Incentive Life Plus(TM) (94-300)
Survivorship 2000(TM) (92-500) Issued by
EQUITABLE VARIABLE
LIFE INSURANCE COMPANY
PROSPECTUS SUPPLEMENT DATED FEBRUARY 28, 1996
This supplement updates the Incentive Life Plus prospectuses dated September 15,
1995 and May 1, 1995, and the Survivorship 2000 prospectus dated May 1, 1995.
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-515
- --------------------------------------------------------------------------------
This Supplement Should be Retained for Future Reference.
Copyright 1996
Equitable Variable Life Insurance Company
All rights reserved.
37431
<PAGE>
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>
SURVIVORSHIP(TM)
2000
Prospectus Dated May 1, 1995
Survivorship 2000 is a flexible premium joint survivorship variable life
insurance policy issued by Equitable Variable Life Insurance Company (Equitable
Variable), a wholly-owned subsidiary of The Equitable Life Assurance Society of
the United States (Equitable).
You may decide the amount of premiums to invest and when, within limits. Other
than the initial premium, there are no required premiums (however, under certain
conditions, additional premiums may be needed to keep the policy in effect). Net
premiums are deposited in a Policy Account.
Policy Account values increase or decrease with investment experience and
reflect certain deductions and charges. You may allocate your Policy Account
value to a guaranteed fixed return and the following thirteen investment
portfolios:
<TABLE>
<C> <C> <C>
o Money Market o Equity Index Asset Allocation Series:
o Intermediate Government Securities o Common Stock o Conservative Investors
o Quality Bond o Global o Balanced
o High Yield o International o Growth Investors
o Growth & Income o Aggressive Stock
</TABLE>
We do not guarantee the investment performance of these investment portfolios,
which involve varying degrees of risk.
Survivorship 2000 provides life insurance coverage on two insureds, with a death
benefit payable when the last surviving insured person dies while the policy is
in effect. You may choose either a fixed benefit equal to the Face Amount of the
policy or a variable benefit equal to the Face Amount plus the Policy Account.
You can reduce the Face Amount and change the death benefit option, within
limits.
The policy may go into default if the Net Cash Surrender Value (Policy Account
value less any loan and accrued loan interest) is insufficient to pay the
policy's monthly deductions. When this condition exists, we guarantee that the
policy will remain in-force under the death benefit guarantee provision (if
available) as long as the accumulated premiums you've paid, less withdrawals,
are at least equal to a guaranteed minimum death benefit premium fund and any
policy loan does not exceed the Cash Surrender Value (Policy Account value).
Otherwise, your policy will end without value unless you make a required
payment.
Ask your Equitable agent to determine if changing, or adding to, your existing
insurance coverage with Survivorship 2000 would be to your advantage. You may
examine the policy for a limited period after your initial payment and if you
are not satisfied for any reason, you may return the policy for a full refund of
premiums paid.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS CONTAINS INFORMATION THAT SHOULD BE KNOWN BEFORE INVESTING IN
SURVIVORSHIP 2000. 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.
Copyright 1995 Equitable Variable Life Insurance Company. All rights reserved.
VM 503
<PAGE>
TABLE OF CONTENTS
SUMMARY OF SURVIVORSHIP 2000 FEATURES........................1
PART 1 -- DETAILED INFORMATION ABOUT EQUITABLE VARIABLE AND
SURVIVORSHIP 2000 INVESTMENT CHOICES...............5
THE COMPANY THAT ISSUES SURVIVORSHIP 2000..........5
Equitable Variable...............................5
Our Parent, Equitable............................5
THE SEPARATE ACCOUNT AND THE TRUST.................5
The Separate Account.............................5
The Trust........................................5
The Trust's Investment Adviser...................5
Investment Policies Of The Trust's Portfolios....6
THE GUARANTEED INTEREST ACCOUNT....................7
Amounts In The Guaranteed Interest Account.......7
Adding Interest In The Guaranteed Interest
Account .......................................8
Transfers From The Guaranteed Interest Account...8
PART 2 -- DETAILED INFORMATION ABOUT SURVIVORSHIP 2000.......8
FLEXIBLE PREMIUMS..................................8
DEATH BENEFITS.....................................9
CHANGES IN INSURANCE PROTECTION....................9
Reducing The Face Amount.........................9
Changing The Death Benefit Option...............10
When Policy Changes Go Into Effect..............10
MATURITY BENEFITS.................................10
LIVING BENEFIT OPTION.............................10
ADDITIONAL BENEFITS MAY BE AVAILABLE..............10
YOUR POLICY ACCOUNT VALUE.........................11
Amounts In The Separate Account.................11
How We Determine The Unit Value.................11
Transfers Of Policy Account Value...............11
Automatic Transfer Service......................11
Telephone Transfers.............................12
Charge for Transfers............................12
BORROWING FROM YOUR POLICY ACCOUNT................12
How To Request A Loan...........................12
Policy Loan Interest............................12
When Interest Is Due............................12
Repaying The Loan...............................13
The Effects Of A Policy Loan....................13
PARTIAL WITHDRAWALS FROM YOUR POLICY ACCOUNT......13
Partial Withdrawal Charges......................13
Allocation Of Partial Withdrawals And Charges...13
The Effects Of A Partial Withdrawal.............13
Surrender For Net Cash Surrender Value..........13
DEDUCTIONS AND CHARGES............................13
Deductions From Your Premiums...................13
Deductions From Your Policy Account.............14
DEDUCTIONS AND CHARGES (CONTINUED)
How Policy Account Charges Are Allocated........15
Charges Against The Separate Account............15
Trust Charges...................................15
ADDITIONAL INFORMATION ABOUT SURVIVORSHIP 2000....15
Your Policy Can Terminate.......................15
You May Restore A Policy After It Terminates....16
Policy Periods, Anniversaries, Dates And Ages...16
TAX EFFECTS.......................................16
Policy Proceeds.................................17
Diversification.................................18
Riders..........................................18
Policy Changes..................................18
Tax Changes.....................................18
Estate And Generation Skipping Taxes............18
Our Taxes.......................................19
When We Withhold Income Taxes...................19
PART 3 -- ADDITIONAL INFORMATION............................19
YOUR VOTING PRIVILEGES............................19
Trust Voting Privileges.........................19
How We Determine Your Voting Shares.............19
Separate Account Voting Rights..................19
OUR RIGHT TO CHANGE HOW WE OPERATE................19
OUR REPORTS TO POLICYOWNERS.......................20
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY.......20
YOUR PAYMENT OPTIONS..............................20
YOUR BENEFICIARY..................................20
ASSIGNING YOUR POLICY.............................20
WHEN WE PAY POLICY PROCEEDS.......................21
DIVIDENDS.........................................21
REGULATION........................................21
SPECIAL CIRCUMSTANCES.............................21
DISTRIBUTION......................................21
LEGAL PROCEEDINGS.................................21
ACCOUNTING AND ACTUARIAL EXPERTS..................22
ADDITIONAL INFORMATION............................22
MANAGEMENT........................................23
PART 4 -- ILLUSTRATIONS OF POLICY BENEFITS..................25
INDIVIDUAL ILLUSTRATIONS..........................25
SEPARATE ACCOUNT FP FINANCIAL STATEMENTS.................FSA-1
EQUITABLE VARIABLE FINANCIAL STATEMENTS....................F-1
APPENDIX A -- COMMUNICATING PERFORMANCE DATA...............A-1
LONG TERM MARKET TRENDS......................A-1
- --------------------------------------------------------------------------------
In this prospectus "we", "our" and "us" mean Equitable Variable Life Insurance
Company (Equitable Variable), a New York stock life insurance company. "You" and
"your" mean the owner(s) of the policy. We refer to the persons who are covered
by the policy as the "insured persons", because the insured persons and the
policyowner(s) may not be the same. Unless indicated otherwise, the discussion
in this prospectus assumes that there is no policy loan outstanding and that the
policy is not in a grace period.
THE POLICY IS NOT AVAILABLE IN ALL JURISDICTIONS. 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 ATTACHED SUPPLEMENT THERETO OR IN ANY
SUPPLEMENTAL SALES MATERIAL AUTHORIZED BY EQUITABLE VARIABLE.
<PAGE>
SUMMARY OF SURVIVORSHIP 2000 FEATURES
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE TERMS OF THE POLICY
WHEN ISSUED AND THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS (SEE TABLE OF CONTENTS ON OPPOSITE PAGE).
INVESTMENT FEATURES
FLEXIBLE PREMIUMS
o Premiums may be invested whenever and in whatever amount you determine, within
limits. Other than the initial premium, there are no scheduled or required
premium payments (however, under certain conditions, additional premiums may
be needed to keep a policy in effect). See FLEXIBLE PREMIUMS on page 8.
POLICY ACCOUNT
o After certain charges are deducted from your premium payment, the balance,
called your net premium, is put in your Policy Account. Net premiums can be
allocated to a Guaranteed Interest Account and to one or more funds of
Equitable Variable's Separate Account FP (each a Fund, and together, the Funds
or the Separate Account). The Funds invest in corresponding portfolios of The
Hudson River Trust (Trust). Subject to certain conditions, you have access to
the Policy Account value through loans, partial withdrawals or by surrendering
the policy. You may also adjust your allocation to the various investment
options by changing your allocation percentages or by making transfers among
the Funds and the Guaranteed Interest Account. If the policy is owned by two
or more persons, we will require authorization from each owner before taking
any action under the policy.
o REQUESTS FOR TRANSFERS OUT OF THE GUARANTEED INTEREST ACCOUNT CAN ONLY BE MADE
ON OR WITHIN 30 DAYS OF A POLICY ANNIVERSARY. SUCH TRANSFERS WILL BE EFFECTIVE
AS OF THE DATE WE RECEIVE YOUR REQUEST, BUT NO EARLIER THAN THE POLICY
ANNIVERSARY. TRANSFERS INTO THE GUARANTEED INTEREST ACCOUNT AND AMONG THE
FUNDS MAY BE REQUESTED AT ANY TIME. Transfers are subject to the rules
discussed under TRANSFERS FROM THE GUARANTEED INTEREST ACCOUNT on page 8 and
TRANSFERS OF POLICY ACCOUNT VALUE on page 11.
o There is no minimum guaranteed cash value for amounts allocated to the Funds.
The value of amounts allocated to the Guaranteed Interest Account will depend
on deductions from that Account and on the interest rates declared each year
by Equitable Variable (4% minimum).
REDEMPTION
o Loans may be taken against 90% of a policy's Cash Surrender Value (equal to
the Policy Account value) subject to certain conditions. Loan interest accrues
daily at a rate determined annually. Currently, amounts set aside to secure
the loan earn interest at a rate 1% lower than the rate charged for policy
loan interest. See BORROWING FROM YOUR POLICY ACCOUNT on page 12.
o Partial withdrawals of Net Cash Surrender Value may be taken after the first
policy year, subject to our approval and certain conditions. See PARTIAL
WITHDRAWALS FROM YOUR POLICY ACCOUNT on page 13.
o The policy may be surrendered for its Net Cash Surrender Value (Policy Account
value less any loan and accrued loan interest), less any lien securing a
Living Benefit payment, at which time insurance coverage will end.
INSURANCE PROTECTION FEATURES
DEATH BENEFITS
o Option A, a fixed benefit equal to the policy's Face Amount.
o Option B, a variable benefit that equals the Face Amount plus the Policy
Account.
o In some cases a higher death benefit may apply in order to meet Federal income
tax law requirements.
o After the first year, you may reduce the Face Amount or change the death
benefit option, within limits. The minimum Face Amount is $200,000.
o The death benefit is payable when the last surviving insured person dies while
the policy is in effect.
DEATH BENEFIT GUARANTEE
o The death benefit is guaranteed if the amount of premiums you've paid,
accumulated at 4% interest, less withdrawals, also accumulated at 4% interest,
is at least equal to a guaranteed minimum death benefit premium fund and any
policy loan does not exceed the Cash Surrender Value (Policy Account Value).
The death benefit guarantee is not available in some jurisdictions, including
New York and New Jersey. You should check with your Equitable Agent to
determine whether the guaranteed minimum death benefit is available in your
state.
MATURITY BENEFITS
o A maturity benefit equal to the Net Cash Surrender Value, less any lien
securing a Living Benefit payment and accrued interest, is payable on the
policy anniversary nearest the younger insured person's 100th birthday, if
either or both of the insured persons are still living on that date.
LIVING BENEFIT
o The Living Benefit rider enables the policyowner to receive a portion of the
policy's death benefit (excluding death benefits payable under certain riders)
if the sole surviving insured has a terminal illness. The Living Benefit rider
will be added to most policies at issue for no additional cost.
1
<PAGE>
ADDITIONAL BENEFITS
o Estate Protector, Option to Split Upon Divorce and Option to Split Upon
Federal Tax Law Change riders are available.
DEDUCTIONS AND CHARGES
FROM PREMIUMS
o Applicable charges for taxes imposed by states and other jurisdictions. Such
taxes currently range between .75% and 5% (Virgin Islands).
o Premium Sales Charge in the first policy year equal to 30% of premiums paid up
to one "target premium" and 3% of premiums paid in excess of the target
premium in that year. The Premium Sales Charge in each subsequent policy year
is equal to 7.5% of premiums paid up to one target premium (6% for certain
combinations of insured persons) and 3% of premiums paid on any excess over
the target premium in each year. Equitable Variable currently intends to stop
deducting this charge at the end of the twentieth policy year. See DEDUCTIONS
FROM YOUR PREMIUMS on page 13 for a detailed discussion, including an
explanation of "target premium."
FROM THE POLICY ACCOUNT
o Monthly administrative charge of $0.07 per $1,000 of Face Amount plus $6 per
month during the first policy year. Current monthly administrative charge of
$6 during subsequent policy years (subject to $8 per month maximum).
o Monthly cost of insurance charge and monthly charge for any additional
benefits.
o Transaction charges (for partial withdrawals and certain transfers).
o Monthly guaranteed minimum death benefit charge equal to $0.01 per $1,000 of
Face Amount for policies with a guaranteed minimum death benefit provision.
FROM THE SEPARATE ACCOUNT
o Charge for certain mortality and expense risks of .90% per annum.
FROM THE TRUST
o Trust shares are purchased at net asset value which reflects investment
management fees and other direct expenses. Investment management fees are
charged at the maximum annual rates of .35% of net assets for the Equity Index
Portfolio; .40% of net assets for Common Stock, Money Market and the Balanced
Portfolios; .50% for Aggressive Stock and the Intermediate Government
Securities Portfolios; .55% for High Yield, Global, Conservative Investors,
Growth Investors, Quality Bond and the Growth & Income Portfolios; and .90%
for the International Portfolio.
VARIATIONS
o Equitable Variable is subject to the insurance laws and regulations in every
jurisdiction in which Survivorship 2000 is sold. As a result, the terms of
Survivorship 2000 may vary from jurisdiction to jurisdiction. The terms of
Survivorship 2000 may also vary where special circumstances result in a
reduction in our costs.
ADDITIONAL INFORMATION
CANCELLATION RIGHT
o You have the right to examine the policy. If for any reason you are not
satisfied with it, you may cancel the policy within the time limits described
below. 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.
o Your request to cancel the policy must be postmarked no later than the latest
of the following three dates: (i) 10 days after you receive the policy; (ii)
10 days after we mail or personally deliver a written notice telling you about
your right to cancel (Notice of Withdrawal Right); or (iii) 45 days after the
latest date Part 1 of a policy application is signed.
o If you cancel the policy, we will refund the premiums you paid. In certain
cases where the policy was purchased as a result of an exchange of an existing
life insurance policy, we may reinstate the prior policy. The cancellation
right may vary in certain states. There may be income tax and withholding
implications associated with cancellation.
DEFAULT AND TERMINATION
o If the Net Cash Surrender Value is insufficient to pay the policy's monthly
deductions the policy will go into default unless the operation of the
policy's guaranteed minimum death benefit provision results in a waiver of the
monthly deductions. In order to benefit from the guaranteed minimum death
benefit provision, accumulated premiums you've paid, less withdrawals, must be
at least equal to a guaranteed minimum death benefit premium fund and any
policy loan must not exceed the Cash Surrender Value. The guaranteed death
benefit provision is not available in some jurisdictions, including New York
and New Jersey. If the policy goes into default, it will terminate without
value unless you make a required payment. See YOUR POLICY CAN TERMINATE on
page 15.
o You will be notified if a default occurs and given the opportunity to maintain
the policy in force by paying the amount specified in the notice. You may be
able to restore a terminated policy within a limited time period, but this
will require additional evidence of insurability. See YOU MAY RESTORE A POLICY
AFTER IT TERMINATES on page 16.
2
<PAGE>
TAX EFFECTS
o Generally, under current Federal income tax law, death benefits are not
subject to income tax and Policy Account earnings are not subject to income
tax so long as they remain in the Policy Account. Loans, partial withdrawals,
surrender, maturity or policy termination may result in recognition of income
for tax purposes.
HUDSON RIVER TRUST RATES OF RETURN
The rates of return shown below are based on the actual investment performance
of The Hudson River Trust portfolios, after deduction for investment management
fees and direct Trust operating expenses, for periods ending December 31, 1994.
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. The Common Stock Portfolio and its predecessors have been in
existence since 1976. No return information is provided for the International
Portfolio, since it received its initial funding on April 3, 1995. The yields
shown below are derived from the actual rate of return of the Trust portfolio
for the period, which is then adjusted to omit capital changes in the portfolio
during the period. We show the SEC standardized 7-day yield for the Money Market
Portfolio and the SEC 30-day yield for the Intermediate Government Securities,
Quality Bond and High Yield Portfolios.
These rates of return and yields are not illustrative of how actual investment
performance will affect the benefits under your policy. Moreover, these rates of
return and yields are not an estimate or guarantee of future performance.
THESE RATES OF RETURN AND YIELDS ARE FOR THE TRUST ONLY AND DO NOT REFLECT THE
ADMINISTRATIVE AND COST OF INSURANCE CHARGES, SALES CHARGES, PREMIUM TAX CHARGES
AND THE MORTALITY AND EXPENSE RISK CHARGE APPLICABLE UNDER A SURVIVORSHIP 2000
POLICY. SUCH CHARGES WOULD REDUCE THE RETURNS AND YIELDS SHOWN. SEE
ILLUSTRATIONS OF SURVIVORSHIP 2000 POLICY ACCOUNT AND CASH SURRENDER VALUES
BASED ON HISTORICAL INVESTMENT RESULTS BELOW.
<TABLE>
<CAPTION>
RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1994
-----------------------------------------------------------------------------
SINCE
PORTFOLIO YIELDS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS INCEPTION(A)
- --------- ---------- --------- ---------- --------- ---------- --------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market............................ 5.59% 4.02% 3.51% 4.98% 6.27% -- 7.54%
Intermediate Government Securities...... 6.35 (4.37) 3.75 -- -- -- 6.16
Quality Bond............................ 6.37 (5.10) -- -- -- -- (4.49)
High Yield.............................. 10.53 (2.79) 10.37 10.60 -- -- 9.04
Growth & Income......................... (0.58) -- -- -- -- (0.66)
Equity Index (b)........................ -- -- -- -- -- 1.08(b)
Common Stock............................ (2.14) 8.03 9.82 15.25 15.32% 13.91
Global.................................. 5.23 11.42 11.15 -- -- 10.39
Aggressive Stock........................ (3.81) 2.84 17.06 -- -- 18.78
The Asset Allocation Series:
Conservative Investors.................. (4.10) 3.97 7.46 -- -- 7.71
Balanced................................ (8.02) 0.12 7.29 -- -- 11.25
Growth Investors........................ (3.15) 5.42 14.05 -- -- 14.19
- -----------------
<FN>
(a) The Equity Index Portfolio received its initial funding on March 1, 1994;
the Growth & Income and Quality Bond Portfolios on October 1, 1993; the
Intermediate Government Securities Portfolio on April 1, 1991; the
Conservative Investors and the Growth Investors Portfolios on October 2,
1989; the Global Portfolio on August 27, 1987; the High Yield Portfolio on
January 2, 1987; the Aggressive Stock and Balanced Portfolios on January 27,
1986; the predecessor of the Money Market Portfolio on July 13, 1981; and
the predecessor of the Common Stock Portfolio on January 13, 1976.
(b) Unannualized.
</FN>
</TABLE>
Additional investment performance information appears in the attached Trust
prospectus.
ILLUSTRATIONS OF CASH SURRENDER VALUES BASED ON HISTORICAL INVESTMENT RESULTS.
The table on the next page was developed to demonstrate how the actual
investment experience of the Trust and its predecessors would have affected the
Cash Surrender Value (Policy Account Value) of hypothetical Survivorship 2000
policies held for specified periods of time. The table illustrates Premiums and
Cash Surrender Values of twelve hypothetical Survivorship 2000 policies, each
with a 100% premium allocation to a different Fund. The illustration also
assumes that the insureds are a standard risk 55-year-old male and a standard
risk 50-year-old female, both non-smokers, and that each policy has a level
death benefit, a $1,000,000 face amount and a $13,580 annual premium.
The table assumes that each policy was purchased on the first day of a calendar
year. For Trust portfolios whose inception dates fall before June 30, the policy
is assumed to have been purchased at the beginning of and earned the actual
return over that entire calendar year. For Trust portfolios whose inception
dates fall after June 30, the policy is assumed to have been purchased at the
beginning of the first full calendar year of that portfolio's operation. Policy
values in the "Since Inception" column are for periods ended December 31, 1994.
Cash Surrender Values reflect all charges assessed under the policy and by the
Trust. Where applicable, current charges have been used to determine policy
values; if guaranteed charges were used, the results would be lower.
3
<PAGE>
ILLUSTRATIONS OF SURVIVORSHIP 2000 POLICY ACCOUNT AND CASH SURRENDER VALUES
BASED ON HISTORICAL INVESTMENT RESULTS, $1,000,000 OF INITIAL INSURANCE
PROTECTION AND CURRENT CHARGES
<TABLE>
<CAPTION>
AT THE END OF THE FIRST YEAR AT THE END OF THE FIFTH YEAR
----------------------------- ------------------------------
TOTAL POLICY ACCOUNT TOTAL POLICY ACCOUNT
PREMIUM VALUE AND CASH PREMIUM VALUE AND CASH
PORTFOLIO PAID SURRENDER VALUE PAID SURRENDER VALUE
- --------- ----------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C>
Money Market .............. $ 13,580 $ 9,210 $ 67,900 $ 69,295
Int. Gov't Securities ..... 13,580 9,132
Quality Bond .............. 13,580 7,606
High Yield ................ 13,580 8,450 67,900 71,624
Growth & Income ........... 13,580 8,012
Equity Index .............. 13,580
Common Stock .............. 13,580 8,883 67,900 103,137
Global .................... 13,580 8,997 67,900 71,608
Aggressive Stock .......... 13,580 11,037 67,900 85,489
THE ASSET ALLOCATION SERIES:
- ---------------------------
Conservative Investors .... 13,580 8,614 67,900 63,299
Balanced .................. 13,580 10,521 67,900 73,063
Growth Investors .......... 13,580 8,979 67,900 73,021
</TABLE>
<TABLE>
<CAPTION>
AT THE END OF THE TENTH YEAR POLICY OWNED SINCE PORTFOLIO'S INCEPTION
------------------------------ ----------------------------------------
TOTAL POLICY ACCOUNT TOTAL POLICY ACCOUNT
PREMIUM VALUE AND CASH PREMIUM PAID VALUE AND CASH
PORTFOLIO PAID SURRENDER VALUE PAID SURRENDER VALUE
- --------- ------------ ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Money Market................ $135,800 $164,484 $176,540 $212,593
Int. Gov't Securities....... 54,320 46,595
Quality Bond................ 13,580 7,606
High Yield.................. 108,640 133,057
Growth & Income............. 13,580 8,012
Equity Index................ 13,580 8,385
Common Stock................ 135,800 269,838 258,020 920,926
Global...................... 95,060 126,077
Aggressive Stock............ 122,220 224,700
THE ASSET ALLOCATION SERIES:
- ------------------------------
Conservative Investors...... 67,900 63,299
Balanced.................... 122,220 148,487
Growth Investors............ 67,900 73,021
</TABLE>
THESE VALUES ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
4
<PAGE>
PART 1: DETAILED INFORMATION ABOUT EQUITABLE VARIABLE AND SURVIVORSHIP 2000
INVESTMENT CHOICES
THE COMPANY THAT ISSUES SURVIVORSHIP 2000
EQUITABLE VARIABLE. Equitable Variable was organized in 1972 in New York State
as a stock life insurance company. We are a wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States. 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.
We sell both traditional and innovative forms of life insurance designed to give
policyowners maximum choice and flexibility. Additional forms of life insurance
are available through our parent, Equitable. Your Equitable agent can provide
information about all forms of life insurance available from us and Equitable
and help you decide which may best meet your objectives.
OUR PARENT, EQUITABLE. Equitable, a New York stock life insurance company, has
been in business since 1859. 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 as of December 31, 1994. Equitable's assets do not back the
benefits that we pay under our policies. Equitable's home office is 787 Seventh
Avenue, New York, New York 10019.
THE SEPARATE ACCOUNT AND THE TRUST
THE SEPARATE ACCOUNT. The Separate Account was established on April 19, 1985
under the Insurance Law of the State of New York. The Separate Account is a type
of investment company called a unit investment trust and is registered with the
Securities and Exchange Commission (SEC) under the Investment Company Act of
1940 (1940 Act). This registration does not involve any supervision by the SEC
of the management or investment policies of the Separate Account.
Under New York law, we own the assets of the Separate Account and use them to
support your policy and other variable life insurance 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 we may conduct. This means
that the assets supporting Policy Account values maintained in the Separate
Account are not subject to the claims of our other creditors. We may also retain
in the Separate Account amounts owed to us for charges or other permitted
allocations. Because such retained amounts do not support Policy Account values,
we may transfer them from the Separate Account to our general account.
THE TRUST. The Separate Account has several funds, each of which invests in
shares of a corresponding portfolio of the Trust. The Trust is an open-end
diversified management investment company, more commonly called a mutual fund.
As a "series" type 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 our 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 may possibly 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 Trust portfolio is so large as to materially impair the
investment performance of a portfolio or the Trust, we will examine other
investment options.
THE TRUST'S INVESTMENT ADVISER. The Trust is advised by Alliance Capital
Management L.P. (Alliance). Alliance is registered as an investment adviser
under the Investment Advisers Act of 1940 (the Advisers Act). Alliance, a
publicly-traded limited partnership, is indirectly majority-owned by Equitable.
Alliance acts as an investment adviser to various separate accounts and general
accounts of Equitable and other affiliated insurance companies. Alliance also
provides management and consulting services to mutual funds, endowment funds,
insurance companies, foreign entities, qualified and non-tax qualified corporate
funds, public and private pension and profit-sharing plans, foundations and
tax-exempt organizations. As of December 31, 1994, Alliance was managing
approximately $121.3 billion in assets.
Alliance's main office is 1345 Avenue of the Americas, New York, New York 10105.
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<PAGE>
The advisory fee payable by the Trust 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
$350 $400 $750
PORTFOLIO MILLION MILLION MILLION
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
Common Stock, Money Market and Balanced.............. .400% .375% .350%
Aggressive Stock and Intermediate Gov't Securities... .500% .475% .450%
High Yield, Global, Conservative Investors and
Growth Investors.................................. .550% .525% .500%
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT
$500 $500 OVER
PORTFOLIO MILLION MILLION $1 BILLION
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
Quality Bond and Growth & Income..................... .550% .525% .500%
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
$750 $750 $1.5
PORTFOLIO MILLION MILLION BILLION
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
Equity Index......................................... .350% .300% .250%
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FIRST OVER
$500 NEXT $1.5
PORTFOLIO MILLION $1 BILLION BILLION
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
International........................................ .900% .850% .800
- -----------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT POLICIES OF THE TRUST'S 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. There is no guarantee that these objectives will be achieved. For
a more complete discussion of the investment objectives and policies of all the
Trust's portfolios, see the attached Trust prospectus. 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 by High current income consistent with
GOVERNMENT 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 securities. High current income consistent with
preservation of capital.
HIGH YIELD.............. Primarily a diversified mix of high yield, High return by maximizing current income
fixed-income securities involving greater and, to the extent consistent with that
volatility of price and risk of principal and objective, capital appreciation.
income than high quality fixed-income securities.
The medium and lower quality debt securities in
which the Portfolio may invest are known as "junk
bonds."
GROWTH & INCOME......... Primarily common stocks and securities convertible High total return through a combination
into common stocks. of 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 of investment performance of the Index
the Index. (including reinvestment of dividends) at
a risk level
consistent with that of the Index.
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 States Long-term growth of capital.
as well as United States companies.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- ----------- -------------------- -----------
<S> <C> <C>
INTERNATIONAL........... Primarily equity securities selected principally Long-term growth of capital.
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, fixed-income High total return without, in the
INVESTORS and equity securities; asset mix and security adviser's opinion, undue risk to
selection are primarily based upon factors principal.
expected to reduce risk. The Portfolio is
generally expected to hold approximately 70% of
its assets in fixed income securities and 30% in
equity securities.
BALANCED................ Primarily common stocks, publicly-traded debt High return through a combination of
securities and high quality money market current income and capital appreciation.
instruments. The Portfolio is generally expected
to hold 50% of its assets in equity securities and
50% in fixed income securities.
GROWTH INVESTORS........ Diversified mix of publicly-traded, fixed-income High total return consistent with the
and equity securities; asset mix and security adviser's
selection based upon factors expected to increase determination of reasonable risk.
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>
Because Policy Account values may be invested in mutual fund options,
Survivorship 2000 offers an opportunity for the Policy Account value to
appreciate more rapidly than it would under comparable fixed-benefit whole-life
insurance. You must, however, accept the risk that if investment performance is
unfavorable, the Policy Account value may not appreciate as rapidly and indeed,
may decrease in value.
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.
THE GUARANTEED INTEREST ACCOUNT
You may allocate some or all of your Policy Account to the Guaranteed Interest
Account, which is funded by our general account and pays interest at a declared
rate guaranteed for each policy year. The principal, after deductions, is also
guaranteed. The general account supports our insurance and annuity guarantees,
including the Guaranteed Interest Account, as well as our general obligations.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations of
all jurisdictions where we are authorized to do business. Because of applicable
exemptive and exclusionary provisions, interests in the general account have not
been registered under the Securities Act of 1933 (1933 Act), nor is the general
account an investment company under the 1940 Act. Accordingly, neither the
general account, the Guaranteed Interest Account nor any interests therein are
generally subject to regulation under these Acts. We have been advised that the
staff of the SEC has not made a review of the disclosures that are included in
the prospectus for your information and that relate to the general account and
the Guaranteed Interest Account. These disclosures, however, may be subject to
certain generally applicable provisions of the Federal securities law relating
to the accuracy and completeness of statements made in prospectuses.
AMOUNTS IN THE GUARANTEED INTEREST ACCOUNT. You may accumulate amounts in the
Guaranteed Interest Account by allocating net premiums and loan repayments to
that Account, transferring amounts from the Funds to the Guaranteed Interest
Account or earning interest on amounts you already have in the Guaranteed
Interest Account. A Living Benefit payment will also result in amounts being
transferred to the Guaranteed Interest Account. See LIVING BENEFIT OPTION on
page 10. In addition, any policy loan is secured by an amount in your Policy
Account equal to the outstanding loan. This amount remains part of the Policy
Account but is assigned to the Guaranteed Interest Account. We refer to this
amount as the loaned amount in the Guaranteed Interest Account.
The amount you have in the Guaranteed Interest Account at any time is the sum of
all net premiums and loan repayments allocated to that Account, all transfers
into that Account (including amounts securing any policy loan or Living Benefit
payment) plus earned interest, less amounts transferred out or withdrawn, and
monthly deductions allocated to, that Account.
7
<PAGE>
ADDING INTEREST IN THE GUARANTEED INTEREST ACCOUNT. We pay a declared interest
rate on all amounts that you have in the Guaranteed Interest Account. At policy
issuance, and prior to each policy anniversary, we declare the rates that will
apply to amounts in the Guaranteed Interest Account for the following policy
year. Different rates may apply to policies currently being issued and
previously issued policies. These annual interest rates will never be less than
the minimum guaranteed interest rate of 4%. Different rates are also paid on
unloaned and loaned amounts in the Guaranteed Interest Account. We reserve the
right to declare higher interest rates for higher Face Amount policies. See
POLICY LOAN INTEREST on page 12. Amounts securing a Living Benefit payment are
considered unloaned amounts for purposes of crediting interest.
Interest is compounded daily at an effective annual rate that equals the
declared rate for each policy year. We credit interest on unloaned amounts in
the Guaranteed Interest Account at the end of each policy month. Interest is
credited on any loaned amount in the Guaranteed Interest Account on each policy
anniversary and at any time you repay a policy loan in full. Credited interest
on the loaned amount is allocated to the Funds and to the unloaned portion of
the Guaranteed Interest Account in accordance with your premium allocation
percentages.
TRANSFERS FROM THE GUARANTEED INTEREST ACCOUNT. Once during each policy year,
you may request a transfer from your unloaned amount in the Guaranteed Interest
Account to one or more of the Funds. If we receive your transfer request within
30 days prior to your policy anniversary, the transfer will be made on your
policy anniversary. If we receive your request on or within 30 days after your
policy anniversary, the transfer will be made as of the date we receive your
request. You may transfer up to 25% of your unloaned value in the Guaranteed
Interest Account as of the transfer date or the minimum transfer amount shown in
your policy, whichever is more. The minimum transfer amount is the minimum
transfer amount shown in the policy or your total unloaned value in the
Guaranteed Interest Account on the transfer date, whichever is less. Amounts
securing a Living Benefit payment may not be transferred from the Guaranteed
Interest Account.
PART 2: DETAILED INFORMATION ABOUT SURVIVORSHIP 2000
FLEXIBLE PREMIUMS
You may choose the amount and frequency of premium payments, as long as they are
within the limits described below. We determine the applicable minimum initial
premium based on the age, sex, rating class and smoker/non-smoker status of each
of the insured persons, the initial Face Amount of the policy (the minimum Face
Amount is $200,000) and any additional benefits selected. In certain situations,
however, no distinction is made based on the sex of either insured person. See
COST OF INSURANCE CHARGE on page 14. You may choose to pay a higher initial
premium.
The full initial premium you indicated on your application must be paid on or
before the date on which the policy is delivered to you. No insurance under your
policy will take effect (a) until a policy is delivered and the full initial
premium is paid while the persons proposed to be insured are living and (b)
unless the information in the application continues to be true and complete,
without material change, as of the time the initial premium is paid.
Your first premium payment should be given to your agent or broker and must be
by check or money order drawn on a U.S. bank in U.S. dollars and made payable to
Equitable Variable. Any additional premiums must be sent directly to our
Administrative Office. We will not accept cash payments. If you have submitted
the full initial premium with your application, we may, subject to certain
conditions, provide a limited amount of temporary insurance on the proposed
insureds. You may review a copy of our Temporary Insurance Agreement on request.
On your application you provide us with initial instructions as to how to
allocate your net premiums and monthly charges among the Funds and the
Guaranteed Interest Account. Allocation percentages may be any whole number from
zero to 100, but the sum must equal 100. Allocations to the Funds take effect on
the first business day that follows the 20th calendar day after the Issue Date
of your policy. The Issue Date is shown on the Information Page of your policy
(the Policy Information Page), and is the date we actually issue your policy.
The date your allocation instructions take effect is called the Allocation Date.
Our business days are described in HOW WE DETERMINE THE UNIT Value on page 11.
Until the Allocation Date, any net premiums allocated to a Fund will be
allocated to the Money Market Fund, and all monthly charges allocable to the
Separate Account will be deducted from the Money Market Fund. On the Allocation
Date, amounts in the Money Market Fund will be allocated to the Funds in
accordance with your policy application. See TRANSFERS OF POLICY ACCOUNT VALUE
on page 11 and POLICY PERIODS, ANNIVERSARIES, DATES AND AGES on page 16. We may
delay the Allocation Date for the same reasons that we would delay effecting a
transfer request. There will be no charge for the transfer out of the Money
Market Fund on the Allocation Date. See TRANSFERS OF POLICY ACCOUNT VALUE on
page 11.
You may change the allocation percentages for either your current premium
payment or the current and future premium payments by writing to our
Administrative Office and indicating the changes you wish to make. Your request
must be signed. These changes will go into effect as of the date your request is
received at our Administrative Office, but no earlier than the first business
day following the Allocation Date, and will affect transactions after such date.
Although premiums are flexible, the Policy Information Page will show a
"planned" periodic premium. You determine the planned premium (within limits set
by us) when you apply for the policy. The planned premium is not necessarily
designed to equal the
8
<PAGE>
amount of premium that will keep your policy in effect. You may make or skip a
planned premium. We will send premium notices if you selected annual,
semi-annual or quarterly planned premiums.
The Policy Information Page will also show a "specified premium" if the policy's
guaranteed minimum death benefit provision is available in your state. This
specified premium is what we refer to in this prospectus as the guaranteed
minimum death benefit premium. We measure actual premium payments against these
hypothetical premiums in order to determine whether your policy is in default
when the Net Cash Surrender Value is insufficient to pay monthly charges in any
month. These are not required premium payments. See YOUR POLICY CAN TERMINATE on
page 15.
The guaranteed minimum death benefit premium is actuarially determined at issue
based on the age, sex, smoker status and rating class of the insured persons.
The guaranteed minimum death benefit premium will change if you request a Face
Amount decrease, add or eliminate a rider, or if there is a change in either
insured person's rating or smoker classification. We reserve the right to limit
the amount of any premium payments you make which are in addition to your
guaranteed minimum death benefit premium.
Generally, premiums may be paid at any time and in any amount, as long as each
payment is at least $100. (Policies issued in some states or automatic payment
plans may require different minimum premium payments.) Except for Texas
policyowners, this minimum may be increased if we give you 90 days written
notice. We may return premium payments if we determine that they would cause
your policy to become a modified endowment contract or to cease to qualify as
life insurance under Federal income tax law. We may also make such changes to
the policy as we deem necessary to continue to qualify the policy as life
insurance. See TAX EFFECTS on page 16 for an explanation of modified endowment
contracts, the special tax consequences of such contracts, and how your policy
might become a modified endowment contract.
DEATH BENEFITS
We pay a benefit to the beneficiary of the policy when the last surviving
insured person dies. This benefit will be equal to the death benefit under your
policy plus any additional benefits included in your policy and then due, less
any unpaid policy loan, any lien securing a Living Benefit payment and accrued
interest. If the last surviving insured person dies during a grace period we
will also deduct any overdue monthly deductions.
You may choose between two death benefit options:
o OPTION A provides a death benefit equal to the policy's Face Amount. Except as
described below, the Option A benefit is fixed.
o OPTION B provides a variable death benefit equal to the policy's Face Amount
PLUS the amount in your Policy Account on the day the last surviving insured
person dies. Under Option B, the value of the benefit is variable and
fluctuates with the amount in your Policy Account.
Policyowners who prefer to have favorable investment experience reflected in
increased insurance coverage should choose Option B. Policyowners who prefer to
have insurance coverage that generally does not vary in amount and lower cost of
insurance charges should choose Option A.
Under both options, a higher death benefit may apply. This higher death benefit
is a percentage multiple of the amount in your Policy Account. The percentage is
designed to ensure that the policy meets the provisions of Federal tax law which
require a minimum death benefit in relation to cash value for your policy to
qualify as life insurance. We may apply a higher percentage multiple than that
required by Federal tax law. This means that when the death benefit is
calculated using those higher percentage multiples, the benefit will be higher
than that otherwise necessary to continue to qualify your policy as life
insurance. See TAX EFFECTS on page 16. Since cost of insurance charges are
assessed on the difference between the Policy Account value and the death
benefit, these charges will increase if the higher death benefit takes effect.
The higher death benefit will be the amount in your Policy Account on the day
the last surviving insured person dies times a percentage based on the younger
insured person's age (nearest birthday) at the beginning of the policy year of
the last surviving insured person's death. The percentages decline with age and
are shown on the Policy Information Page of your policy.
The death benefit is guaranteed if the amount of premiums you've paid,
accumulated at 4% interest, less withdrawals, also accumulated at 4% interest,
is at least equal to a guaranteed minimum death benefit premium fund and any
policy loan does not exceed the Cash Surrender Value. In other words, we will
guarantee your death benefit coverage, regardless of the policy's investment
performance, if you have paid a certain amount of premiums into your policy, as
long as you have not withdrawn or overloaned those amounts. This guaranteed
minimum death benefit provision is not available in some jurisdictions,
including New York and New Jersey. You should check with your Equitable Agent to
determine whether the guaranteed minimum death benefit is available in your
state.
CHANGES IN INSURANCE PROTECTION
REDUCING THE FACE AMOUNT. You may request a Face Amount decrease any time after
the first policy year by sending a signed written request to our Administrative
Office. Any change will be subject to our approval. You may not reduce the Face
Amount below the minimum we require to issue this policy at the time of the
reduction. Any reduction must be at least $10,000. Our current procedure is to
disapprove a requested decrease if it would cause a death benefit based upon the
Policy Account percentage multiple to apply. See DEATH BENEFITS on page 9. See
TAX EFFECTS on page 16 for the tax consequences of reducing the Face Amount. If
you reduce the Face Amount while the Estate Protector rider is in effect, the
face amount of that rider will generally be reduced
9
<PAGE>
proportionately. See ADDITIONAL BENEFITS MAY BE AVAILABLE on page 10. Monthly
deductions from your Policy Account for the cost of insurance will generally
decrease, beginning on the date the reduction in Face Amount takes effect.
CHANGING THE DEATH BENEFIT OPTION. At any time after the first policy year while
your policy is in force, you may request a change in the death benefit option by
sending a signed written request to our Administrative Office. See TAX EFFECTS
on page 16 for the tax consequences of changing the death benefit option.
o If you change from OPTION A TO OPTION B, the Face Amount will be decreased by
the amount in your Policy Account on the date of the change. We may not allow
such a change if it would reduce the Face Amount below the minimum required to
issue this policy at the time of the reduction.
o If you change from OPTION B TO OPTION A, the Face Amount of insurance will be
increased by the amount in the Policy Account on the date of the change.
These increases and decreases in Face Amount are made so that the amount of the
death benefit remains the same on the date of the change. When the death benefit
remains the same, there is no change in the net amount at risk, which is the
amount on which cost of insurance charges are based (see COST OF INSURANCE
CHARGE on page 14). If your death benefit is determined by a percentage multiple
of the Policy Account, however, the new Face Amount will be determined
differently.
WHEN POLICY CHANGES GO INTO EFFECT. A reduction in Face Amount or change in
death benefit option will go into effect at the beginning of the policy month
that coincides with or follows the date we approve the request for the change.
In some cases we may not approve a change because it might disqualify your
policy as life insurance under applicable Federal income tax law. In other cases
there may be tax consequences as a result of the change. See TAX EFFECTS on page
16.
MATURITY BENEFITS
If either or both of the insured persons are still living on the policy
anniversary nearest the younger insured person's 100th birthday (the Maturity
Date), we will pay you a benefit in an amount equal to the Net Cash Surrender
Value as of the Maturity Date, less any lien securing a Living Benefit payment
and accrued interest. The policy will then terminate. You may choose to have
this benefit paid in installments. See TAX EFFECTS on page 16 and YOUR PAYMENT
OPTIONS on page 20.
LIVING BENEFIT OPTION
Subject to regulatory approval in your state and our underwriting guidelines,
our Living Benefit rider will be included with your policy at issue. The Living
Benefit rider enables the policyowner to receive a portion of the policy's death
benefit (excluding death benefits payable under certain riders) if the sole
surviving insured has a terminal illness. Certain eligibility requirements apply
when you submit a Living Benefit claim (for example, satisfactory evidence of
less than six month life expectancy). There is no additional charge for the
rider, but we will deduct an administrative charge of up to $250 from the
proceeds of the Living Benefit payment. In addition, if you tell us that you do
not wish to have the rider added at issue, but you later ask to add it,
additional underwriting will be required and there will be a $100 administrative
charge.
When a Living Benefit claim is paid, Equitable Variable establishes a lien
against the policy. The amount of the lien is the sum of the Living Benefit
payment and any accrued interest on that payment. Interest will be charged at a
rate equal to the greater of: (i) the yield on a 90-day Treasury bill and (ii)
the maximum adjustable policy loan interest rate permitted in the state your
policy is delivered. See BORROWING FROM YOUR POLICY ACCOUNT -- POLICY LOAN
INTEREST on page 12.
Until a death benefit is paid, or the policy is surrendered, a portion of the
lien is allocated to the policy's Cash Surrender Value. This liened amount will
be transferred to the Guaranteed Interest Account where it will earn interest at
the same rate as unloaned amounts. See THE GUARANTEED INTEREST ACCOUNT on page
7. This liened amount will not be available for loans, transfers or partial
withdrawals. Any death benefit, maturity benefit or Net Cash Surrender Value
payable upon policy surrender will be reduced by the amount of the lien.
Unlike a death benefit received by a beneficiary after the death of an insured,
receipt of a Living Benefit payment may be taxable as a distribution under the
policy. See TAX EFFECTS on page 16 for a discussion of the tax treatment of
distributions under the policy. Consult your tax advisor. Receipt of a Living
Benefit payment may also affect a policyowner's eligibility for certain
government benefits or entitlements. You should contact your Equitable agent if
you wish to make a claim under the rider.
ADDITIONAL BENEFITS MAY BE AVAILABLE
Your policy may include additional benefits. These benefits are subject to our
rules. More details will be included in your policy if you choose any of these
benefits. The following additional benefits are currently available:
o ESTATE PROTECTOR RIDER under which an additional benefit is payable during the
first four policy years if both insured persons die during this period. A
monthly charge will be deducted from the Policy Account for this rider. This
rider may not be cancelled but will automatically terminate four years from
the policy's Register Date or the date the policy terminates, whichever is
earlier.
o OPTION TO SPLIT UPON DIVORCE RIDER permits you to split the Survivorship 2000
policy into two other individual life insurance policies upon divorce, without
evidence of insurability. A monthly charge will be deducted from the Policy
Account for this rider. Certain conditions, as described in the rider, must be
met before the rider's benefit can be exercised.
10
<PAGE>
o OPTION TO SPLIT UPON FEDERAL TAX LAW CHANGE RIDER also permits you to split
the Survivorship 2000 policy into two other individual life insurance
policies, without evidence of insurability, if certain Federal tax law changes
occur. These changes are described in the rider. There is no charge for this
rider.
See TAX EFFECTS -- RIDERS on page 18 for possible tax consequences of splitting
a Survivorship 2000 policy.
YOUR POLICY ACCOUNT VALUE
The amount in your Policy Account is the sum of the amounts you have in the
Guaranteed Interest Account and in the various Funds. Your Policy Account also
reflects various charges. See DEDUCTIONS AND CHARGES on page 13.
AMOUNTS IN THE SEPARATE ACCOUNT. Amounts allocated, transferred or added to a
Fund are used to purchase units of that Fund. Units are redeemed from a Fund
when amounts are withdrawn, transferred or deducted for charges or capitalized
loan interest. The number of units purchased or redeemed in a Fund is calculated
by dividing the dollar amount of the transaction by the Fund's unit value
calculated after the close of business that day. On any given day, the value you
have in a Fund is the unit value for that Fund times the number of units
credited to you in that Fund.
HOW WE DETERMINE THE UNIT VALUE. We determine unit values for the Funds 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. We are closed on national
business holidays, including Martin Luther King, Jr. Day, and also on the Friday
after Thanksgiving. Additionally, we may choose to close on the day immediately
preceding or following a national business holiday or due to emergency
conditions. We will not process any policy transactions received as of such days
other than a policy anniversary report, monthly charge deduction and the payment
of death benefit proceeds. The unit value for any business day is equal to the
unit value for the preceding business day multiplied by the net investment
factor for that Fund on that business day.
A net investment factor is determined for each Fund every business day as
follows: first, we take the net asset value of a share in the corresponding
Trust portfolio at the close of business that day, as reported by the Trust, and
we add the per share amount of any dividends or capital gains distributions paid
by the Trust on that day. We divide this amount by the per share net asset value
on the preceding business day. Then, we subtract a daily asset charge for each
calendar day between business days (for example, a Monday calculation will
include charges for Saturday, Sunday and Monday). The daily charge is guaranteed
not to exceed an effective annual rate of .90%. See CHARGES AGAINST THE SEPARATE
ACCOUNT on page 15. Finally, we reserve the right to subtract any daily charge
for taxes or amounts set aside as a reserve for taxes. For current Survivorship
2000 unit values, call (212) 714-5015.
TRANSFERS OF POLICY ACCOUNT VALUE. You may request a transfer of amounts from
any Fund to any other Fund or to the Guaranteed Interest Account. Special rules
apply to transfers out of the Guaranteed Interest Account. See TRANSFERS FROM
THE GUARANTEED INTEREST ACCOUNT on page 8. You may make a transfer by telephone
or by submitting a signed written transfer request to our Administrative Office.
Transfer request forms are available from your Equitable agent or from our
Administrative Office. Special rules apply to telephone transfers. See TELEPHONE
TRANSFERS on page 12.
The minimum amount which may be transferred on any date will be shown on the
Policy Information Page and is usually $500. This minimum need not come from any
one Fund or be transferred to any one Fund as long as the total amount
transferred that day, including any amount transferred to or from the Guaranteed
Interest Account, is at least equal to the minimum. However, we will transfer
the entire amount in any Fund even if it is less than the minimum specified in
your policy. A lower minimum amount applies to our Automatic Transfer Service,
which is described below.
Transfers take effect on the date we receive your request, but no earlier than
the first business day following the Allocation Date. When part of a transfer
request cannot be processed, we will not process any part of the request. This
could occur, for example, where the request does not comply with our transfer
limitations, or where the request is for a transfer of an amount greater than
currently allocated to that fund. We may delay making a transfer if the New York
Stock Exchange is closed or the SEC has declared that an emergency exists. In
addition, we may delay transfers where permitted under applicable law.
AUTOMATIC TRANSFER SERVICE. The Automatic Transfer Service enables you to make
automatic monthly transfers out of the Money Market Fund into the other Funds.
To start using this service you must first complete a special election form that
is available from your agent or our Administrative Office. You must also have a
minimum of $5,000 in the Money Market Fund on the date the Automatic Transfer
Service is scheduled to begin. You can elect up to eight Funds for monthly
transfers, but the minimum amount that may be transferred to each Fund each
month is $50.
If you elect the Automatic Transfer Service with your policy application, the
automatic transfers will begin in the second policy month following the
Allocation Date. If you elect the Automatic Transfer Service after your
application has been submitted, automatic transfers will begin on the next
monthly processing date after we receive your election form at our
Administrative Office. See POLICY PERIODS, ANNIVERSARIES, DATES AND AGES on page
16.
The Automatic Transfer Service will remain in effect until the earliest of the
following events: (1) the amount in the Money Market Fund is insufficient to
cover the automatic transfer amount; (2) the policy is in a grace period; (3) we
receive at our Administrative Office your written instruction to cancel the
Automatic Transfer Service; or (4) we receive notice of the sole surviving
insured's death under the policy.
Using the Automatic Transfer Service does not guarantee a profit or protect
against loss in a declining market.
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TELEPHONE TRANSFERS. In order to make a transfer by telephone, each policyowner
must first complete and return an authorization form. Authorization forms can be
obtained from your Equitable agent or our Administrative Office. The completed
signed form MUST be returned to our Administrative Office before requesting a
telephone transfer.
Telephone transfers may be requested on each day we are open to transact
business. You will receive the Fund's unit value as of the close of business on
the day you call. We do not accept telephone transfer requests after 3:00 PM
EASTERN TIME. Only one telephone transfer request is permitted per day and it
may not be revoked at any time. Telephone transfer requests are automatically
recorded and are invalid if incomplete information is given, portions of the
request are inaudible, no authorization form is on file, or the request does not
comply with the transfer limitations described above.
We have established reasonable procedures designed to confirm that instructions
communicated by telephone are genuine. Such procedures include requiring certain
personal identification information prior to acting on telephone instructions
and providing written confirmation of instructions communicated by telephone. If
we do not employ reasonable procedures to confirm that instructions communicated
by telephone are genuine, we may be liable for any losses arising out of any act
or any failure to act resulting from our own negligence, lack of good faith, or
willful misconduct. In light of the procedures established, we will not be
liable for following telephone instructions that we reasonably believe to be
genuine.
During times of extreme market activity it may be impossible to contact us to
make a telephone transfer. If this occurs, you should submit a written transfer
request to our Administrative Office. Our rules on telephone transfers are
subject to change and we reserve the right to discontinue telephone transfers in
the future.
CHARGE FOR TRANSFERS. We have reserved the right under your policy to make a
charge of up to $25 for transfers of Policy Account value. You will be able to
make 12 free transfers in any policy year, but we will charge $25 per transfer
after the twelfth transfer. All transfers made on one transfer request form will
count as one transfer, and all transfers made in one telephone request will
count as one transfer. Transfers made through the Automatic Transfer Service or
on the Allocation Date will not count toward the twelve free transfers. No
charge will ever apply to the transfer of all of your amounts in the Separate
Account to the Guaranteed Interest Account.
BORROWING FROM YOUR POLICY ACCOUNT
You may borrow up to 90% of your policy's Cash Surrender Value using only your
policy as security for the loan. Any new loan must be at least the minimum
amount shown on the Policy Information Page, usually $500. If you request an
additional loan, the additional amount requested will be added to the amount of
any outstanding loan and accrued loan interest. Any amount that secures a loan
remains part of your Policy Account but is assigned to the Guaranteed Interest
Account. This loaned amount earns an interest rate expected to be different from
the interest rate for unloaned amounts. Amounts securing a Living Benefit
payment are not available for policy loans.
HOW TO REQUEST A LOAN. You may request a loan by sending a signed written
request to our Administrative Office. You should tell us how much of the
requested loan you want taken from your unloaned amount in the Guaranteed
Interest Account and how much you want taken from your amounts in the Funds. If
you request a loan from a Fund, we will redeem units sufficient to cover that
part of the loan and transfer the amount to the loaned portion of the Guaranteed
Interest Account. The amounts you have in each Fund or the Account will be
determined as of the day your request for a loan is received at our
Administrative Office.
If you do not indicate how you wish to allocate the loan, it will be allocated
according to the deduction allocation percentages applicable to your Policy
Account. See FLEXIBLE PREMIUMS on page 8. If the loan cannot be allocated based
on these percentages, it will be allocated based on the proportions of your
unloaned amounts in the Guaranteed Interest Account and your value in each Fund
to the unloaned value of your Policy Account.
POLICY LOAN INTEREST. Interest on a policy loan accrues daily at an adjustable
interest rate. We determine the rate at the beginning of each policy year. The
same rate applies to any outstanding policy loan and any additional amounts you
borrow during the year. You will be notified of the current rate when you apply
for a loan. The maximum rate is the greater of 5%, or the "Published Monthly
Average" for the month that ends two months before the interest rate is set. The
"Published Monthly Average" is the Monthly Average Corporates yield shown in
Moody's Corporate Bond Yield Averages published by Moody's Investors Service,
Inc. If this average is no longer published, we will use any successor or the
average established by the insurance supervisory official of the jurisdiction in
which the policy is delivered. We will not charge more than the maximum rate
permitted by applicable law. We may also set a rate lower than the maximum.
Any change in the rate from one year to the next will be at least 1/2%. Your
maximum loan interest rate will only change, therefore, if the Published Monthly
Average differs from the previous interest rate by at least 1/2 of 1%. You will
be notified in advance of any increase in the interest rate on any loan you have
outstanding.
When you borrow on your policy, the amount of your loan is set aside in the
Guaranteed Interest Account where it earns a declared rate for loaned amounts.
Loaned amounts will earn interest at a lower rate than the rate you are charged
for policy loan interest. Currently the rate we credit on loaned amounts is 1%
less than the rate we charge for policy loan interest. Beginning in the
twenty-first policy year, the rate we currently credit on loaned amounts is 1/2
of 1% less than the rate we charge for policy loan interest. Because
Survivorship 2000 was offered for the first time in 1992, no reduction in the
loan spread in the twenty-first policy year has yet been attained. These loan
spreads are those currently in effect and are not guaranteed. However, the
interest credited on loaned amounts will never be less than 4%.
WHEN INTEREST IS DUE. Interest is due on each policy anniversary. If you do not
pay the interest when it is due, it will be added to your outstanding loan and
allocated based on the deduction allocation percentages for your Policy Account
which are then in effect.
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This means an additional loan is made to pay the interest and amounts are
transferred from the Funds to make the loan. If the interest cannot be allocated
on this basis, it will be allocated as described above for allocating your loan.
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 and your policy is not in
grace, we assume that any money you send us is meant to repay the loan. If you
wish to have any of these payments applied as premium payments, you must
specifically so indicate in writing at the time you make your payment. Any
amount not needed to repay a loan and accrued loan interest will be applied as a
premium payment. We will first allocate loan repayments to our Guaranteed
Interest Account until the amount of any loan originally allocated to that
Account has been repaid. After you have repaid this amount, you may choose how
you want us to allocate the balance of any additional repayments. If you do not
provide specific instructions, repayments will be allocated on the basis of your
premium allocation percentages.
THE EFFECTS OF A POLICY LOAN. A loan will have a permanent effect on the value
of your Policy Account and, therefore, on the benefits under your policy, even
if the loan is repaid. The loaned amount in the Guaranteed Interest Account will
not be available for investment in the Funds or in the unloaned portion of the
Guaranteed Interest Account. Whether you earn more or less with the loaned
amount set aside depends on the investment experience of the Funds and the rates
declared for the unloaned portion of the Guaranteed Interest Account. The amount
of any policy loan and accrued loan interest will reduce the proceeds paid from
your policy upon the death of the last surviving insured person, maturity or
policy surrender. In addition, a loan will reduce the amount available for you
to withdraw from your policy. A loan may also affect the length of time that
your insurance remains in force because the amount set aside to secure your loan
cannot be used to cover the monthly deductions. See YOUR POLICY CAN TERMINATE on
page 15. See TAX EFFECTS on page 16 for the tax consequences of a policy loan.
PARTIAL WITHDRAWALS FROM YOUR POLICY ACCOUNT
At any time after the first policy year while either of the insured persons is
living, you may request a partial withdrawal of your Net Cash Surrender Value by
writing to our Administrative Office. Your request must be signed. Any such
withdrawal is subject to our approval and to certain conditions. Amounts
securing a Living Benefit payment are not available for partial withdrawals. In
addition, we reserve the right to decline a request for a partial withdrawal.
Under our current rules, a withdrawal must:
o be at least $500,
o not cause the Face Amount to fall below the minimum for which we would issue
the policy at the time, and
o not cause the policy to fail to qualify as life insurance under applicable tax
law.
PARTIAL WITHDRAWAL CHARGES. When you make a partial withdrawal, an expense
charge of $25 or 2% of the amount withdrawn, whichever is less, will be deducted
from your Policy Account.
ALLOCATION OF PARTIAL WITHDRAWALS AND CHARGES. You may specify how much of the
withdrawal you want taken from amounts you have in each Fund and the unloaned
portion of the Guaranteed Interest Account. If you do not specifically indicate,
we will make the withdrawal on the basis of your deduction allocation
percentages. If we cannot make the withdrawal in the manner described above, we
will make the withdrawal based on the proportions of your unloaned amounts in
the Guaranteed Interest Account and the Funds to the total unloaned value of
your Policy Account.
THE EFFECTS OF A PARTIAL WITHDRAWAL. A partial withdrawal reduces the amount you
have in your Policy Account and your Net Cash Surrender Value. Normally, it also
reduces the death benefit on a dollar-for-dollar basis, but does not affect the
net amount at risk, which is the difference between the current death benefit
and the amount in your Policy Account. If you selected death benefit Option A,
the Face Amount of your policy will generally be reduced so that there will be
no change in the net amount at risk. However, under either option, if the death
benefit is based on the Policy Account percentage multiple, the reduction in
death benefit would be greater and the net amount at risk would be reduced. See
DEATH BENEFITS on page 9. The partial withdrawal and these reductions will be
effective as of the date your withdrawal request is received at our
Administrative Office. See TAX EFFECTS on page 16 for the tax consequences of a
reduction in benefits or a partial withdrawal.
SURRENDER FOR NET CASH SURRENDER VALUE. You may surrender your policy for its
Net Cash Surrender Value (Policy Account minus any loan and accrued loan
interest) at any time while either of the insured persons are living. We will
deduct from the Net Cash Surrender Value any amount securing a Living Benefit
payment. You may surrender the policy by sending a written request and the
policy to our Administrative Office. We will compute the Net Cash Surrender
Value as of the date we receive your request and the policy at our
Administrative Office. All insurance coverage under your policy will end on that
date. See TAX EFFECTS on page 16 for the tax consequences of a policy surrender.
DEDUCTIONS AND CHARGES
DEDUCTIONS FROM YOUR PREMIUMS. Charges for applicable taxes and certain other
charges are deducted from premiums as specified below. The balance of each
premium (the net premium) is placed in your Policy Account.
o CHARGES FOR APPLICABLE TAXES and additional charges imposed on premium
payments by all states and certain jurisdictions are deducted from each
premium payment. Such taxes currently range between .75% and 5% (Virgin
Islands). This tax is incurred by Equitable Variable, so you cannot deduct it
on your income tax return. The amount of the tax may vary depending on the
jurisdiction in which the insured persons reside.
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This charge will be increased or decreased to reflect any legislative changes
or changes in residence. You should notify us of any change in residence. Any
change in this charge will take effect on the next policy anniversary.
o PREMIUM SALES CHARGE. This charge is intended to compensate us in part for
sales and promotional expenses in connection with selling Survivorship 2000,
such as commissions, advertising, and the cost of preparing and printing sales
literature and prospectuses. We pay these expenses from our own resources,
including the Premium Sales Charge and any profit we may earn on other charges
deducted under the policy.
The Premium Sales Charge in the first policy year is equal to 30% of premiums
paid up to one "target premium" and 3% of premiums paid in excess of the
target premium in that year. The target premium is actuarially determined
based upon the age, sex and smoker status of each of the insured persons. The
target premium is established at issue, and will be reduced if you request a
Face Amount decrease or if there is a change from smoker to non-smoker status
of an insured person. See COST OF INSURANCE CHARGE below. If your policy has a
guaranteed minimum death benefit provision, a target premium equals one
guaranteed minimum death benefit premium at issue, excluding premiums for
riders and substandard ratings.
The Premium Sales Charge in each subsequent policy year is 7.5% of premiums
paid up to one target premium (6% for joint insureds whose combined issue ages
equal 134 or more) and 3% of premiums paid in excess of the target premium.
Equitable Variable currently intends to stop deducting this charge at the end
of the twentieth policy year. However, this is our current intention and is
not guaranteed.
Paying less than one target premium in the first policy year or paying more
than one target premium in any policy year (including the first year) could
reduce the policyowner's total Premium Sales Charge. For example, assume that
the target premium is $10,000 and that the policyowner would like to pay ten
target premiums in a way that does not cause the policy to become a modified
endowment contract. If the policyowner paid $20,000 (i.e., two times the
amount of the target premium) in every other policy year up to the ninth
policy year, the total Premium Sales Charge would be $7,500. If, however, the
policyowner paid $10,000 in each of the first ten policy years, the total
Premium Sales Charge would be $9,750.
Attempting to structure the timing and amount of premium payments to reduce
the potential Premium Sales Charge is not recommended as it could increase the
risk that your policy will terminate without value. Remember, a target premium
is generally the equivalent of a guaranteed minimum death benefit premium.
Therefore, delaying the payment of target premiums to later years could
adversely effect the availability of the guaranteed minimum death benefit
provision if, as a result of the delay, actual premium payments were less than
the accumulation of guaranteed minimum death benefit premiums. If the policy's
guaranteed minimum death benefit provision is not in effect and the Net Cash
Surrender Value is insufficient to pay monthly deductions, the policy will
lapse unless a required premium payment is made. See YOUR POLICY CAN TERMINATE
on page 15. In addition, any acceleration of premium payments to early years
should take into account the modified endowment seven-pay premium limit. If at
any time the aggregate premiums paid exceed the policy's cumulative seven-pay
limit, the policy will become a modified endowment and the policyowner may
incur adverse tax consequences when distributions are made. See TAX EFFECTS on
page 16.
DEDUCTIONS FROM YOUR POLICY ACCOUNT. At the beginning of each policy month, the
following charges are deducted from your Policy Account:
o MONTHLY ADMINISTRATIVE CHARGES. $0.07 per $1,000 of Face Amount during the
first policy year to compensate us for the cost of underwriting and issuing
your policy. $6 per month in each policy year to compensate us for the ongoing
costs of maintaining your policy, such as billings, policy transactions and
policyowner communications. We reserve the right to increase this charge, but
it is guaranteed not to exceed $8 per month. All administrative charges are
designed to reimburse us for expenses, and we do not expect to profit from
them.
o COST OF INSURANCE CHARGE. The cost of insurance charge is calculated by
multiplying the net amount at risk at the beginning of the policy month by the
monthly cost of insurance rate applicable to the insured persons at that time.
The net amount at risk is the difference between the current death benefit and
the amount in your Policy Account.
Your cost of insurance charge will vary from month to month with changes in
the net amount at risk. For example, if the current death benefit for the
month is increased because the death benefit is based on a percentage multiple
of the Policy Account, then the net amount at risk for the month will
increase. Assuming the percentage multiple is not in effect, increases or
decreases to the Policy Account will result in a corresponding decrease or
increase to the net amount at risk under Option A policies, but no change to
the net amount at risk under Option B policies. Increases or decreases to the
Policy Account can result from making premium payments, investment experience
or the deduction of charges.
The monthly cost of insurance rate applicable to your policy will be based on
our current monthly cost of insurance rates. The current monthly cost of
insurance rates may be changed from time to time. However, the current rates
will never be more than the guaranteed maximum rates set forth in your policy.
The guaranteed rates are based on the Commissioner's 1980 Standard Ordinary
Male and Female, Smoker and Non-Smoker Mortality Tables. The current monthly
cost of insurance rates are determined based on the sex, age, rating class and
smoker/non-smoker status of each of the insured persons and the policy year.
Lower cost of insurance rates apply for insured persons who qualify as
non-smokers. To qualify, an insured person must meet additional requirements
that relate to smoking habits.
There will be no distinctions based on sex in the cost of insurance rates for
Survivorship 2000 policies sold in Montana and in other states for other
special circumstances. In these cases the references to sex in this prospectus
should be disregarded. Cost of insurance rates applicable to a policy issued
with unisex rates would not be greater than the comparable male rates set
forth or illustrated in this
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prospectus. Similarly, illustrated policy values in Part 4 would be no less
favorable for comparable policies issued with unisex rates. The guaranteed
cost of insurance rates for Survivorship 2000 are based on the Commissioner's
1980 Standard Ordinary SD Smoker and ND Non-Smoker Mortality Table. 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 rating class.
o CHARGES FOR ADDITIONAL BENEFITS. The cost of any additional benefits you
choose will be deducted monthly. The amount and duration of these charges are
shown on the Policy Information Page.
o GUARANTEED MINIMUM DEATH BENEFIT CHARGE. One cent per $1,000 of Face Amount of
insurance is deducted monthly to compensate us for the risk we assume by
guaranteeing a death benefit, no matter how unfavorable investment experience
may be, as long as the accumulated premiums you've paid, less withdrawals,
exceed a guaranteed minimum death benefit premium fund and any policy loan
does not exceed the Cash Surrender Value. This charge will be deducted only
for those policies that contain a guaranteed minimum death benefit provision
regardless of whether the guaranteed minimum death benefit premiums are paid.
See YOUR POLICY CAN TERMINATE on page 15. This charge will be assessed as long
as your policy remains in force.
Any changes in the cost of insurance rates, charges for additional benefits,
Premium Sales Charge, mortality and expense risk charge or administrative
charges will be by class of insured persons and will be based on changes in
future expectations about such factors as investment earnings, mortality, the
length of time policies will remain in effect, expenses and taxes.
In addition to the monthly deductions from your Policy Account described above,
we may charge fees for certain policy transactions. See PARTIAL WITHDRAWALS FROM
YOUR POLICY ACCOUNT on page 13 and TRANSFERS OF POLICY ACCOUNT VALUE on page 11
for a description of policy transaction fees. Also, if you request more than one
illustration in a policy year, we may charge a fee. See INDIVIDUAL ILLUSTRATIONS
on page 25.
HOW POLICY ACCOUNT CHARGES ARE ALLOCATED. Generally, deductions from your Policy
Account for monthly charges are made from the Funds and the unloaned portion of
our Guaranteed Interest Account in accordance with the deduction allocation
percentages specified in your application unless you instruct us in writing to
do otherwise. See FLEXIBLE PREMIUMS on page 8. If a deduction cannot be made in
accordance with these percentages, it will be made based on the proportions that
your unloaned amounts in the Guaranteed Interest Account and your amounts in the
Funds bear to the total unloaned value of your Policy Account.
CHARGES AGAINST THE SEPARATE ACCOUNT. These charges are reflected in the unit
values for the divisions of the Separate Account. See HOW WE DETERMINE THE UNIT
VALUE on page 11.
o A charge for assuming MORTALITY AND EXPENSE RISKS will be made. The annual
rate is .90%. We are committed to fulfilling our obligations under the policy
and providing service to you over the lifetime of your policy. Despite the
uncertainty of future events, we guarantee that monthly administrative and
cost of insurance deductions from your Policy Account will never be greater
than the maximum amounts shown in your policy. In making this guarantee, we
assume the mortality risk that insured persons will live for shorter periods
than we estimated. When this happens, we have to pay a greater amount of death
benefit than we expected to pay in relation to the cost of insurance charges
we received. We also assume the expense risk that the cost of issuing and
administering policies will be greater than we expected. We make a charge for
these mortality and expense risks at an effective annual rate applied to the
value of the assets in the Separate Account attributable to Survivorship 2000.
If the amount collected from this charge exceeds losses from the risks
assumed, it will be to our profit.
o We reserve the right to make a charge in the future for taxes or reserves set
aside for taxes, which will reduce the investment experience of the Funds. See
TAX EFFECTS on page 16.
TRUST CHARGES. Our Separate Account purchases shares of the Trust at net asset
value. That price reflects investment management fees and other direct expenses
that have already been deducted from the assets of the Trust. The Trust does not
impose a sales charge. See THE TRUST'S INVESTMENT ADVISER on page 5.
ADDITIONAL INFORMATION ABOUT SURVIVORSHIP 2000
YOUR POLICY CAN TERMINATE. Your insurance coverage will continue as long as the
Net Cash Surrender Value of the policy is enough to pay the monthly deductions.
If the Net Cash Surrender Value at the beginning of a policy month is less than
such deductions for that month, your policy will go into default unless the
operation of the guaranteed minimum death benefit provision results in a waiver
of the monthly deductions. The guaranteed minimum death benefit provision is not
available in some jurisdictions, including New York and New Jersey.
Under the guaranteed minimum death benefit provision, we compare the guaranteed
minimum death benefit premium fund with the actual premium fund in order to
determine whether your coverage remains in effect. If the actual premium fund is
equal to or greater than the guaranteed minimum death benefit premium fund and
any policy loan outstanding does not exceed the Cash Surrender Value, then
monthly deductions in excess of the Net Cash Surrender Value will be waived for
that policy month and the policy will not go into default. If there is a loan
outstanding that exceeds the Cash Surrender Value, the policy will be in
default. The policy will also be in default if the actual premium fund is less
than the guaranteed minimum death benefit premium fund.
The guaranteed minimum death benefit premium fund for any policy month is the
accumulation of all the "specified premiums" shown on the Policy Information
Page up to that month, at 4% interest. The actual premium fund for any policy
month is the accumulation of all the premiums actually paid under the policy at
4% interest, less all withdrawals accumulated at 4% interest.
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If your policy goes into default, we will notify you, and any assignees on our
records, in writing, that a 61-day grace period has begun and indicate the
payment that is needed to avoid policy termination at the end of the grace
period. The required payment will approximate an amount which would increase the
Net Cash Surrender Value to cover total monthly deductions for three months
(without regard to any investment performance in the Policy Account). The
required payment and any residual Policy Account value will be used to cover the
overdue deductions. However, if your Policy Account has unfavorable investment
experience, the required payment may not be sufficient to cover the overdue
deductions on the date we receive the payment. In this case, a new 61-day grace
period will begin. While a policy is in a grace period you may not transfer
Policy Account value, decrease the Face Amount, make a partial withdrawal or
change the death benefit option.
If we do not receive payment within the 61 days, your policy will terminate
without value. We will withdraw any amount left in your Policy Account and apply
this amount to the overdue deductions and any unpaid loan and accrued loan
interest. We will inform you, and any assignees, at last known addresses, that
your policy has ended without value. See TAX EFFECTS on page 16 for the
potential tax consequences of a policy termination.
YOU MAY RESTORE A POLICY AFTER IT TERMINATES. You may restore a policy within
six months after it terminates if:
o the insured persons who were living on the date the policy terminates are
still alive;
o you provide evidence of insurability on those insured persons that is
satisfactory to us; and
o you make the premium payment that we require to restore the policy.
The policy will be restored as of the beginning of the policy month which
coincides with or follows the date we approve your application. Previous loans
will not be reactivated.
From the required payment we will deduct the charge for applicable taxes and the
Premium Sales Charge. We will start to make monthly deductions as of the
effective date of restoration. On that date, the monthly administrative charges
from the beginning of the grace period to the effective date of restoration will
be deducted from the Policy Account. See TAX EFFECTS on page 16 for the
potential tax consequences of restoring a terminated policy. Some states may
vary the time period and conditions of policy restoration.
POLICY PERIODS, ANNIVERSARIES, DATES AND AGES. When the applications for a
Survivorship 2000 policy are completed and submitted to us, we decide whether or
not to issue the policy. This decision is made based on the information in the
applications and our standards for issuing insurance and classifying risks. If
we decide not to issue a policy, we will either refund any premium paid or
reinstate a prior policy.
The Issue Date, shown on the Policy Information Page, is the date your policy is
actually issued, but if we have advanced the Register Date, the Issue Date will
be the same as the Register Date. Generally, contestability is measured from the
Issue Date, as is the suicide exclusion.
The Register Date also shown on the Policy Information Page, is used to measure
policy years, months and anniversaries (annual and monthly). Charges and
deductions under the policy are first made as of the Register Date. As to when
coverage under the policy begins, see FLEXIBLE PREMIUMS on page 8.
Generally, we determine the Register Date based upon when we receive your full
initial premium. In most cases:
o If you submit the full initial premium to your Equitable agent at the time you
sign the application, and we issue the policy as it was applied for, then the
Register Date will be the later of (a) the date part I of the policy
application was signed or, (b) the date part II of the policy application was
signed by a medical professional.
o If we do not receive your full initial premium at our Administrative Office
before the Issue Date or, if the policy is not issued as applied for, the
Register Date will be the same as the Issue Date.
An early Register Date may be permitted for employer sponsored cases in order to
accommodate a common Register Date for all employees. We may also permit
policyowners to advance a Register Date (up to three months) in employer
sponsored cases. An early Register Date may also be permitted to provide a
younger age at issue.
The investment start date is the date that your first net premium begins to vary
with the investment performance of the Funds or accrue interest in the
Guaranteed Interest Account. Generally, the investment start date will be the
same as the Register Date if the full first premium is received at our
Administrative Office before the Register Date. Otherwise, the investment start
date will be the date the full first premium is received at our Administrative
Office. Thus, to the extent that your first premium is received before the
Register Date, there will be a period during which the initial premium will not
be experiencing investment performance. The investment start date for policies
with early Register Dates will also be the date the premium is received at our
Administrative Office. Remember, the amount of your first net premium to be
allocated to the Funds will initially be allocated to the Money Market Fund of
the Separate Account until the Allocation Date. See FLEXIBLE PREMIUMS on page 8.
Any subsequent premium payment received after the investment start date will
begin to experience investment performance as of the date such payment is
received at our Administrative Office.
Generally, when we refer to the age of an insured person, we mean his or her age
on the birthday nearest to the beginning of the particular policy year.
TAX EFFECTS
This discussion is based on our understanding of the effect of the current
Federal income tax laws as currently interpreted on Survivorship 2000 policies
owned by U.S. resident individuals. The tax effects on corporate taxpayers
subject to the Federal alternative minimum tax, non-U.S. residents or non-U.S.
citizens may be different. This discussion is general in nature, and should not
be considered tax advice, for which you should consult your legal or tax
adviser.
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POLICY PROCEEDS. A Survivorship 2000 policy will be treated as "life insurance"
for Federal income tax purposes if it meets the definitional requirement of the
Internal Revenue Code (the Code) and as long as the portfolios of the Trust
satisfy the diversification requirements under the Code. We believe that
Survivorship 2000 will meet these requirements, and that under Federal income
tax law:
o the death benefit received by the beneficiary under your Survivorship 2000
policy will not be subject to Federal income tax; and
o as long as your policy remains in force, increases in the Policy Account value
as a result of interest or investment experience will not be subject to
Federal income tax unless and until there is a distribution from your policy,
such as a loan or a partial withdrawal.
Special tax rules may apply, however, if you transfer your ownership of the
policy. Consult your tax adviser before any transfer of your policy.
The Federal income tax consequences of a distribution from your policy will
depend on whether your policy is determined to be a "modified endowment." The
character of any income recognized will be ordinary income as opposed to capital
gain.
A MODIFIED ENDOWMENT IS a life insurance policy which fails to meet a
"seven-pay" test. In general, a policy will fail the seven-pay test if the
cumulative amount of premiums paid under the policy at any time during the first
seven policy years exceeds a calculated premium level. The calculated seven-pay
premium level is based on a hypothetical policy issued on the same insured
persons and for the same initial death benefit which, under specified conditions
(which include the absence of expense and administrative charges), would be
fully paid for after seven level annual payments. Your policy will be treated as
a modified endowment unless the cumulative premiums paid under your policy, at
all times during the first seven policy years, are less than or equal to the
cumulative seven-pay premiums which would have been paid under the hypothetical
policy on or before such times.
Whenever there is a "material change" under a policy, it will generally be
treated as a new contract for purposes of determining whether the policy is a
modified endowment, and subjected to a new seven-pay period and a new seven-pay
limit. The new seven-pay limit would be determined taking into account, under a
downward adjustment formula, the Policy Account value of the policy at the time
of such change. A materially changed policy would be considered a modified
endowment if it failed to satisfy the new seven-pay limit. A material change
could occur as a result of a change in death benefit option, the selection of
additional benefits, the restoration of a terminated policy and certain other
changes.
If the benefits under your policy are reduced for example, by requesting a
decrease in Face Amount, or in some cases by making partial withdrawals,
terminating additional benefits under a rider, changing the death benefit
option, or as a result of policy termination, the calculated seven-pay premium
level will be redetermined based on the reduced level of benefits and applied
retroactively for purposes of the seven-pay test. If the premiums previously
paid are greater than the recalculated seven-pay premium level limit, the policy
will become a modified endowment. Generally, a life insurance policy which is
received in exchange for a modified endowment or a modified endowment which
terminates and is restored, will also be considered a modified endowment.
Changes made to a life insurance policy, for example, a decrease in benefits or
the termination of or restoration of a terminated policy, may have other effects
on your policy, including impacting the maximum amount of premiums that can be
paid under the policy, as well as the maximum amount of Policy Account value
that may be maintained under the policy. In some cases, this may cause us to
take action in order to assure your policy continues to qualify as life
insurance. See POLICY CHANGES on page 18.
IF YOUR SURVIVORSHIP 2000 POLICY IS NOT A MODIFIED ENDOWMENT, as long as it
remains in force, a loan under your policy will be treated as indebtedness and
no part of the loan will be subject to current Federal income tax. Interest on
the loan will generally not be tax deductible. After the first fifteen policy
years, the proceeds from a partial withdrawal will not be subject to Federal
income tax except to the extent such proceeds exceed your "Basis" in your
policy. Your Basis in your policy generally will equal the premiums you have
paid less any amounts previously recovered through tax-free policy
distributions. During the first fifteen policy years, the proceeds from a
partial withdrawal could be subject to Federal income tax to the extent your
Policy Account value exceeds your Basis in your policy. The portion subject to
tax will depend upon the ratio of your death benefit to the Policy Account value
(or, in some cases, the premiums paid) under your policy and the ages of the
insured persons at the time of the withdrawal. If at any time your policy is
surrendered, the excess, if any, of your Cash Surrender Value (which includes
the amount of any policy loan and accrued loan interest) over your Basis will be
subject to Federal income tax. In addition, if a policy terminates while there
is a policy loan, the cancellation of such loan and accrued loan interest will
be treated as a distribution and could be subject to tax under the above rules.
Upon the Maturity Date of the policy, the excess of the amount of any benefit
paid, not taking into account any reduction for any loan and accrued loan
interest, over your Basis in the policy will be subject to Federal income tax.
IF YOUR POLICY IS A MODIFIED ENDOWMENT, any distribution from your policy will
be taxed on an "income-first" basis. Distributions for this purpose include a
loan (including any increase in the loan amount to pay interest on an existing
loan or an assignment or a pledge to secure a loan) or partial withdrawal. Any
such distribution will be considered taxable income to you to the extent your
Policy Account value exceeds your Basis in the policy. For modified endowments,
your Basis would be increased by the amount of any prior loan under your policy
that was considered taxable income to you. For purposes of determining the
taxable portion of any distribution, all modified endowments issued by the same
insurer or an affiliate to the same policyowner during any calendar year are to
be aggregated. The Secretary of the Treasury has authority to prescribe
additional rules to prevent avoidance of "income-first" taxation on
distributions from modified endowments.
A 10% penalty tax will also apply to the taxable portion of a distribution from
a modified endowment. The penalty tax will not, however, apply to distributions
(i) to taxpayers 59 1/2 years of age or older, (ii) in the case of disability
(as defined in the Code) or (iii) received as part of a series of substantially
equal periodic annuity payments for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and
beneficiary. If your policy is surrendered, the excess, if any, of your Cash
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Surrender Value over your Basis will be subject to Federal income tax and,
unless one of the above exceptions applies, the 10% penalty tax. If your policy
terminates while there is a policy loan, the cancellation of such loan and
accrued loan interest will be treated as a distribution to the extent not
previously treated as such and could be subject to tax, including the penalty
tax, as described under the above rules. In addition, upon the Maturity Date of
the policy, the excess of the amount of any benefit paid, not taking into
account any reduction for any loan and accrued loan interest, over your Basis in
the policy will be subject to Federal income tax, and, unless an exception
applies, a 10% penalty tax.
If your policy becomes a modified endowment, distributions that occur during the
policy year it becomes a modified endowment and any subsequent policy year will
be taxed as described in the two preceding paragraphs. In addition,
distributions from a policy within two years before it becomes a modified
endowment will be subject to tax in this manner. THIS MEANS THAT A DISTRIBUTION
MADE FROM A POLICY THAT IS NOT A MODIFIED ENDOWMENT COULD LATER BECOME TAXABLE
AS A DISTRIBUTION FROM A MODIFIED ENDOWMENT. The Secretary of the Treasury has
been authorized to prescribe rules which would treat similarly other
distributions made in anticipation of a policy becoming a modified endowment.
DIVERSIFICATION. Under Section 817(h) of the Code, the Secretary of the Treasury
has the authority to set standards for diversification of the investments
underlying variable life insurance policies. The Treasury Department has issued
final regulations regarding the diversification requirements. Failure to meet
these requirements would disqualify your policy as a variable life insurance
policy under Section 7702 of the Code. If this were to occur, you would be
subject to Federal income tax on the income under the policy. The Separate
Account, through the Trust, intends to comply with these requirements in order
to avoid such occurrence.
In connection with the issuance of the then temporary diversification
regulations, the Treasury Department stated that it anticipated the issuance of
regulations or rulings prescribing the circumstances in which the ability of a
policyowner to direct his investment to particular divisions of a separate
account may cause the policyowner, rather than the insurance company, to be
treated as the owner of the assets in the account. If you were considered the
owner of the assets of the Separate Account, income and gains from the Separate
Account would be included in your gross income for Federal income tax purposes.
Under current law we believe that Equitable Variable, and not the owner of the
policy, would be considered the owner of the assets of the Separate Account.
RIDERS. Certain riders permit the splitting of a policy into two other
individual policies on the lives of a husband and wife, upon a divorce or
certain changes in the Federal estate tax law. This splitting of a policy could
have adverse tax consequences including but not limited to, the recognition of
taxable income in an amount up to any gain in the policy at the time of the
split.
POLICY CHANGES. For you and your beneficiary to receive the tax treatment
discussed above, your policy must initially qualify and continue to qualify as
life insurance under Sections 7702 and 817(h) of the Code. We may make changes
in the policy or its riders or make distributions from the policy to the extent
we deem necessary to qualify your policy as life insurance for tax purposes. Any
such change will apply uniformly to all policies that are affected. You will be
given advance written notice of such changes.
TAX CHANGES. Recently proposed Treasury Regulations concerning what constitutes
reasonable mortality and expense charges in testing whether a policy qualifies
as life insurance would, if finalized as now proposed, provide stricter rules
for policies covering more than one life. As currently drafted the rules would
only apply to policies issued after the regulations are finalized, causing such
policies to generally provide increased levels of death benefits relative to
policy account values. The United States Congress has in the past considered, is
currently considering and may in the future consider legislation that, if
enacted, 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. State tax laws or, if you are not
a United States resident, foreign tax laws, may affect the tax consequences to
you, the insured or your beneficiary. These laws may change from time to time
without notice and, as a result, the tax consequences may be altered. There is
no way of predicting whether, when or in what form any such change would be
adopted. Any such change could have a retroactive effect regardless of the date
of enactment. We suggest you consult your legal or tax adviser.
ESTATE AND GENERATION SKIPPING TAXES. When the last surviving insured dies, the
death benefit will generally be includable in the policyowner's estate for
purposes of Federal estate tax if the insured owned the policy. If the
policyowner is not the insured person, under certain conditions only the fair
market value of the policy would be included. Federal estate tax is integrated
with Federal gift tax under a unified rate schedule. In general, estates less
than $600,000 will not incur a Federal estate tax liability. In addition, an
unlimited marital deduction may be available for Federal estate and gift tax
purposes.
As a general rule, if a "transfer" is made to a person two or more generations
younger than the policyowner, a generation skipping tax may be payable at rates
similar to the maximum estate tax rate in effect at the time. The generation
skipping tax provisions generally apply to "transfers" which would be subject to
the gift and estate tax rules. Individuals are generally allowed an aggregate
generation skipping tax exemption of $1 million. Because these rules are
complex, you should consult with your tax adviser for specific information,
especially where benefits are passing to younger generations.
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 and generation skipping taxes as well as state and local estate,
inheritance, generation skipping and other taxes.
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OUR TAXES. Under the life insurance company tax provisions of the Code, variable
life insurance is treated in a manner consistent with fixed life insurance. The
operations of the Separate Account are reported in our Federal income tax return
but we currently pay no income tax on investment income and capital gains
reflected in variable life insurance policy reserves. Therefore, no charge is
currently being made to any Fund of the Separate Account for taxes. We reserve
the right to make a charge in the future for taxes incurred, for example, a
charge to the Separate Account for income taxes incurred by us that are
allocable to the policy.
We may have to pay state, local or other taxes in addition to applicable taxes
based on premiums. At present, these taxes are not substantial. If they
increase, charges may be made for such taxes when they are attributable to the
Separate Account or allocable to the policy.
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 the withdrawal
of money from your Policy Account or the surrender or the maturity of your
policy is a taxable transaction. If you do not wish us to withhold tax from the
payment, or if enough is not withheld, you may have to make tax payments later.
You may also have to pay penalties under the tax rules if your withholding and
estimated tax payments are insufficient. In some cases, where generation
skipping taxes may apply, we may also be required to withhold for such taxes
unless we are provided satisfactory written notification that no such taxes are
due.
PART 3: ADDITIONAL INFORMATION
YOUR VOTING PRIVILEGES
TRUST VOTING PRIVILEGES. As explained in Part 1, we invest the assets in the
Funds in shares of the corresponding Trust portfolios. Equitable Variable is the
legal owner of the shares and will attend, and has the right to vote at, any
meeting of the Trust's shareholders. Among other things, we may vote on any
matters described in the Trust's prospectus or requiring a vote by shareholders
under the 1940 Act.
Even though we own the shares, to the extent required by the 1940 Act, you will
have the opportunity to tell us how to vote the number of shares that can be
attributed 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 vote any Trust
shares that we are entitled to vote directly due to amounts we have accumulated
in the Separate Account in the same proportions that all policyowners vote,
including those who participate in other separate accounts. 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 corresponding to the Funds to which your
Policy Account is allocated. The number of Trust shares in each Fund that are
attributable to your policy is determined by dividing the amount in your Policy
Account allocated to that Fund by the net asset value of one share of the
corresponding Trust portfolio as of the record date set by the Trust's Board of
Trustees 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 of the Trust.
Fractional shares are counted.
If you are entitled to give us voting instructions, we will send you proxy
material and a form for providing 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.
SEPARATE ACCOUNT VOTING RIGHTS. Under the 1940 Act, certain actions (such as
some of those described under OUR RIGHT TO CHANGE HOW WE OPERATE, below) may
require policyowner approval. In that case, you will be entitled to one vote for
every $100 of value you have in the Funds. We will cast votes attributable to
amounts we have in the Funds in the same proportions as votes cast by
policyowners.
OUR RIGHT TO CHANGE HOW WE OPERATE
In addition to changing or adding investment companies, we have the right to
modify how we or the Separate Account operate. We intend to comply with
applicable law in making any changes and, if necessary, we will seek policyowner
approval. We have the right to:
o add Funds to, or remove Funds from, the Separate Account, combine two or more
Funds within the Separate Account, or withdraw assets relating to Survivorship
2000 from one Fund and put them into another;
o register or end the registration of the Separate Account under the 1940 Act;
o operate the 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 1940
Act);
o restrict or eliminate any voting rights of policyowners or other people who
have voting rights that affect the Separate Account;
o operate the Separate Account or one or more of the Funds in any other form the
law allows, including a form that allows us to make direct investments. Our
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.
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If any changes are made that result in a material change in the underlying
investments of a Fund, you will be notified as required by law. We may, for
example, cause the Fund 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 Fund to
another Fund or to the Guaranteed Interest Account, you may do so, without
charge, by contacting our Administrative Office. At the same time, you may also
change how your net premiums and deductions are allocated.
OUR REPORTS TO POLICYOWNERS
Shortly after the end of each policy year you will receive a report that
includes information about your policy's current death benefit, Cash Surrender
Value and policy loan. Notices will be sent to you to confirm premium payments
(except premiums paid through an automated payment plan), transfers of amounts
between Funds and certain other policy transactions.
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY
We can challenge the validity of your insurance policy based on material
misstatements in your application and any application for change. However, there
are some limits on how and when we can challenge the policy.
o We cannot challenge the policy after it has been in effect, during the
lifetimes of both insured persons, for two years from the date the policy was
issued.
o We cannot challenge any policy change that requires evidence of insurability
or any restoration of the policy after the change or restoration has been in
effect for two years during the lifetime of any insured person living at the
time the change or restoration takes effect.
If the last surviving insured person dies within the time that we may challenge
the validity of the policy, we may delay payment until we decide whether to
challenge the policy. Some states may require that we measure these times in
some other way. If an insured person's age or sex is misstated on any
application, the death benefit and any additional benefits provided will be
those which would be purchased by the most recent deduction for the cost of
insurance and the cost of any additional benefits at that insured person's
correct age and sex.
If the last surviving insured person commits suicide within two years after the
date on which the policy was issued or following a policy change that increases
the death benefit, the death benefit will be limited as described in the policy.
Some states require that we measure this time by some other date.
YOUR PAYMENT OPTIONS
Policy benefits or other payments such as the Net Cash Surrender Value may be
paid immediately 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 Fund. Instead, interest accrues pursuant to the
options chosen.
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.) If you do not arrange for a specific form of
payment before the last surviving insured person dies, the beneficiary will be
paid through the Equitable Access Account.(TM) See WHEN WE PAY POLICY PROCEEDS
on page 21. The beneficiary will then have a choice of payment options. However,
if you do make an arrangement with us for how the money will be paid, the
beneficiary cannot change the choice after the last surviving insured person
dies. Different payment options may result in different tax consequences.
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 payment option, 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 are selected and 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.
YOUR BENEFICIARY
You name your beneficiary when you apply for the policy. The beneficiary is
entitled to the insurance benefits of the policy. While either or both of the
insured persons are living, you may change the beneficiary by writing to our
Administrative Office. You can name more than one beneficiary. Beneficiaries may
be classed as primary and contingent beneficiaries. When two or more persons are
named in a class they will share equally unless you have specified their
respective shares. If no beneficiary is living when the last surviving insured
person dies, we will pay the death benefit in equal shares to such insured
person's surviving children. If there are no surviving children, we will pay the
death benefit to that insured person's estate.
ASSIGNING YOUR POLICY
You may assign (transfer) your rights in the policy to someone else as
collateral for a loan or for some other reason, if we agree. 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 taken before we receive notice
of the assignment or for the validity of the assignment. An absolute assignment
is a change of ownership. BECAUSE THERE MAY BE TAX CONSEQUENCES, INCLUDING THE
LOSS OF INCOME TAX-FREE TREATMENT FOR ANY DEATH BENEFIT PAYABLE TO THE
BENEFICIARY, YOU SHOULD CONSULT YOUR TAX ADVISER PRIOR TO MAKING AN ASSIGNMENT.
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WHEN WE PAY POLICY PROCEEDS
We will pay any death benefits, maturity benefit, Net Cash Surrender Value or
loan proceeds within seven days after we receive the last required form or
request (and other documents that may be required for payment of death benefits)
at our Administrative Office. Death benefits are determined as of the date of
death of the last surviving insured person and will not be affected by
subsequent changes in the unit values of the Funds. Death benefits will
generally be paid through the Equitable Access Account, an interest bearing
checking account. A beneficiary will have immediate access to the proceeds by
writing a check on the account. We pay interest from the date of death to the
date the Equitable Access Account is closed. If an Equitable agent helps the
beneficiary of a policy to prepare the documents that are required for payment
of the death benefit, we will send the Equitable Access Account checkbook or
check to the agent within seven days after we receive the required documents.
Our agents will take reasonable steps to arrange for prompt delivery to the
beneficiary.
We may, however, delay payment if we contest the policy. We may also delay
payment if 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 SEC, or because the SEC has declared that an emergency exists. In addition,
if necessary to protect our policyowners, we may delay payment where permitted
under applicable law.
We may defer payment of Net Cash Surrender Value withdrawal or loan amount
(except a loan to pay a premium to us) from the Guaranteed Interest Account for
up to six months after we receive your request. We will pay interest of at least
3% a year from the date we receive your request if we delay more than 30 days in
paying you such amounts from the Guaranteed Interest Account.
DIVIDENDS
No dividends are paid on the policy described in this prospectus.
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 the
Survivorship 2000 policy may vary somewhat from jurisdiction to jurisdiction.
The Survivorship 2000 policy (Plan No. 92-500) has been filed with and approved
by insurance officials in 50 states, Puerto Rico and the Virgin Islands. No
Survivorship 2000 policy is available in the District of Columbia. 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.
SPECIAL CIRCUMSTANCES
Equitable Variable may vary the charges and other terms of Survivorship 2000
where special circumstances result in sales or administrative expenses or
mortality risks that are different than those normally associated with
Survivorship 2000 policies. These variations will be made only in accordance
with uniform rules that we establish.
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's principal business address is 1755 Broadway, New York, NY 10019. Equico
is registered with the SEC as a broker-dealer under the Securities Exchange Act
of 1934 (the Exchange Act) and is a member of the National Association of
Securities Dealers, Inc. 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.
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 Equico. The agent who sells you this policy receives sales
commissions from Equitable. We reimburse Equitable from our own resources,
including the Premium Sales Charge deducted from your premium. Generally, during
the first policy year, the agent will receive an amount equal to a maximum of
50% of the premiums paid up to a certain amount and 4% of the premiums paid in
excess of that amount. For policy years two through ten, the agent receives an
amount up to a maximum of 4% of the premiums paid up to a certain amount; and,
for years eleven and later, the agent receives an amount up to 3% of the
premiums paid. Agents with limited years of service may be paid differently.
Commissions paid to agents based upon refunded premiums may be recovered.
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 Equico or of another company registered
with the SEC as a broker-dealer under the Exchange Act. The commissions for
independent brokers will be no more than those for agents and the same policy
for recovery of commissions applies. Commissions will be paid through the
registered broker-dealer.
Equitable performs certain sales and administrative duties for us pursuant to a
written agreement which is automatically renewed each year, unless either party
terminates. Under this agreement, we pay Equitable for salary costs and other
services and an amount for indirect costs incurred through our use of Equitable
personnel and facilities. We also reimburse Equitable for sales expenses related
to business other than variable life insurance policies. The amounts paid and
accrued to Equitable by us under the sales and services agreements totalled
approximately $380.5 million in 1994, $355.7 million in 1993 and $374.9 million
in 1992.
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
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ACCOUNTING AND ACTUARIAL EXPERTS
The financial statements of Separate Account FP and Equitable Variable included
in this prospectus 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 Separate Account FP and Equitable Variable for the years ended
December 31, 1994 and 1993 included in this prospectus have been so included in
reliance on the reports of Price Waterhouse LLP, independent accountants, given
on the authority of such firm as experts in accounting and auditing. The
financial statements of Separate Account FP and Equitable Variable for the year
ended December 31, 1992 included in this prospectus have been so included in
reliance on the reports of Deloitte & Touche LLP, independent accountants, given
on the authority of such firm as experts in accounting and auditing.
The financial statements of Equitable Variable contained in this prospectus
should be considered only as bearing upon the ability of Equitable Variable to
meet its obligations under the Survivorship 2000 policies. They should not be
considered as bearing upon the investment experience of the Funds of the
Separate Account.
Actuarial matters in this prospectus have been examined by Barbara Fraser,
F.S.A., M.A.A.A., who is a Vice President and Actuary of Equitable. Her 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.
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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>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ----------------------- -------------------------
DIRECTORS
<S> <C>
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>
23
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ----------------------- -------------------------
OFFICERS--DIRECTORS (Continued)
<S> <C>
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, Alliance
1345 Avenue of the Americas Capital Management Corporation, July 1993 to present; Senior Vice President, Equitable
New York, New York 10105 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. Vice
200 Plaza Drive President, Equitable since February 1988; prior thereto, Assistant Vice President.
Secaucus, NJ 07096
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>
24
<PAGE>
PART 4: ILLUSTRATIONS OF POLICY BENEFITS
To help clarify how the key financial elements of the policy work, a series of
tables has been prepared. The tables show how the death benefits and Cash
Surrender Value ("policy benefits") under a hypothetical Survivorship 2000
policy could vary over time if the Funds had CONSTANT hypothetical gross annual
investment returns of 0%, 6% or 12% over the years covered by each table. Actual
policy benefits will differ from those shown in the tables if the annual
investment returns AVERAGE 0%, 6% or 12% over a period of years but go above or
below those figures in individual policy years. Actual policy benefits will also
differ, depending on your premium allocations to each Fund, if the overall
actual rates of return averaged 0%, 6% or 12%, but went above or below those
figures for the individual investment Funds. The tables are for a standard risk
male non-smoker, age 55, and a standard risk female non-smoker, age 50. Planned
premiums of $13,580 for an initial Face Amount of $1,000,000 are assumed to be
paid at the beginning of each policy year.
The tables illustrate cost of insurance and expense charges (policy cost
factors) at both the current rates and at the maximum rates guaranteed in the
policy. Beginning in policy year twenty, the current charges reflect the
termination of the Premium Sales Charge. See DEDUCTIONS FROM YOUR PREMIUMS on
page 13. The amounts shown at the end of each policy year reflect daily charges
against the Separate Account Funds of .90% for mortality and expense risks, .51%
for investment management (the average of the effective annual advisory fees
applicable to each Trust portfolio during 1994 the maximum advisory fee for the
Equity Index Portfolio) and .03% for direct Trust expenses. The charge reflected
for direct Trust expenses exceeds the aggregate actual charges incurred by the
portfolios of the Trust as a percentage of aggregate average daily Trust net
assets during 1994. The effect of these adjustments is that on a 0% gross rate
of return the net rate of return would be -1.44%, on 6% it would be 4.48% and on
12% it would be 10.39%. Remember, however, that investment management fees and
direct Trust expenses vary by portfolio. See THE TRUST'S INVESTMENT ADVISER on
page 5.
The tables assume first year monthly administrative charges of $0.07 per $1,000
of Face Amount and $6 per month and an applicable tax rate of 2% of premiums.
There are tables for both death benefit Option A and death benefit Option B and
each option is illustrated using current and guaranteed policy cost factors. The
current tables assume that the monthly administrative charge remains constant at
$6 after the first policy year. The guaranteed tables assume that this monthly
charge is $8. The tables reflect the fact that no charge is currently made for
Federal taxes. If a charge is made for those taxes in the future, it will take a
higher rate of return to produce after-tax returns of 0%, 6% or 12%.
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 surrendered in its very early years, the
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.
The internal rate of return on Cash Surrender Value is equivalent to an interest
rate (after taxes) at which an amount equal to the illustrated premiums could
have been invested outside the Policy to arrive at the Cash Surrender Value of
the Policy. The internal rate of return on the death benefit is equivalent to an
interest rate (after taxes) at which an amount equal to the illustrated premiums
could have been invested outside the Policy to arrive at the death benefit of
the Policy. The internal rate of return is compounded annually, and the premiums
are assumed to be paid at the beginning of each policy year.
INDIVIDUAL ILLUSTRATIONS. On request, we will furnish you with a comparable
illustration based on the age and sex of the proposed insured persons, standard
risk assumptions and an initial Face Amount and planned premium of your choice.
If you purchase a policy, we will, on request, deliver an individualized
illustration reflecting the planned premium you have chosen and the insured
persons' actual risk classes. Upon request after issuance, we will also provide
a comparable illustration reflecting your actual Net Cash Surrender Value. If
you request illustrations more than once in any policy year, we may charge for
the illustration.
25
<PAGE>
SURVIVORSHIP 2000
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT SURVIVORSHIP VARIABLE LIFE INSURANCE
PLANNED PREMIUM $13,580 INITIAL FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION A
MALE AGE 55/FEMALE AGE 50
NON-SMOKER
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------------ ------------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
---- ----------- ---------- ---------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 14,259 $1,000,000 $1,000,000 $1,000,000 $ 8,056 $ 8,569 $ 9,082
2 29,231 1,000,000 1,000,000 1,000,000 19,791 21,522 23,314
3 44,951 1,000,000 1,000,000 1,000,000 31,297 34,992 38,960
4 61,458 1,000,000 1,000,000 1,000,000 42,562 48,989 56,155
5 78,790 1,000,000 1,000,000 1,000,000 53,586 63,532 75,054
6 96,988 1,000,000 1,000,000 1,000,000 64,378 78,653 95,845
7 116,097 1,000,000 1,000,000 1,000,000 74,917 94,353 118,701
8 136,161 1,000,000 1,000,000 1,000,000 85,189 110,643 143,824
9 157,228 1,000,000 1,000,000 1,000,000 95,181 127,534 171,439
10 179,348 1,000,000 1,000,000 1,000,000 104,883 145,043 201,798
15 307,689 1,000,000 1,000,000 1,156,773 148,135 241,992 405,175
20 471,487 1,000,000 1,000,000 1,744,537 181,231 356,579 726,588
25 $680,541 $1,000,000 $1,003,495 $2,486,484 $200,879 $494,332 $1,224,869
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED -------------------------------- -----------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
---- ----------- --------- --------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 14,259 -40.68% -36.90% -33.12% 7,263.77% 7,263.77% 7,263.77%
2 29,231 -19.33 -14.54 -9.76 709.58 709.58 709.58
3 44,951 -12.62 -7.41 -2.22 281.01 281.01 281.01
4 61,458 -9.52 -4.09 1.33 161.03 161.03 161.03
5 78,790 -7.79 -2.21 3.36 108.39 108.39 108.39
6 96,988 -6.70 -1.01 4.66 79.68 79.68 79.68
7 116,097 -5.96 -0.19 5.56 61.90 61.90 61.90
8 136,161 -5.43 0.41 6.21 49.92 49.92 49.92
9 157,228 -5.05 0.85 6.70 41.37 41.37 41.37
10 179,348 -4.76 1.19 7.09 34.99 34.99 34.99
15 307,689 -4.10 2.12 8.20 18.25 18.25 19.84
20 471,487 -4.04 2.53 8.66 11.26 11.26 15.68
25 $680,541 -4.33% 2.78% 8.85% 7.55% 7.57% 13.25%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
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.
26
<PAGE>
SURVIVORSHIP 2000
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT SURVIVORSHIP VARIABLE LIFE INSURANCE
PLANNED PREMIUM $13,580 INITIAL FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION A
MALE AGE 55/FEMALE AGE 50
NON-SMOKER
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------------ ------------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
---- ----------- ---------- ---------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 14,259 $1,000,000 $1,000,000 $1,000,000 $ 8,045 $ 8,558 $ 9,070
2 29,231 1,000,000 1,000,000 1,000,000 19,723 21,451 23,240
3 44,951 1,000,000 1,000,000 1,000,000 31,142 34,828 38,786
4 61,458 1,000,000 1,000,000 1,000,000 42,287 48,691 55,833
5 78,790 1,000,000 1,000,000 1,000,000 53,139 63,041 74,516
6 96,988 1,000,000 1,000,000 1,000,000 63,676 77,872 94,979
7 116,097 1,000,000 1,000,000 1,000,000 73,872 93,180 117,383
8 136,161 1,000,000 1,000,000 1,000,000 83,699 108,953 141,904
9 157,228 1,000,000 1,000,000 1,000,000 93,125 125,180 168,737
10 179,348 1,000,000 1,000,000 1,000,000 102,110 141,842 198,094
15 307,689 1,000,000 1,000,000 1,117,475 138,234 230,310 391,410
20 471,487 1,000,000 1,000,000 1,624,865 149,406 320,202 676,745
25 $680,541 $1,000,000 $1,000,000 $2,150,704 $109,680 $394,819 $1,059,460
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED -------------------------------- -----------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
---- ----------- --------- --------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 14,259 -40.76% -36.98% -33.21% 7,263.77% 7,263.77% 7,263.77%
2 29,231 -19.53 -14.74 -9.95 709.58 709.58 709.58
3 44,951 -12.84 -7.64 -2.44 281.01 281.01 281.01
4 61,458 -9.77 -4.33 1.10 161.03 161.03 161.03
5 78,790 -8.06 -2.46 3.12 108.39 108.39 108.39
6 96,988 -7.01 -1.29 4.40 79.68 79.68 79.68
7 116,097 -6.31 -0.50 5.28 61.90 61.90 61.90
8 136,161 -5.83 0.06 5.91 49.92 49.92 49.92
9 157,228 -5.49 0.48 6.39 41.37 41.37 41.37
10 179,348 -5.26 0.79 6.76 34.99 34.99 34.99
15 307,689 -5.02 1.52 7.80 18.25 18.25 19.46
20 471,487 -6.12 1.54 8.07 11.26 11.26 15.12
25 $680,541 -10.38% 1.14% 7.92% 7.55% 7.55% 12.36%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
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.
27
<PAGE>
SURVIVORSHIP 2000
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT SURVIVORSHIP VARIABLE LIFE INSURANCE
PLANNED PREMIUM $13,580 INITIAL FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION B
MALE AGE 55/FEMALE AGE 50
NON-SMOKER
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------------ ------------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
---- ----------- ---------- ---------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 14,259 $1,008,056 $1,008,569 $1,009,082 $ 8,056 $ 8,569 $ 9,082
2 29,231 1,019,790 1,021,520 1,023,312 19,790 21,520 23,312
3 44,951 1,031,291 1,034,985 1,038,952 31,291 34,985 38,952
4 61,458 1,042,547 1,048,971 1,056,134 42,547 48,971 56,134
5 78,790 1,053,554 1,063,493 1,075,008 53,554 63,493 75,008
6 96,988 1,064,322 1,078,582 1,095,757 64,322 78,582 95,757
7 116,097 1,074,824 1,094,232 1,118,544 74,824 94,232 118,544
8 136,161 1,085,043 1,110,446 1,143,560 85,043 110,446 143,560
9 157,228 1,094,962 1,127,228 1,171,011 94,962 127,228 171,011
10 179,348 1,104,566 1,144,582 1,201,131 104,566 144,582 201,131
15 307,689 1,146,669 1,239,443 1,400,985 146,669 239,443 400,985
20 471,487 1,176,801 1,347,218 1,721,197 176,801 347,218 716,867
25 $680,541 $1,189,053 $1,463,659 $2,455,422 $189,053 $463,659 $1,209,567
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED -------------------------------- -----------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
---- ----------- --------- --------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 14,259 -40.68% -36.90% -33.12% 7,323.09% 7,326.87% 7,330.65%
2 29,231 -19.34 -14.55 -9.76 718.01 718.75 719.51
3 44,951 -12.63 -7.42 -2.23 285.38 285.89 286.44
4 61,458 -9.54 -4.10 1.32 164.18 164.65 165.17
5 78,790 -7.81 -2.23 3.34 110.99 111.46 112.00
6 96,988 -6.72 -1.03 4.63 81.97 82.46 83.04
7 116,097 -5.99 -0.22 5.52 63.98 64.50 65.14
8 136,161 -5.47 0.37 6.17 51.86 52.41 53.12
9 157,228 -5.09 0.80 6.65 43.20 43.79 44.57
10 179,348 -4.81 1.14 7.03 36.74 37.37 38.22
15 307,689 -4.23 2.00 8.08 19.75 20.59 21.92
20 471,487 -4.30 2.28 8.55 12.57 13.64 15.57
25 $680,541 -4.87% 2.32% 8.77% 8.66% 9.98% 13.17%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
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.
28
<PAGE>
SURVIVORSHIP 2000
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT SURVIVORSHIP VARIABLE LIFE INSURANCE
PLANNED PREMIUM $13,580 INITIAL FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION B
MALE AGE 55/FEMALE AGE 50
NON-SMOKER
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------------ ------------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
---- ----------- ---------- ---------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 14,259 $1,008,045 $1,008,557 $1,009,070 $ 8,045 $ 8,557 $ 9,070
2 29,231 1,019,721 1,021,448 1,023,237 19,721 21,448 23,237
3 44,951 1,031,133 1,034,818 1,038,775 31,133 34,818 38,775
4 61,458 1,042,264 1,048,665 1,055,802 42,264 48,665 55,802
5 78,790 1,053,092 1,062,984 1,074,447 53,092 62,984 74,447
6 96,988 1,063,588 1,077,762 1,094,841 63,588 77,762 94,841
7 116,097 1,073,722 1,092,984 1,117,130 73,722 92,984 117,130
8 136,161 1,083,457 1,108,626 1,141,466 83,457 108,626 141,466
9 157,228 1,092,753 1,124,661 1,168,014 92,753 124,661 168,014
10 179,348 1,101,561 1,141,046 1,196,942 101,561 141,046 196,942
15 307,689 1,135,528 1,225,574 1,383,385 135,528 225,574 383,385
20 471,487 1,140,159 1,300,059 1,654,036 140,159 300,059 654,036
25 $680,541 $1,086,939 $1,327,105 $2,074,988 $ 86,939 $327,105 $1,022,161
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED -------------------------------- -----------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
---- ----------- --------- --------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 14,259 -40.76% -36.99% -33.21% 7,323.01% 7,326.78% 7,330.56%
2 29,231 -19.53 -14.75 -9.96 717.99 718.72 719.48
3 44,951 -12.86 -7.65 -2.45 285.36 285.87 286.41
4 61,458 -9.79 -4.35 1.08 164.16 164.63 165.15
5 78,790 -8.09 -2.49 3.08 110.97 111.43 111.97
6 96,988 -7.05 -1.33 4.35 81.94 82.43 83.01
7 116,097 -6.36 -0.55 5.22 63.95 64.47 65.10
8 136,161 -5.89 0.00 5.84 51.83 52.37 53.07
9 157,228 -5.58 0.40 6.31 43.16 43.75 44.52
10 179,348 -5.36 0.69 6.66 36.69 37.32 38.16
15 307,689 -5.29 1.26 7.56 19.64 20.47 21.78
20 471,487 -6.84 0.94 7.78 12.32 13.36 15.26
25 $680,541 -13.17% -0.29% 7.69% 8.09% 9.36% 12.14%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
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.
29
<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
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 Survivorship 2000 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.
A-1
<PAGE>
AVERAGE ANNUAL RATES OF RETURN
<TABLE>
<CAPTION>
LONG-TERM LONG-TERM INTERMEDIATE- CONSUMER
COMMON GOVERNMENT CORPORATE TERM TREASURY PRICE
STOCKS BONDS BONDS BONDS BILLS INDEX
------ ----- ----- ----- ----- -----
FOR THE
FOLLOWING
PERIODS 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 years................. 6.26 5.62 5.28 4.19 3.43 2.81
5 years................. 8.69 8.34 8.36 7.46 4.73 3.51
10 years................. 14.40 11.86 11.57 9.40 5.76 3.59
20 years................. 14.58 9.42 10.00 9.25 7.29 5.45
30 years................. 9.95 6.96 7.31 7.84 6.66 5.36
40 years................. 10.66 5.62 6.14 6.58 5.63 4.40
50 years................. 11.92 4.99 5.34 5.59 4.69 4.35
60 years................. 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 --
- -------------
<FN>
*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.
</FN>
</TABLE>
A-2
