment income ............................................... 526.8 557.6 574.5
Investment (losses) gains, net ...................................... (4.6) 1.5 (54.0)
Other income ........................................................ 2.9 3.0 5.5
-------- -------- --------
Total revenues .................................................... 1,117.8 1,094.2 1,001.8
-------- -------- --------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances ................ 389.3 439.2 510.6
Policyholders' benefits ............................................. 242.3 251.0 247.5
Other operating costs and expenses .................................. 413.8 356.7 306.5
-------- -------- --------
Total benefits and other deductions ............................ 1,045.4 1,046.9 1,064.6
-------- -------- --------
Earnings (loss) before Federal income taxes and cumulative
effect of accounting changes ........................................ 72.4 47.3 (62.8)
Federal income tax expense (benefit) ................................... 25.0 20.5 (21.6)
-------- -------- --------
Earnings (loss) before cumulative effect of accounting changes ......... 47.4 26.8 (41.2)
Cumulative effect of accounting changes, net of Federal income taxes.... (11.4) -- (22.4)
-------- -------- --------
Net Earnings (Loss) .................................................... $ 36.0 $ 26.8 $ (63.6)
======== ======== ========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-2
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
COMMON STOCK, AT PAR VALUE:
Beginning and end of year ...................... $ 1.5 $ 1.5 $ 1.5
-------- -------- --------
CAPITAL IN EXCESS OF PAR VALUE:
Balance, beginning of year ..................... 1,305.7 1,055.7 955.7
Additional capital in excess of par value ...... 50.0 250.0 100.0
-------- -------- --------
Balance, end of year ........................... 1,355.7 1,305.7 1,055.7
-------- -------- --------
RETAINED EARNINGS:
Balance, beginning of year ..................... 129.5 102.7 166.3
Net earnings (loss) ............................ 36.0 26.8 (63.6)
-------- -------- --------
Balance, end of year ........................... 165.5 129.5 102.7
-------- -------- --------
NET UNREALIZED INVESTMENT (LOSSES) GAINS:
Balance, beginning of year ..................... 22.3 11.1 7.7
Change in unrealized investment (losses) gains.. (94.9) 11.2 3.4
-------- -------- --------
Balance, end of year ........................... (72.6) 22.3 11.1
-------- -------- --------
MINIMUM PENSION LIABILITY:
Balance, beginning of year ..................... (6.3) --
Change in minimum pension liability ............ 5.1 (6.3)
-------- --------
Balance, end of year ........................... (1.2) (6.3)
-------- --------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR ........... $1,448.9 $1,452.7 $1,171.0
======== ======== ========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-3
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
NET EARNINGS (LOSS) .................................................... $ 36.0 $ 26.8 $ (63.6)
ADJUSTMENTS TO RECONCILE NET EARNINGS (LOSS) TO NET CASH (USED) PROVIDED
BY OPERATING ACTIVITIES:
Investment losses (gains), net ...................................... 4.6 (1.5) 54.0
General Account policy charges ...................................... (572.8) (496.7) (412.3)
Interest credited to policyholders' account balances ................ 389.3 439.2 510.6
Other, net .......................................................... (17.2) 117.2 (95.1)
--------- --------- ---------
Net cash (used) provided by operating activities ....................... (160.1) 85.0 (6.4)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities and repayments ........................................... 511.8 1,165.8 717.7
Sales ............................................................... 2,119.0 2,844.2 1,533.5
Return of capital from joint ventures and limited partnerships ...... 14.2 56.3 68.3
Purchases ........................................................... (2,251.7) (4,414.0) (2,584.0)
Other, net .......................................................... (102.2) (98.8) (103.5)
--------- --------- ---------
Net cash provided (used) by investing activities ....................... 291.1 (446.5) (368.0)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits .......................................................... 602.8 612.9 611.3
Withdrawals ....................................................... (697.7) (506.2) (544.4)
Capital contribution from Equitable Life ............................ 50.0 250.0 100.0
Other, net .......................................................... (1.8) 2.0 --
--------- --------- ---------
Net cash (used) provided by financing activities ....................... (46.7) 358.7 166.9
--------- --------- ---------
Change in cash and cash equivalents .................................... 84.3 (2.8) (207.5)
Cash and cash equivalents, beginning of year ........................... 98.0 100.8 308.3
--------- --------- ---------
Cash and Cash Equivalents, End of Year ................................. $ 182.3 $ 98.0 $ 100.8
========= ========= =========
Supplemental cash flow information:
Interest Paid ....................................................... $ 5.7 $ 2.1
========= =========
Income Taxes Refunded ............................................... $ 8.4 $ .3 $ 8.5
========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-4
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Equitable Variable Life Insurance Company ("Equitable Variable Life") was
incorporated on September 11, 1972 as a wholly owned subsidiary of The
Equitable Life Assurance Society of the United States ("Equitable Life").
Equitable Variable Life's operations consist principally of the sale of
interest-sensitive life insurance and annuity products.
In accordance with Equitable Life's plan of demutualization, Equitable Life
converted to a stock life insurance company on July 22, 1992 and became a
wholly owned subsidiary of The Equitable Companies Incorporated (the
"Holding Company").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation--The accompanying
consolidated financial statements include the accounts of Equitable Variable
Life and its non-insurance subsidiaries (collectively "EVLICO"). After July
22, 1992, EVLICO commenced to prepare its general purpose consolidated
financial statements in conformity with generally accepted accounting
principles ("GAAP") for stock life insurance companies. Such principles have
been applied retroactively in the preparation of these consolidated
financial statements for all periods prior to conversion. All significant
intercompany transactions and balances have been eliminated in
consolidation.
Certain reclassifications have been made in the amounts presented for prior
periods to conform these periods with the 1994 presentation.
Accounting Changes--In the fourth quarter of 1994 (effective as of January
1, 1994), EVLICO adopted Statement of Financial Accounting Standards
("SFAS") No. 112, "Employers' Accounting for Postemployment Benefits," which
requires employers to recognize the obligation to provide postemployment
benefits. Implementation of this statement resulted in a charge for the
cumulative effect of accounting change of $11.4 million, net of a Federal
income tax benefit of $6.2 million. The current year impact from the
implementation of this statement had no material effect on the 1994
consolidated statement of earnings.
In the first quarter of 1993, EVLICO adopted SFAS No. 113, "Accounting and
Reporting for Reinsurance of Short-Duration and Long-Duration Contracts,"
which establishes the conditions for reinsurance accounting. With the
adoption of this statement, certain reinsurance contracts were reclassified
in 1993 and are presented on a gross basis. Implementation of this statement
had no material effect on EVLICO's consolidated financial statements.
At December 31, 1993, EVLICO adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which expands the use of fair
value accounting for those securities that a company does not have positive
intent and ability to hold to maturity. Implementation of this statement
increased consolidated shareholder's equity by $7.2 million, net of deferred
policy acquisition costs and deferred Federal income tax.
In the fourth quarter of 1992 (effective as of January 1, 1992), EVLICO
adopted SFAS No. 109, "Accounting for Income Taxes" and SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." The
cumulative effect of accounting changes of $22.4 million is comprised of a
credit of $65.0 million related to the income tax statement and a charge of
$87.4 million, net of a Federal income tax benefit of $45.0 million, related
to the postretirement benefit statement.
In 1992, effective in the fourth quarter, EVLICO changed its method of
accounting for foreclosed assets to comply with AICPA Statement of Position
No. 92-3, "Accounting for Foreclosed Assets." This change resulted in a
charge of $16.1 million which is reflected in investment (losses) gains,
net.
New Accounting Pronouncements--In the first quarter of 1995, EVLICO intends
to adopt SFAS No. 114, "Accounting by Creditors for Impairment of a Loan."
This statement applies to all creditors and addresses the accounting for
impairment of a loan by specifying how allowances for credit losses should
be determined. The statement also applies to all loans that are restructured
in a troubled debt restructuring involving a modification of terms. It
requires that impaired loans that are within the scope of this statement be
measured based on the present value of expected future cash flows discounted
at the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price or the fair value of the collateral if the
loan is collateral dependent. EVLICO is currently providing for impairment
of loans through an allowance for possible losses, and the implementation of
this statement is not expected to have a significant effect on the level of
this allowance. As a result, there should be no material effect on EVLICO's
consolidated statements of earnings or shareholder's equity upon adoption.
Valuation of Investments--Fixed maturities which EVLICO has both the ability
and the intent to hold to maturity are stated principally at amortized cost.
For publicly traded fixed maturities and for directly negotiated fixed
maturities, the amortized cost is adjusted for impairments in value deemed
to be other than temporary. Fixed maturities which have been identified as
available for sale are reported at estimated fair value.
F-5
<PAGE>
Mortgage loans on real estate are stated at unpaid principal balances, net
of unamortized discounts and valuation allowances. The valuation allowances
are based on losses expected by management to be realized on transfers of
mortgage loans to real estate (upon foreclosure or in-substance
foreclosure), on the disposition or settlement of mortgage loans and on
mortgage loans which management believes may not be collectible in full. In
establishing valuation allowances, management considers, among other things,
the estimated fair value of the underlying collateral.
Policy loans are stated at unpaid principal balances.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired in
satisfaction of debt is valued at estimated fair value. Valuation allowances
on real estate held for the production of income are computed using the
forecasted cash flows of the respective properties discounted at a rate
equal to EVLICO's cost of funds; valuation allowances on real estate
available for sale are computed using the lower of estimated current fair
value or depreciated cost, net of disposition cost.
Partnerships and joint venture interests in which EVLICO does not have
control and a majority economic interest are reported on the equity basis of
accounting and are included with either equity real estate or other equity
investments, as appropriate.
Equity securities, comprised of common and non-redeemable preferred stocks,
are carried at estimated fair value and are included in other equity
investments.
Short-term investments are stated at amortized cost which approximates fair
value and are included with other invested assets.
Cash and cash equivalents include cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less.
All securities are recorded in the consolidated financial statements on a
trade date basis.
Investment Results and Unrealized Investment Gains (Losses)--Realized
investment gains and losses are determined by specific identification and
are presented as a component of revenue. Valuation allowances are netted
against the asset categories to which they apply and changes in the
valuation allowances are included in investment gains or losses.
Unrealized investment gains and losses on fixed maturities available for
sale and equity securities are accounted for as a separate component of
shareholder's equity, net of related deferred Federal income taxes and
deferred policy acquisition costs related to universal life and
investment-type products.
Recognition of Insurance Income and Related Expenses--Premiums from
universal life and investment-type contracts are reported as deposits to
policyholders' account balances. Revenues from these contracts consist of
amounts assessed during the period against policy holders' account balances
for mortality charges, policy administration charges and surrender charges.
Policy benefits and claims that are charged to expense include benefit
claims incurred in the period in excess of related policyholders' account
balances.
Premiums from life and annuity policies with life contingencies are
recognized generally as income when due. Benefits and expenses are matched
with such income so as to result in the recognition of profits over the life
of the contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
Deferred Policy Acquisition Costs--The costs of acquiring new business,
principally commissions, underwriting, agency and policy issue expenses, all
of which vary with and are primarily related to the production of new
business, are deferred. Deferred policy acquisition costs are subject to
recoverability testing at the time of policy issue and loss recognition
testing at the end of each accounting period.
For universal life products and investment-type products, deferred policy
acquisition costs are amortized over the expected average life of the
contracts (periods ranging from 15 to 35 years and 5 to 17 years,
respectively) as a constant percentage of estimated gross profits arising
principally from investment results, mortality and expense margins and
surrender charges based on historical and anticipated future experience,
updated at the end of each accounting period. The effects of revisions to
experience on previous amortization of deferred policy acquisition costs are
reflected in earnings and change in unrealized investment gains (losses) in
the period estimated gross profits are revised.
Amortization charged to income amounted to $200.2 million, $135.5 million
and $61.8 million for the years ended December 31, 1994, 1993 and 1992,
respectively.
Policyholders' Account Balances and Future Policy Benefits--EVLICO's
insurance contracts are primarily universal life and investment-type
contracts. Policyholders' account balances are equal to the policy account
values. The policy account values represent an accumulation of gross premium
payments plus credited interest less expense and mortality charges and
withdrawals.
The future policy benefit liabilities for the remainder of EVLICO's
insurance contracts, consisting primarily of supplementary contracts with
life contingencies and various policy riders, are computed by various
valuation methods based on assumed interest rates and mortality and
morbidity assumptions reflecting EVLICO's experience and industry standards.
F-6
<PAGE>
Federal Income Taxes--EVLICO is included in a consolidated Federal income
tax return with Equitable Life and its other eligible subsidiaries. In
accordance with an agreement between EVLICO and Equitable Life, the amount
of current income taxes as determined on a separate return basis will be
paid to, or received from, Equitable Life. Benefits for losses, which are
paid to EVLICO to the extent they are utilized by Equitable Life, may not
have been received in the absence of such agreement. Effective January 1,
1992, deferred income tax assets and liabilities are recognized based on the
difference between financial statement carrying amounts and income tax bases
of assets and liabilities using the enacted income tax rates and laws.
Separate Accounts--Separate Accounts are established in conformity with the
New York State Insurance Law and are generally not chargeable with
liabilities that arise from any other business of EVLICO. Separate Accounts
assets are subject to General Account claims only to the extent the value of
such assets exceeds the Separate Accounts liabilities.
Assets and liabilities of the Separate Accounts, representing net deposits
and accumulated net investment earnings less fees, held primarily for the
benefit of contractholders, are shown as separate captions in the
consolidated balance sheets. Assets held in the Separate Accounts are
carried at quoted market values or, where quoted values are not available,
at estimated fair values as determined by management.
The investment results of Separate Accounts are reflected directly in
Separate Accounts liabilities. For the years ended December 31, 1994, 1993
and 1992, investment results of Separate Accounts were $135.9 million,
$344.1 million and $52.1 million, respectively.
Deposits to Separate Accounts are reported as increases in Separate Accounts
liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges of the Separate Accounts are included
in revenues.
F-7
<PAGE>
3. INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
-------- ------- ------ ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
December 31, 1994
-----------------
Fixed Maturities:
Held to Maturity:
Corporate ................................................. $1,812.4 $ 11.9 $ 93.1 $1,731.2
U.S. Treasury securities and U.S. government
and agency securities ................................... 180.4 -- 21.7 158.7
States and political subdivisions ......................... 14.4 -- .9 13.5
Foreign governments ....................................... 1.3 .1 -- 1.4
-------- ------ ------ --------
Total Held to Maturity ...................................... $2,008.5 $ 12.0 $115.7 $1,904.8
======== ====== ====== ========
Available for Sale:
Corporate ................................................. $1,622.3 $ 5.1 $112.6 $1,514.8
Mortgage-backed ........................................... 221.9 .5 16.4 206.0
U.S. Treasury securities and U.S. government and
agency securities ....................................... 365.4 1.4 20.7 346.1
States and political subdivisions ......................... 4.8 -- .6 4.2
Foreign governments ....................................... 14.8 .2 -- 15.0
Redeemable preferred stock ................................ 58.0 .1 5.4 52.7
-------- ------ ------ --------
Total Available for Sale .................................... $2,287.2 $ 7.3 $155.7 $2,138.8
======== ====== ====== ========
Equity Securities:
Common stock ................................................ $ 42.0 $ 10.1 $ 9.4 $ 42.7
======== ====== ====== ========
December 31, 1993
-----------------
Fixed Maturities:
Held to Maturity:
Corporate ................................................. $2,056.2 $108.4 $ 8.5 $2,156.1
Mortgage-backed ........................................... 55.3 2.1 -- 57.4
U.S. Treasury securities and U.S. government and
agency securities ....................................... 22.4 1.5 -- 23.9
States and political subdivisions ......................... 85.7 3.3 .1 88.9
Foreign governments ....................................... 10.3 1.2 -- 11.5
-------- ------ ------ --------
Total Held to Maturity ...................................... $2,229.9 $116.5 $ 8.6 $2,337.8
======== ====== ====== ========
Available for Sale:
Corporate ................................................. $1,673.1 $ 55.7 $ 7.5 $1,721.3
Mortgage-backed ........................................... 444.5 14.1 .6 458.0
U.S. Treasury securities and U.S. government and
securities agency ....................................... 73.4 1.8 .3 74.9
States and political subdivisions ......................... 119.7 4.5 .3 123.9
Foreign governments ....................................... 19.6 1.5 .1 21.0
Redeemable preferred stock ................................ 5.2 -- 2.0 3.2
-------- ------ ------ --------
Total Available for Sale .................................... $2,335.5 $ 77.6 $ 10.8 $2,402.3
======== ====== ====== ========
Equity Securities:
Common stock .............................................. $ 40.6 $ 25.9 $ .2 $ 66.3
Non-redeemable preferred stock ............................ .4 .1 .2 .3
-------- ------ ------ --------
Total Equity Securities ........................................ $ 41.0 $ 26.0 $ .4 $ 66.6
======== ====== ====== ========
</TABLE>
For publicly traded fixed maturities and equity securities, estimated fair
value is determined using quoted market prices. For fixed maturities without
a readily ascertainable market value, EVLICO has determined an estimated
fair value using a discounted cash flow approach, including provisions for
credit risk, generally based upon the assumption that such securities will
be held to maturity. Estimated fair value for equity securities,
substantially all of which do not have a readily ascertainable market value,
has been determined by EVLICO. Such estimated fair values do not necessarily
represent the values for which these securities could have been sold at the
dates of the consolidated balance sheets. At December 31, 1994 and 1993,
respectively, securities without a readily ascertainable market value having
an amortized cost of $1,529.5 million and $1,738.7 million, respectively,
had estimated fair values of $1,469.5 million and $1,835.8 million,
respectively.
F-8
<PAGE>
The contractual maturity of bonds at December 31, 1994 are shown below:
<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
------------------------ ------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
--------- ---------- --------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Due in one year or less ........ $ 74.9 $ 75.3 $ 136.2 $ 137.3
Due in years two through five... 756.5 739.0 593.3 579.7
Due in years six through ten.... 795.9 743.9 798.8 724.5
Due after ten years ............ 381.2 346.6 479.0 438.6
Mortgage-backed securities ..... -- -- 221.9 206.0
-------- -------- -------- --------
Total .......................... $2,008.5 $1,904.8 $2,229.2 $2,086.1
======== ======== ======== ========
</TABLE>
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or pre-payment penalties.
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
------ ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year ........................ $ 87.3 $ 147.2 $100.7
Additions charged to income ........................ 12.7 44.4 75.0
Deductions for writedowns and asset dispositions.... (31.5) (104.3) (28.5)
------ ------- ------
Balances, End of Year .............................. $ 68.5 $ 87.3 $147.2
====== ======= ======
Balances, end of year comprise:
Mortgage loans on real estate ................... $ 24.0 $ 46.7 $ 60.2
Equity real estate .............................. 44.5 40.6 25.1
Fixed maturities ................................ -- -- 61.9
------ ------- ------
Total .............................................. $ 68.5 $ 87.3 $147.2
====== ======= ======
</TABLE>
Deductions for writedowns and asset dispositions for 1993 include a $20.2
million writedown of fixed maturity investments at December 31, 1993 as a
result of adopting a new accounting statement for the valuation of these
investments that requires specific writedowns instead of valuation
allowances.
At December 31, 1994, the carrying values of investments held for the
production of income which were non-income producing for the twelve months
preceding the consolidated balance sheet date were $12.4 million of fixed
maturities and $5.4 million of mortgage loans on real estate.
EVLICO's fixed maturity investment portfolio includes corporate high yield
securities consisting of public high yield bonds, redeemable preferred
stocks and directly negotiated debt in leveraged buyout transactions. EVLICO
seeks to minimize the higher than normal credit risks associated with such
securities by monitoring the total investments in any single issuer or total
investment in a particular industry group. Certain of these corporate high
yield securities are classified as other than investment grade by the
various rating agencies, i.e., a rating below Baa or an NAIC (National
Association of Insurance Commissioners) designation of 3 (medium grade), 4
or 5 (below investment grade) or 6 (in or near default). At December 31,
1994, approximately 10.6% of the $4,127.1 million aggregate amortized cost
of bonds held by EVLICO were considered to be other than investment grade.
During 1993, EVLICO sold $250.0 million of primarily privately placed below
investment grade fixed maturities to EQ Asset Trust 1993, (the "Trust"), a
limited purpose business trust, wholly owned by the Holding Company.
In addition to its holding of corporate high yield securities, EVLICO is an
equity investor in limited partnership interests which invest primarily in
securities considered to be other than investment grade.
EVLICO has restructured or modified the terms of certain fixed maturity
investments. The fixed maturity portfolio, based on amortized cost, includes
$13.3 million and $23.1 million at December 31, 1994 and 1993, respectively,
of such restructured securities. These amounts include fixed maturities
which are in default as to principal and/or interest payments, are to be
restructured pursuant to commenced negotiations or where the borrowers went
into bankruptcy subsequent to acquisition (collectively, "problem fixed
maturities") of $5.6 million and $12.4 million at December 31, 1994 and
1993, respectively. Gross interest income that would have been recorded in
accordance with the original terms of restructured fixed maturities amounted
to $1.1 million, $2.2 million and $13.7 million in 1994, 1993 and 1992,
respectively. Gross interest income on these fixed maturities included in
net investment income aggregated $1.0 million, $1.5 million and $11.3
million in 1994, 1993 and 1992, respectively.
F-9
<PAGE>
At December 31, 1994 and 1993, mortgage loans on real estate with scheduled
payments 60 days (90 days for agricultural mortgages) or more past due or in
foreclosure (collectively, "problem mortgage loans on real estate") had an
amortized cost of $35.2 million (3.9% of total mortgage loans on real
estate) and $108.6 million (9.8% of total mortgage loans on real estate),
respectively.
The payment terms of mortgage loans on real estate may from time to time be
restructured or modified. The investment in restructured mortgage loans on
real estate, based on amortized cost, amounted to $130.8 million and $147.9
million at December 31, 1994 and 1993, respectively. These amounts include
$0.0 million and $19.8 million of problem mortgage loans on real estate at
December 31, 1994 and 1993, respectively. Gross interest income on
restructured mortgage loans on real estate that would have been recorded in
accordance with the original terms of such loans amounted to $12.3 million,
$13.9 million and $14.1 million in 1994, 1993 and 1992, respectively. Gross
interest income on these loans included in net investment income aggregated
$11.4 million, $11.5 million and $12.3 million in 1994, 1993 and 1992,
respectively.
EVLICO's investment in equity real estate is through direct ownership and
through investments in real estate joint ventures. At December 31, 1994 and
1993, the carrying value of equity real estate available for sale amounted
to $138.4 million and $92.2 million, respectively. At December 31, 1994 and
1993, EVLICO owned $230.5 million and $190.9 million, respectively, of real
estate acquired in satisfaction of debt.
Depreciation on real estate is computed using the straight-line method over
the estimated useful lives of the properties, which generally range from 40
to 50 years. Accumulated depreciation on real estate was $51.1 million and
$39.1 million at December 31, 1994 and 1993, respectively. Depreciation
expense on real estate totaled $12.7 million, $11.6 million and $5.9 million
for the years ended December 31, 1994, 1993 and 1992, respectively.
4. JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information of real estate joint ventures (12
and 14 individual ventures as of December 31, 1994 and 1993, respectively)
and of other limited partnership interests accounted for under the equity
method, in which EVLICO has an investment of $10.0 million or greater and an
equity interest of 10% or greater is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1993
-------- --------
(IN MILLIONS)
<S> <C> <C>
FINANCIAL POSITION
Investments in real estate, at depreciated cost ................................. $1,047.0 $1,034.6
Investments in securities, generally at estimated fair value .................... 3,061.2 3,623.6
Cash and cash equivalents ....................................................... 46.4 98.1
Other assets .................................................................... 261.9 486.4
-------- --------
Total assets .................................................................... 4,416.5 5,242.7
-------- --------
Funds borrowed -- third party ................................................... 1,233.6 1,254.6
Other liabilities ............................................................... 611.0 674.8
-------- --------
Total liabilities ............................................................... 1,844.6 1,929.4
-------- --------
Partners' Capital ............................................................... $2,571.9 $3,313.3
======== ========
Equity in partners' capital included above ...................................... $ 327.3 $ 375.4
Equity in limited partnership interests not included above ...................... 50.4 57.6
Excess of equity in partners' capital over investment cost and equity earnings... 3.7 --
Negative equity in certain joint ventures presented as other liabilities ........ -- .8
-------- --------
Carrying Value .................................................................. $ 381.4 $ 433.8
======== ========
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1994 1993 1992
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures ...................................... $ 180.1 $ 136.6 $ 183.1
Revenues of other limited partnership interests ............................. 102.5 318.9 150.3
Interest expense -- third party ............................................. (88.1) (79.7) (12.1)
Other expenses .............................................................. (172.4) (132.7) (156.1)
------- ------- -------
Net Earnings ................................................................ $ 22.1 $ 243.1 $ 165.2
======= ======= =======
Equity in net earnings included above ....................................... $ 11.7 $ 34.0 $ 26.1
Equity in net earnings of limited partnership interests not included above... 6.3 12.0 15.8
Excess of earnings in joint ventures over equity ownership percentage and
amortization of differences in bases ..................................... (1.1) (.1) (.1)
------- ------- -------
Total Equity in Net Earnings ................................................ $ 16.9 $ 45.9 $ 41.8
======= ======= =======
</TABLE>
F-10
<PAGE>
5. NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities ..................... $331.4 $319.9 $310.1
Mortgage loans on real estate ........ 86.7 105.7 132.5
Equity real estate ................... 67.0 69.8 23.0
Policy loans ......................... 79.5 76.1 70.9
Other equity investments ............. 13.4 38.5 32.8
Other investment income .............. 24.5 17.0 36.9
------ ------ ------
Gross investment income .............. 602.5 627.0 606.2
Investment expenses .................. 75.7 69.4 31.7
------ ------ ------
Net Investment Income ................ $526.8 $557.6 $574.5
====== ====== ======
</TABLE>
Investment (losses) gains, net, including changes in valuation allowances,
are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities ..................... $ (6.8) $ 45.1 $ 2.6
Mortgage loans on real estate ........ (13.3) (32.0) (38.8)
Equity real estate ................... (5.3) (13.4) (21.0)
Other equity investments ............. 20.8 1.8 3.2
------ ------ ------
Investment (Losses) Gains, Net ....... $ (4.6) $ 1.5 $(54.0)
====== ====== ======
</TABLE>
Gross gains of $42.6 million, $66.2 million and $34.3 million and gross
losses of $41.2 million, $66.5 million and $31.3 million were realized on
sales of investments in fixed maturities for the years ended December 31,
1994, 1993 and 1992, respectively. In addition, writedowns of fixed
maturities amounted to $8.2 million, $1.4 million and $5.6 million for the
years ended December 31, 1994, 1993 and 1992, respectively.
For the year ended December 31, 1994, proceeds received on sales of fixed
maturities classified as available for sale amounted to $2,065.1 million.
Gross gains of $21.2 million and gross losses of $28.1 million were realized
on these sales. The increase in unrealized investment losses related to
fixed maturities classified as available for sale for the year ended
December 31, 1994 amounted to $215.2 million.
During the year ended December 31, 1994, one security classified as held to
maturity was sold and two securities so classified were transferred to the
available for sale portfolio. These actions were taken as a result of a
significant deterioration in creditworthiness. The amortized cost of the
security sold was $9.9 million with a related investment gain of $.4 million
recognized; the aggregate amortized cost of the securities transferred was
$13.2 million with gross unrealized investment losses of $4.0 million
charged to consolidated shareholder's equity.
F-11
<PAGE>
The unrealized investment (losses) gains, included in the consolidated
balance sheets as a component of equity, and the changes for the
corresponding years are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1994 1993 1992
------- ------ -----
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year ........................................ $ 22.3 $ 11.1 $ 7.7
Changes in unrealized investment (losses) gains ................... (241.8) 3.4 5.1
Effect of adopting SFAS No. 115 ................................... -- 72.2 --
Changes in unrealized investment (gains) losses attributable to:
Deferred policy acquisition costs .............................. 95.8 (58.2) --
Deferred Federal income taxes .................................. 51.1 (6.2) (1.7)
------- ------ -----
Balance, End of Year .............................................. $ (72.6) $ 22.3 $11.1
======= ====== =====
Balance, end of year comprises:
Unrealized investment (losses) gains on:
Fixed maturities ............................................. $(148.4) $ 66.8 $(3.5)
Other equity investments ..................................... .7 25.6 20.3
Other ........................................................ (1.7) -- --
------- ------ -----
Total .......................................................... (149.4) 92.4 16.8
Amounts of unrealized investment (gains) losses attributable to:
Deferred policy acquisition costs ............................ 37.6 (58.2) --
Deferred Federal income taxes ................................ 39.2 (11.9) (5.7)
------- ------ -----
Total ............................................................. $ (72.6) $ 22.3 $11.1
======= ====== =====
</TABLE>
6. FEDERAL INCOME TAXES
A summary of the Federal income tax expense (benefit) in the consolidated
statements of earnings is shown below:
1994 1993 1992
------ ------ ------
(IN MILLIONS)
Federal income tax expense (benefit):
Current .......................... $ (1.4) $ (3.4) $(11.3)
Deferred ......................... 26.4 23.9 (10.3)
------ ------ ------
Total ............................... $(25.0) $(20.5) $(21.6)
====== ====== ======
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings (loss)
from operations before Federal income taxes by the expected Federal income
tax rate (35% for 1994 and 1993 and 34% for 1992).
The sources of the difference and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- ------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense (benefit).... $25.3 $16.6 $(21.4)
Tax rate adjustment ............................. -- 4.0 --
Other ........................................... (.3) (.1) (.2)
----- ----- ------
Federal Income Tax Expense (Benefit) ............ $25.0 $20.5 $(21.6)
===== ===== ======
</TABLE>
The components of the net deferred income tax liability are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------------- ---------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------ ----------- ------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Deferred policy acquisition costs, reserves and reinsurance................ $ -- $250.6 $ -- $262.0
Investments................................................................ 38.4 -- 13.4 --
Compensation and related benefits.......................................... 52.2 -- 48.8 --
Other...................................................................... 25.6 -- 37.3 --
------ ------ ----- ------
Total...................................................................... $116.2 $250.6 $99.5 $262.0
====== ====== ===== ======
</TABLE>
F-12
<PAGE>
The deferred Federal income tax expense (benefit) impacting operations
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. The sources of these temporary
differences and the tax effects of each are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------ ----- ------
(IN MILLIONS)
<S> <C> <C> <C>
Deferred policy acquisition costs, reserves and reinsurance.... $(11.4) $(6.8) $ 1.8
Investments ................................................... 26.1 11.4 (18.6)
Compensation and related benefits ............................. (2.8) 1.9 --
Other ......................................................... 14.5 17.4 6.5
------ ----- ------
Deferred Federal Income Tax Expense (Benefit) ................. $ 26.4 $23.9 $(10.3)
====== ===== ======
</TABLE>
At December 31, 1994, EVLICO had net operating loss carryforwards for tax
purposes approximating $62.7 million which expire in 2002 through 2007.
These loss carryforwards are available to offset future tax payments to
Equitable Life under the tax sharing agreement.
7. REINSURANCE AGREEMENTS
EVLICO cedes reinsurance to other insurance companies. EVLICO evaluates the
financial condition of its reinsurers to minimize its exposure to
significant losses from reinsurer insolvencies. The effect of reinsurance is
summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993
----- -----
(IN MILLIONS)
<S> <C> <C>
Direct premiums ...................................................... $40.2 $47.0
Reinsurance ceded .................................................... (.1) (.1)
----- -----
Premiums ............................................................. $40.1 $46.9
===== =====
Universal Life and Investment-type Product Policy Fee Income Ceded.... $24.9 $26.0
===== =====
Policyholders' Benefits Ceded ........................................ $ 8.3 $14.5
===== =====
</TABLE>
EVLICO reinsures mortality risks in excess of $5.0 million on any single
life. EVLICO also reinsures the entire risk on certain substandard
underwriting risks as well as in certain other cases.
8. RELATED PARTY TRANSACTIONS
Under a cost sharing agreement, EVLICO reimburses Equitable Life for its use
of Equitable Life's personnel, property and facilities in carrying out
certain of its operations. Reimbursement for intercompany services is based
on the allocated cost of the services provided. The incurred balances of
these intercompany transactions, which are included in other operating costs
and expenses are as follows:
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
------ ------ ------
(IN MILLIONS)
Personnel and facilities .......... $257.9 $252.7 $273.7
Agent commissions and fees ........ 122.6 103.0 101.2
These cost allocations include various employee related obligations for
pensions and postretirement benefits. At December 31, 1994, EVLICO recorded
as a reduction of shareholder's equity its allocated portion of an
additional minimum pension liability of $1.2 million, net of related Federal
income taxes, representing the excess of the accumulated benefit obligation
over the fair value of plan assets and accrued pension liability.
During 1994, 1993 and 1992, Equitable Life restructured certain operations
in connection with cost reduction programs. EVLICO recorded provisions of
$6.9 million, $17.3 million and $9.5 million in 1994, 1993 and 1992,
respectively, relating primarily to allocated lease obligations (net of
sub-lease rentals) and severance liabilities.
EVLICO incurred investment advisory and asset management fee expenses of
$19.2 million, $16.0 million and $15.6 million during 1994, 1993 and 1992,
respectively.
EVLICO and Equitable Life have an agreement whereby certain Equitable Life
policyholders may purchase EVLICO's policies without presenting evidence of
insurability. Under the agreement, Equitable Life pays EVLICO a conversion
charge for the extra mortality risk associated with issuing these policies.
EVLICO received payments of $3.2 million, $3.1 million and $3.9 million in
1994, 1993 and 1992, respectively, which were reported as other income.
F-13
<PAGE>
On August 31, 1993, EVLICO sold $250.0 million of primarily privately placed
below investment grade fixed maturities to the Trust. EVLICO realized a $1.1
million gain, net of related deferred policy acquisition costs and deferred
Federal income taxes. In conjunction with this transaction, EVLICO received
$75.4 million of Class B notes issued by the Trust. These notes have
interest rates ranging from 6.85% to 9.45%. The Class B notes are classified
as other invested assets on the consolidated balance sheets.
Net amounts payable to Equitable Life were $226.7 million and $195.4 million
at December 31, 1994 and 1993, respectively.
9. DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives--EVLICO primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce EVLICO's exposure to interest rate fluctuations.
Accounting for interest swap transactions is on an accrual basis. Gains and
losses related to hedge transactions are amortized as yield adjustments for
the remaining life of the underlying hedged item. Income and expense
resulting from derivative activities are reflected in net investment income.
The notional amount of matched interest rate swaps outstanding at December
31, 1994 was $704.7 million. The average unexpired terms at December 31,
1994 is 3.0 years. At December 31, 1994, the cost of terminating outstanding
matched swaps in a loss position was $34.2 million and the unrealized gain
on outstanding matched swaps in a gain position was $4.9 million. EVLICO has
no intention of terminating these contracts prior to maturity.
Fair Value of Financial Instruments--EVLICO defines fair value as the quoted
market prices for those instruments that are actively traded in financial
markets. In cases where quoted market prices are not available, fair values
are estimated using present value or other valuation techniques. The fair
value estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument, including
estimates of timing, amount of expected future cash flows and the credit
standing of counterparties. Such estimates do not reflect any premium or
discount that could result from offering for sale at one time EVLICO's
entire holdings of a particular financial instrument, nor do they consider
the tax impact of the realization of unrealized gains or losses. In many
cases, the fair value estimates cannot be substantiated by comparison to
independent markets, nor can the disclosed value be realized in immediate
settlement of the instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts. Fair
market value of off-balance-sheet financial instruments of EVLICO was not
material at December 31, 1994 and 1993.
Fair value for mortgage loans on real estate is estimated by discounting
future contractual cash flows using interest rates at which loans with
similar characteristics and credit quality would be made. Fair values for
foreclosed mortgage loans and problem mortgage loans are limited to the
estimated fair value of the underlying collateral if lower.
The estimated fair values for single premium deferred annuities ("SPDA") are
estimated using projected cash flows discounted at current offering rates.
The estimated fair values for supplementary contracts not involving life
contingencies ("SCNILC") and annuities certain are derived using discounted
cash flows based upon the estimated current offering rate.
The following table discloses carrying value and estimated fair value for
financial instruments not otherwise disclosed in Note 3:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------
1994 1993
---------------------- ----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
-------- -------- -------- --------
(IN MILLIONS)
Consolidated Financial Instruments:
----------------------------------
<S> <C> <C> <C> <C>
Mortgage loans on real estate ...... $ 888.5 $ 865.3 $1,059.5 $1,101.7
Other joint ventures ............... 196.4 196.4 240.7 240.7
Policy loans ....................... 1,185.2 1,138.7 1,087.3 1,155.3
Policyholders' account balances:
SPDA ............................ 1,744.3 1,732.7 2,129.5 2,143.0
Annuity certain and SCNILC ...... 159.0 151.3 157.4 160.6
</TABLE>
10. COMMITMENTS AND CONTINGENT LIABILITIES
EVLICO is the obligor under certain structured settlement agreements which
it has entered into with unaffiliated insurance companies and beneficiaries.
To satisfy its obligations under these agreements, EVLICO has purchased
single premium annuities from Equitable Life and directed Equitable Life to
make payments directly to the beneficiaries. A contingent liability exists
with respect to these agreements should Equitable Life be unable to meet its
obligations. Management believes the need to satisfy such obligations is
remote.
EVLICO had outstanding commitments of $1.3 million at December 31, 1994
under existing loan or loan commitment agreements.
F-14
<PAGE>
11. LITIGATION
EVLICO is a defendant in connection with various legal actions and
proceedings of a character normally incident to its business. Some of the
actions and proceedings have been brought on behalf of various alleged
classes of claimants and certain of these claimants seek damages of
unspecified amounts. While the ultimate outcome of such litigation cannot be
predicted with certainty, management believes, after consultation with
counsel responsible for such litigation, that the resolution of these
actions and proceedings will not result in losses that would have a material
effect on the consolidated financial statements.
12. STATUTORY FINANCIAL INFORMATION
EVLICO is restricted as to the amounts it may pay as dividends to Equitable
Life. Under the New York Insurance Law, the New York Superintendent has
broad discretion to determine whether the financial condition of a stock
life insurance company would support the payment of dividends to its
shareholders. The New York Insurance Department has established informal
guidelines for the Superintendent's determinations which focus upon, among
other things, the overall financial condition and profitability of the
insurer under statutory accounting practices. For the years ended December
31, 1994, 1993 and 1992, statutory earnings (loss) totaled $27.3 million,
$(88.4) million and $(32.7) million, respectively. No amounts are expected
to be available for dividends from EVLICO to Equitable Life in 1995.
At December 31, 1994, EVLICO, in accordance with various government and
state regulations, had $3.4 million of securities deposited with such
government or state agencies.
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from GAAP. The following reconciles EVLICO's net change in
statutory surplus and capital stock and statutory surplus and capital stock
determined in accordance with accounting practices prescribed by the New
York Insurance Department with net earnings (loss) and shareholder's equity
on a GAAP basis.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Net change in statutory surplus and capital stock ............................. $ 64.8 $ 184.4 $ 39.7
Change in asset valuation reserves ............................................ 18.5 26.0 10.6
-------- -------- --------
Net change in statutory surplus, capital stock and asset valuation reserves.... 83.3 210.4 50.3
Adjustments:
Future policy benefits and policyholders' account balances ................. (13.5) (22.5) (46.2)
Initial fee liability ...................................................... (20.3) (11.6) (13.3)
Deferred policy acquisition costs .......................................... 34.7 62.2 131.5
Deferred Federal income taxes .............................................. (20.2) (23.9) 120.3
Valuation of investments ................................................... 27.4 33.8 (27.8)
Limited risk reinsurance ................................................... .1 (5.4) (41.7)
Contribution from Equitable Life ........................................... (50.0) (250.0) (100.0)
Other, net ................................................................. (5.5) 33.8 (136.7)
-------- -------- --------
Net Earnings (Loss) ........................................................... $ 36.0 $ 26.8 $ (63.6)
======== ======== ========
Statutory surplus and capital stock ........................................... $ 777.6 $ 712.7 $ 528.3
Asset valuation reserves ...................................................... 88.3 69.8 43.8
-------- -------- --------
Statutory surplus, capital stock and asset valuation reserves ................. 865.9 782.5 572.1
Adjustments:
Future policy benefits and policyholders' account balances ................. (354.5) (341.1) (318.6)
Initial fee liability ...................................................... (200.5) (180.3) (168.7)
Deferred policy acquisition costs .......................................... 2,077.1 1,946.7 1,942.7
Deferred Federal income taxes .............................................. (134.4) (159.5) (136.0)
Valuation of investments ................................................... (156.5) 57.4 (105.3)
Limited risk reinsurance ................................................... (378.6) (378.7) (373.3)
Post retirement and other pension liabilities .............................. (105.8) (122.7) (132.4)
Other, net ................................................................. (163.8) (151.6) (109.5)
-------- -------- --------
Shareholder's Equity .......................................................... $1,448.9 $1,452.7 $1,171.0
======== ======== ========
</TABLE>
13. SUPPLEMENTAL CASH FLOW INFORMATION
For the years ended December 31, 1994, 1993 and 1992, respectively, real
estate of $59.0 million, $92.1 million and $17.5 million was acquired in
satisfaction of debt.
F-15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Equitable Variable Life Insurance
Company
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of Equitable
Variable Life Insurance Company and its subsidiaries ("EVLICO") at December 31,
1994 and 1993, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
These financial statements are the responsibility of EVLICO's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 2 to the consolidated financial statements, EVLICO changed
its methods of accounting for postemployment benefits in 1994 and for investment
securities and for reinsurance in 1993.
PRICE WATERHOUSE LLP
New York, New York
February 8, 1995
F-16
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Equitable Variable Life Insurance Company:
We have audited the consolidated statements of earnings, shareholder's equity
and cash flows of Equitable Variable Life Insurance Company ("EVLICO") for the
year ended December 31, 1992. These consolidated financial statements are the
responsibility of EVLICO's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated results of operations and consolidated cash
flows of Equitable Variable Life Insurance Company for the year ended December
31, 1992 in conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in 1992 EVLICO
changed its method of accounting for foreclosed assets, income taxes and
postretirement benefits other than pensions.
DELOITTE & TOUCHE LLP
New York, New York
February 16, 1993
F-17
<PAGE>
APPENDIX A
POLICY PROSPECTUSES AND PROSPECTUS SUPPLEMENTS
INCENTIVE LIFE PLUS
o Prospectus dated December 19, 1994*, as supplemented February 14, 1995.
CHAMPION 2000
o Prospectus dated May 1, 1994, as supplemented February 14, 1995.
o Prospectus dated May 1, 1993, as supplemented August 29, 1993, February
28, 1994, May 1, 1994 and February 14, 1995.
o Prospectus dated November 27, 1991, as supplemented May 1, 1992, March
15, 1993, May 1, 1993, August 29, 1993, February 28, 1994, May 1, 1994
and February 14, 1995.
INCENTIVE LIFE 2000
o Prospectus dated May 1, 1994*, as supplemented February 14, 1995.
o Prospectus dated May 1, 1993*, as supplemented August 29, 1993, February
28, 1994, May 1, 1994 and February 14, 1995.
o Prospectus dated November 27, 1991*, as supplemented May 1, 1992, March
15, 1993, May 1, 1993, August 29, 1993, February 28, 1994, May 1, 1994
and February 14, 1995.
INCENTIVE LIFE
o Prospectus dated May 1, 1994, as supplemented February 14, 1995.
o Prospectus dated May 1, 1993, as supplemented August 29, 1993, February
28, 1994, May 1, 1994 and February 14, 1995.
o Prospectus dated February 27, 1991, as supplemented May 1, 1992, January
27, 1993, May 1, 1993, August 29, 1993, February 28, 1994, May 1, 1994
and February 14, 1995.
o Prospectus dated May 1, 1990, as supplemented August 15, 1990, February
27, 1991, January 29, 1993, May 1, 1993, August 29, 1993, February 28,
1994, May 1, 1994 and February 14, 1995.
o Prospectus dated August 29, 1989, as supplemented October 23, 1989,
August 15, 1990, February 27, 1991, January 29, 1993, May 1, 1993,
August 29, 1993, February 28, 1994, May 1, 1994 and February 14, 1995.
o Prospectus dated May 1, 1989, as supplemented August 29, 1989, August
15, 1990, February 27, 1991, January 29, 1993, February 28, 1994, May 1,
1994 and February 14, 1995.
SP-FLEX
o Prospectus dated September 30, 1987, as supplemented May 1, 1989, May 1,
1990, February 27, 1991, May 1, 1993, February 28, 1994, May 1, 1994,
August 29, 1994 and February 14, 1995.
o Prospectus dated August 24, 1987, as supplemented September 30, 1987,
May 1, 1989, May 1, 1990, February 27, 1991, May 1, 1993, February 28,
1994, May 1, 1994, August 29, 1994 and February 14, 1995.
SURVIVORSHIP 2000
o Prospectus dated May 1, 1994, as supplemented February 14, 1995.
o Prospectus dated May 1, 1993, as supplemented August 29, 1993, February
28, 1994, May 1, 1994 and February 14, 1995.
o Prospectus dated August 18, 1992, as supplemented May 1, 1993, August
29, 1993, February 28, 1994, May 1, 1994 and February 14, 1995.
*Including, for eligible purchasers, Special Offer Policy Supplement of same
date.
A-1
<PAGE>
APPENDIX B
MANAGEMENT
Here is a list of our directors and principal officers and a brief statement of
their business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
<S> <C>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ----------------------- -------------------------
DIRECTORS
Michel Beaulieu...................... Director of Equitable Variable since February 1992. Senior Vice President, Equitable,
since September 1991; prior thereto, Chief Life Actuary AXA group 1989 to 1991;
Managing Director Blondeau & CIE (France) 1986 to 1989. Director, Equity & Law (London).
William T. McCaffrey................. Director of Equitable Variable since February 1987. Executive Vice President,
Equitable, since February 1986 and Chief Administrative Officer since February 1988;
prior thereto, various other Equitable positions. Director, Equitable Foundation since
September 1986.
Christophe Dupont-Madinier........... Director of Equitable Variable since February 1993. Senior Vice President, AXA (Paris,
France), since 1988. Director, Donaldson, Lufkin & Jenrette, Inc.; Alliance Capital
Management Corporation, Equitable Real Estate Investment Management, Inc.
Jose S. Suquet....................... Director of Equitable Variable since January 1995. Executive Vice President and Chief
Agency Officer, Equitable, since August 1994; prior thereto, Agency Manager, Equitable,
since February 1985.
Laurent Clamagirand.................. Director of Equitable Variable since February 1995; Director of Financial Reporting,
Equitable, since November 1994; prior thereto, International Controller, AXA, January
1990 to October 1994; Director, Equitable of Colorado, since March 1995
OFFICERS -- DIRECTORS
James M. Benson...................... President, Equitable Variable since December, 1993; Vice Chairman of the Board,
Equitable Variable July 1993 to December 1993. President and Chief Operating Officer,
Equitable, February 1994 to present; Senior Executive Vice President, April 1993 to
February 1994. Prior thereto, President, Management Compensation Group, 1983 to
February 1993. Director, Alliance Capital, October 1993 to present.
Harvey Blitz......................... Vice President, Equitable Variable since April 1995; Director of Equitable Variable
since October 1992. Senior Vice President, Equitable since September 1987. Senior Vice
President, The Equitable Companies Incorporated, since July 1992. Director, Equico
Securities, Inc., since September 1992; Equitable of Colorado, since September 1992;
Equisource and its subsidiaries since October 1992
Gordon Dinsmore...................... Senior Vice President, Equitable Variable, since February 1991. Senior Vice President,
Equitable since September 1989; prior thereto, various other Equitable positions.
Director and Senior Vice President, March 1991 to present, Equitable of Colorado;
Director, FHJV Holdings, Inc., December 1990 to present; Director, Equitable
Distributors, Inc., August 1993 to present, and Director Equitable Foundation, May 1991
to present
Jerry de St Paer..................... Senior Investment Officer, Equitable Variable since April 1995; Director of Equitable
Variable since April 1992. Executive Vice President & Chief Financial Officer,
Equitable, since April 1992; prior thereto, Executive Vice President since December
1990; Senior Vice President & Treasurer June 1990 to December 1990; Senior Vice
President, Equitable Investment Corporation January 1987 to January 1991; Executive
Vice President & Chief Financial Officer, The Equitable Companies Incorporated since
May 1992; Director, Economic Services Corporation & various Equitable subsidiaries.
James S. Kalmer...................... Senior Vice President, Equitable Variable, since February 1991. Vice President since
December 1987. Senior Vice President, Equitable, since September 1989, prior thereto,
Vice President. Director, Equisource and its subsidiaries since March 1991; and
Equitable Underwriting and Sales Agency (Bahamas) Limited since March 1994.
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ----------------------- -------------------------
OFFICERS -- DIRECTORS (Continued)
Joseph J. Melone.................... Chairman of the Board and Chief Executive Officer, Equitable Variable, since
November 1990; Chairman of the Board and Chief Executive Officer, Equitable,
February 1994 to present; President and Chief Executive Officer, September 1992 to
February 1994; President and Chief Operating Officer from November 1990 to September
1992. President and Chief Operating Officer of The Equitable Companies Incorporated
since July 1992. Prior thereto, President, The Prudential Insurance Company of
America, since December 1984. Director, Equity & Law (United Kingdom) and various
other Equitable subsidiaries.
Brian O'Neil........................ Senior Vice President and Chief Investment Officer, Equitable Variable, since
October 1992. Executive Vice President & Chief Investment Officer, Equitable, since
April 1992; prior thereto; Senior Vice President since February 1989; Vice President
from July 1988 to February 1989. Senior Vice President, Equitable Capital Management
Corporation, from November 1987 to March 1989. Director, Equitable Real Estate
Investment Management, Inc. since May 1992; Alliance since October 1993; Equitable
Foundation since May 1991.
Samuel B. Shlesinger................ Senior Vice President, Equitable Variable, since February 1988. Senior Vice
President and Actuary, Equitable; prior thereto, Vice President and Actuary.
Director, Chairman and CEO, Equitable of Colorado.
Dennis D. Witte..................... Senior Vice President, Equitable Variable, since February 1991; Senior Vice
President, Equitable, since July 1990; prior thereto, various other Equitable
positions.
OFFICERS
J. Thomas Liddle, Jr. .............. Senior Vice President and Chief Financial Officer, Equitable Variable, since
February 1986. Senior Vice President, Equitable since April 1991; prior thereto,
Vice President and Actuary, Equitable.
Franklin Kennedy, III............... Vice President, Equitable Variable, since August 1981. Senior Vice President,
1345 Avenue of the Americas Alliance Capital Management Corporation, July 1993 to present; Senior Vice
New York, New York 10105 President, Equitable Capital Management Corporation, March 1987 to July 1993. Vice
President, The Hudson River Trust. Managing Director and Chief Investment Officer,
Equitable Investment Management Corporation, from November 1983 to January 1987.
William A. Narducci................. Vice President and Chief Claims Officer, Equitable Variable since February 1989.
200 Plaza Drive Vice President, Equitable since February 1988; prior thereto, Assistant Vice
Secaucus, New Jersey 07096 President.
John P. Natoli...................... Vice President and Chief Underwriting Officer, Equitable Variable, since February
1988. Vice President, Equitable.
Molly K. Heines..................... Secretary, Equitable Variable, since February 1991; Vice President and Secretary,
Equitable, since July 1990; prior thereto, Vice President & Counsel.
Kevin R. Byrne...................... Treasurer, Equitable Variable, since September 1990; Vice President and Treasurer,
Equitable since September 1993; prior thereto, Vice President from March 1989 to
September 1993. Vice President and Treasurer, The Equitable Companies Incorporated,
September 1993 to present; Frontier Trust since August 1990; Equisource and its
subsidiaries October 1990 to present.
Stephen Hogan....................... Vice President and Controller, Equitable Variable, February 1994 to present. Vice
President, Equitable, January 1994 to present; prior thereto, Controller, John
Hancock subsidiaries, from 1987 to December 1993.
</TABLE>
B-2
<PAGE>
APPENDIX C
COMMUNICATING PERFORMANCE DATA
In reports or other communications to policyowners or in advertising material,
we may describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance or ranking of the Separate
Account Funds and Trust portfolios with (1) that of other insurance company
separate accounts or mutual funds included in the rankings prepared by Lipper
Analytical Services, Inc., Morningstar, Inc. or similar investment services that
monitor the performance of insurance company separate accounts or mutual funds,
(2) other appropriate indices of investment securities and averages for peer
universes of funds, or (3) data developed by us derived from such indices or
averages. Advertisements or other communications furnished to present or
prospective policyowners may also include evaluations of a Separate Account Fund
or Trust portfolio by financial publications that are nationally recognized such
as Barron's, Morningstar's Variable Annuities / Life, Business Week, Forbes,
Fortune, Institutional Investor, Money, Kiplinger's Personal Finance, Financial
Planning, Investment Adviser, Investment Management Weekly, Money Management
Letter, Investment Dealers Digest, National Underwriter, Pension & Investments,
USA Today, Investor's Daily, The New York Times, The Wall Street Journal, the
Los Angeles Times and the Chicago Tribune.
Performance data for peer universes of funds with similar investment objectives
are compiled by Lipper Analytical Services, Inc. (Lipper) in its Lipper Variable
Insurance Products Performance Analysis Service (Lipper Survey) and Morningstar,
Inc. in the Morningstar Variable Annuity / Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 funds
underlying variable annuity and life insurance products. The Lipper Survey
divides these actively managed funds into 25 categories by portfolio objectives.
The Lipper Survey contains two different universes, which differ in terms of the
types of fees reflected in performance data. The "Separate Account" universe
reports performance data net of investment management fees, direct operating
expenses and asset-based charges applicable under variable insurance and annuity
contracts. The "Mutual Fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects
asset-based charges that relate only to the underlying mutual fund.
The Morningstar Report consists of nearly 700 variable life and annuity funds,
all of which report their data net of investment management fees, direct
operating expenses and separate account level charges.
LONG-TERM MARKET TRENDS
As a tool for understanding how different investment strategies may affect
long-term results, it may be useful to consider the historical returns on
different types of assets. The following chart presents historical return trends
for various types of securities. The information presented, while not directly
related to the performance of the Funds of the Separate Account or the Trust
portfolios, may help to provide a perspective on the potential returns of
different asset classes over different periods of time. By combining this
information with your knowledge of your own financial needs, you may be able to
better determine how you wish to allocate your variable life insurance premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long or short-term debt securities, although
common stocks have been subject to more dramatic changes in value over short
periods of time. The Common Stock Fund of the Separate Account may, therefore,
be a desirable selection for policyowners who are willing to accept such risks.
Policyowners who have a need to limit short-term risk, may find it preferable to
allocate a smaller percentage of their net premiums to those funds that invest
primarily in common stock. Any investment in securities, whether equity or debt,
involves varying degrees of potential risk, in addition to offering varying
degrees of potential reward.
The chart on page A-2 illustrates the average annual compound rates of return
over selected time periods between December 31, 1925 and December 31, 1994 for
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds and Treasury Bills. The Consumer Price Index
is shown as a measure of inflation for comparison purposes. The average annual
returns assume the reinvestment of dividends, capital gains and interest.
The information presented is an historical record of unmanaged groups of
securities and is neither an estimate nor a guarantee of future results. In
addition, investment management fees and expenses and charges associated with a
variable life insurance policy, are not reflected.
The rates of return illustrated do not represent returns of the Separate Account
or the Trust and do not constitute a representation that the performance of the
Separate Account Funds or the Trust portfolios will correspond to rates of
return such as those illustrated in the chart. For a comparative illustration of
performance results of The Hudson River Trust, see page A-1 of the Trust's
prospectus.
C-1
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RATES OF RETURN
LONG-TERM LONG-TERM INTERMEDIATE- CONSUMER
COMMON GOVERNMENT CORPORATE TERM TREASURY PRICE
STOCKS BONDS BONDS BONDS BILLS INDEX
------ ----- ----- ----- ----- -----
FOR THE
FOLLOWING
PERIOD ENDING
12/31/94:
- ---------
<S> <C> <C> <C> <C> <C> <C>
1 year.................... 1.31 - 7.77 - 5.76 - 5.14 3.90 2.78
3 year.................... 6.26 5.62 5.28 4.19 3.43 2.81
5 year.................... 8.69 8.34 8.36 7.46 4.73 3.51
10 year.................... 14.40 11.86 11.57 9.40 5.76 3.59
20 year.................... 14.58 9.42 10.00 9.25 7.29 5.45
30 year.................... 9.95 6.96 7.31 7.84 6.66 5.36
40 year.................... 10.66 5.62 6.14 6.58 5.63 4.40
50 year.................... 11.92 4.99 5.34 5.59 4.69 4.35
60 year.................... 11.48 4.81 5.21 5.19 3.92 4.10
since 1926................. 10.19 4.83 5.41 5.09 3.69 3.13
Inflation Adjusted
Since 1926 ................ 6.85 1.65 2.22 1.91 0.55 --
- ------------
</TABLE>
*Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 1995
YEARBOOK(TM), Ibbotson Associates, Inc., Chicago. All rights reserved.
Common Stocks (S&P 500) -- Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
Long-term Government Bonds -- Measured using a one-bond portfolio constructed
each year containing a bond with approximately a twenty year maturity and a
reasonably current coupon.
Long-term Corporate Bonds -- For the period 1969-1994, represented by the
Salomon Brothers Long-Term, High-Grade Corporate Bond Index; for the period
1946-1968, the Salomon Brothers' Index was backdated using Salomon Brothers'
monthly yield data and a methodology similar to that used by Salomon for
1969-1994; for the period 1926-1945, the Standard and Poor's monthly
High-Grade Corporate Composite yield data were used, assuming a 4 percent
coupon and a twenty year maturity.
Intermediate-term Government Bonds -- Measured by a one-bond portfolio
constructed each year containing a bond with approximately a five year
maturity.
U.S. Treasury Bills -- Measured by rolling over each month a one-bill
portfolio containing, at the beginning of each month, the bill having the
shortest maturity not less than one month.
Inflation -- Measured by the Consumer Price Index for all Urban Consumers
(CPI-U), not seasonally adjusted.
C-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VM 501
HRT 103 (5/95)
- --------------------------------------------------------------------------------
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 148
BROOKLYN, N.Y.
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
Mailing Address:
2 Penn Plaza
New York, New York 10121
ADDRESS CORRECTION REQUESTED
RETURN POSTAGE GUARANTEED
<PAGE>
VARIABLE LIFE INSURANCE POLICY WITH
ADDITIONAL PREMIUM OPTION
SP-FLEX(TM)
[SP-FLEX LOGO]
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO -- 1986 VERSION]
VM 369 PROSPECTUS DATED SEPTEMBER 30, 1987
THE HUDSON RIVER TRUST
PRINCIPAL OFFICE LOCATED AT:
787 SEVENTH AVENUE
NEW YORK, N.Y. 10019
HRT 102 PROSPECTUS DATED SEPTEMBER 30, 1987
<PAGE>
SP-FLEX(TM)
VARIABLE LIFE INSURANCE POLICY WITH
ADDITIONAL PREMIUM OPTION
SP-Flex(TM) (Policy Form No. 87-500) is a variable life insurance policy that
currently requires payment of only one premium. SP-Flex is issued by Equitable
Variable Life Insurance Company. The minimum initial premium for policies on
insured persons over age 30 is $10,000 (age 30 or under, the minimum is $5,000).
However, you may also make additional premium payments ($1,000 minimum), subject
to certain conditions. Before issuing a policy or accepting any additional
premium payments, we require satisfactory evidence of insurability.
Your entire initial premium and, after deduction of a $25 administrative charge,
any additional premiums are deposited in your Policy Account. The value of your
Policy Account will increase or decrease with the investment experience of the
assets supporting your policy. The value of your Policy Account will also
reflect the cost of insurance and expenses. You may incur a surrender charge if
you surrender your policy or allow it to lapse.
The amounts in your Policy Account are allocated, at your direction, among one
or more of the investment divisions of Equitable Variable's Separate Account FP.
We invest each of the investment divisions of our Separate Account in shares of
a corresponding portfolio of The Hudson River Trust, a mutual fund that invests
the assets of separate accounts of insurance companies. The Trust is the
successor to The Hudson River Fund, Inc. pursuant to an Agreement and Plan of
Reorganization dated September 30, 1987.
The prospectus for the Trust, attached to this prospectus, describes the
investment objectives, policies and risks of each of the Trust's portfolios.
Currently, the following portfolios are available:
o Aggressive Stock o Global o Balanced
o High Yield o Common Stock o Money Market
Your Policy Account will vary in value with the investment performance of the
corresponding Fund portfolios, and there is no minimum Policy Account value.
This means that you will bear the investment risk for the amounts in your Policy
Account.
SP-Flex pays an Insurance Benefit (net of any indebtedness) when the insured
person dies if the policy is still in effect. The Insurance Benefit equals the
amount in your Policy Account on the day the insured person dies less any unpaid
cost of insurance charges, times a factor which is based on the insured person's
age and sex. There is no minimum Insurance Benefit.
SP-FLEX IS A VARIABLE LIFE INSURANCE POLICY DESIGNED FOR SINGLE PREMIUM
PURCHASES. SP-FLEX OFFERS A LIMITED OPPORTUNITY TO PAY ADDITIONAL PREMIUMS. YOU
ARE NOT REQUIRED TO PAY ANY ADDITIONAL PREMIUMS.
Your policy is serviced at the Administrative Office shown on page 3 of your
policy when it is issued. Our Home Office is 787 Seventh Avenue, New York, N.Y.
10019, telephone (212) 714-4643.
You have the right to examine this policy and return it to us for a refund
within 10 days after you receive it.
PLEASE READ THIS PROSPECTUS FOR DETAILS ON THE POLICY BEING OFFERED TO YOU, AND
KEEP IT FOR FUTURE REFERENCE. THIS PROSPECTUS IS NOT VALID UNLESS IT IS ATTACHED
TO A CURRENT PROSPECTUS FOR THE HUDSON RIVER TRUST.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
REPLACING YOUR EXISTING INSURANCE OR, IF YOU ALREADY OWN A FLEXIBLE PREMIUM
INSURANCE POLICY, ACQUIRING ADDITIONAL INSURANCE THROUGH THE POLICY DESCRIBED IN
THIS PROSPECTUS, MAY NOT BE TO YOUR ADVANTAGE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 30, 1987
VM-369
Copyright 1987 Equitable Variable Life Insurance Company. All rights reserved.
<PAGE>
In this prospectus "Equitable Variable", "we", "our" and "us" mean Equitable
Variable Life Insurance Company, a New York stock life insurance company. We are
a wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States, a New York mutual life insurance company (Equitable).
"You" and "your" mean the owner of the policy. We refer to the person who is
covered by the policy as the "insured person", because the insured person and
the policyowner may not be the same.
TABLE OF CONTENTS
PAGE
PART 1 -- SUMMARY.........................................................1
FEATURES OF SP-FLEX.............................................1
INVESTMENT CHOICES..............................................1
CHARGES.........................................................2
USING YOUR POLICY ACCOUNT.......................................2
ADDITIONAL INFORMATION..........................................3
RATES OF RETURN.................................................3
HYPOTHETICAL ILLUSTRATIONS......................................4
PART 2 -- DETAILED INFORMATION ABOUT EQUITABLE VARIABLE
AND SP-FLEX INVESTMENT CHOICES..........................................6
EQUITABLE VARIABLE..............................................6
EQUITABLE.......................................................6
Equitable's Investment In Equitable Variable.................6
Donaldson, Lufkin & Jenrette, Inc............................6
INVESTMENT CHOICES..............................................7
THE SEPARATE ACCOUNT AND ITS DIVISIONS..........................7
A Unit Investment Trust......................................7
The Investment Divisions Of The Separate
Account...................................................7
Other Policies Use The Separate Account......................7
We Own The Assets Of The Separate
Account...................................................7
THE TRUST.......................................................7
PREDECESSORS OF THE TRUST.......................................8
INVESTMENT OBJECTIVES OF THE PORTFOLIOS.........................8
THE TRUST'S INVESTMENT ADVISER..................................9
PART 3 -- DETAILED INFORMATION ABOUT SP-FLEX.............................10
PREMIUMS.......................................................10
You Direct The Investment Of Your
Premiums.................................................10
CHARGES........................................................10
Deductions From Premiums....................................10
Policy Account Charges......................................10
Expenses Of The Trust.......................................11
Surrender Charge............................................11
Transfer Charge.............................................12
INSURANCE BENEFIT..............................................12
YOUR POLICY ACCOUNT VALUE......................................13
Amounts In The Separate Account.............................13
How We Determine Unit Value.................................13
BORROWING FROM YOUR POLICY ACCOUNT.............................14
How To Request A Loan.......................................14
Policy Loan Interest........................................14
Interest On Your Loaned Policy Account......................15
When Interest Is Due........................................15
Repaying The Loan...........................................15
The Effects Of A Policy Loan................................16
OTHER POLICY ACCOUNT TRANSACTIONS..............................16
Changing Your Premium Allocations...........................16
Transfers Among Investment Choices..........................16
Surrendering Your Policy For Cash...........................16
YOUR RIGHT TO EXAMINE THE POLICY...............................16
YOUR RIGHT TO EXCHANGE THE POLICY..............................16
YOUR POLICY CAN LAPSE..........................................17
POLICY PERIODS, ANNIVERSARIES, DATES AND AGES..................17
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY....................18
ADDITIONAL INFORMATION ABOUT SP-FLEX...........................18
When We Pay Proceeds........................................18
Your Payment Options........................................19
Your Beneficiary............................................20
Assigning Your Policy.......................................20
Employee Benefit Plans......................................20
Our Reports To Policyowners.................................20
Dividends...................................................20
PART 4 -- ADDITIONAL INFORMATION.........................................21
TAX EFFECTS....................................................21
Policy Proceeds.............................................21
Pension And Profit-Sharing Plans............................22
Our Income Taxes............................................22
Tax Reform..................................................22
When We Withhold Income Taxes...............................22
YOUR VOTING PRIVILEGES.........................................23
Trust Voting Privileges.....................................23
How We Determine Your Voting Shares.........................23
How Trust Shares Are Voted..................................23
Voting Privileges Of Others.................................24
Separate Account Voting Privileges..........................24
SPECIAL ISSUE PROGRAMS.........................................24
Purpose.....................................................24
Guidelines..................................................24
OUR RIGHT TO CHANGE HOW WE OPERATE.............................24
SALES AND OTHER AGREEMENTS.....................................25
Agents Are Paid Sales Commissions...........................25
Brokers Are Paid Commissions................................25
Applications................................................25
Our Joint Service Agreement With Equitable..................25
REGULATION.....................................................26
LEGAL MATTERS..................................................26
LEGAL PROCEEDINGS..............................................26
FINANCIAL AND ACTUARIAL EXPERTS................................26
ADDITIONAL INFORMATION.........................................26
MANAGEMENT.....................................................27
PART 5 -- ILLUSTRATIONS OF INSURANCE BENEFIT, POLICY ACCOUNT
AND CASH SURRENDER VALUES, AND ACCUMULATED PREMIUMS....................30
PART 6 -- FINANCIAL STATEMENTS...........................................37
The purpose of the policy we are offering is to provide insurance protection for
a policy's beneficiary.
We do not claim that the policy is in any way similar to or comparable to a
mutual fund's systematic investment plan.
The policy is not available in all states. This prospectus does not constitute
an offering in any jurisdiction in which such offering may not lawfully be made.
Equitable Variable does not authorize any information or representations
regarding the offering described in this prospectus other than as contained in
this prospectus or any supplement thereto or in any supplemental sales material
authorized by Equitable Variable.
i
<PAGE>
PART 1: SUMMARY
Unless indicated otherwise, the discussion in this prospectus assumes that there
is no policy loan outstanding and that state variations will be covered by
prospectus supplement or policy endorsement, as appropriate. The terms under
which SP-Flex is issued may also vary from those described in this prospectus
based on particular circumstances. See "Special Issue Programs" in Part 4.
The description of SP-Flex in this prospectus is subject to the terms of the
policy you buy and any supplement or endorsement to it. You may review a copy of
our policy and any supplement or endorsement to it on request.
FEATURES OF SP-FLEX
PREMIUMS. You purchase SP-Flex with a single initial premium payment. The
minimum initial premium payment for policies on insured persons over age 30 is
$10,000 (age 30 or under, the minimum is $5,000). If you provide us with
satisfactory evidence that the insured person is still insurable, you may pay
additional premiums ($1,000 minimum) after the second policy year, subject to
certain conditions. In addition, if we impose the maximum cost of insurance
charges permitted under your policy, an additional premium could be required to
keep your policy from lapsing.
POLICY ACCOUNT. Your entire initial premium and, after deduction of a $25
administrative charge, any additional premiums you pay are put in your Policy
Account. The amounts in your Policy Account are allocated, at your direction,
among one or more of the divisions of our Separate Account FP (the Separate
Account).
Your Policy Account reflects the amount of premiums paid, charges for the cost
of insurance and expenses, the investment experience of amounts you have
allocated to one or more divisions of the Separate Account and interest declared
on your Loaned Policy Account (amounts set aside to secure any borrowing you
have made under your SP-Flex policy). No minimum Policy Account value is
guaranteed. See "Your Policy Account Value" and "Policy Periods, Anniversaries,
Dates And Ages" in Part 3.
INSURANCE BENEFIT. SP-Flex pays an Insurance Benefit (net of any indebtedness)
when the insured person dies if the policy is still in effect. The Insurance
Benefit equals the amount in the Policy Account on the day the insured person
dies less any unpaid cost of insurance charges, times a factor. The factor used
depends on the insured person's sex and age. The factor generally declines as
the insured person gets older. No minimum Insurance Benefit is guaranteed. See
"Insurance Benefit" and "Additional Information about SP-Flex -- Your Payment
Options" in Part 3.
INVESTMENT CHOICES
You may allocate amounts in your Policy Account to one or more of the investment
divisions of our Separate Account. The current investment divisions are:
o Aggressive Stock o Common Stock
o High Yield o Balanced
o Global o Money Market
Each of the investment divisions invests in shares of a corresponding portfolio
of The Hudson River Trust (the Trust), a "series" type mutual fund. The
portfolios of the Trust have different investment objectives.
Equitable Capital Management Corporation (Equitable Capital) is the investment
adviser of the Trust. The maximum effective annual rate at which the Trust pays
advisory fees is .55% of the average daily value of a portfolio's aggregate net
assets.
For a full description of the Trust, see the Trust's prospectus, which is
attached to this prospectus, and the Trust's Statement of Additional Information
referred to therein.
<PAGE>
CHARGES
DEDUCTIONS FROM PREMIUMS. Your entire initial premium is put in your Policy
Account. No deductions are made from your initial premium. However, any
additional premiums you choose to pay are subject to a $25 administrative
charge. See "Charges -- Deductions From Premiums" in Part 3. Also, as described
below, all premiums may be subject to a surrender charge.
POLICY ACCOUNT CHARGES. In determining the value of the amounts you have in the
divisions of the Separate Account, charges are deducted daily at effective
annual rates of .85% for mortality and expense risks and .35% for administrative
costs. We guarantee that the rates for mortality and expense risks and
administrative costs will not increase.
We also make a charge for the cost of insurance under your policy. We guarantee
that the cost of insurance charges under your policy will not exceed cost of
insurance charges based on the Commissioner's 1980 Standard Ordinary Male and
Female Mortality Tables. Currently, the charge for the cost of insurance is
deducted daily at an effective annual rate of .60%. See "Charges -- Policy
Account Charges" in Part 3.
In addition, we reserve the right to make a charge in the future for taxes or
provisions made for taxes.
EXPENSES OF THE TRUST. Shares of the Trust are purchased and redeemed at their
net asset value which reflects management fees and other expenses already
deducted from the assets of the Trust. The Trust does not impose a sales charge.
See "The Trust" in Part 2.
SURRENDER CHARGE. If you surrender your policy or allow it to lapse you will
incur a surrender charge. The maximum charge is 7% of the initial premium and 5%
of each additional premium. The charge is a contingent deferred sales load which
is based on premium payments and declines 1% each policy year to zero over a
fixed surrender charge period. See "Charges -- Surrender Charge" and "Your
Policy Can Lapse" in Part 3.
USING YOUR POLICY ACCOUNT
BORROWING FROM YOUR POLICY ACCOUNT. You may borrow up to 95% of the Cash
Surrender Value on the date of the borrowing, using only your policy as security
for the loan. The Cash Surrender Value is the difference between the value of
your Policy Account (net of any unpaid cost of insurance charge) and any
applicable surrender charge. Up to a certain loan amount, the interest charged
on your loan will, in effect, be offset by the interest we declare on your
Loaned Policy Account. The interest rate charged on borrowings in excess of this
amount will be no more than 2% over the interest rate we declare on your Loaned
Policy Account. See "Borrowing From Your Policy Account" in Part 3.
TRANSFERS AMONG INVESTMENT CHOICES. You may transfer amounts in your Policy
Account among the divisions of our Separate Account. Transfers take effect on
the date we receive your request. We require minimum amounts for any transfer,
usually $500. Currently, you may make transfers among your investment choices
without charge. However, we may impose a transfer charge in the future of up to
$25 if you make more than four transfers a year. See "Other Policy Account
Transactions -- Transfers Among Investment Choices" in Part 3.
SURRENDERING YOUR POLICY FOR CASH. If you surrender the policy for cash, we will
pay you the Net Cash Surrender Value (Cash Surrender Value less any outstanding
loan and loan interest due). See "Other Policy Account Transactions --
Surrendering Your Policy For Cash" in Part 3.
2
<PAGE>
ADDITIONAL INFORMATION
YOUR RIGHT TO EXAMINE THIS POLICY. You have a right to examine the policy and,
if you wish, return it to us for a refund. Your request must be postmarked no
later than 10 days after you receive your policy. See "Your Right To Examine The
Policy" in Part 3.
YOUR RIGHT TO EXCHANGE THIS POLICY. Within 24 months of your policy's Issue
Date, you may exchange it for a policy of permanent fixed benefit life insurance
on the life of the insured person. This exchange will not require evidence of
insurability. See "Your Right To Exchange The Policy" in Part 3.
TAX EFFECTS OF SP-FLEX. Generally, the Insurance Benefit paid to the beneficiary
of this policy is not subject to Federal income tax. In addition, under current
Federal tax law, you do not generally have to pay income tax on any earnings in
your Policy Account as long as they remain in your Policy Account. See "Tax
Effects" in Part 4.
YOUR POLICY CAN LAPSE. This policy will remain in force for the life of the
insured person unless the unpaid portion of any amount you have borrowed under
your policy plus unpaid loan interest exceeds your policy's Cash Surrender
Value. Your policy could also lapse if your policy's Net Cash Surrender Value is
insufficient to pay the deduction for the cost of insurance charge. See "Your
Policy Can Lapse" in Part 3.
RATES OF RETURN
The rates of return shown below are based on the actual investment performance,
after deduction for investment management fees and direct Trust operating
expenses, of the portfolios of the Trust (other than the High Yield and Global
Portfolios) for the periods ending June 30, 1987. The High Yield and Global
Portfolios received their initial funding on January 2, 1987 and August 31,
1987, respectively. The historical performance of the Common Stock and Money
Market Portfolios for periods prior to March 22, 1985 has been adjusted to
reflect current investment management fees of .40% per annum and .10% per annum
in estimated direct Trust operating expenses. See "Predecessors of the Trust" in
Part 2.
These rates of return do not reflect the 1.80% Policy Account charges which
reduce the actual return to policyowners. Also, the rates do not reflect the
surrender charge you may incur if you surrender your policy or allow it to
lapse. (See "Charges -- Policy Account Charges" in Part 3). Accordingly, these
rates are not illustrative of how actual investment performance will affect the
benefits under your policy (see, however, "Hypothetical Illustrations").
Moreover, these rates of return are not an estimate or guarantee of future
performance. You may, however, consider these rates of return in assessing the
competence and performance of the Trust's investment adviser.
PORTFOLIO 10 YEARS 5 YEARS 3 YEARS 1 YEAR
-------- ------- ------- ------
Aggressive Stock(a)... -- -- -- 23.1%
Common Stock.......... 19.0% 28.5% 29.4% 18.4%
Balanced(a)........... -- -- -- 10.9%
Money Market(a)....... -- 8.7% 7.9% 6.0%
- ----------
(a) The Aggressive Stock and Balanced Portfolios received their initial funding
on January 27, 1986, and the predecessor of the Money Market Portfolio
received its initial funding on July 13, 1981.
Additional information regarding the investment performance of the portfolios of
the Trust appears in the attached Trust prospectus.
3
<PAGE>
HYPOTHETICAL ILLUSTRATIONS
To demonstrate how the actual investment experience of the Separate Account
divisions will affect the Insurance Benefit, Policy Account and Cash Surrender
Values under SP-Flex, we have developed hypothetical illustrations for the
Common Stock and Money Market Divisions which invest in the Common Stock and
Money Market Portfolios of the Trust.
ADJUSTMENTS AND ASSUMPTIONS. Because the historical charges against the
predecessors of the Common Stock and Money Market Portfolios (See "Predecessors
Of The Trust" in Part 2) differed from the charges currently applicable, the
historical performance has been adjusted to reflect the current maximum annual
investment management fee of .40% and estimated direct operating expenses of
.10% per year.
In addition, we have assumed that the Separate Account has been in existence
since January 1, 1977 and that the Policy Account charges applied during the
periods shown. We have developed these illustrations based on both the current
Policy Account charges at the effective annual rate of 1.80% and the charges
that would apply if the maximum cost of insurance charges permitted under your
policy were imposed. See "Charges -- Policy Account Charges" in Part 3. These
adjustments were made only for the value of Trust shares on the policy
anniversaries shown, not on a daily basis as the current charges would be made.
EXPLANATION OF EXAMPLES. The examples of policy performance that follow are for
a specific age, sex and policy anniversary and are not an estimate or guarantee
of future performance. They assume that no additional premium payments have been
made and that no transfer charges have been incurred. Part of the increase in
the Cash Surrender Values in these examples is due to the 1% annual decrease in
the surrender charge which applies during the first seven policy years.
THE COMMON STOCK DIVISION. The following examples show how the hypothetical net
return of the Common Stock Division and its predecessors would have affected
benefits for a policy dated January 1, 1977. Assume that the insured person was
a male age 35 and that a single premium of $20,000 was paid on January 1, 1977.
The examples also assume that the premium and related Policy Account and Cash
Surrender Values were in the Common Stock Division for the entire period.
SP-FLEX
VARIABLE LIFE INSURANCE POLICY WITH ADDITIONAL PREMIUM OPTION
($79,452 Initial Insurance Benefit Standard Risk)
Based on Current Charges
<TABLE>
<CAPTION>
POLICY ANNIVERSARY
ON JAN. 1 OF INSURANCE BENEFIT POLICY ACCOUNT VALUE CASH SURRENDER VALUE
- ------------------ ----------------- -------------------- --------------------
<S> <C> <C> <C>
1978.............. $ 67,972 $17,686 $16,486
1979.............. 70,968 19,085 18,085
1980.............. 84,688 23,534 22,734
1981.............. 124,451 35,732 35,132
1982.............. 111,676 33,122 32,722
1983.............. 121,774 37,298 37,098
1984.............. 148,589 46,988 46,988
1985.............. 137,952 45,029 45,029
1986.............. 176,735 59,529 59,529
1987.............. 200,793 69,771 69,771
</TABLE>
4
<PAGE>
SP-FLEX
VARIABLE LIFE INSURANCE POLICY WITH ADDITIONAL PREMIUM OPTION
($79,452 Initial Insurance Benefit Standard Risk)
Based on Maximum Charges
<TABLE>
<CAPTION>
POLICY ANNIVERSARY
ON JAN. 1 OF INSURANCE BENEFIT POLICY ACCOUNT VALUE CASH SURRENDER VALUE
- ------------------ ----------------- -------------------- --------------------
<S> <C> <C> <C>
1978.............. $ 67,963 $17,683 $16,483
1979.............. 70,942 19,078 18,078
1980.............. 84,624 23,516 22,716
1981.............. 124,286 35,685 35,085
1982.............. 111,442 33,052 32,652
1983.............. 121,397 37,182 36,982
1984.............. 147,937 46,781 46,781
1985.............. 137,137 44,763 44,763
1986.............. 175,371 59,069 59,069
1987.............. 198,830 69,089 69,089
</TABLE>
As of June 30, 1987, under current and maximum charges, respectively, the
Insurance Benefit would have increased to $255,354 and $252,566; the Policy
Account Value would have increased to $88,729 and $87,761; and the Cash
Surrender Value would have increased to $88,729 and $87,761.
THE MONEY MARKET DIVISION. The following examples show how the hypothetical net
return of the Money Market Division and its predecessors would have affected
benefits for a policy dated January 1, 1982. Assume that the insured was a male
age 35 and that a single premium of $20,000 was paid on January 1, 1982. The
examples also assume that the premium and related Policy Account and Cash
Surrender Values were in the Money Market Division for the entire period.
SP-FLEX
VARIABLE LIFE INSURANCE POLICY WITH ADDITIONAL PREMIUM OPTION
($79,452 Initial Insurance Benefit Standard Risk)
Based on Current Charges
<TABLE>
<CAPTION>
POLICY ANNIVERSARY
ON JAN. 1 OF INSURANCE BENEFIT POLICY ACCOUNT VALUE CASH SURRENDER VALUE
- ------------------ ----------------- -------------------- --------------------
<S> <C> <C> <C>
1983.............. $85,279 $22,189 $20,989
1984.............. 88,319 23,751 22,751
1985.............. 93,003 25,845 25,045
1986.............. 95,680 27,471 26,871
1987.............. 96,995 28,767 28,367
</TABLE>
SP-FLEX
VARIABLE LIFE INSURANCE POLICY WITH ADDITIONAL PREMIUM OPTION
($79,452 Initial Insurance Benefit Standard Risk)
Based on Maximum Charges
<TABLE>
<CAPTION>
POLICY ANNIVERSARY
ON JAN. 1 OF INSURANCE BENEFIT POLICY ACCOUNT VALUE CASH SURRENDER VALUE
- ------------------ ----------------- -------------------- --------------------
<S> <C> <C> <C>
1983.............. $85,267 $22,186 $20,986
1984.............. 88,286 23,742 22,742
1985.............. 92,933 25,826 25,026
1986.............. 95,554 27,435 26,835
1987.............. 96,792 28,707 28,307
</TABLE>
As of June 30, 1987, under current and maximum charges, respectively, the
Insurance Benefit would have increased to $98,964 and $98,709; the Policy
Account Value would have increased to $29,351 and $29,276; and the Cash
Surrender Value would have increased to $28,951 and $28,876.
OTHER ILLUSTRATIONS. We have also prepared illustrations based on assumed rates
of return. See "Illustrations Of Insurance Benefit, Policy Account And Cash
Surrender Values, And Accumulated Premiums" in Part 5.
5
<PAGE>
PART 2: DETAILED INFORMATION ABOUT EQUITABLE VARIABLE
AND SP-FLEX INVESTMENT CHOICES
EQUITABLE VARIABLE
Equitable Variable, a wholly-owned subsidiary of Equitable, was organized in
1972 in New York State as a stock life insurance company. We are licensed to do
business in all 50 states, Puerto Rico, the Virgin Islands and the District of
Columbia.
We sell both traditional and innovative forms of life insurance designed to give
policyowners maximum choice and flexibility. In 1976 we began selling variable
life insurance policies with insurance benefits that varied with the experience
of each policy's investment account. In 1983 we began selling variable life
insurance policies which could be purchased with a single premium payment. In
1986 we introduced variable life insurance policies which, within limits,
permitted premium payments to be made on a flexible basis. We also sell single
premium annuity contracts, fixed life insurance, term life insurance and
universal life insurance.
At the end of 1986, we had approximately $9.7 billion of variable life insurance
in force and $47.1 billion of fixed life insurance in force. We also had $1.9
billion of fixed annuity payment obligations.
Our financial statements and those of the Separate Account are in Part 6.
EQUITABLE
Equitable is a New York mutual life insurance company that has its home office
at 787 Seventh Avenue, New York, New York 10019.
Equitable has been in business since 1859. Its total assets make it the third
largest life insurance company in the United States. On December 31, 1986, these
assets were approximately $55 billion. Equitable is also one of the largest
managers of pension fund assets in the United States. On December 31, 1986,
Equitable and its subsidiaries were managing pension fund assets of $66.2
billion and total assets of $102.7 billion. These assets include amounts in our
General Account, Equitable's General Account and separate accounts, and other
accounts managed by Equitable and Equitable Capital.
On December 31, 1986, Equitable Capital was managing approximately $30 billion
in assets. Equitable Capital acts as an investment adviser to various separate
accounts and general accounts of Equitable and other affiliated insurance
companies. Equitable Capital also provides management and consulting services to
mutual funds, endowment funds, insurance companies, foreign entities, and
non-tax-qualified corporate funds, pension and profit-sharing plans, foundations
and tax-exempt organizations.
EQUITABLE'S INVESTMENT IN EQUITABLE VARIABLE. Between the time Equitable
Variable was organized and December 31, 1986, Equitable invested over $570
million in us. We have used the money to help meet operational costs and policy
reserve requirements. Equitable will probably invest more money in us in the
future, although it has no legal obligation to do so. Equitable's assets do not
back the benefits that we pay under our policies.
DONALDSON, LUFKIN & JENRETTE, INC. Donaldson, Lufkin & Jenrette, Inc. (DLJ) is a
wholly-owned subsidiary of Equitable. DLJ and its subsidiaries offer investment
banking and securities services, market independently originated research to
institutions and supply correspondent services, including order execution,
securities clearance and other centralized financial services, to approximately
300 independent regional securities firms and 100 banks. To the extent permitted
by law, we and our separate accounts, Equitable and its separate accounts, and
companies affiliated with us, including the Trust, may engage in securities or
other transactions with DLJ and its subsidiaries, including buying shares of
affiliated investment companies.
6
<PAGE>
INVESTMENT CHOICES
Your entire initial premium and, after deduction of a $25 administrative charge,
any additional premiums you pay are put into your Policy Account. The amounts in
your Policy Account are allocated to one or more of the divisions of the
Separate Account according to the directions you provide. See "Premiums -- You
Direct The Investment Of Your Premiums" in Part 3.
THE SEPARATE ACCOUNT AND ITS DIVISIONS
A UNIT INVESTMENT TRUST. The Separate Account is our Separate Account FP,
established on April 19, 1985 under the Insurance Law of the State of New York
as a unit investment trust registered with the Securities and Exchange
Commission (SEC) under the Investment Company Act of 1940. The registration does
not involve any supervision by the SEC of the management or investment policies
of the Separate Account. A unit investment trust is a type of investment
company.
THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT. The Separate Account has six
investment divisions, each of which invests in shares of a corresponding
portfolio of the Trust. Currently, the Separate Account has Aggressive Stock,
High Yield, Global, Common Stock, Balanced and Money Market Divisions.
OTHER POLICIES USE THE SEPARATE ACCOUNT. Premiums from our flexible premium
variable life insurance policies also are, and premiums from other policies may
also be, allocated to the Separate Account. These policyowners will participate
in the Separate Account in proportion to the amounts in the Separate Account
relating to their policies. We may also permit charges owed to us to stay in the
Separate Account. Thus, we may also participate proportionately in the Separate
Account. These accumulated amounts belong to us and we may transfer them from
the Separate Account to our General Account.
WE OWN THE ASSETS OF THE SEPARATE ACCOUNT. Under New York law, we own the assets
of the Separate Account and use them to support your policy and other variable
life policies. The portion of the Separate Account's assets supporting these
policies may not be used to satisfy liabilities arising out of any other
business of ours. Under certain unlikely circumstances, one division of the
Separate Account may be liable for claims relating to the operations of another
division.
THE TRUST
The Trust is an open-end diversified management investment company, more
commonly called a mutual fund. As a "series" type of mutual fund, it issues
several different "series" of stock, each of which relates to a different Trust
portfolio with a different investment policy. The Trust does not impose a sales
charge or "load" for buying and selling its shares. The Trust's shares are
bought and sold by the Separate Account at net asset value. The Trust's
custodian is The Chase Manhattan Bank, N.A.
The Trust sells its shares to separate accounts of insurance companies, both
affiliated and not affiliated with Equitable. We currently do not foresee any
disadvantages to our policyowners arising out of this. However, the Trust's
Board of Trustees intends to monitor events in order to identify any material
irreconcilable conflicts that possibly may arise and to determine what action,
if any, should be taken in response. If we believe that the Trust's response to
any of those events insufficiently protects our policyowners, we will see to it
that appropriate action is taken to protect our policyowners. Also, if we ever
believe that any of the Trust's portfolios is so large as materially to impair
the investment performance of a portfolio or the Trust, we will examine other
investment options.
More detailed information about the Trust, its investment policies, risks,
expenses and all other aspects of its operations, appears in its prospectus,
which is attached to this prospectus, and in its Statement of Additional
Information referred to therein.
7
<PAGE>
PREDECESSORS OF THE TRUST
Pursuant to a Plan of Reorganization approved by policyowners, we restructured
our Separate Accounts I and II into one separate account in unit investment
trust form, with two investment divisions, effective March 22, 1985. The assets
and related liabilities of Separate Accounts I and II were transferred to the
Common Stock and Money Market Portfolios, respectively, of The Hudson River
Fund, Inc., in exchange for shares of the Fund's portfolios.
On September 30, 1987, pursuant to an Agreement and Plan of Reorganization
approved by policyowners, The Hudson River Fund, Inc., a Maryland corporation,
was reorganized as a Massachusetts business trust and its name was changed to
The Hudson River Trust. Refer to the prospectus for the Trust for further
information.
INVESTMENT OBJECTIVES OF THE PORTFOLIOS
Each portfolio has a different investment objective which it tries to achieve by
following separate investment policies. The objectives and policies of each
portfolio will affect its return and its risks. Remember that the investment
experience of the investment divisions of our Separate Account depends on the
performance of the corresponding Trust portfolios. 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 smaller sized
companies with strong growth potential
HIGH YIELD......... Primarily a diversified mix of high yield, High return by maximizing current income and,
fixed income securities involving greater to the extent consistent with that objective,
volatility of price and risk of principal capital appreciation
and income than high quality fixed income
securities
GLOBAL............. Primarily equity securities of non-United Long term growth of capital, with current
States as well as United States companies income as a secondary objective
COMMON STOCK....... Primarily common stock and other equity-type Long-term growth of capital and increasing
instruments income
BALANCED........... Common stocks, publicly-traded debt High return through a combination of current
securities and high quality money market income and capital appreciation
instruments
MONEY MARKET....... Primarily high quality short-term money High level of current income while preserving
market instruments assets and maintaining liquidity
</TABLE>
There is no guarantee that these objectives will be achieved.
8
<PAGE>
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Equitable Capital, a wholly-owned subsidiary of
Equitable. Equitable Capital is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940. Equitable Capital's address is 1285
Avenue of the Americas, New York, New York 10019.
The advisory fee payable by the Trust is based on annual percentages of the
value of each portfolio's daily average net assets. The annual percentages for
the portfolios corresponding to the divisions available for investment under
SP-Flex are as follows:
DAILY AVERAGE NET ASSETS
----------------------------------------------
LESS THAN $350 TO GREATER THAN
$350 MILLION $750 MILLION $750 MILLION
------------ ------------ ------------
COMMON STOCK, MONEY MARKET AND
BALANCED PORTFOLIOS ............ .400% .375% .350%
AGGRESSIVE STOCK PORTFOLIO ....... .500% .475% .450%
HIGH YIELD AND GLOBAL PORTFOLIOS . .550% .525% .500%
9
<PAGE>
PART 3: DETAILED INFORMATION ABOUT SP-FLEX
PREMIUMS
You purchase SP-Flex with a single initial premium due on or before the delivery
of the policy. However, you may pay additional premiums after the second policy
year, subject to certain conditions. The payment of additional premiums, if
accepted by us, would increase the Insurance Benefit otherwise payable under
your policy. See "Insurance Benefit." We reserve the right to limit additional
premium payments to the extent necessary for the policy to continue to qualify
as life insurance under applicable state law. See "Tax Effects -- Policy
Proceeds" in Part 4.
Before issuing a policy or accepting any additional premium payments, we require
satisfactory evidence of insurability. If we determine not to issue you a policy
or decline to accept an additional premium, we will refund the initial premium
or additional premium (exclusive of any interest or investment experience), as
the case may be, to you. Any additional premium which we refund will have no
effect on the value of your Policy Account. Additional premiums may be accepted
to age 78.
The minimum initial premium for policies on insured persons over age 30 is
$10,000 (age 30 or under, the minimum is $5,000). No insurance will take effect
before the minimum initial premium is paid. The minimum amount of any additional
premium payment is currently $1,000. We may increase the minimum amount of any
additional premium payment 90 days after we notify you.
YOU DIRECT THE INVESTMENT OF YOUR PREMIUMS. Your entire initial premium is put
in your Policy Account as of the later of the Register Date shown on page 3 of
your policy when it is issued or the date we receive your initial premium at our
Administrative Office. After deduction of a $25 administrative charge, any
additional premium you pay is put in your Policy Account as of the later of the
date we receive any required medical evidence or the date we receive any
additional premium at our Administrative Office. Amounts become subject to
charges and begin to vary with the investment experience of the divisions of the
Separate Account as of the date they are put in your Policy Account.
You direct how the amounts in your Policy Account will be allocated among the
divisions of the Separate Account. See "The Separate Account And Its Divisions"
and "The Trust" in Part 2.
You make your initial decision regarding premium allocation on the application
for your policy. Allocation percentages must be zero or a whole number not
greater than 100. The sum of premium allocation percentages must equal 100. You
may change such allocation percentages by written notice to our Administrative
Office. A change will take effect on the date we receive it at our
Administrative Office and will apply to additional premiums received after that
date. You may also, within limits, transfer amounts in your Policy Account among
the divisions of the Separate Account. See "Other Policy Account Transactions --
Transfers Among Investment Choices".
CHARGES
DEDUCTIONS FROM PREMIUMS. No deduction is made from your initial premium before
it is put into your Policy Account. However, any additional premiums you chose
to pay are subject to a $25 administrative charge. This charge is designed to
reimburse us for the additional administrative costs we will incur as a result
of an additional premium payment and we do not expect to gain from it.
POLICY ACCOUNT CHARGES. Currently, the amounts allocated to the divisions of the
Separate Account are charged on a daily basis for mortality and expense risks
and administrative costs at effective annual rates of .85% and .35%,
respectively. We also make a daily charge at the current effective annual rate
of .60% for the cost of insurance under the policies. See "Your Policy Account
Value -- How We Determine Unit Value".
10
<PAGE>
We guarantee that the rates for mortality and expense risks and administrative
costs will not increase and that the cost of insurance charges will not exceed
our guaranteed maximum (described below). In addition, we reserve the right to
make a charge in the future for taxes or provisions made for taxes. See "Tax
Effects -- Our Income Taxes" in Part 4.
o MORTALITY AND EXPENSE RISKS. In issuing an SP-Flex policy, we assume the
mortality risk that insured persons may live for shorter periods of time than
expected. The expense risk we assume is that the costs of issuing and
administering policies may be greater than estimated.
If the amount collected from the charge for mortality and expense risk exceeds
the amount needed, it will be to our benefit.
o COST OF INSURANCE. We guarantee that the cost of insurance charges under your
policy will never be more than the cost based on the Commissioner's 1980
Standard Ordinary Male and Female Mortality Tables for the "net amount at
risk" attributable to your Policy. The net amount at risk is the excess of
your Insurance Benefit over the amount in your Policy Account (net of any
unpaid cost of insurance charges). Congress and the legislatures of various
states have from time to time considered legislation that would require
insurance rates to be the same for males and females of the same age and risk
class. In Montana, there will be no distinctions based on sex.
Subject to the guaranteed maximum cost of insurance charges described in the
preceding paragraph, instead of making a daily charge for cost of insurance, as
discussed above, we reserve the right to make a charge at the end of a policy
year for that year's cost of insurance based on the amount in your Policy
Account and the sex and attained age of the insured person. The charge would be
deducted from your Policy Account based on the proportion that your value in
each division of the Separate Account bears to your total value in the
divisions. Also, in determining the Insurance Benefit and Cash Surrender Value
under your policy, we would deduct from the Policy Account an amount equal to
any unpaid cost of insurance charge (determined on a pro rata basis for the
portion of the policy year for which such charge applies).
Your policy could lapse if your policy's Net Cash Surrender Value is
insufficient to pay the deduction for the cost of insurance charge. See "Your
Policy Can Lapse".
o ADMINISTRATIVE COSTS. In connection with issuing your policy we incur
administrative costs, such as premium taxes and costs for application
processing, medical examinations, establishing policy records and
underwriting. In addition, we incur the continuing costs of maintaining your
policy, such as claims processing, recordkeeping, communication with
policyowners and other expenses and overhead. The charge for administrative
costs is designed to reimburse us for such expenses. In the aggregate, we
expect that the charges for administrative costs, including the $25
administrative charge deducted from additional premium payments, will be
approximately equal to the related expenses.
EXPENSES OF THE TRUST. The Separate Account purchases shares of the Trust at
their net asset value which reflects the management fees and other expenses
deducted from the assets of the Trust. The Trust does not impose a sales charge.
See "The Trust" in Part 2.
SURRENDER CHARGE. We incur expenses in selling SP-Flex, such as commissions, the
cost of sales literature and other promotional activities and other direct and
indirect expenses. To help recover these expenses, a surrender charge is imposed
if you surrender your policy or allow it to lapse. The surrender charge is a
contingent deferred sales load. If sales expenses are not covered by the
surrender charge, we will recover them from other funds, including funds derived
from any excess of other charges under this policy over our related costs.
11
<PAGE>
The surrender charge is calculated as a percentage of premium payments and
applies on a declining basis over a fixed surrender charge period. The portion
of the charge based on the initial premium equals 7% of the initial premium and
declines 1% in each successive policy year until it reaches zero at the
beginning of the eighth policy year. The portion of the surrender charge based
on each additional premium payment equals 5% of the additional premium during
the policy year the premium was paid and declines 1% in each successive policy
year until it reaches zero at the end of the fifth such policy year. The
surrender charge is reflected as the difference between the amount in your
Policy Account and the Cash Surrender Value during the surrender charge period.
TRANSFER CHARGE. Currently, we do not charge for transfers of Policy Account
value. However, we may impose a charge in the future of up to $25 for each
additional transfer if you make more than four transfers in a policy year. Any
transfer charge would be designed to reimburse us for the costs of effecting the
additional transfers.
All transfers included in one transfer request will count as one transfer for
purposes of the charge. The charge will be deducted from the divisions of the
Separate Account based on the proportion that your value in each division of the
Separate Account bears to your total value in the divisions. See "Other Policy
Account Transactions -- Transfers Among Investment Choices".
INSURANCE BENEFIT
We pay an Insurance Benefit (net of any indebtedness) to the beneficiary of this
policy when the insured person dies. However, see "Your Policy Can Lapse". The
Insurance Benefit varies daily to reflect the investment experience of the
assets supporting your policy. See "Your Policy Account Value".
The Insurance Benefit is the amount in your Policy Account on the day the
insured person dies less any unpaid cost of insurance charges through the date
of death, times the factor for the insured person's sex and age (nearest
birthday) at the beginning of the policy year of the insured person's death. In
Montana, there will be no distinctions based on sex. The initial Insurance
Benefit equals the applicable factor times your initial premium.
Different factors apply in the initial policy year and in each subsequent policy
year. The factors generally decline as the insured person gets older. For ages
that are not shown on the following table, we will furnish the applicable
factors on request. If the insured person is still living on the policy
anniversary nearest his or her 100th birthday, we will pay you the amount in
your Policy Account (net of any indebtedness and unpaid cost of insurance
charges). The policy will then end.
We reserve the right to make changes to the factors to the extent necessary to
continue to qualify SP-Flex as life insurance under applicable tax law. See "Tax
Effects -- Policy Proceeds" in Part 4.
SP-FLEX
- --------------------------------------------------------------------------------
TABLE OF FACTORS USED IN DETERMINING INSURANCE BENEFIT
AGE MALE FEMALE AGE MALE FEMALE
--- ---- ------ --- ---- ------
0 12.3773 14.2337 55 2.1412 2.4901
5 11.0429 12.6564 60 1.8740 2.1577
10 9.4234 10.8128 65 1.6584 1.8762
15 7.4164 9.1817 70 1.4880 1.6474
20 6.3938 7.8159 75 1.3546 1.4601
25 5.5051 6.6467 80 1.2560 1.3188
30 4.6874 5.6364 85 1.1812 1.2135
35 3.9726 4.7761 90 1.1277 1.1398
40 3.3717 3.9423 95 1.0748 1.0764
45 2.8779 3.3649 99 1.0198 1.0198
50 2.4728 2.8872
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EXAMPLE: If the insured person was a male who was age 35 (nearest birthday) at
the beginning of the policy year of his death and you had $20,000 in your Policy
Account on the date of his death, the Insurance Benefit would be 3.9726 times
$20,000, or $79,452.
If you have submitted an application and paid the full initial premium,
Equitable Variable may, subject to certain conditions, provide a limited amount
of temporary insurance on the person proposed to be insured. You may review a
copy of Equitable Variable's Temporary Insurance Agreement on request. No
insurance under your policy will take effect: (a) until a policy is delivered
and the full initial premium is paid while the person proposed to be insured is
living and (b) unless the information in the application continues to be true
and complete, without material change, as of the time the premium is paid.
YOUR POLICY ACCOUNT VALUE
The amount in your Policy Account is the sum of the amounts you have in the
various divisions of our Separate Account and in your Loaned Policy Account
(amounts set aside to secure any borrowing you have made under your policy).
Your Policy Account also reflects various charges on a daily basis. Transfer
charges or surrender charges are made as of the effective date of the
transaction. See "Charges". Any amount allocated to an investment division of
the Separate Account will vary depending on the investment experience of that
division; there is no guaranteed minimum cash value.
AMOUNTS IN THE SEPARATE ACCOUNT. Amounts allocated or transferred to the
divisions of the Separate Account are used to purchase units. The amount you
have in each division is represented by the value of the units credited to your
Policy Account for that division. The number of units purchased or redeemed in a
division of the Separate account is calculated by dividing the dollar amount of
the transaction by the division's SP-Flex unit value calculated after the close
of business that day. The value of units fluctuates with the investment
performance of the corresponding portfolios of the Trust, which reflects the
investment income and realized and unrealized capital gains and losses of the
portfolios and Trust expenses. Currently, the SP-Flex unit values also reflect
all Policy Account charges. See "Charges -- Policy Account Charges". The number
of units credited to you, however, will not vary because of changes in unit
values. On any given day, the value you have in an investment division of the
Separate Account is the SP-Flex unit value times the number of units credited to
you in that division.
The units of each division of the Separate Account have different unit values.
In addition, units attributable to SP-Flex policyowners will have different unit
values than those attributable to owners of Incentive Life(TM), our flexible
premium variable life insurance policies.
Units of a division are purchased when you allocate premiums, repay loans or
transfer amounts to that division and, if the division already has value in it,
when interest is credited on your Loaned Policy Account. Units are redeemed or
sold when you transfer amounts from a division of the Separate Account
(including transfers to your Loaned Policy Account), surrender your policy or
allow it to lapse, and to pay the Insurance Benefit when the insured person
dies. Units would also be redeemed to pay cost of insurance charges if we
commenced to impose such charges at the end of a policy year instead of
reflecting the charges in the unit value calculation.
HOW WE DETERMINE UNIT VALUE. We determine the SP-Flex unit values for the
divisions of our Separate Account at the end of each business day. Generally, a
business day is any day we are open and the New York Stock Exchange is open for
trading. However, we are closed on Martin Luther King Day and the Friday after
Thanksgiving Day, and we will not process any policy transaction as of such
days, other than a policy anniversary report or the payment of the Insurance
Benefit under a policy. The SP-Flex unit value for each division will be set at
$100 on the first day there are policy transactions in the division. After that,
the SP-Flex unit value for any business day is equal to the SP-Flex unit value
for the preceding business day multiplied by the net investment factor for that
division on that business day.
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Currently, an SP-Flex net investment factor is determined for each investment
division every business day as follows:
o First, we take the value of the shares belonging to the division in the
corresponding Trust portfolio at the close of business that day (before
giving effect to any policy transactions for that day, such as premium
payments or surrenders). For that purpose, the share value reported by the
Trust is used.
o Next, we add any dividends or capital gains distributions paid by the Trust
on that day.
o Then, we divide this amount by the value of the amounts in the division at
the close of business on the preceding business day (after giving effect to
any policy transactions on that day).
o Then, we subtract a daily asset charge for each calendar day between business
days (for example, a Monday calculation may include charges for Saturday and
Sunday). The current daily charge is .00004932, which is an effective annual
rate of 1.80%. This charge is for mortality and expense risks, current costs
of insurance and administrative charges. See "Charges -- Policy Account
Charges".
Currently, a .00001644 charge for cost of insurance is included in the daily
asset charge deducted in determining the SP-Flex net investment factor. This
represents an effective annual rate of .60%. We may impose higher cost of
insurance charges and may also change the method by which we deduct such
charges. See "Charges -- Policy Account Charges".
BORROWING FROM YOUR POLICY ACCOUNT
You may borrow money, using only your policy as security for the loan, at any
time your policy has a loan value in excess of the minimum loan amount shown in
the policy when it is issued (usually $500). The loan value on any date is 95%
of the Cash Surrender Value on that date. The amount of a loan may not be more
than the loan value.
Subject to the preceding paragraph, you may borrow additional money after your
initial loan. If you request an additional loan, the amounts of any outstanding
loan and loan interest will be added to the additional amount requested and will
be considered a request for a new loan for the total amount for purposes of
determining the amount you may borrow. Any amount that secures a loan remains
part of your Policy Account but is transferred from your value in the divisions
of the Separate account to your Loaned Policy Account.
HOW TO REQUEST A LOAN. You may request a loan by contacting our Administrative
Office. You may tell us how much of the loan you want taken from your amounts in
each investment division of the Separate Account. If you request a loan from a
division of the Separate Account, we will redeem units sufficient to cover that
part of the loan and transfer the amount to your Loaned Policy Account. The
amounts you have in each division will be determined as of the day your request
for a loan is received at our Administrative Office.
Unless you indicate how you wish to allocate the loan, the loan will be
allocated based on the proportions that your values in each division of the
Separate Account bear to your total value in the divisions. The loan will also
be allocated this way if it cannot be allocated as you indicate.
POLICY LOAN INTEREST. Interest on a loan accrues daily, at a maximum annual rate
of 4%. However, the interest you earn on your Loaned Policy Account, in effect,
either partially or fully offsets the interest you are charged for your loan.
Your policy can lapse if the unpaid portion of any amount you have borrowed
under a policy plus any unpaid loan interest exceeds the Cash Surrender Value of
your policy. See "Your Policy Can Lapse". Generally, interest on a loan under
the policy will not be deductible for Federal income tax purposes.
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INTEREST ON YOUR LOANED POLICY ACCOUNT. We pay a declared interest rate on all
amounts set aside in your Loaned Policy Account. Interest on amounts in your
Loaned Policy Account is earned daily at an annual rate that equals the declared
rate for each policy year. At the time we issue a policy and before each policy
anniversary, we determine the rates that will apply to such amounts for the
following policy year.
o FOR UP TO A CERTAIN AMOUNT OF YOUR LOANED POLICY ACCOUNT, we will declare the
same interest rate we are then charging for policy loans. In effect, the
interest we declare on this amount will offset the interest charge for
borrowing this amount. We will redetermine this amount each time a new loan
or partial repayment is made and on each policy anniversary. The maximum
amount for this purpose is the lesser of:
o 50% of the amount in your Policy Account; or
o the portion of your Cash Surrender Value in excess of 85% of the total
premiums paid under your policy.
o FOR THE BALANCE OF YOUR LOANED POLICY ACCOUNT, we will declare a rate which
equals the rate we are then charging for policy loan interest reduced by no
more than 2%.
Interest credited on your Loaned Policy Account is allocated each policy
anniversary or upon full repayment of the loan to the divisions of the Separate
Account based on the proportion that your values in each division of the
Separate Account bear to your total value in the divisions.
EXAMPLE: Assume that you purchase a policy for a male age 35 for an initial
premium of $20,000. As illustrated in Part 5, assuming an 8% hypothetical gross
investment return, your policy would have a Cash Surrender Value of $19,909 and
a Policy Account value of $21,109 at the beginning of your second policy year.
On your first policy anniversary you could borrow a maximum of $18,914. Up to
$2,909 of this amount could be borrowed with the interest charged on the loan
being offset by the interest declared on your Loaned Policy Account.
These amounts are derived as follows:
o First, to determine the maximum amount you could borrow, multiply your Cash
Surrender Value by 95% ($19,909 times 95% equals $18,914).
o Then, to determine the amount you could borrow for which loan interest
charged would be fully offset by interest declared, take the less of (i) 50%
of the value of your Policy Account (50% of $21,109 equals $10,554), or (ii)
the portion of your Cash Surrender Value in excess of 85% of the premiums
paid under your policy ($19,909 less $17,000 [which is 85% of $20,000] equals
$2,909).
WHEN INTEREST IS DUE. Interest is due on each policy anniversary. If it is not
paid when due, it will be added to your outstanding loan and allocated based on
the proportion that your value in each division of the Separate Account bears to
your total value in the divisions. This means an additional loan is made to pay
the interest and amounts are withdrawn from the divisions of the Separate
Account and transferred to your Loaned Policy Account.
REPAYING THE LOAN. You may repay all or part of a policy loan at any time while
your policy is in force. While you have a policy loan, we assume that any money
you send us is meant to repay the loan. Any of these payments you wish to have
applied as premium payments will be subject to our normal procedures for
additional premiums. See "Premiums".
You may choose how you want us to allocate any repayments. If you do not provide
specific instructions, repayments will be allocated on the basis of your premium
allocation percentages then in effect.
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THE EFFECTS OF A POLICY LOAN. A loan against your policy will have a permanent
effect on the value of your Policy Account and, therefore, on the Insurance
Benefit under this policy, even if the loan is repaid. When you borrow on your
policy, the loan amount will not be available for investment in the divisions of
our Separate Account. Whether you earn more or less because of this depends on
the investment experience of the divisions of the Separate Account and the rates
declared for the amount in your Loaned Policy Account.
OTHER POLICY ACCOUNT TRANSACTIONS
CHANGING YOUR PREMIUM ALLOCATIONS. You may change the allocation percentages for
any additional premium payments by writing to our Administrative Office and
indicating the changes you wish to make. These changes will go into effect as of
the date your request is received at our Administrative Office and will affect
transactions on and after that date.
TRANSFERS AMONG INVESTMENT CHOICES. You may transfer amounts among your
investment choices by contacting our Administrative Office. You may request a
transfer of amounts from any division of the Separate Account to any other
division of the Separate Account. Currently, you may make transfers without
charge. However, we may impose a transfer charge in the future. See "Charges --
Transfer Charge".
A transfer will take effect as of the date we receive your request. The minimum
amount which may be transferred on any date will be shown on page 3 of your
policy when it is issued, and is usually $500. This minimum need not come from
any one division or be transferred to any one division as long as the total
amount transferred that day equals the minimum. However, we will transfer the
entire amount in any division of the Separate Account even if it is less than
the minimum specified in your policy. If you transfer the entire amount out of a
division of the Separate Account, that division will become inactive for
purposes of allocations of any additional premiums you pay. See "Changing Your
Premium Allocations", above, for the procedure to be followed if you want to
allocate additional premiums to an inactive division.
SURRENDERING YOUR POLICY FOR CASH. The Cash Surrender Value is the amount in
your Policy Account minus any unpaid cost of insurance charges and the surrender
charge described under "Charges -- Surrender Charge".
You may surrender your policy for its Net Cash Surrender Value at any time while
the insured person is living. You may do this by sending a written request and
the policy to our Administrative Office. The Net Cash Surrender Value equals the
Cash Surrender Value minus any outstanding loan and loan interest. We will
compute the Net Cash Surrender Value as of the date we receive your request and
the policy at our Administrative Office, and all insurance coverage under your
policy will end on that date. As to the tax consequences of surrendering your
policy, see "Tax Effects" in Part 4.
YOUR RIGHT TO EXAMINE THE POLICY
You have a right to examine the policy. If for any reason you are not satisfied
with it, you may cancel the policy within 10 days after your receive it. You may
cancel the policy by sending it to our Administrative Office with a written
request to cancel. Insurance coverage ends when you send your request.
Your request to cancel this policy must be postmarked no later than 10 days
after you receive the policy. If you cancel the policy, we will refund an amount
equal to the premiums that you paid.
YOUR RIGHT TO EXCHANGE THE POLICY
You may exchange this policy for a permanent fixed benefit life insurance policy
on the life of the insured. You have this right for 24 months from Issue Date of
your policy. The new policy will be our Flexible Premium Adjustable Life Plan.
You may review a copy of this policy on request.
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The exchange will be effective when we receive your request, accompanied by your
policy and an application for the new policy. However, before the exchange is
effective, any outstanding loan must be repaid, along with any accrued loan
interest.
We will not require evidence of the insured person's insurability before an
exchange. The new policy will have the same Issue Date, Issue Age, and policy
anniversary as your SP-Flex policy. The face amount of insurance under the new
policy will equal the initial Insurance Benefit under the SP-Flex policy.
On the effective date of the exchange, the entire amount in your SP-Flex Policy
Account will be transferred to your Policy Account under the new policy.
However, if required for the new policy to qualify as life insurance for Federal
income tax purposes, a portion of the amount in your SP-Flex Policy Account may
be returned to you. We suggest that you or your tax adviser consult with us in
advance as to the portion, if any, of any such distribution which would be
subject to Federal income tax.
YOUR POLICY CAN LAPSE
Your policy can lapse if the unpaid portion of any amount you have borrowed
under your policy plus any unpaid loan interest is greater than the Cash
Surrender Value of your policy. Also, your policy could lapse if the deduction
for the cost of insurance charge exceeds your policy's Net Cash Surrender Value.
See "Charges -- Policy Account Charges".
When a loan plus loan interest first exceeds the Cash Surrender Value we will
mail you and any assignee of record, at last known addresses, a notice that the
policy will terminate if such excess amount is not repaid within 61 days after
we mail the notice. If we receive payment of this amount before the end of the
61-day period, the amount received will first be used to pay unpaid loan
interest. Any balance will be applied towards repayment of your loan. Any
remaining balance of your payment will be returned to you.
If the cost of insurance deduction made at the end of a policy year exceeds the
Net Cash Surrender Value of the policy, we will mail to you and any assignee of
record, at last known addresses, a notice that the policy will terminate if you
do not, within 61 days after we mailed the notice, make a premium payment equal
to (i) the amount of such excess plus $25, and (ii) 25% of the amount which
would be deducted on the next policy anniversary for annual cost of insurance
charges assuming the same Policy Account value existed as at the end of the most
recent policy year. The amount of this payment will be treated as an additional
premium payment, except that we will not require evidence of the insured
person's insurability nor will we impose any timing, amount or age limitations.
Any payment in excess of the amount required will be returned to you.
If we do not receive a required payment within the 61-day period, you policy
will lapse without value. A policy which lapses will not be reinstated. We will
inform you and any assignee, at last known addresses, that your policy has ended
without value. If your policy lapses during the surrender charge period you will
incur a surrender charge. See "Charges -- Surrender Charge". As to the tax
consequences of allowing your policy to lapse, see "Tax Effects -- Policy
Proceeds" in Part 4.
If the insured person dies during the 61-day period, we will pay the Insurance
Benefit to the beneficiary, minus any outstanding loan and loan interest and any
unpaid cost of insurance deduction through the date of death.
POLICY PERIODS, ANNIVERSARIES, DATES AND AGES
We measure policy years and policy anniversaries from the Register Date shown on
page 3 of your policy when it is issued. The Issue Date, shown on page 3 of your
policy, is the date your policy is actually issued. Except for any portion of
the Insurance Benefit attributable to an additional premium (see "Limits On Our
Right To Challenge The Policy"), contestability is measured from the Issue Date,
as is the suicide exclusion.
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If the initial premium is received before the Issue Date of the policy, amounts
allocated to the Policy Account will become subject to charges and begin to vary
with the investment experience of the divisions of the Separate Account as of
the Register Date. The time between the submission of an application and the
Register Date will vary, depending on the underwriting and other requirements
for issuing a particular policy.
If the initial premium is received after the Issue Date, the Register Date will
be the same as the Issue Date and the initial premium will be put into the
Policy Account, become subject to charges and begin to vary with the investment
experience of the divisions of the Separate Account as of the date we receive it
at our Administrative Office.
As to when insurance coverage under SP-Flex starts, see "Insurance Benefit".
Generally, when we refer to the age of the insured person, we mean his or her
age on the birthday nearest to the beginning of the policy year.
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY
We can challenge the validity of your insurance policy based on material
misstatements in the application. However, there are limits on how and when we
can challenge the policy.
o We cannot challenge the policy after it has been in effect, during the
insured person's lifetime, for two years from the date the policy was issued.
(Some states may require that we measure this time in some other way.)
o We cannot challenge any increase in the Insurance Benefit attributable to an
additional premium after the increase has been in effect for two years during
the insured person's lifetime.
If the insured person dies within the time that we may challenge the validity of
the policy or increase, we may delay payment until we decide whether to
challenge the policy.
If the insured person's age or sex is misstated on any application, the
Insurance Benefit will be that calculated using the appropriate factor for the
insured person's correct age and sex. See "Insurance Benefit".
If the insured person commits suicide within two years after the date on which
the policy was issued, the Insurance Benefit paid will be limited to the initial
premium minus the amount of any outstanding policy loan and loan interest. If
the insured person commits suicide within two years after the date we receive
any additional premium for the policy at our Administrative Office, the
Insurance Benefit paid as a result of such additional premium will be limited to
such premium minus the amount of any outstanding policy loan and loan interest.
ADDITIONAL INFORMATION ABOUT SP-FLEX
WHEN WE PAY PROCEEDS. We will pay the Insurance Benefit (net of indebtedness),
Net Cash Surrender Value or loan proceeds within seven days after we receive the
required form or request (and other documents that may be required for payment
of the Insurance Benefit) at our Administrative Office. The Insurance Benefit is
determined as of the date of death of the insured person and will not be
affected by subsequent changes in the unit values of the investment divisions of
our Separate Account. We pay interest from the date of death to the date of
payment. If an Equitable agent helps the beneficiary of a policy to prepare the
documents that are required for payment of the Insurance Benefit, we will send
the check to the agent within seven days after we receive the required
documents. The agent will deliver the check to the beneficiary.
We may, however, delay payment if:
o We contest the policy; or
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o We cannot determine the amount of the payment because the New York Stock
Exchange is closed, because trading in securities has been restricted by the
Securities and Exchange Commission, or because the SEC has declared that an
emergency exists.
We may also request the SEC to permit us to extend the seven day payment period
for the protection of our policyowners.
YOUR PAYMENT OPTIONS. The Insurance Benefit (net of indebtedness) or the Net
Cash Surrender Value may be paid in one sum or you may choose another form of
payment for all or part of the money. Payments under these options are not
affected by the investment experience of any investment division of our Separate
Account. Instead, interest accrues pursuant to the options chosen. If you do not
arrange for a specific form of payment before the insured person dies, the
beneficiary will have this choice. However, if you do make an arrangement with
us for how the money will be paid, the beneficiary cannot change the choice
after the insured person dies. Payment options will also be subject to our rules
at the time of selection. Currently, these alternate payment options are only
available if the proceeds applied are $2500 or more and any periodic payment
will be at least $25.
You have the following payment options:
o DEPOSIT OPTION: The money will stay on deposit with us for a period agreed
upon. You will receive interest on the money at a declared interest rate.
o INSTALLMENT PAYMENT OPTIONS: There are two ways that we pay installments:
FIXED PERIOD: We will pay the amount applied in equal installments plus
applicable interest, for a specific number of years (not more than 30).
FIXED AMOUNT: We will pay the sum in installments in an amount agreed
upon. We will pay the installments until we pay the original amount,
together with any interest earned.
o MONTHLY LIFE INCOME OPTION: We will pay the money as monthly income for life.
You may choose any one of three ways to receive the income: We will guarantee
payments for at least 10 years (called "10 Years Certain"); at least 20 years
(called "20 Years Certain"); or until the payments we make equal the original
sum (called "Refund Certain").
o OTHER: You may ask us to apply the money under any option that we make
available at the time the Insurance Benefit (net of indebtedness) or Net Cash
Surrender Value is paid.
We guarantee interest under the Deposit Option at the rate of 3% a year, and
under either Installment Option at 3-1/2% a year. We may also allow interest
under the Deposit Option and under either Installment Option at a rate that is
above the guaranteed rate.
The beneficiary or any other person who is entitled to receive payment may name
a successor to receive any amount that we would otherwise pay to that person's
estate if that person died. The person who is entitled to receive payment may
change the successor at any time.
We must approve any arrangements that involve more than one of the payment
options, or a payee who is not a natural person (for example, a corporation), or
a payee who is a fiduciary. Also, the details of all arrangements will be
subject to our rules at the time the arrangements take effect. This includes
rules on the minimum amount we will pay under an option, minimum amounts for
installment payments, withdrawal or commutation rights (your rights to receive
payments over time, for which we may offer a lump sum payment), the naming of
people who are entitled to receive payment and their successors, and the ways of
proving age and survival.
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You will make a choice of payment option (or any later changes) and your choice
will take effect in the same way as it would if you were changing a beneficiary.
(See "Your Beneficiary", below). Any amounts that we pay under the payment
options will not be subject to the claims of creditors or to legal process, to
the extent that the law provides.
YOUR BENEFICIARY. You name your beneficiary when you apply for the policy. The
beneficiary is entitled to the insurance benefits of the policy. You may change
the beneficiary during the insured person's lifetime by sending a written notice
to our Administrative Office. The change will take effect on the date you sign
the notice, but will not apply to any payment we make or other action we take
before we receive the notice. If no beneficiary is living when the insured
person dies, we will pay the Insurance Benefit in equal shares to the insured
person's surviving children. If there are no surviving children, we will pay the
Insurance Benefit to the insured person's estate.
ASSIGNING YOUR POLICY. You may assign (transfer) your rights in this policy to
someone else as collateral for a loan or for some other reason. If you do, a
copy of the assignment must be forwarded to our Administrative Office. We are
not responsible for any payment we make or any action we take before we receive
notice of the assignment or for the validity of the assignment. An absolute
assignment is a change of ownership.
EMPLOYEE BENEFIT PLANS. Employers and employee organizations should consider, in
consultation with counsel, the impact of Title VII of the Civil Rights Act of
1964 on the purchase of SP-Flex in connection with an employment-related
insurance or benefit plan. The United States Supreme Court held, in a 1983
decision, that, under Title VII, optional annuity benefits under a deferred
compensation plan could not vary on the basis of sex.
OUR REPORTS TO POLICYOWNERS. Shortly after the end of each policy year you will
receive a report indicating the current Insurance Benefit for your policy, the
value of your Policy Account, information about divisions of the Separate
Account, the Cash Surrender Value of your policy, the amount of any outstanding
policy loans, the amount of any interest owed on the loan and the current loan
interest rate. We will also send you semi-annual and annual reports with
financial information on the Separate Account and the Trust, including a list of
the investments held by each portfolio.
In addition, the report will also contain any other information that is required
by the insurance supervisory official in the jurisdiction in which the insurance
policy is delivered.
Notices will be sent to you for transfers of amounts between investment
divisions and certain other policy transactions.
DIVIDENDS. No dividends are paid on the policy described in this prospectus.
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PART 4: ADDITIONAL INFORMATION
TAX EFFECTS
POLICY PROCEEDS. The Deficit Reduction Act of 1984 (1984 Act) includes a
definition of life insurance for tax purposes. SP-Flex meets this definition of
life insurance and receives the same Federal income tax treatment as fixed
benefit life insurance. Thus:
o the Insurance Benefit under SP-Flex will be excludable from the gross income
of the beneficiary under Section 101(a)(1) of the Internal Revenue Code
(Code) and
o the policyowner will not be considered to have received any increases in the
Policy Account due to interest or investment experience before a surrender,
maturity or lapse of the policy.
If you surrender your policy or if it lapses or matures, you will not be taxed
on the amount you receive, except for that portion that, together with any
unpaid loan and loan interest, exceeds the premiums you have paid.
For you and your beneficiary to receive the above tax treatment, your policy
must initially qualify and continue to qualify as life insurance under
applicable tax law. To make sure that the policy continues to qualify, we have
reserved in the policy the right to decline to accept additional premium
payments that would cause your policy to fail to qualify as life insurance under
applicable tax law. We may also make changes in the policy (such as to the
factors used to determine the Insurance Benefit) or make payments from the
policy to the extent we deem necessary to qualify your policy as life insurance.
Any such change will apply uniformly to all policies that are affected. You will
be given advance written notice of such changes.
The 1984 Act also gives the Secretary of the Treasury authority to set standards
for diversification of the investments underlying variable life insurance
policies in order for such policies to be treated as life insurance. On
September 15, 1986, Treasury issued temporary regulations regarding the
diversification requirements. Failure to meet these diversification requirements
would disqualify SP-Flex as a variable life insurance policy under Section 7702
of the Code. If this were to occur, you would be taxed on the amount in your
Policy Account that exceeds the premiums you have paid. We believe that the
investments underlying SP-Flex are in compliance with the requirements. We do
not anticipate any problems with the investments continuing to meet the
requirements.
You will not be taxed on amounts transferred among investment choices within
your Policy Account. We also believe that loans received under the policies will
be treated as indebtedness of the policyowner, and that no part of any loan
under a policy will constitute income to the owner. Generally, interest on
policy loans under SP-Flex policies will not be deductible.
The Insurance Benefit under SP-Flex will generally be includable in the estate
of the insured for purposes of Federal estate tax. Federal estate tax is
integrated with Federal gift tax under a unified gift rate schedule. Federal
estate tax is imposed on distributions at graduated rates from 37% to 55% (with
the maximum rate applying to distributions in excess of $3,000,000). In general,
estates not in excess of $600,000 are exempt from Federal estate tax. In
addition, an unlimited marital deduction applies for Federal estate tax
purposes.
The particular situation of each policyowner or beneficiary will determine how
ownership or receipt of policy proceeds will be treated for purposes of Federal
estate tax as well as state and local estate, inheritance and other taxes. We
suggest you consult your tax adviser.
See the prospectus for the Trust for a discussion of the Trust's tax aspects,
including the diversification requirements.
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PENSION AND PROFIT-SHARING PLANS. If SP-Flex policies are purchased by a trust
which forms part of a pension or profit-sharing plan qualified under Section
401(a) of the Code for the benefit of participants covered under the plan, the
Federal income tax treatment of such policies will be somewhat different from
that described above. We suggest you consult your legal or tax adviser.
If purchased as part of a pension or profit-sharing plan, the current cost of
insurance for the net amount at risk is treated as a "current fringe benefit"
and is required to be included annually in the plan participant's gross income.
This cost (generally referred to as the "P.S. 58" cost) is reported to the
participant annually as an addition to wages and salaries on the Form W-2
furnished by the employer who is maintaining the plan.
If the plan participant dies while covered by the plan and the policy proceeds
are paid to the participant's beneficiary, then the excess of the Insurance
Benefit over the value of the Policy Account will not be subject to Federal
income tax. However, the value of the Policy Account will be taxable to the
extent it exceeds the sum of $5,000 plus the participant's cost basis in the
policy. The participant's cost basis will include the costs of insurance
previously reported on the participant's Form W-2. Special rules may apply if
the participant had borrowed from his Policy Account or was an owner-employee
under the plan.
There are limits on the amount of life insurance that may be purchased on behalf
of a participant in a pension or profit-sharing plan. Complex rules, in addition
to those discussed above, apply whenever life insurance is purchased by a tax
qualified plan. We suggest you consult your legal or tax adviser prior to
purchase of this policy by a pension or profit-sharing plan.
OUR INCOME TAXES. Under the life insurance company tax provisions of the Code,
as amended by the 1984 Act, variable life insurance is treated in a manner
consistent with fixed life insurance. The operations of our Separate Account are
included in our Federal income tax return and we pay no tax on investment income
and capital gains reflected in variable life insurance policy reserves.
Therefore, no charge is currently being made to any division of the Separate
Account for our income taxes. We reserve the right, however, to make such a
charge in the future, if we incur income tax which is attributable to the
Separate Account. If such a charge is made, it would be set aside as a provision
for taxes which we would keep in the affected division rather than in our
General Account. We anticipate that our SP-Flex policyowners would benefit from
any investment earnings that are not needed to maintain this provision.
We may have to pay state and local taxes (in addition to applicable taxes based
on premiums) in several states. At present, these taxes are not substantial. If
they increase, however, charges may be made for such taxes when they are
attributable to the Separate Account.
TAX REFORM. On October 22, 1986, the President signed into law a comprehensive
Federal income tax reform bill. The new law would not directly affect the taxes
paid by life insurance companies, such as Equitable Variable as they relate to
the Separate Account, nor would it alter the general favorable tax treatment of
life insurance policies described in this prospectus.
WHEN WE WITHHOLD INCOME TAXES. Generally, unless you provide us with a written
election to the contrary before we make the distribution, we are required to
withhold income tax from any portion of the money you receive if you surrender
the policy or if it matures. If you do not wish tax to be withheld from the
payment, or if enough is not withheld, you may have to pay tax later. You may
also have to pay penalties under the tax rules if your withholding and estimated
tax payments are insufficient. You may, therefore, want to consult your tax
adviser.
22
<PAGE>
YOUR VOTING PRIVILEGES
TRUST VOTING PRIVILEGES. As explained in Part 2, the assets in the divisions of
the Separate Account are invested in shares of the corresponding portfolios of
the Trust. Equitable Variable is the legal owner of the shares and, as such, has
the right to vote on certain matters at any meeting of the Trust's shareholders
that may be held. Among other things, we may vote on any matters described in
the Trust's prospectus or requiring a vote by shareholders under the Investment
Company Act of 1940.
Even though we own the shares, you will have the opportunity to tell us how to
vote the number of shares that can be allocated to your policy. We will vote
those shares at meetings of Trust shareholders according to your instructions.
If we do not receive instructions in time from all policyowners, we will vote
shares in a portfolio for which no instructions have been received in the same
proportion as we vote shares for which we have received instructions in that
portfolio. We will also vote any Trust shares that we are entitled to vote
directly due to amounts we have accumulated in our Separate Account in the same
proportions that all policyowners vote, including those who participate in other
separate accounts. See "Voting Privileges Of Others", below. If the Federal
securities laws or regulations or interpretations of them change so that we are
permitted to vote shares of the Trust in our own right or to restrict
policyowner voting, we may do so.
HOW WE DETERMINE YOUR VOTING SHARES. You may participate in voting only on
matters concerning the Trust portfolios in which your assets have been invested.
The number of Trust shares in each division that is attributable to your policy
is determined by dividing the amount in your Policy Account allocated to that
division by the net asset value of one share of the corresponding Trust
portfolio as of the record date set by the Trust's Board for the Trust's
shareholders' meeting. The record date for this purpose must be at least 10 and
no more than 90 days before the meeting. Fractional shares are counted.
EXAMPLE: Assume that your Policy Account has a value of $20,000, with 50% of
this amount being attributable to the Common Stock Division and 50% being
attributable to the Money Market Division, giving you $10,000 in each division.
Assume that the net asset value of one share in the Trust's Common Stock
Portfolio is $150 and the net asset value of one share in the Trust's Money
Market Portfolio is $100. If you divide the $10,000 in each division by the net
asset value of one share, you have the right to instruct us regarding 66-2/3
shares for the Common Stock Division and 100 shares for the Money Market
Division.
If you have a voting interest, we will send you proxy material and a form for
providing voting instructions. In certain cases, we may disregard instructions
relating to changes in the Trust's adviser or the investment policies of its
portfolios. We will advise you if we do and detail the reasons in the next
semiannual report to policyowners.
HOW TRUST SHARES ARE VOTED. All Trust shares are entitled to one vote. The votes
of all divisions are cast together on an aggregate basis, except on matters
where the interests of the portfolios differ. In such cases, voting is on a
portfolio-by-portfolio basis. In these cases, the approval of the shareholders
in one portfolio is not needed in order to make a decision in another portfolio.
Examples of matters that would require a portfolio-by-portfolio vote are changes
in the fundamental investment policy of a particular portfolio or approval of an
investment advisory agreement. Shareholders in a portfolio not affected by a
particular matter generally would not be entitled to vote on it.
23
<PAGE>
VOTING PRIVILEGES OF OTHERS. Currently, we control the Trust. Trust shares may
be held by other separate accounts of ours or by separate accounts of insurance
companies affiliated or unaffiliated with us. Shares held by these separate
accounts will probably be voted according to the instructions of the owners of
insurance policies and contracts issued by those insurance companies. This will
dilute the effect of the voting instructions of the owners of SP-Flex. In
addition, because the Separate Account also invests premiums relating to our
flexible premium life insurance policy, the voting instructions of the owners of
SP-Flex will be further diluted. We do not foresee any disadvantages to this.
Nevertheless, the Trust's Board of Trustees will monitor events to identify
conflicts that may arise and determine appropriate action. If we think any Trust
action is insufficient, we will see that appropriate action is taken to protect
our policyowners.
SEPARATE ACCOUNT VOTING PRIVILEGES. Under the Investment Company Act of 1940,
certain actions (such as some of those described below under "Our Right To
Change How We Operate") may require policyowner approval. In that case, you will
be entitled to one vote for every $100 of value you have in the investment
divisions of our Separate Account. We will cast votes attributable to amounts we
have in the investment divisions of our Separate Account in the same proportions
as votes cast by policyowners.
SPECIAL ISSUE PROGRAMS
The terms under which SP-Flex policies are issued may vary. For example, an
employer may purchase a number of policies with certain of its employees being
designated as insured persons under the policies or an association may
facilitate the solicitation of its members for the purchase of policies by them.
PURPOSE. If special circumstances result in a reduction in our sales and
administrative expenses or our insurance risks relating to purchases of SP-Flex
policies, we may recognize the reduction by varying the terms of the policies to
be issued.
GUIDELINES. The terms of the policies will vary only in accordance with rules we
have in effect as of the date the applications for the policies are approved.
The rules, and any related actions, shall be reasonable, fair and not
discriminatory to the interests of all other SP-Flex policyowners. We may modify
these rules from time to time.
OUR RIGHT TO CHANGE HOW WE OPERATE
In addition to changing or adding investment companies, we have the right to
modify how we or our Separate Account operate. We intend to comply with
applicable law in making any changes and, if necessary, we will seek policyowner
approval. If required by law or regulation, the investment policy of the
Separate Account will not be changed without the approval of the Superintendent
of Insurance of the State of New York. We have the right to:
o add investment divisions to, or remove investment divisions from, the
Separate Account, combine two or more divisions within the Separate Account,
or withdraw assets relating to SP-Flex from one investment division and put
them into another;
o register or end the registration of the Separate Account under the Investment
Company Act of 1940;
o operate our Separate Account under the direction of a committee or discharge
such a committee at any time (the committee may be composed entirely of
persons who are "interested persons" of Equitable Variable under the
Investment Company Act of 1940);
o restrict or eliminate any voting rights of policyowners or other people who
have voting rights that affect the Separate Account;
24
<PAGE>
o operate the Separate Account or one or more of the divisions in any other
form the law allows, including a form that allows us to make direct
investments. The Separate Account may be charged an advisory fee if its
investments are made directly, rather than through an investment company. We
may make any legal investments we wish. In choosing these investments, we
will rely on our own or outside counsel for advice. In addition, we may
disapprove any change in investment advisers or in investment policy unless a
law or regulation provides differently.
If any changes are made that result in a material change in the underlying
investments of a division, you will be notified, as required by law. We may, for
example, cause the division to invest in a mutual fund other than or in addition
to the Trust.
If you then wish to transfer the amount you have in that division to another
division of the Separate Account, you may do so, without charge, by writing to
our Administrative Office. At the same time, you may also change how any future
net premiums will be allocated.
SALES AND OTHER AGREEMENTS
Equitable Variable and Integrity Life Insurance Company, a wholly-owned
subsidiary of Equitable, are the principal underwriters for the Trust under a
Distribution Agreement. Under that Agreement, we have entered into a Sales
Agreement with Equitable by which Equitable will distribute our policies.
Both Equitable Variable and Equitable are registered with the SEC as
broker-dealers under the Securities Exchange Act of 1934 and we are each members
of the National Association of Securities Dealers, Inc. We are also the
principal underwriter for our policies funded through our Separate Account FP
and our other policies funded through our Separate Account I, which is also a
registered investment company. Equitable may also be considered a principal
underwriter.
AGENTS ARE PAID SALES COMMISSIONS. We sell our policies through agents who are
licensed by state insurance officials to sell our variable life policies. These
agents are also registered representatives of Equitable.
Under the Sales Agreement, the agent who sells you this policy receives sales
commissions from Equitable. Equitable Variable reimburses Equitable for these
commissions. We also reimburse Equitable for other expenses incurred in
marketing and selling our policies, such as agency and district managers'
compensation, agents' training allowances, deferred compensation, insurance
benefits of agents and agency and district managers, and agency clerical and
advertising expenses.
Agents may receive a commission equal to a maximum of 3% of the premiums paid on
a policy. Agents with less than three full years of service with Equitable may
be paid differently.
BROKERS ARE PAID COMMISSIONS. We also sell our policies through independent
brokers who are licensed by state insurance officials to sell our variable life
policies. They will also be registered representatives either of Equitable or of
another company registered with the SEC as a broker-dealer under the Securities
Exchange Act of 1934. The commissions for independent brokers will be no more
than those for agents. Commissions will be paid through the registered
broker-dealer.
APPLICATIONS. When an application for one of our policies is completed, it is
submitted to us. We make the decision to issue a policy based on the information
in the application and our standards for issuing insurance and classifying
risks. If we decide not to issue a policy, any premium paid will be refunded.
OUR JOINT SERVICE AGREEMENT WITH EQUITABLE. In addition to acting as distributor
for our policies, Equitable performs certain other sales and administrative
duties for us. Equitable does this pursuant to a written agreement. The
agreement is automatically renewed each year, unless either party terminates.
25
<PAGE>
Under this agreement, we pay Equitable for salary costs and other services and
an amount for indirect costs incurred through our use of Equitable personnel and
facilities. We also reimburse Equitable for sales expenses related to business
other than variable life insurance policies. The amounts paid or accrued to
Equitable by us under sales and joint services agreements totalled approximately
$249.4 million in 1986, $225.7 million in 1985 and $164.8 million in 1984.
REGULATION
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to the insurance laws and regulations in every
jurisdiction where we sell policies. As a result, the provisions of this policy
may vary somewhat from jurisdiction to jurisdiction.
We submit annual reports on our operations and finances to insurance officials
in all the jurisdictions where we sell policies. The officials are responsible
for reviewing our reports to be sure that we are financially sound and that we
are complying with applicable laws and regulations.
We are also subject to various Federal securities laws and regulations.
LEGAL MATTERS
The legal validity of the policy described in this prospectus has been passed on
by Herbert P. Shyer, who is Executive Vice President and General Counsel of
Equitable.
The Washington, D.C., law firm of Freedman, Levy, Kroll & Simonds has advised
Equitable Variable with respect to certain matters relating to Federal
securities laws.
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
FINANCIAL AND ACTUARIAL EXPERTS
The financial statements of Equitable Variable as of December 31, 1986 and 1985
and for the years then ended, the financial statements of the Separate Account
as of December 31, 1986 and for the period then ended, and the Statement of
Assets and Liabilities of the High Yield Division as of January 1, 1987 included
in this prospectus have been examined by the accounting firm of Deloitte Haskins
& Sells, our independent auditors, to the extent stated in their opinions, and
their opinions on the statements are part of this prospectus. We have relied on
the opinions of Deloitte Haskins & Sells given upon their authority as experts
in accounting and auditing.
Actuarial matters in this prospectus have been examined by Joseph O. North, Jr.,
F.S.A., M.A.A.A., who is a Vice President and Actuary of Equitable Variable and
a Vice President and Actuary of Equitable. His opinion on actuarial matters is
filed as an exhibit to the Registration Statement we filed with the SEC.
ADDITIONAL INFORMATION
We have filed a Registration Statement relating to the Separate Account and the
variable life insurance policy described in this prospectus with the SEC. The
Registration Statement, which is required by the Securities Act of 1933,
includes additional information that is not required in this prospectus under
the rules and regulations of the SEC. If you would like the additional
information, you may obtain it from the SEC's main office in Washington, D.C.
You will have to pay a fee for the material.
26
<PAGE>
MANAGEMENT
Here is a list of our directors and officers and a brief statement of their
business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ---------------- ----------------------
<S> <C>
Harry Douglas Garber............ Vice Chairman of the Board, Equitable, since February 1984; prior thereto,
Executive Vice President and Chief Financial Officer. Director, Equitable
Investment Corporation (EIC) and Genesco, Inc. Former Chairman and Chief
Executive Officer, Equitable Variable.
Glenn Howard Gettier, Jr. ...... Executive Vice President and Chief Financial Officer, Equitable, since
December 1984; prior thereto, Partner, Peat, Marwick, Mitchell & Co.
Richard Hampton Jenrette........ Vice Chairman, Chief Investment Officer and Director, Equitable. Chairman,
Donaldson, Lufkin and Jenrette, Inc., since February 1985; prior thereto,
Chairman and Chief Executive Officer. Director, Equitable Capital Management
Corporation (Equitable Capital) and various other Equitable subsidiaries.
William Thomas McCaffrey........ Executive Vice President, Equitable, since March 1986; prior thereto, various
other Equitable positions.
Francis Helmut Schott........... Senior Vice President and Chief Economist, Equitable.
Leo Martin Walsh, Jr. .......... Senior Executive Vice President, Director and Chief Operating Officer,
Equitable, since July 1986; prior thereto, Executive Vice President, Director
and Chief Investment Officer. Chairman, EIC, since July 1986; prior thereto,
President and Chief Executive Officer. Director, Equitable Capital and various
other Equitable subsidiaries.
Peter Rawlinson Wilde........... Executive Vice President, Equitable, since July 1984. Director, Integrity Life
Insurance Company (Integrity) and National Integrity Life Insurance Company
(National Integrity). Chairman and Chief Executive Officer, Equitable
Variable, from November 1984 to December 1986. Chief Financial Officer, CIGNA
Corporation, from April 1983 to June 1984; prior thereto, Senior Vice
President.
Brian Fredrick Wruble........... Chairman, President and Chief Executive Officer, Equitable Capital. Executive
Vice President, Equitable, since September 1984; prior thereto, various other
Equitable positions.
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
OFFICER -- DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ---------------- ----------------------
<S> <C>
Robert Wayne Barth.............. Chairman and Chief Executive Officer, Equitable Variable, since December 1986;
President and Chief Operating Officer, from December 1985 to December 1986.
Executive Vice President, Equitable, since June 1985; Senior Vice President
since September 1984; prior thereto, Vice President since April 1984.
Thomas Michael Kirwan........... President and Chief Operating Officer, Equitable Variable, since December
1986. Executive Vice President and Chief Financial Officer, EIC, since March
1985; prior thereto, President, Columbia Group -- CBS, Inc. Director,
Equitable Capital and various other Equitable subsidiaries.
Robert Seymour Jones............ Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since June 1985; prior thereto, Vice President.
Michael Searle Martin........... Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since June 1985; prior thereto, Vice President.
Stanley Julian Rispler.......... Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President.
Samuel Barry Shlesinger......... Senior Vice President and Actuary, Equitable Variable, since February 1986.
Senior Vice President and Actuary, Equitable; prior thereto, Vice President
and Actuary.
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ---------------- ----------------------
<S> <C>
James Thomas Liddle, Jr. ....... Senior Vice President and Chief Financial Officer, Equitable Variable, since
February 1986. Vice President and Actuary, Equitable.
Richard Marshall Stenson........ Senior Vice President, Equitable Variable, since December 1981. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President and
Actuary. Actuary, Integrity.
William Arnold Canfield......... Vice President and Chief Underwriting Officer, Equitable Variable. Vice
2 Penn Plaza President, Equitable.
New York, New York 10121
Franklin Kennedy, III........... Vice President, Equitable Variable, since August 1981. Senior Vice President,
1221 Avenue of the Americas Equitable Capital since January 1987. Managing Director and Chief Investment
New York, New York 10020 Officer, Equitable Investment Management Corporation, from November 1983 to
January 1987. Vice President, Equitable.
Donald Anthony King............. Vice President, Equitable Variable, since February 1986. Vice President,
1285 Avenue of the Americas Integrity, since April 1984. Vice President, Equitable, since January 1976.
New York, New York 10020 Executive Vice President, Equitable Capital.
Joseph Oswell North, Jr. ....... Vice President and Actuary, Equitable Variable, since February 1984. Vice
2 Penn Plaza President and Actuary, Equitable, since October 1984; prior thereto, Assistant
New York, New York 10121 Vice President and Actuary, since April 1982.
Stephen Anthony Scarpati........ Vice President and Controller, Equitable Variable, since June 1986. Vice
2 Penn Plaza President, Equitable, since December 1985. Vice President and Controller, EIC,
New York, New York 10121 from November 1984 to December 1985; prior thereto, Division Controller,
Colgate-Palmolive Company.
Larry Kenneth Mills............. Treasurer, Equitable Variable, Integrity and National Integrity, since
February 1986. Vice President and Treasurer, Equitable, since March 1986;
prior thereto, Vice President.
Theodore Edward Plucinski, M.D.. Chief Medical Director, Equitable Variable, Integrity and National Integrity.
2 Penn Plaza Chief Medical Director, Equitable, since September 1985; prior thereto, Chief
New York, New York 10121 Medical Director, MONY.
Kevin Brian Keefe................ Secretary, Equitable Variable, Integrity, National Integrity and The Hudson
River Trust. Vice President and Assistant Secretary, Equitable, since June
1986; prior thereto, Assistant Vice President and Assistant Secretary.
</TABLE>
29
<PAGE>
PART 5: ILLUSTRATIONS OF INSURANCE BENEFIT, POLICY ACCOUNT AND CASH SURRENDER
VALUES, AND ACCUMULATED PREMIUMS
To help clarify how the key financial elements of the policy work, a series of
tables has been prepared.
The tables show how the Insurance Benefit, Policy Account and Cash Surrender
Values ("policy benefits") could vary over an extended period of time if the
investment divisions of our Separate Account had CONSTANT hypothetical gross
annual investment returns of 0%, 4%, 8% or 12% over the years covered by each
table. The policy benefits will differ from those shown in the tables if the
annual investment returns are not absolutely constant. That is, the figures will
be different if the returns AVERAGED 0%, 4%, 8% or 12% over a period of years
but went above or below those figures in individual policy years. The policy
benefits will also differ, depending on your premium allocations to each
division, if the overall actual rates of return averaged 0%, 4%, 8% or 12%, but
went above or below those figures for the individual investment divisions. The
tables show the policy benefits as they would be as of each policy anniversary.
The tables are for standard risk males. (Our Policy Account charges do not
differ for non-smokers.) The difference between the Policy Account and the Cash
Surrender Value is the surrender charge.
The tables illustrate the Policy Account charges (policy cost factors) at both
the current effective annual rate of 1.80% and the charges that would apply if
the maximum cost of insurance charges permitted under the policy were imposed.
See "Charges -- Policy Account Charges" in Part 3. The amounts shown at the end
of each policy year also reflect a daily charge against the Separate Account
investment divisions at an effective annual rate of .50%. This charge reflects a
.40% charge for investment management and direct Trust expenses (estimated at
.10% of aggregate average daily net assets). Using the current rate for Policy
Account charges, the effect of these adjustments is that on a 0% gross rate of
return the net rate of return would be -2.275%, on 4% it would be 1.634%, on 8%
it would be 5.544% and on 12% it would be 9.453%. The effect of these
adjustments would be greater if the maximum cost of insurance charges permitted
under the policy were imposed. Because of investment management fees higher than
.40%, if amounts are allocated to the Aggressive Stock, High Yield or Global
Divisions, higher gross rates of returns will be necessary to produce the same
net rates of return. See "The Trust's Investment Adviser" in Part 2.
The second column of each table shows the effect of an amount equal to the
premiums invested to earn interest, after taxes, of 5% compounded annually.
These tables show that if a policy is returned in its very early years for
payment of its Cash Surrender Value, that Cash Surrender Value will be low in
comparison to the amount of the premiums accumulated with interest. Thus, the
cost of owning your policy for a relatively short time will be high.
INDIVIDUAL ILLUSTRATIONS. On request, we will furnish you with comparable
illustrations based on the age and sex of the proposed insured person and an
initial premium of your choice.
TABLE OF CONTENTS OF ILLUSTRATIONS
Male Initial Current Maximum
Age Premium Charges Charges
- ---- -------- ------- -------
10 $ 5,000 page 31 page 32
35 $ 20,000 page 33 page 34
55 $100,000 page 35 page 36
30
<PAGE>
SP-FLEX
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE LIFE INSURANCE WITH ADDITIONAL PREMIUM OPTION
INITIAL PREMIUM $5,000 INITIAL INSURANCE BENEFIT $47,117
MALE AGE 10
ASSUMING CURRENT CHARGES
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
INSURANCE BENEFIT(2)
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED -----------------------------------------------
YEAR PREMIUMS(1) 0% 4% 8% 12%
------ ----------- ------- ------- -------- ----------
1 $ 5,250 $44,542 $46,324 $ 48,106 $ 49,888
2 5,512 42,112 45,549 49,121 52,827
3 5,788 39,830 44,804 50,176 55,961
4 6,078 34,910 40,840 47,496 54,934
5 6,381 33,051 40,213 48,565 58,252
6 6,700 31,318 39,629 49,701 61,822
7 7,036 29,701 39,085 50,905 65,665
8 7,387 28,184 38,573 52,170 69,790
9 7,757 26,753 38,079 53,483 74,196
10 8,144 25,397 37,595 54,835 78,889
11 8,552 24,106 37,112 56,213 83,867
12 8,979 22,874 36,624 57,608 89,132
13 9,428 21,696 36,128 59,013 94,688
14 9,900 20,568 35,620 60,422 100,540
15 10,395 19,490 35,103 61,834 106,701
16 10,914 18,458 34,574 63,245 113,179
17 11,460 17,472 34,037 64,658 119,994
18 12,033 16,533 33,496 66,078 127,171
19 12,635 15,640 32,954 67,509 134,737
20 13,266 14,791 32,412 68,954 142,718
55 (Age 65) 73,178 2,338 20,224 161,235 1,191,919
[THE LEFT-HAND HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT-HAND HALF
(BELOW) APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ---------------------------------------------- ----------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- ------- -------- ------ ------- ------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
$4,886 % 5,082 $ 5,277 $ 5,473 $4,586 $ 4,782 $ 4,977 $ 5,173
4,775 5,165 5,570 5,990 4,525 4,915 5,320 5,740
4,666 5,249 5,879 6,556 4,466 5,049 5,679 6,356
4,560 5,335 6,204 7,176 4,410 5,185 6,054 7,026
4,457 5,422 6,548 7,854 4,357 5,322 6,448 7,754
4,355 5,511 6,911 8,597 4,305 5,461 6,861 8,547
4,256 5,601 7,295 9,410 4,256 5,601 7,295 9,410
4,159 5,692 7,699 10,299 4,159 5,692 7,699 10,299
4,065 5,785 8,126 11,273 4,065 5,785 8,126 11,273
3,972 5,880 8,576 12,338 3,972 5,880 8,576 12,338
3,882 5,976 9,052 13,505 3,882 5,976 9,052 13,505
3,793 6,074 9,554 14,781 3,793 6,074 9,554 14,781
3,707 6,173 10,083 16,179 3,707 6,173 10,083 16,179
3,623 6,274 10,642 17,708 3,623 6,274 10,642 17,708
3,540 6,376 11,232 19,382 3,540 6,376 11,232 19,382
3,460 6,481 11,855 21,214 3,460 6,481 11,855 21,214
3,381 6,587 12,512 23,220 3,381 6,587 12,512 23,220
3,304 6,694 13,206 25,415 3,304 6,694 13,206 25,415
3,229 6,804 13,938 27,818 3,229 6,804 13,938 27,818
3,155 6,915 14,710 30,447 3,155 6,915 14,710 30,447
1,410 12,195 97,223 718,716 1,410 12,195 97,223 718,716
</TABLE>
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT-HAND AND RIGHT-HAND HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
THE INSURANCE BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUES WILL DIFFER IF
ADDITIONAL PREMIUMS ARE PAID.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE INSURANCE
BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE INSURANCE BENEFIT, POLICY
ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS
OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST
PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
31
<PAGE>
SP-FLEX
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE LIFE INSURANCE WITH ADDITIONAL PREMIUM OPTION
INITIAL PREMIUM $5,000 INITIAL INSURANCE BENEFIT $47,117
MALE AGE 10
ASSUMING MAXIMUM CHARGES
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
INSURANCE BENEFIT(2)
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED -----------------------------------------------
YEAR PREMIUMS(1) 0% 4% 8% 12%
------ ----------- ------- ------- -------- ----------
1 $ 5,250 $44,540 $46,322 $ 48,104 $ 49,886
2 5,512 42,105 45,541 49,112 52,818
3 5,788 39,803 44,773 50,141 55,922
4 6,078 34,840 40,758 47,400 54,823
5 6,381 32,935 40,071 48,394 58,046
6 6,700 31,134 39,395 49,408 61,457
7 7,036 29,431 38,731 50,443 65,069
8 7,387 27,822 38,078 51,500 68,893
9 7,757 26,301 37,435 52,579 72,941
10 8,144 24,863 36,805 53,681 77,229
11 8,552 23,503 36,184 54,806 81,768
12 8,979 22,218 35,573 55,953 86,572
13 9,428 21,003 34,974 57,126 91,661
14 9,900 19,855 34,384 58,323 97,047
15 10,395 18,769 33,804 59,545 102,752
16 10,914 17,743 33,234 60,794 108,792
17 11,460 16,773 32,674 62,068 115,185
18 12,033 15,856 32,123 63,368 121,955
19 12,635 14,989 31,582 64,696 129,124
20 13,266 14,169 31,049 66,052 136,712
55 (Age 65) 73,178 1,980 17,123 136,499 1,009,053
[THE LEFT-HAND HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT-HAND HALF
(BELOW) APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ---------------------------------------------- ----------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- ------- -------- ------ ------- ------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
$4,886 $ 5,082 $ 5,277 $ 5,472 $4,586 $ 4,782 $ 4,977 $ 5,172
4,774 5,164 5,569 5,989 4,524 4,914 5,319 5,739
4,663 5,246 5,874 6,552 4,463 5,046 5,674 6,352
4,551 5,324 6,192 7,162 4,401 5,174 6,042 7,012
4,441 5,403 6,525 7,827 4,341 5,303 6,425 7,727
4,329 5,478 6,871 8,546 4,279 5,428 6,821 8,496
4,217 5,550 7,228 9,324 4,217 5,550 7,228 9,324
4,106 5,619 7,600 10,167 4,106 5,619 7,600 10,167
3,996 5,688 7,988 11,082 3,996 5,688 7,988 11,082
3,889 5,756 8,396 12,079 3,889 5,756 8,396 12,079
3,785 5,827 8,825 13,167 3,785 5,827 8,825 13,167
3,685 5,899 9,279 14,357 3,685 5,899 9,279 14,357
3,589 5,976 9,761 15,662 3,589 5,976 9,761 15,662
3,497 6,056 10,272 17,093 3,497 6,056 10,272 17,093
3,409 6,141 10,816 18,665 3,409 6,141 10,816 18,665
3,326 6,230 11,395 20,392 3,326 6,230 11,395 20,392
3,246 6,323 12,011 22,290 3,246 6,323 12,011 22,290
3,169 6,420 12,664 24,373 3,169 6,420 12,664 24,373
3,095 6,520 13,357 26,659 3,095 6,520 13,357 26,659
3,023 6,624 14,091 29,166 3,023 6,624 14,091 29,166
1,194 10,325 82,308 608,449 1,194 10,325 82,308 608,449
</TABLE>
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT-HAND AND RIGHT-HAND HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
THE INSURANCE BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUES WILL DIFFER IF
ADDITIONAL PREMIUMS ARE PAID.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE INSURANCE
BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE INSURANCE BENEFIT, POLICY
ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS
OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST
PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
32
<PAGE>
SP-FLEX
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE LIFE INSURANCE WITH ADDITIONAL PREMIUM OPTION
INITIAL PREMIUM $20,000 INITIAL INSURANCE BENEFIT $79,452
MALE AGE 35
ASSUMING CURRENT CHARGES
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
INSURANCE BENEFIT(2)
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ---------------------------------------------
YEAR PREMIUMS(1) 0% 4% 8% 12%
------ ----------- ------- ------- -------- --------
1 $21,000 $75,117 $78,122 $ 81,127 $ 84,132
2 22,050 71,026 76,823 82,847 89,098
3 23,152 67,169 75,557 84,615 94,371
4 24,310 63,532 74,325 86,437 99,974
5 25,526 60,104 73,127 88,317 105,931
6 26,802 56,876 71,968 90,260 112,272
7 28,142 53,835 70,846 92,270 119,024
8 29,549 50,968 69,756 94,346 126,210
9 31,027 48,269 68,705 96,498 133,871
10 32,578 45,725 67,688 98,726 142,035
11 34,207 43,326 66,702 101,031 150,735
12 35,917 41,066 65,751 103,422 160,018
13 37,713 38,932 64,828 105,893 169,909
14 39,599 36,919 63,936 108,452 180,461
15 41,579 35,018 63,070 111,099 191,713
16 43,657 33,225 62,234 113,844 203,727
17 45,840 31,534 61,431 116,697 216,568
18 48,132 29,941 60,660 119,664 230,300
19 50,539 28,439 59,923 122,758 245,006
20 53,066 27,026 59,223 125,992 260,774
30 (Age 65) 86,439 16,629 53,942 167,379 498,408
[THE LEFT-HAND HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT-HAND HALF
(BELOW) APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ---------------------------------------------- ------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- ------- -------- ------- ------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
$19,545 $20,327 $ 21,109 $ 21,891 $18,345 $19,127 $ 19,909 $ 20,691
19,100 20,659 22,279 23,960 18,100 19,659 21,279 22,960
18,666 20,997 23,514 26,225 17,866 20,197 22,714 25,425
18,241 21,340 24,818 28,704 17,641 20,740 24,218 28,104
17,826 21,689 26,194 31,418 17,426 21,289 25,794 31,018
17,420 22,043 27,646 34,388 17,220 21,843 27,446 34,188
17,024 22,403 29,178 37,638 17,024 22,403 29,178 37,638
16,637 22,769 30,796 41,197 16,637 22,769 30,796 41,197
16,258 23,142 32,503 45,091 16,258 23,142 32,503 45,091
15,888 23,520 34,305 49,354 15,888 23,520 34,305 49,354
15,527 23,904 36,207 54,019 15,527 23,904 36,207 54,019
15,174 24,295 38,214 59,126 15,174 24,295 38,214 59,126
14,828 24,692 40,333 64,715 14,828 24,692 40,333 64,715
14,491 25,095 42,568 70,833 14,491 25,095 42,568 70,833
14,161 25,506 44,928 77,529 14,161 25,506 44,928 77,529
13,839 25,922 47,419 84,858 13,839 25,922 47,419 84,858
13,524 26,346 50,048 92,880 13,524 26,346 50,048 92,880
13,216 26,777 52,823 101,660 13,216 26,777 52,823 101,660
12,916 27,214 55,751 111,270 12,916 27,214 55,751 111,270
12,622 27,659 58,842 121,789 12,622 27,659 58,842 121,789
10,027 32,527 100,928 300,536 10,027 32,527 100,928 300,536
</TABLE>
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT-HAND AND RIGHT-HAND HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
THE INSURANCE BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUES WILL DIFFER IF
ADDITIONAL PREMIUMS ARE PAID.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE INSURANCE
BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE INSURANCE BENEFIT, POLICY
ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS
OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST
PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
33
<PAGE>
SP-FLEX
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE LIFE INSURANCE WITH ADDITIONAL PREMIUM OPTION
INITIAL PREMIUM $20,000 INITIAL INSURANCE BENEFIT $79,452
MALE AGE 35
ASSUMING MAXIMUM CHARGES
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
INSURANCE BENEFIT(2)
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ---------------------------------------------
YEAR PREMIUMS(1) 0% 4% 8% 12%
------ ----------- ------- ------- -------- --------
1 $21,000 $75,107 $78,111 $ 81,116 $ 84,121
2 22,050 71,000 76,794 82,816 89,065
3 23,152 67,118 75,500 84,552 94,300
4 24,310 63,449 74,227 86,324 99,842
5 25,526 59,979 72,975 88,132 105,710
6 26,802 56,701 71,746 89,981 111,925
7 28,142 53,601 70,537 91,867 118,503
8 29,549 50,669 69,346 93,790 125,465
9 31,027 47,899 68,177 95,756 132,840
10 32,578 45,280 67,028 97,763 140,649
11 34,207 42,804 65,897 99,811 148,913
12 35,917 40,465 64,788 101,906 157,670
13 37,713 38,252 63,695 104,040 166,935
14 39,599 36,160 62,621 106,220 176,747
15 41,579 34,182 61,564 108,443 187,130
16 43,657 32,313 60,525 110,716 198,128
17 45,840 30,547 59,506 113,037 209,775
18 48,132 28,876 58,502 115,405 222,103
19 50,539 27,297 57,515 117,823 235,156
20 53,066 25,805 56,547 120,294 248,981
30 (Age 65) 86,439 14,707 47,705 148,019 440,758
[THE LEFT-HAND HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT-HAND HALF
(BELOW) APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ---------------------------------------------- ----------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------ ------- ------- -------- ------ ------- ------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
$19,542 $20,324 $21,106 $ 21,888 $18,342 $19,124 $19,906 $ 20,688
19,093 20,651 22,271 23,951 18,093 19,651 21,271 22,951
18,652 20,981 23,496 26,205 17,852 20,181 22,696 25,405
18,217 21,312 24,785 28,666 17,617 20,712 24,185 28,066
17,789 21,643 26,139 31,352 17,389 21,243 25,739 30,952
17,367 21,975 27,560 34,281 17,167 21,775 27,360 34,081
16,950 22,305 29,051 37,474 16,950 22,305 29,051 37,474
16,539 22,635 30,614 40,954 16,539 22,635 30,614 40,954
16,133 22,964 32,253 44,744 16,133 22,964 32,253 44,744
15,734 23,291 33,970 48,872 15,734 23,291 33,970 48,872
15,340 23,616 35,769 53,366 15,340 23,616 35,769 53,366
14,951 23,939 37,654 58,258 14,951 23,939 37,654 58,258
14,569 24,260 39,627 63,582 14,569 24,260 39,627 63,582
14,193 24,579 41,693 69,375 14,193 24,579 41,693 69,375
13,823 24,896 43,854 75,675 13,823 24,896 43,854 75,675
13,459 25,211 46,116 82,526 13,459 25,211 46,116 82,526
13,101 25,520 48,478 89,966 13,101 25,520 48,478 89,966
12,747 25,824 50,942 98,041 12,747 25,824 50,942 98,041
12,397 26,121 53,510 106,797 12,397 26,121 53,510 106,797
12,052 26,409 56,181 116,281 12,052 26,409 56,181 116,281
8,868 28,766 89,254 265,773 8,868 28,766 89,254 265,773
</TABLE>
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT-HAND AND RIGHT-HAND HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
THE INSURANCE BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUES WILL DIFFER IF
ADDITIONAL PREMIUMS ARE PAID.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE INSURANCE
BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE INSURANCE BENEFIT, POLICY
ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS
OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST
PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
34
<PAGE>
SP-FLEX
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE LIFE INSURANCE WITH ADDITIONAL PREMIUM OPTION
INITIAL PREMIUM $100,000 INITIAL INSURANCE BENEFIT $214,120
MALE AGE 55
ASSUMING CURRENT CHARGES
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
INSURANCE BENEFIT(2)
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED -----------------------------------------------
YEAR PREMIUMS(1) 0% 4% 8% 12%
------ ----------- -------- -------- -------- --------
1 $105,000 $203,571 $211,714 $219,858 $228,002
2 110,250 193,629 209,431 225,853 242,895
3 115,762 184,249 207,258 232,108 258,868
4 121,551 175,387 205,183 238,622 275,991
5 127,628 167,030 203,222 245,433 294,384
6 134,010 159,127 201,352 252,529 314,114
7 140,710 151,667 199,591 259,949 335,321
8 147,746 144,632 197,946 267,723 358,142
9 155,133 138,000 196,426 275,886 382,732
10 162,889 131,746 195,026 284,457 409,240
11 171,034 125,853 193,755 293,474 437,852
12 179,586 120,288 192,597 302,942 468,719
13 188,565 115,038 191,559 312,900 502,059
14 197,993 110,066 190,612 323,329 538,010
15 207,893 105,360 189,761 334,267 576,814
16 218,287 100,908 189,013 345,757 618,741
17 229,202 96,705 188,387 357,868 664,136
18 240,662 92,734 187,878 370,629 713,296
19 252,695 88,996 187,520 384,152 766,706
20 265,330 85,488 187,334 398,534 824,875
[THE LEFT-HAND HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT-HAND HALF
(BELOW) APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ---------------------------------------------- ----------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------- -------- -------- -------- ------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
$97,725 $101,634 $105,544 $109,453 $91,725 $ 95,634 $ 99,544 $103,453
95,501 103,295 111,395 119,800 90,501 98,295 106,395 114,800
93,329 104,983 117,570 131,125 89,329 100,983 113,570 127,125
91,205 106,699 124,088 143,521 88,205 103,699 121,088 140,521
89,130 108,443 130,968 157,088 87,130 106,443 128,968 155,088
87,102 110,215 138,228 171,939 86,102 109,215 137,228 170,939
85,120 112,017 145,891 188,192 85,120 112,017 145,891 188,192
83,184 113,847 153,979 205,983 83,184 113,847 153,979 205,983
81,291 115,708 162,515 225,455 81,291 115,708 162,515 225,455
79,442 117,599 171,525 246,768 79,442 117,599 171,525 246,768
77,634 119,521 181,034 270,096 77,634 119,521 181,034 270,096
75,868 121,474 191,070 295,629 75,868 121,474 191,070 295,629
74,142 123,459 201,663 323,575 74,142 123,459 201,663 323,575
72,455 125,477 212,842 354,164 72,455 125,477 212,842 354,164
70,806 127,528 224,642 387,644 70,806 127,528 224,642 387,644
69,195 129,612 237,096 424,289 69,195 129,612 237,096 424,289
67,621 131,730 250,240 464,398 67,621 131,730 250,240 464,398
66,082 133,883 264,113 508,299 66,082 133,883 264,113 508,299
64,579 136,071 278,754 556,350 64,579 136,071 278,754 556,350
63,110 138,295 294,208 608,944 63,110 138,295 294,208 608,944
</TABLE>
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT-HAND AND RIGHT-HAND HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
THE INSURANCE BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUES WILL DIFFER IF
ADDITIONAL PREMIUMS ARE PAID.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE INSURANCE
BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE INSURANCE BENEFIT, POLICY
ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS
OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST
PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
35
<PAGE>
SP-FLEX
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE LIFE INSURANCE WITH ADDITIONAL PREMIUM OPTION
INITIAL PREMIUM $100,000 INITIAL INSURANCE BENEFIT $214,120
MALE AGE 55
ASSUMING MAXIMUM CHARGES
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
INSURANCE BENEFIT(2)
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ---------------------------------------------
YEAR PREMIUMS(1) 0% 4% 8% 12%
------ ----------- -------- -------- -------- --------
1 $105,000 $202,414 $210,511 $218,609 $226,706
2 110,250 191,348 206,964 223,192 240,032
3 115,762 180,887 203,475 227,870 254,141
4 121,551 170,990 200,037 232,637 269,069
5 127,628 161,648 196,673 237,523 284,896
6 134,010 152,808 193,355 242,497 301,636
7 140,710 144,451 190,092 247,576 319,360
8 147,746 136,553 186,887 252,764 338,130
9 155,133 129,088 183,739 258,065 358,009
10 162,889 122,029 180,639 263,470 379,046
11 171,034 115,357 177,594 268,992 401,324
12 179,586 109,047 174,595 274,622 424,901
13 188,565 103,088 171,658 280,388 449,891
14 197,993 97,450 168,761 286,259 476,325
15 207,893 92,121 165,914 292,254 504,315
16 218,287 87,083 163,115 298,377 533,951
17 229,202 82,325 160,371 304,640 565,354
18 240,662 77,821 157,661 311,013 598,559
19 252,695 73,564 155,000 317,525 633,727
20 265,330 69,547 152,397 324,200 671,018
[THE LEFT-HAND HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT-HAND HALF
(BELOW) APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- ---------------------------------------------- ----------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- ------- -------- -------- -------- ------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
$97,170 $101,057 $104,944 $108,831 $91,170 $ 95,057 $ 98,944 $102,831
94,376 102,078 110,082 118,388 89,376 97,078 105,082 113,388
91,625 103,067 115,424 128,731 87,625 99,067 111,424 124,731
88,919 104,024 120,976 139,921 85,919 101,024 117,976 136,921
86,258 104,948 126,746 152,025 84,258 102,948 124,746 150,025
83,643 105,838 132,737 165,108 82,643 104,838 131,737 164,108
81,070 106,686 138,947 179,234 81,070 106,686 138,947 179,234
78,537 107,487 145,375 194,473 78,537 107,487 145,375 194,473
76,042 108,235 152,018 210,891 76,042 108,235 152,018 210,891
73,582 108,924 158,870 228,561 73,582 108,924 158,870 228,561
71,160 109,551 165,931 247,563 71,160 109,551 165,931 247,563
68,778 110,120 173,208 267,992 68,778 110,120 173,208 267,992
66,440 110,633 180,709 289,953 66,440 110,633 180,709 289,953
64,150 111,093 188,440 313,557 64,150 111,093 188,440 313,557
61,909 111,501 196,408 338,921 61,909 111,501 196,408 338,921
59,716 111,853 204,606 366,146 59,716 111,853 204,606 366,146
57,566 112,140 213,020 395,325 57,566 112,140 213,020 395,325
55,455 112,350 221,629 426,537 55,455 112,350 221,629 426,537
53,381 112,474 230,408 459,856 53,381 112,474 230,408 459,856
51,341 112,503 239,333 495,363 51,341 112,503 239,333 495,363
</TABLE>
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT-HAND AND RIGHT-HAND HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
THE INSURANCE BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUES WILL DIFFER IF
ADDITIONAL PREMIUMS ARE PAID.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE INSURANCE
BENEFIT, POLICY ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE INSURANCE BENEFIT, POLICY
ACCOUNT AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS
OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST
PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
36
