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Filed pursuant to Rule 497(e)
Registration No. 2-30070
EQUI-VEST(REGISTERED TRADEMARK) AND MOMENTUM
PERSONAL RETIREMENT PROGRAMS
AND
EMPLOYER SPONSORED RETIREMENT PROGRAMS
PROSPECTUS, DATED MAY 1, 1996
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VARIABLE ANNUITY CONTRACTS FUNDED THROUGH THE
INVESTMENT FUNDS OF SEPARATE ACCOUNT A
Issued By:
The Equitable Life Assurance Society of the United States
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This prospectus describes group and individual deferred variable annuity
contracts (CONTRACTS) offered by The Equitable Life Assurance Society of the
United States (EQUITABLE LIFE). The EQUI-VEST Contracts are designed for
retirement savings and long-range financial planning as part of a retirement
savings plan. The Momentum Contract (MOMENTUM) is designed to fund defined
contribution plans. Contributions in both MOMENTUM and EQUI-VEST Contracts
accumulate on a Federal income tax-deferred basis, and at a future date you
can receive a stream of periodic payments, including a fixed or variable
annuity.
EQUI-VEST Personal Retirement Programs include individual retirement
annuities (IRAS) and those established through rollovers from tax-favored
retirement plans (QP IRAS) as well as non-qualified annuities (NQS).
EQUI-VEST Employer Sponsored Retirement Programs include SEPs, TSAs, EDCs,
Trusteed and Annuitant-Owned HR-10 Plans, as described in this prospectus.
MOMENTUM Employer-Sponsored Retirement Plans include 401(a) and 401(k) plans
as described in this prospectus. Employers sponsoring such plans and trustees
of such plans (PLAN TRUSTEES) can participate in MOMENTUM through the
MOMENTUM Program. The MOMENTUM Program consists of a defined contribution
master plan and trust sponsored by Equitable Life (the MASTER PLAN AND TRUST)
or, for Employers who prefer to use their own individually-designed or a
prototype defined contribution plan, a pooled trust (the POOLED TRUST).
EQUI-VEST offers the investment options (INVESTMENT OPTIONS) listed below.
MOMENTUM offers the Investment Options listed below except the Fixed Maturity
Periods. These Investment Options include the Guaranteed Interest Account,
which is part of Equitable Life's general account and pays interest at
guaranteed fixed rates, and thirteen variable investment funds (INVESTMENT
FUNDS) of Separate Account A (SEPARATE ACCOUNT). Each Fixed Maturity Period
(FIXED MATURITY PERIOD) in the Fixed Maturity Account is available only under
EQUI-VEST (in states where approved).
<TABLE>
<CAPTION>
OTHER
INVESTMENT FUNDS INVESTMENT OPTIONS
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<S> <C> <C> <C>
o Money Market o Growth & Income Asset Allocation o Guaranteed Interest
Series: Account
o Intermediate o Equity Index o Conservative o Fixed Maturity
Government Investors Periods with
Securities o Common Stock o Balanced Expiration Dates
o Quality Bond o Global o Growth 1996 through 2006
o International Investors
o High Yield o Aggressive
Stock
</TABLE>
We invest each Investment Fund in shares of a corresponding portfolio
(PORTFOLIO) of The Hudson River Trust (TRUST), a mutual fund whose shares are
purchased by the separate accounts of insurance companies. The prospectus for
the Trust, directly following this prospectus, describes the investment
objectives, policies and risks of the Portfolios.
Amounts allocated to a Fixed Maturity Period accumulate on a fixed basis and
are credited with interest at a rate we set (RATE TO MATURITY) for the entire
period. On each business day (BUSINESS DAY) we will determine the Rate to
Maturity available for amounts newly allocated to Fixed Maturity Periods. A
market value adjustment (positive or negative) will be made for withdrawals,
transfers, terminations and certain other transactions from a Fixed Maturity
Period before its expiration date (EXPIRATION DATE). Each Fixed Maturity
Period has its own Rates to Maturity.
Participants may choose from a variety of payout options. If an annuity is
selected as the retirement payout option, variable and fixed annuities are
available. Fixed annuities are funded through Equitable Life's general
account. Variable payments will be funded through your choice of Investment
Funds.
This prospectus provides information about EQUI-VEST and MOMENTUM that
prospective investors should know before investing. You should read it
carefully and retain it for future reference. The prospectus is not valid
unless it is attached to a current prospectus for the Trust, which you should
also read carefully.
Registration statements relating to the Separate Account and to interests
under the Fixed Maturity Periods have been filed with the Securities and
Exchange Commission (SEC). The statement of additional information (SAI),
dated May 1, 1996, which is part of the registration statement for the
Separate Account, is available free of charge upon request by writing to the
Processing Office or calling 1-800-628-6673 for EQUI-VEST, or 1-800-528-0204
for MOMENTUM, our toll-free numbers. The SAI has been incorporated by
reference into this prospectus. The Table of Contents for the SAI appears at
the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE CONTRACTS ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY
ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
May 1, 1996 888-1107
Copyright 1996
The Equitable Life Assurance Society of the United States,
New York, New York, 10019.
All rights reserved.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1995 is incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE
ACT) after the date hereof and prior to the termination of the offering of
the securities offered hereby shall be deemed to be incorporated by reference
in this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this prospectus.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
directed to The Equitable Life Assurance Society of the United States, 787
Seventh Avenue, New York, New York 10019. Attention: Corporate Secretary
(telephone: (212) 554-1234).
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PROSPECTUS TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL TERMS PAGE 5
PART 1:SUMMARY PAGE 8
Equitable Life 8
Types of Retirement Programs 8
Investment Options 9
Selecting Investment Options 9
Contributions 10
Transfers 10
Services We Provide 10
Distribution Options and Death Benefits 12
SPDA Variable Distribution Option 12
Withdrawals and Termination 12
Loans 13
Taxes 13
Deductions and Charges 13
Deferred Variable Annuities 14
10-Day Free Look for EQUI-VEST 14
Fee Tables and Examples 15
PART 2: SEPARATE ACCOUNT A AND
ITS INVESTMENT FUNDS PAGE 24
Separate Account A 24
The Hudson River Trust 24
The Trust's Investment Adviser 25
Investment Policies and Objectives of the
Trust's Portfolios 25
PART 3: INVESTMENT PERFORMANCE PAGE 27
Investment Fund Performance 27
PART 4: THE GUARANTEED INTEREST ACCOUNT PAGE 36
PART 5: THE EQUI-VEST FIXED MATURITY ACCOUNT PAGE 37
PART 6: PROVISIONS OF THE EQUI-VEST CONTRACTS PAGE 40
The EQUI-VEST Contract Series 40
Selecting Investment Options 40
Contributions Under the Contracts 40
Annuity Account Value 42
Transfers 43
Automatic Transfer Options Investment
Simplifier 44
Loans (for TSA and Corporate Trusteed
only) 44
Assignment and Funding Changes 45
Partial Withdrawals and Termination 45
Third Party Transfers or Exchanges 46
Requirements for Distributions 46
Distribution Options 46
Guaranteed Death Benefit 49
Your Beneficiary 49
Proceeds 50
PART 7: PROVISIONS OF THE MOMENTUM
CONTRACT AND SERVICES WE PROVIDE PAGE 51
Understanding the MOMENTUM Program 51
Employer's Responsibilities 51
Adopting the MOMENTUM Program 52
The MOMENTUM Contract 52
Selecting Investment Options 52
Contributions 53
Retirement Account Value 53
Transfers 54
Investment Simplifier: Automatic Transfer
Options 55
Loans 55
Withdrawals and Termination 56
Forfeitures 56
Distribution Options 57
Annuity Distribution Options 57
Electing an Annuity Distribution Option 57
Minimum Distributions/Automatic
Minimum Withdrawal Over-Age 70 1/2 58
Death Benefit 58
Payment of Proceeds 59
Plan Recordkeeping Services 59
PART 8: DEDUCTIONS AND CHARGES PAGE 61
All Contracts 61
Trust Charges to Portfolios 61
Charges for State Premium and Other
Applicable Taxes 61
EQUI-VEST IRA, QP IRA, SEP and NQ
Contracts (Series 300 and 400 only) 61
Charges to Investment Funds 61
Annual Administrative Charge 62
Contingent Withdrawal Charge 62
Allocation of Certain Charges to the
Fixed Maturity Account 64
Charge on Third Party Transfer or
Exchange 64
All EQUI-VEST EDC, TSA and Trusteed
Contracts plus IRA, QP IRA, SEP and NQ
(Series 100 and 200 only) 65
Limitation on Charges 65
Charges to Investment Funds 65
Annual Administrative Charge 65
Contingent Withdrawal Charge 66
MOMENTUM Contract 68
Limitation on Charges 68
Charges to Investment Funds 68
Quarterly Administrative Charge 69
Charge for Plan Recordkeeping Services 69
Contingent Withdrawal Charge 69
Plan Loan Charges 70
Special Circumstances 71
</TABLE>
3
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<TABLE>
<CAPTION>
<S> <C>
PART 9:VOTING RIGHTS PAGE 72
PART 10:FEDERAL TAX AND
ERISA MATTERS PAGE 73
Annuities 73
Taxation of Non-Qualified
Annuities--EQUI-VEST Only 73
Special Rules for Tax Favored Retirement
Programs 74
Tax-Qualified Retirement Plans
("Qualified Plans") 74
Tax Sheltered Annuity (TSAs) Arrangements 74
Distributions from Qualified Plans and
TSAs 75
Tax-Qualified Individual Retirement
Arrangements (IRSs) 77
Annuity Account Values and Cash Values
(Tables) 83
Simplified Employee Pensions (SEPs) 84
Public and Tax-Exempt Organization
Employee Deferred Compensation Plans
(EDC Plans) 84
Penalty Tax on Early Distributions 85
Tax Penalties for Insufficient
Distributions 85
Federal and State Income Tax Withholding 85
Other Withholding 86
Special Rules for NQ and Trusteed
Contracts Issued in Puerto Rico 86
Impact of Taxes to Equitable Life 87
Transfer Among Investment Options 87
Tax Changes 87
ERISA Matters 87
Certain Rules Applicable to Plan Loans 87
Certain Rules Applicable to Plans
Designed to Comply with Section 404(c)
of ERISA 88
PART 11:INDEPENDENT ACCOUNTANTS PAGE 89
APPENDIX I: AN EXAMPLE OF EQUI-VEST
MARKET VALUE ADJUSTMENT PAGE 90
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS PAGE 91
HOW TO OBTAIN THE EQUI-VEST AND MOMENTUM
STATEMENT OF ADDITIONAL INFORMATION PAGE 91
</TABLE>
4
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GENERAL TERMS
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In this prospectus, the terms "we," "our" and "us" mean The Equitable Life
Assurance Society of the United States (EQUITABLE LIFE). The terms "you" and
"your" refer to the Contract Owner for EQUI-VEST and either the Employer,
Trustee or the Participant as indicated for MOMENTUM. Some of the terms
described below may be called different names under EQUI-VEST and MOMENTUM.
We have indicated those differences in the following descriptions and in
those instances where the term is applicable only to EQUI-VEST the symbol EV
will be used and in those instances where it is applicable only to MOMENTUM
the symbol M will be used.
ACCUMULATION UNIT--Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund. The "Accumulation Unit
Value" is the dollar value of each Accumulation Unit in an Investment Fund on
a given date.
ACTIVE LOAN-M-The principal amount of any Participant plan loan that has
neither been repaid nor deemed distributed under Section 72(p) of the Code.
ANNUITANT/PARTICIPANT--EV--We use the term Annuitant in our Contracts and in
our Certificates we use the term Participant. In either case, these terms
mean the individual who is the measuring life for determining annuity
benefits and generally the person who is entitled to receive those benefits.
The person may, in certain cases, not be the Contract or Certificate Owner.
The Annuitant or Participant will have the right to exercise rights under a
Contract or Certificate only if that person is also the Contract or
Certificate Owner. Throughout this prospectus, we will use the term
"Annuitant" to refer to both Annuitants and Participants.
ANNUITY ACCOUNT VALUE--EV--The sum of the amounts in the Investment Options
under your Contract, plus the amount of any loan reserve account (including
accrued interest). The sum of the amounts in the Investment Options on any
Business Day equals (1) the value of your Investment Funds on that date, (2)
the value in the Guaranteed Interest Account on that date plus (3) the sum of
your Market Adjusted Amounts in the Fixed Maturity Periods on that date. See
"Annuity Account Value" in Part 6.
BUSINESS DAY--Generally, our Business Day is any day on which Equitable Life
is open and the New York Stock Exchange is open for trading. We are closed on
national business holidays and also on Martin Luther King, Jr. Day and 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. For the purpose of determining the Transaction Date,
our Business Day ends at 4:00 p.m. Eastern Time or the closing of the New
York Stock Exchange, if earlier.
CASH VALUE--EV--The Annuity Account Value minus any applicable withdrawal
charges and minus any outstanding loan (including accrued interest).
CASH VALUE--M--The Retirement Account Value minus any applicable withdrawal
charges.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACT/CERTIFICATE--EV--When EQUI-VEST is offered under a group Contract, the
document provided to participating individuals is called a Certificate rather
than a Contract. When EQUI-VEST is offered on an individual basis, the
document provided is a Contract. Throughout this prospectus, we will use the
term "Contract" to refer to both Contracts and Certificates.
CONTRACT DATE/PARTICIPATION DATE--EV--We use the term Contract Date in our
Contracts and in our Certificates we use the term Participation Date. In
either case, this is the Business Day we receive at our Processing Office,
the properly completed and signed application form for your Contract, any
other required documentation and a contribution (unless payment is being made
through your employer). Throughout this prospectus, we will use the term
"Contract Date" to refer to both the Contract Date and Participation Date.
CONTRACT OWNER/CERTIFICATE OWNER--EV--The Annuitant, employer, trustee or other
party, whichever owns the Contract or Certificate. References to "Contracts"
and "Contract Owners" in this prospectus include the Certificates and their
Certificate Owners. Throughout this prospectus, we will use the term
"Contract Owner" to refer to both the Contract Owner and Certificate Owner.
5
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CONTRACT YEAR/PARTICIPATION YEAR--EV--We use the term Contract Year in our
Contracts and in our Certificates we use the term Participation Year. In
either case, this is the 12-month period beginning on either your Contract
Date or each anniversary of that date. Throughout this prospectus, we will
use the term "Contract Year" to refer to both Contract Year and Participation
Year.
CURRENT TOTAL ACCOUNT BALANCE--EV--The sum of the amounts in your Investment
Funds and your Guaranteed Interest Account, plus the total Book Value of all
of your Fixed Maturity Periods.
DEFAULT OPTION--M--The Money Market Fund, if that Fund is selected by the
Employer or Plan Trustee as a funding option under the plan. Otherwise, the
Guaranteed Interest Account. For Original Certificates, the Guaranteed
Interest Account is the Default Option.
EMPLOYER--M--An employer who has sponsored a defined contribution plan that
participates in the MOMENTUM Program through either the Master Plan and Trust
or the Pooled Trust.
ERISA--The Employee Retirement Income Securities Act of 1974, as amended.
EXPIRATION DATE--EV--The date on which a Fixed Maturity Period ends.
FIXED MATURITY ACCOUNT--EV--The Account that contains the Fixed Maturity
Periods. The Fixed Maturity Account is referred to as the "Guaranteed Period
Account" in the Contracts.
FIXED MATURITY PERIOD (PERIODS)--EV--Any of the periods of time ending on an
Expiration Date that are available for investment under the Series 400
Contracts. Fixed Maturity Periods are referred to as "Guarantee Periods" in
the Contracts.
GUARANTEED INTEREST ACCOUNT--The Investment Option that pays interest at
guaranteed fixed rates and is part of our general account. The Guaranteed
Interest Account is referred to as "Guaranteed Interest Division" in some
EQUI-VEST Certificates.
INVESTMENT FUNDS--In some EQUI-VEST contracts and in the MOMENTUM Contract,
the Investment Funds are referred to as Investment Divisions. For EQUI-VEST
we use the term Investment Funds in our Contracts, and in our Certificates we
use the term Investment Divisions. These are the thirteen variable investment
funds of the Separate Account. Throughout this prospectus, we will use the
term "Investment Funds" to refer to both Investment Funds and Investment
Divisions.
INVESTMENT OPTIONS--The choices for investment of contributions: the thirteen
Investment Funds, the Guaranteed Interest Account, and for EQUI-VEST, each
available Fixed Maturity Period.
MASTER PLAN AND TRUST--M--A defined contribution master plan and trust
sponsored by Equitable Life.
MATURITY AMOUNT--EV--The amount in a Fixed Maturity Period on its Expiration
Date. The Maturity Amount is referred to as the "Maturity Value" in the
Contracts.
MAXIMUM FUND CHOICE--EV--One of two methods for selecting Investment
Options--Allows the Contract Owner to allocate contributions to any
Investment Fund, the Guaranteed Interest Account and (for Owners of Series
400 Contracts only) the Fixed Maturity Account. This election will result in
restrictions in the amount you can transfer out of the Guaranteed Interest
Account.
MAXIMUM TRANSFER FLEXIBILITY--EV--One of two methods for selecting Investment
Options--Allows the Contract Owner to allocate contributions to the Balanced,
Growth & Income, Equity Index, Common Stock, Global, International,
Aggressive Stock and Growth Investors Funds only and to the Guaranteed
Interest Account, with no transfer restrictions in the amount you can
transfer out of the Guaranteed Interest Account.
ORIGINAL CONTRACTS/CERTIFICATES--EQUI-VEST Contracts and MOMENTUM
Certificates under which the EQUI-VEST Contract Owner or the MOMENTUM
Employer has not elected to add Intermediate Government Securities, Quality
Bond, High Yield, Growth & Income, Equity Index, Global, International,
Conservative Investors and Growth Investors Investment Funds as Investment
Options. These Contracts/Certificates:
o permit investment in only the Guaranteed Interest Account and the Money
Market, Balanced, Common Stock and Aggressive Stock Funds and
o prohibit transfers into the Money Market Fund.
PARTICIPANT--An individual who participates in an Employer's plan funded by
either an EQUI-VEST or the MOMENTUM Contract.
PARTICIPATION DATE--M--The Business Day we receive your properly completed and
signed enrollment form at our Processing Office or the date we receive the
first contribution made on your behalf, if earlier. For Participants in plans
that converted to MOMENTUM from our EQUI-VEST Corporate Trusteed Contract,
the Participation Date is the same Participation Date as in the EQUI-VEST
Corporate
6
<PAGE>
Trusteed Certificate relating to that Participant. If more than one EQUI-VEST
Corporate Trusteed Certificate is in force with respect to a Participant,
then the Participation Date will be the earliest Participation Date.
PARTICIPATION YEAR--M--The 12-month period beginning on either your
Participation Date or each anniversary of that date.
PLAN TRUSTEE--M--A trustee or trustees for an Employer's individually-designed
or prototype defined contribution plan.
POOLED TRUST--M--The Pooled Trust for Members Retirement Plans of The Equitable
Life Assurance Society of the United States.
PORTFOLIOS--The portfolios of the Hudson River Trust that correspond to the
Investment Funds of the Separate Account.
PROCESSING OFFICE--The office to which all contributions, written requests or
other written communications must be sent. See "Services We Provide" in Part 1.
RATE TO MATURITY--EV--The interest rate established for each Business Day for
each Fixed Maturity Period. Rates to Maturity are referred to as "Guaranteed
Rates" in the Contracts.
RETIREMENT ACCOUNT VALUE--M--The sum of the amounts that a Participant has in
the Investment Options under the MOMENTUM Contract.
SAI--The EQUI-VEST and MOMENTUM Statement of Additional Information.
SEPARATE ACCOUNT--Our Separate Account A.
SOURCE--M--The source of a contribution. There are six potential sources: (i)
employer, (ii) post-tax, (iii) prior plan, (iv) qualified non-elective and
qualified matching, (v) salary deferral, and (vi) matching contributions. A
detailed description of these Sources is contained in the SAI.
SUCCESSOR ANNUITANT AND OWNER--EV--The individual who upon the death of the
Annuitant and Owner succeeds as the Annuitant and Owner of the Contract. You
can designate a Successor Annuitant and Owner under Series 300 and 400
Contracts if the following conditions are met: (1) you are both Annuitant and
Owner and (2) you name your spouse as the sole beneficiary.
SUCCESSOR OWNER--EV--The individual who upon your death will succeed you as
Owner of your Contract. A Successor Owner can be designated under Series 300
and 400 Contracts.
TRANSACTION DATE--The Business Day we receive a contribution or acceptable
written or telephone transaction request providing the information we need at
our Processing Office. If your contribution or request is not accompanied by
complete information or is mailed to the wrong address, the Transaction Date
will be the date we receive such complete information at our Processing
Office. If your contribution or request reaches our Processing Office on a
non-Business Day, or after the close of the Business Day, the Transaction
Date will be the next following Business Day--unless under certain
circumstances, a future date certain is specified in the request.
THE TRUST--The Hudson River Trust, a mutual fund in which the assets of
Separate Account A are invested.
VALUATION PERIOD--Each Business Day together with any consecutive preceding
non-Business Day(s).
7
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PART 1: SUMMARY
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The following Summary is qualified in its entirety by more detailed
information appearing elsewhere in the prospectus (see "Prospectus Table of
Contents" on page 3) and the terms of applicable Contracts. Please be sure to
read the prospectus in its entirety.
EQUITABLE LIFE
EQUITABLE LIFE is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our Home Office is located
at 787 Seventh Avenue, New York, New York 10019. We are authorized to sell
life insurance and annuities in all fifty states, the District of Columbia,
Puerto Rico and the Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly-owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding shares of
common stock of the Holding Company plus convertible preferred stock. Under
its investment arrangements with Equitable Life and the Holding Company, AXA
is able to exercise significant influence over the operations and capital
structure of the Holding Company and its subsidiaries, including Equitable
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $195.3 billion of assets as of December 31, 1995, including
third party assets of approximately $144.4 billion. We are one of the
nation's leading pension fund managers. These assets are primarily managed
for retirement and annuity programs for businesses, tax-exempt organizations
and individuals. This broad customer base includes nearly half the Fortune
100, more than 42,000 small businesses, state and local retirement funds in
more than half the 50 states, approximately 250,000 employees of educational
and non- profit institutions, as well as nearly 500,000 individuals. Millions
of Americans are covered by Equitable Life's annuity, life and pension
contracts.
TYPES OF RETIREMENT PROGRAMS
EQUI-VEST and MOMENTUM are designed to meet the retirement savings needs of
individuals and those working for businesses and other organizations.
EQUI-VEST PERSONAL RETIREMENT PROGRAMS:
o IRA
An individual retirement annuity (IRA) for both deductible and
non-deductible IRA contributions made by an individual. The Contract
Owner must also be the Annuitant.
o QP IRA
An IRA for rollover distributions only (QP IRA) (generally from
qualified plans or tax-sheltered annuities). The Contract Owner must
also be the Annuitant. References to IRA may include QP IRA.
o NQ
An annuity generally for after-tax or non-qualified (NQ) dollars
contributed by or on behalf of an individual. The Annuitant and Contract
Owner need not be the same.
EQUI-VEST EMPLOYER SPONSORED RETIREMENT PROGRAMS:
o SEP and SARSEP
An IRA Contract used to fund a simplified employee pension plan (SEP)
sponsored by sole proprietorships, partnerships or corporations.
Contributions are made directly by the employer, at the employer's
expense or under a salary reduction program (SARSEP) which permits an
employer to reduce an employee's compensation for the purpose of making
contributions. Each individual employee covered by the SEP is the
Contract Owner of the IRA set up on his or her behalf and must also be
the Annuitant. Unless otherwise noted, all references to SEP Contracts
include SARSEP arrangements.
o UNINCORPORATED TRUSTEED
Trustee-owned Contracts used to fund qualified defined contribution
plans of employers who are sole proprietorships, partnerships or
business trusts. These plans are known as "HR-10" or "Keogh" plans.
Contributions are made by the employer for the benefit of employees who
become Annuitants under the Contract. We do not act as trustee for these
plans, so the employer must select a trustee.
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o TSA
A Code section 403(b) tax-sheltered annuity (TSA) for public schools and
nonprofit entities organized under Code section 501(c)(3). Contributions
are made by the employer either directly or through a salary reduction
agreement entered into with the employee. Each employee is the Contract
Owner and must also be the Annuitant.
O UNIVERSITY TSA
A TSA, originally designed to meet the needs of restricted plans of some
universities, may be used for any TSA plan that prohibits loans and has
additional restrictions not found in the basic TSA. Contributions are
made by the employer either directly or through a salary reduction
agreement entered into with the employee. Each employee is the Contract
Owner and must also be the Annuitant. Unless otherwise noted, references
to TSA Contracts include University TSAs.
o EDC
Contracts used to fund Code section 457 employee deferred compensation
(EDC) plans of state and municipal governments and other tax-exempt
organizations. Contributions are made by the employer on behalf of the
employee generally pursuant to a salary reduction agreement. The
employer is the Contract Owner but the employee is the Annuitant. The
EDC program currently is not available for state or municipal government
plans in Texas.
o PAYROLL DEDUCTION IRA AND NQ
Contributions are remitted by the employer on behalf of the employee
through a payroll deduction program.
In the past, EQUI-VEST was available to fund (i) Corporate Trusteed plans
where the employer was a corporation, and (ii) HR-10 (Keogh) plans where the
Contracts were owned by the Annuitants themselves (Annuitant-Owned HR-10),
rather than by a trustee. Although we still issue such Corporate Trusteed and
Annuitant-Owned HR-10 Contracts to employees whose employer's plans enrolled
on this basis, plans of this type are no longer available under EQUI- VEST to
new employer groups. New employers will be offered our MOMENTUM Program.
Later in this prospectus we refer to program features which are specific to
particular types of retirement programs. Under some employer-sponsored plans,
the availability of certain features may be limited. Employers can provide
more detail about such plans.
Only NQ and Trusteed Contracts may be sold in Puerto Rico.
THE MOMENTUM PROGRAM:
o POOLED TRUST
A funding vehicle used in connection with an Employer's qualified
defined contribution plan and trust.
o MASTER TRUST
A funding vehicle used in connection only with the Master Plan, an
IRS-approved master defined contribution plan, in which case the Master
Trust will be the sole funding vehicle for the Employer's plan.
The Employer or Plan Trustee, as applicable, is responsible for determining
whether the MOMENTUM Contract is a suitable funding vehicle for its defined
contribution plan and should, therefore, carefully read this prospectus and
the MOMENTUM Contract before entering into the contract.
INVESTMENT OPTIONS
The following Investment Options are offered: The Guaranteed Interest
Account, and thirteen Investment Funds (Money Market, Intermediate Government
Securities, Quality Bond, High Yield, Growth & Income, Equity Index, Common
Stock, Global, International, Aggressive Stock and the Asset Allocation
Series: Conservative Investors, Balanced and Growth Investors). Each
Investment Fund invests in shares of a corresponding Portfolio of the Trust.
The attached Trust prospectus describes the investment objectives and
policies of the Portfolios available to Contract Owners. Also, for EQUI-VEST
only, subject to state regulatory approval, Fixed Maturity Periods are
available under Series 400 Contracts.
If an employer's plan is intended to comply with the requirements of ERISA
Section 404(c), the Employer or the Plan Trustee is responsible for making
sure that the Investment Options chosen constitute a broad range of
investment choices as required by the Department of Labor's (DOL) regulation
under ERISA Section 404(c). See "Certain Rules Applicable to Plans Designed
to Comply with Section 404(c) of ERISA" in Part 10.
Educational information about investing which may be useful for Participants
is contained in "Part 13: Key Factors in Retirement Planning" in the SAI. The
SAI is available free of charge by calling (EQUI-VEST) 1-800-628-6673 or
(MOMENTUM) 1-800-528-0204.
SELECTING INVESTMENT OPTIONS
Under EQUI-VEST Trusteed Contracts and under the MOMENTUM Program, the
Employer or Plan Trustee will choose the investment options available
9
<PAGE>
to the Participant. Under all other Contracts, the Contract Owner makes that
choice. If any of the Options listed below are selected, there will be
restrictions on the amount you can transfer out of the Guaranteed Interest
Account. Additionally, if you are participating through your Employer's plan
and your employer makes any of these Options available to you, whether or not
you select them, you will be subject to such restrictions. The Options that
result in restrictions are: Conservative Investors, Money Market,
Intermediate Government Securities, Quality Bond, High Yield and, for
EQUI-VEST, the Fixed Maturity Periods.
EQUI-VEST and MOMENTUM Original Contracts and Certificates limit you to only
the Guaranteed Interest Account and the Money Market, Balanced, Common Stock
and Aggressive Stock Funds.
CONTRIBUTIONS
Generally, for EQUI-VEST, contributions may be made at any time: in single
sum amounts, on a regular basis or as your financial situation permits. For
some types of retirement plans, contributions must be made by the employer.
Different minimum contribution limits apply to different EQUI-VEST Contracts.
MOMENTUM contributions may be made at any time and may be made only by the
Employer or Plan Trustee by either wire transfer or check. Participants
should not send contributions directly to Equitable Life. There is no minimum
contribution.
MOMENTUM and EQUI-VEST contributions are credited as of the Transaction Date,
if they are accompanied by properly completed forms. Failure to use the
proper form, or to complete the form properly, may result in a delay in
crediting contributions. All contributions made by check must be drawn on a
bank in the U.S., in U.S. dollars and made payable to Equitable Life. All
checks are accepted subject to collection. Under the MOMENTUM Program and
EQUI-VEST Trusteed Contracts, either you or the Plan Trustee, or both, as
applicable, must instruct us to allocate contributions to one or several
Investment Options that are available under your Employer's plan.
Under all other EQUI-VEST Contracts, you, as Owner, may instruct us to
allocate your contributions to one or several Investment Options.
Allocation percentages must be in whole numbers and the sum must equal 100%.
Contributions made to an Investment Fund purchase Accumulation Units in that
Investment Fund.
TRANSFERS
Under the MOMENTUM Program and EQUI-VEST Trusteed Contracts, either the
Participant or the Plan Trustee, or both as applicable, may direct us to
transfer among the investment options. Under other EQUI-VEST Contracts, you
may make such transfers. There is no charge for these transfers. If you have
an Original Contract, restrictions will apply to transfers into the Money
Market Fund from any of the other Investment Options. Minimum transfer
amounts may apply.
SERVICES WE PROVIDE
Your Equitable Life Agent can help you with any questions you have. In
addition, there are a number of services designed to keep you informed.
REGULAR REPORTS
We currently provide written confirmation of every financial transaction,
and:
o Annual statement
o Semi-annual statement of account
(MOMENTUM only)
o Statement as of the last day of the Contract Year (EQUI-VEST only)
We reserve the right to change the frequency of these reports.
ADDITIONAL SERVICES
Materials and seminars of an educational nature to assist retirement planning
needs of Participants can be arranged through your Equitable Life Agent. Your
Equitable Life Agent can also schedule retirement planning workshops to
facilitate plan enrollment periods.
TELEPHONE OPERATED
PLAN/POLICY SUPPORT (TOPS) SYSTEM
TOPS is designed to provide up-to-date information via touch-tone telephone.
TOPS is available under all EQUI-VEST Contracts, but in certain plans, the
use of TOPS may be limited by the plan provisions. Under MOMENTUM, TOPS is
available only if your Employer has elected this service. Use TOPS:
o for current Annuity or Retirement Account Value;
o for current allocation percentages;
o for the number of units held in the Investment Funds under your account;
or
o to change your allocation percentages and transfer money among the
Investment Funds and the Guaranteed Interest Account.
o to elect Investment Simplifier (EQUI-VEST only)
10
<PAGE>
A special code number is required to use TOPS. We have established procedures
that are considered to be reasonable and are designed to confirm that
instructions communicated by telephone are genuine. Such procedures include
requiring certain personal identification information prior to acting on
telephone instructions and providing written confirmation 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 action on our part or any failure or
omission to act as a result of 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. We reserve the right to terminate or modify any telephone or
automated transfer/withdrawal service we provide upon 90 days written
notice.
A toll-free number is available, and local TOPS telephone numbers will be
provided. TOPS is available daily, 24 hours a day for EQUI-VEST and from 8:00
a.m. to 9:00 p.m. Eastern Time every Business Day for MOMENTUM. Transfers
made after 4:00 p.m. Eastern Time on a Business Day or on a non-Business Day
are not processed until the following Business Day.
TOLL-FREE TELEPHONE SERVICES
We maintain toll-free numbers for your convenience. See the charts below.
WRITTEN COMMUNICATION
All items received at the proper address prior to 4:00 p.m. Eastern Time on a
Business Day will be effective on the same Business Day. Written requests
will be processed as of the date a properly completed request is received at
our Processing Office.
WHERE TO REACH US
EQUI-VEST
<TABLE>
<CAPTION>
CONTRIBUTIONS:
FOR EDC, TSA, TRUSTEED,
FOR ALL WRITTEN REQUESTS CONTRIBUTIONS: ANNUITANT OWNED HR-10,
AND COMMUNICATIONS (OTHER FOR IRA & NQ OWNERS SEP AND LOAN REPAYMENTS:
THAN CONTRIBUTIONS AND WHO CONTRIBUTE IRA AND NQ WHEN CONTRIBUTIONS FOR TSA AND CORPORATE
LOAN REPAYMENTS INDIVIDUALLY ARE REMITTED BY THE EMPLOYER TRUSTEED LOAN REPAYMENTS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REGULAR Individual Annuity Center Equitable Life Equitable Life Equitable Life Loan
MAIL Equitable Life EQUI-VEST Individual EQUI-VEST Unit Annuity Repayment IAC Lockbox
Post Office Box 2996 Annuity Collections Collections Post Office Box 13496
New York, NY 10116-2996 Post Office Box 13459 Post Office Box 13463 Newark, NJ 07188-0496
Newark, NJ 07188-0459 Newark, NJ 07188-0463
EXPRESS Individual Annuity Center Equitable Life Equitable Life N/A
MAIL Equitable Life* c/o First Chicago c/o First Chicago National
2 Penn Plaza, 5th Floor National Processing Processing Center
New York, NY 10121 Center, 3rd Floor 300 Harmon Meadow
300 Harmon Meadow Boulevard, 3rd Floor
Secaucus, NJ 07094 Secaucus, NJ 07094
Attn: Box 13459 Attn: Box 13463
TOPS 1-800-755-7777
Note: Your subscriber number is 777700000
DAILY UNIT VALUE 1-800-841-0801
CUSTOMER SERVICE REPRESENTATIVES 1-800-628-6673
(AVAILABLE 8:30 A.M.-7:00 P.M, EASTERN
TIME, ON EACH BUSINESS DAY
</TABLE>
* Effective on or about July 1, 1996, Equitable intends to relocate this
office to 200 Plaza Drive, 2nd Floor, Secaucus, N.J. 07094.
11
<PAGE>
MOMENTUM
<TABLE>
<CAPTION>
FOR PAYMENTS (E.G., CONTRIBUTIONS, LOAN FOR ALL OTHER COMMUNICATIONS (E.G.,
PAYMENTS, ETC.) REQUESTS FOR TRANSFERS, WITHDRAWALS)
- ----------- -------------------------------------------- ---------------------------------------
<S> <C> <C>
REGULAR Equitable Life MOMENTUM Administrative MOMENTUM Administrative Services P.O.
MAIL Services P.O. Box 13629 Newark, NJ Box 2919 New York, NY 10116
07188-0629
EXPRESS First Chicago National Processing Center 300 MOMENTUM Administrative Services 200
MAIL Harmon Meadow Boulevard, 3rd Floor Secaucus, Plaza Drive Harmon Meadow Secaucus, NJ
NJ 07094 Attention: MOMENTUM 13629 07094
TOPS----------------------------------------------1-800-821-7777---------------------------------------------
Note: Your subscriber number is 66644. For Original Certificates, the subscriber number is 66633.
DAILY UNIT VALUE-----------------------------------Call TOPS or Telephone Consultants------------------------
TELEPHONE CONSULTANTS------------------------------1-800-528-0204-------------------------------------------
(AVAILABLE 8:30 A.M.-7:00 P.M.,
EASTERN TIME, ON EACH BUSINESS DAY)
- --------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OPTIONS AND
DEATH BENEFITS
Not all of the options described below may be available to MOMENTUM
Participants. The selection of options depends on the terms of each Employer
plan. EQUI-VEST Contracts and the MOMENTUM Program provide several different
types of distribution options, including:
o fixed and variable annuities;
o lump sum payments;
o partial withdrawals;
o required minimum distributions;
o payments for a specific period of time.
o our Systematic Withdrawal option under EQUI-VEST (not available for
amounts allocated to the Fixed Maturity Account);
Under EQUI-VEST, there is a death benefit if the Annuitant dies before an
annuity payout begins. The beneficiary will be paid the greater of the
Annuity Account Value minus any outstanding loan balance (including accrued
interest) or the minimum death benefit. Under MOMENTUM, if a participant dies
before distributions begin, the MOMENTUM Contract provides a death benefit.
The beneficiary will be paid the greater of the Participant's Retirement
Account Value or the minimum death benefit. The minimum death benefit will
not be less than the total contributions adjusted for total withdrawals and
any applicable taxes, and, for EQUI-VEST, less any outstanding loan balance
(including accrued interest).
SPDA VARIABLE DISTRIBUTION OPTION
In addition to offering a variable annuity distri-bution option to
participants in EQUI-VEST and MOMENTUM, we also make the variable annuity
distribution option described in Part 6 under "Distribution Options: Fixed
and Variable Annuity Forms" available to owners of Equitable Life's single
premium deferred annuity (SPDA) contracts. SPDA contractholders who are
considering purchasing a variable distribution option should review the
section on Distribution Options in Part 6, "Part 2: Separate Account A and
its Investment Funds," "Part 3: Investment Performance," the Hudson River
Trust prospectus (beginning after page 91 of this prospectus) and the
sections of the Statement of Additional Information which discuss the
variable annuity distribution option.
WITHDRAWALS AND TERMINATION
Premature withdrawals or contract terminations (generally prior to age
59 1/2), may be restricted and subject to an early withdrawal Federal income tax
penalty. See "Part 10: Federal Tax and ERISA Matters."
Subject to income tax rules and the provisions of any applicable employer
plan, you may withdraw funds at any time by completing and submitting a
proper form. This form is available from your Agent or from our Processing
Office. Withdrawals may be subject to a minimum amount or to a contingent
withdrawal charge. Under EQUI-VEST, withdrawals from Fixed Maturity Periods
prior to their Expiration Dates will result in a market value adjustment.
The MOMENTUM Contract also permits the Employer or Plan Trustee to terminate
the Employer's plan's participation under the Contract at any time. Equitable
Life has also reserved the right to terminate the Contract if we learn that
the Employer's plan fails to qualify under the Code or if the Employer fails
to provide the Participant information necessary to administer the Contract.
Withdrawals due to plan termination may also result in a contingent
withdrawal charge.
12
<PAGE>
LOANS
The MOMENTUM Contract permits your Employer to withdraw funds from your
Retirement Account Value, without incurring a contingent withdrawal charge,
in order to make a loan to a Participant under the Employer's plan. See
"Loans" in Part 7 for a description of loan procedures and rules and
"Deductions and Charges" in Part 8 for a description of charges associated
with plan loans.
A plan loan under the MOMENTUM Program will be in default if the amount of
any scheduled repayment is not received by us within 90 days of its due date,
or if the Participant dies or participation under the MOMENTUM Contract is
terminated. We will then treat the outstanding loan principal as a withdrawal
subject to the contingent withdrawal charge.
Certain EQUI-VEST Contracts also permit loans without incurring a contingent
withdrawal charge on undefaulted loan amounts. Such loans will be
administered in accordance with proposed regulations, if applicable. See
"Loans" in Part 6 for more information.
TAXES
Generally, any earnings attributable to your Annuity Account Value or to your
Retirement Account Value will not be included in your taxable income until
distributions are made. See "Part 10: Federal Tax and ERISA Matters."
DEDUCTIONS AND CHARGES
Keep in mind that these programs are designed for retirement savings and
long-range financial planning; certain charges will not apply unless you make
early withdrawals from your Contract.
Following is a summary of the different types of deductions and charges which
may be applicable.
O CHARGE TO INVESTMENT FUNDS--We make a daily charge for certain expenses
of the Contract. It covers death benefits, mortality risks, expenses and
expense risks. The daily Accumulation Unit Value is quoted net of these
charges. These charges will vary by Contract, and are at a maximum of
1.35% (effective annual rate) for the Intermediate Government
Securities, Quality Bond, High Yield, Growth & Income, Equity Index,
Global, International, Aggressive Stock, Conservative Investors and
Growth Investors Funds and 1.49% (effective annual rate) for the Money
Market, Common Stock and Balanced Funds. Further, EQUI-VEST Series 100
and 200 Contracts and the MOMENTUM Contract impose an overall limit of
1.75% on total Separate Account and Trust expenses for the Money Market,
Common Stock, Aggressive Stock and Balanced Funds.
O TRUST CHARGES TO PORTFOLIOS--Investment advisory fees and other expenses
of the Trust are charged daily against the Trust's assets. These charges
are reflected in the Portfolio's daily share price and in the daily
Accumulation Unit Value for the Investment Funds.
O ADMINISTRATIVE CHARGES--The administrative charge is currently at a
maximum of $30 a year but may be less under different contracts.
For EQUI-VEST, the charge is deducted each Contract Year from your
Annuity Account Value in the Guaranteed Interest Account and Investment
Funds and, in certain cases, from the Fixed Maturity Periods.
For MOMENTUM, the charge is deducted pro rata from your Retirement
Account Value on the last Business Day of each calendar quarter. Under
most contracts, we reserve the right to increase this charge if our
administrative costs increase. Employers under the MOMENTUM Contract
have the option of being billed directly for this charge.
O CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES--Generally, charges
for state premium taxes and other applicable taxes, if any, are deducted
when an annuity payment option is elected. The current tax charge that
might be imposed varies by state and ranges from 0% to 3.5%; however,
the rate is 1% in Puerto Rico and 5% in the Virgin Islands.
O CONTINGENT WITHDRAWAL CHARGE--If you terminate your participation under
a contract or make a partial withdrawal, your Annuity Account Value or
Retirement Account Value, as applicable, may be subject to a contingent
withdrawal charge that will be used to cover sales and promotional
expenses. This charge will not exceed 6% of the amount withdrawn. The
amount withdrawn includes the amount you request and the withdrawal
charge. Important exceptions and limitations eliminate or reduce the
contingent withdrawal charge.
O CHARGE ON THIRD PARTY TRANSFER OR EXCHANGE UNDER EQUI-VEST
CONTRACTS--You may instruct us to make a direct transfer to a third
party of amounts under your Contract, or request that your Contract be
exchanged for another contract or certificate issued by another carrier.
Certain Contracts permit us to deduct a charge of $25 per occurrence for
such transfers or exchanges.
13
<PAGE>
O PLAN LOAN CHARGES UNDER MOMENTUM Program--A $25 set-up fee will be
deducted from your Retirement Account Value at the time a plan loan is
made. Also, we will deduct a loan recordkeeping fee of $6 from your
Retirement Account Value on the last Business Day of each calendar
quarter if there is an Active Loan on that date. We reserve the right to
increase these administrative charges if our costs increase. Your
Employer may elect to pay these fees. See "Plan Loan Charges" in Part 8.
O CHARGE FOR PLAN RECORDKEEPING SERVIES UNDER MOMENTUM Program--Equitable
Life offers two plan recordkeeping options, one of which must be elected
for each plan. The annual charge for basic recordkeeping is $300 per
plan and is billed directly to the Employer. The full service
recordkeeping option is available only for plans that satisfy Equitable
Life's underwriting requirements. Fees for the full service
recordkeeping option are defined in the plan recordkeeping services
agreement which is required for all plans that elect this option. We
reserve the right to increase these charges. See "Charge for Plan
Recordkeeping Services" in Part 8.
DEFERRED VARIABLE ANNUITIES
EQUI-VEST is a series of deferred variable annuity contracts. The MOMENTUM
Program is offered under a group variable annuity contract. Variable
annuities are designed for retirement savings and long-range financial
planning. Contributions accumulate on a Federal income tax deferred basis and
at a future date you can receive a stream of periodic payments. Tax deferral
is one of the advantages of an annuity over many other kinds of investments.
In addition, annuities offer individuals the opportunity to receive an
assured stream of payments for life.
Under Federal tax law, an individual, employer or trustee may, subject to
various limits, purchase an annuity to fund a tax-favored retirement program,
such as an IRA or qualified retirement plan. In many cases, the individual or
employer makes contributions to the tax-favored retirement program with
pre-tax dollars. Alternatively, annuities may be purchased with after-tax
dollars by individuals who wish to create additional retirement savings.
There are a variety of payout options at retirement, including a lump sum and
a variety of investment choices while your contributions are accumulating.
10-DAY FREE LOOK FOR EQUI-VEST
You have the right to examine your EQUI-VEST Contract for a period of 10 days
after you receive it, and to return it to us for a refund. You cancel it by
sending it to our Processing Office. The free look is extended if your state
requires a refund period of longer than 10 days. This right applies only to
the initial owner of a Contract.
For contributions allocated to Investment Funds, your refund will equal those
contributions plus or minus any investment gain or loss through the date we
receive your Contract at our Processing Office. Certain daily charges will
also be automatically deducted. For contributions allocated to the Guaranteed
Interest Account, the refund will equal the amount allocated to the
Guaranteed Interest Account without interest. For contributions allocated to
the Fixed Maturity Account, the refund will equal the amount of your
contributions plus any crediting of interest, and plus or minus any market
value adjustment. Some states or Federal income tax regulations may require
that we calculate the refund differently. We follow these same procedures if
you change your mind before a Contract has been issued, but after a
contribution has been made.
In certain cases, there may be tax implications to cancelling your Contract
during the 10-day free look period.
14
<PAGE>
FEE TABLES AND EXAMPLES
The EQUI-VEST Contracts and the MOMENTUM Contract may differ in terms of the
fees that are charged. One of the following four Tables will apply to you.
These Tables, and the related Examples, will assist you in understanding the
various costs and expenses under your EQUI-VEST Contract or the MOMENTUM
Program so that you may compare them with other products. The Tables reflect
expenses of both the Separate Account and the Trust for the year ended
December 31, 1995.
As explained in Parts 4 and 5, the Guaranteed Interest Account and the
EQUI-VEST Fixed Maturity Account are not a part of the Separate Account and
are not covered by the Tables and Examples. The only expenses shown in the
Tables which apply to the Guaranteed Interest Account and the Fixed Maturity
Account are the Contingent Withdrawal Charge, the Annual Administrative
Charge and the Third Party Transfer or Exchange Fee, if applicable. Also see
"Income Annuity Distribution Options" in Part 6 for a description of charges
under EQUI-VEST Income Annuities and "Distribution Options" and "Annuity
Distribution Options" in Part 7 for a description of annuity options under
the MOMENTUM Program and Part 8 for charges associated with some of those
options.
Certain expenses and fees shown in these Tables may not apply to you. To
determine whether a particular item in a Table applies (and the actual
amount, if any) consult the section of the prospectus for your EQUI-VEST
Contract series or for MOMENTUM indicated in the notes to the Table. For a
description of the different EQUI-VEST Series, see "Part 6: The EQUI-VEST
Contract Series". A charge for applicable state or local taxes may be
deducted from contributions in some states. See "Charges for State Premium
and Other Applicable Taxes" in Part 8.
TABLE 1: EQUI-VEST SERIES 100
Description of Expenses
<TABLE>
<CAPTION>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
SALES LOAD ON PURCHASES ................... NONE
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) .. 6%
MAXIMUM ANNUAL ADMINISTRATIVE CHARGE (2) .. $30
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY GROWTH & EQUITY
MARKET SECURITIES BOND HIGH YIELD INCOME INDEX
---------- -------------- --------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND TRUST
ANNUAL EXPENSE (3) 1.75% N/A N/A N/A N/A N/A
Separate Account Annual
Expenses (4)
Mortality and Expense Risk Fees .65% .50% .50% .50% .50% .50%
Other Expenses .84% .84% .84% .84% .84% .84%
---------- -------------- --------- ------------ ---------- --------
Total Separate Account Annual
Expenses 1.49%(3) 1.34% 1.34% 1.34% 1.34% 1.34%
Trust Annual Expenses (4)
Investment Advisory Fees 0.40% 0.50% 0.55% 0.55% 0.55% 0.35%
Other Expenses 0.04% 0.07% 0.04% 0.05% 0.05% 0.13%
---------- -------------- --------- ------------ ---------- --------
Total Trust Annual Expenses (5) 0.44%(3) 0.57% 0.59% 0.60% 0.60% 0.48%
</TABLE>
<TABLE>
<CAPTION>
COMMON AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
---------- -------- --------------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND
TRUST ANNUAL EXPENSE (3) 1.75% N/A N/A 1.75% N/A 1.75% N/A
Separate Account Annual Expenses
(4)
Mortality and Expense Risk Fees .65% .50% .50% .50% .50% .65% .50%
Other Expenses .84% .84% .84% .84% .84% .84% .84%
---------- -------- --------------- ------------ -------------- ---------- -----------
Total Separate Account Annual
Expenses 1.49%(3) 1.34% 1.34% 1.34%(3) 1.34% 1.49%(3) 1.34%
Trust Annual Expenses (4)
Investment Advisory Fees 0.35% 0.53% 0.90% 0.46% 0.55% 0.37% 0.52%
Other Expenses 0.03% 0.08% 0.13% 0.03% 0.04% 0.03% 0.04%
---------- -------- --------------- ------------ -------------- ---------- -----------
Total Trust Annual Expenses (5) 0.38%(3) 0.61% 1.03% 0.49%(3) 0.59% 0.40%(3) 0.56%
</TABLE>
15
<PAGE>
TABLE 2: EQUI-VEST SERIES 200
Description of Expenses
<TABLE>
<CAPTION>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
SALES LOAD ON PURCHASES ................... None
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) .. 6%
MAXIMUM ANNUAL ADMINISTRATIVE CHARGE (2) .. $30
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY GROWTH & EQUITY
MARKET SECURITIES BOND HIGH YIELD INCOME INDEX
---------- -------------- --------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND TRUST
ANNUAL EXPENSE (3) 1.75% N/A N/A N/A N/A N/A
Separate Account Annual Expenses
(4)
Mortality and Expense Risk Fees 1.15% 1.09% 1.09% 1.09% 1.09% 1.09%
Other Expenses .25% .25% .25% .25% .25% .25%
---------- -------------- --------- ------------ ---------- --------
Total Separate Account Annual
Expenses 1.40%(3) 1.34% 1.34% 1.34% 1.34% 1.34%
Trust Annual Expenses (4)
Investment Advisory Fees 0.40% 0.50% 0.55% 0.55% 0.55% 0.35%
Other Expenses 0.04% 0.07% 0.04% 0.05% 0.05% 0.13%
---------- -------------- --------- ------------ ---------- --------
Total Trust Annual Expenses (5) 0.44%(3) 0.57% 0.59% 0.60% 0.60% 0.48%
</TABLE>
<TABLE>
<CAPTION>
COMMON AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
---------- -------- --------------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND
TRUST ANNUAL EXPENSE (3) 1.75% N/A N/A 1.75% N/A 1.75% N/A
Separate Account Annual Expenses
(4)
Mortality and Expense Risk Fees 1.15% 1.09% 1.09% 1.09% 1.09% 1.15% 1.09%
Other Expenses .25% .25% .25% .25% .25% .25% .25%
---------- -------- --------------- ------------ -------------- ---------- -----------
Total Separate Account Annual
Expenses 1.40%(3) 1.34% 1.34% 1.34%(3) 1.34% 1.40%(3) 1.34%
Trust Annual Expenses (4)
Investment Advisory Fees 0.35% 0.53% 0.90% 0.46% 0.55% 0.37% 0.52%
Other Expenses 0.03% 0.08% 0.13% 0.03% 0.04% 0.03% 0.04%
---------- -------- --------------- ------------ -------------- ---------- -----------
Total Trust Annual Expenses (5) 0.38%(3) 0.61% 1.03% 0.49%(3) 0.59% 0.40%(3) 0.56%
</TABLE>
- ------------
Notes:
(1) The contingent withdrawal charge is a percentage of specified
contributions or amounts withdrawn, depending on the Contract.
Important exceptions and limitations eliminate or reduce the contingent
withdrawal charge. See "Contingent Withdrawal Charge" in Part 8.
(2) Many Contracts are exempt from this charge. The Annual Administrative
Charge is the lesser of $30 or 2% of the Annuity Account Value. See
"Annual Administrative Charge" in Part 8.
(3) The amounts shown in the Table under "Separate Account Annual Expenses"
and "Hudson River Trust Annual Expenses," when added together, are not
permitted to exceed a total annual rate of 1.75% of the value of the
assets held in the Money Market, Common Stock, Aggressive Stock and
Balanced Funds. For Series 100 Contracts, without this expense
limitation, total Separate Account Annual Expenses plus Trust Annual
Expenses for 1995 would have been 1.93%, 1.87%, 1.83%, and 1.89% for
the Money Market, Common Stock, Aggressive Stock and Balanced Funds,
respectively. For Series 200 Contracts, without this expense limitation,
total Separate Account Annual Expenses plus Trust Annual Expenses for
1995 would have been 1.84%, 1.78%, 1.83%, and 1.80% for the Money Market,
Common Stock, Aggressive Stock and Balanced Funds, respectively. For
Series 100 Contracts, Separate Account Annual Expenses are guaranteed
not to exceed a total annual rate of 1.49% for the Money Market, Balanced
and Common Stock Funds and an annual rate of 1.34% for all other
Investment Funds. See "Limitation on Charges" in Part 8.
(4) Separate Account and Trust expenses are shown as a percentage of each
Investment Fund's or Portfolio's average value. "Mortality and Expense
Risk Fees" includes death benefit charges. "Other Expenses" under
"Separate Account Annual Expenses" includes financial accounting
expenses. See "Limitation on Charges," "Charges to Investment Funds"
and "Trust Charges to Portfolios" in Part 8.
(5) Expenses shown for all Portfolios are for the fiscal year ended
December 31, 1995. The amount shown for the International Portfolio,
which was established on April 3, 1995 is annualized. The investment
advisory fee for each Portfolio may vary from year to year depending
upon the average daily net assets of the respective Portfolio of the
Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. The Trust expenses are shown as a
percentage of each Portfolio's average value. See "Trust Charges to
Portfolios" in Part 8.
16
<PAGE>
EXAMPLES: EQUI-VEST SERIES 100 AND 200
For each type of Series 100 and 200 Contract, the examples which follow
show the expenses that a hypothetical Contract Owner would pay in the
surrender and non-surrender situations noted below, assuming a single
contribution of $1,000 on the Contract Date invested in one of the
Investment Funds listed and a 5% annual return on assets and no waiver of
the contingent withdrawal charge.(1) For purposes of these examples, the
annual administrative charge is computed by reference to the actual
aggregate annual administrative charges as a percentage of the total assets
held under all EQUI-VEST Contracts.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future
investment performance.
IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSE
WOULD BE:
FOR IRA (INCLUDING CERTAIN QP IRA(2)), SEP, EDC AND PARTICIPANT-OWNED HR-10
CONTRACTS:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Money Market $81.26 $125.75 $166.03 $259.78
Intermediate Government Securities 82.84 130.51 174.07 276.62
Quality Bond 83.04 131.11 175.07 278.70
High Yield 83.13 131.41 175.57 279.74
Growth & Income 83.13 131.41 175.57 279.74
Equity Index 81.95 127.84 169.55 267.18
Common Stock 81.26 125.75 166.03 259.78
Global 83.23 131.70 176.07 280.78
International 87.37 144.12 196.86 323.52
Aggressive Stock 81.26 125.75 166.03 259.78
Asset Allocation Series:
Conservative Investors 83.04 131.11 175.07 278.70
Balanced 81.26 125.75 166.03 259.78
Growth Investors 82.74 130.22 173.57 275.57
FOR TSA AND QP IRA CONTRACTS:(3) 1 Year 3 Years 5 Years 10 Years
-------- --------- --------- ----------
Money Market $75.08 $119.19 $166.03 $259.78
Intermediate Government Securities 76.67 123.98 174.07 276.62
Quality Bond 76.86 124.58 175.07 278.70
High Yield 76.96 124.88 175.57 279.74
Growth & Income 76.96 124.88 175.57 279.74
Equity Index 75.77 121.29 169.55 267.18
Common Stock 75.08 119.19 166.03 259.78
Global 77.06 125.18 176.07 280.78
International 81.23 137.67 196.86 323.52
Aggressive Stock 75.08 119.19 166.03 259.78
Asset Allocation Series:
Conservative Investors 76.86 124.58 175.07 278.70
Balanced 75.08 119.19 166.03 259.78
Growth Investors 76.57 123.68 173.57 275.57
FOR TRUSTEED AND NQ CONTRACTS: 1 Year 3 Years 5 Years 10 Years
-------- --------- --------- ----------
Money Market $75.08 $119.19 $163.26 $223.29
Intermediate Government
Securities 76.67 123.98 171.80 240.72
Quality Bond 76.86 124.58 172.87 242.88
High Yield 76.96 124.88 173.40 243.95
Growth & Income 76.96 124.88 173.40 243.95
Equity Index 75.77 121.29 167.00 230.95
Common Stock 75.08 119.19 163.26 223.29
Global 77.06 125.18 173.93 245.03
International 81.23 137.67 196.04 289.27
Aggressive Stock 75.08 119.19 163.26 223.29
Asset Allocation Series:
Conservative Investors 76.86 124.58 172.87 242.88
Balanced 75.08 119.19 163.26 223.29
Growth Investors 76.57 123.68 171.27 239.64
</TABLE>
17
<PAGE>
IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE
EXPENSE WOULD BE:
FOR ALL SERIES 100 AND 200 CONTRACTS:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Money Market $19.43 $60.08 $103.26 $223.29
Intermediate Government
Securities 21.10 65.16 111.80 240.72
Quality Bond 21.31 65.80 112.87 242.88
High Yield 21.42 66.11 113.40 243.95
Growth & Income 21.42 66.11 113.40 243.95
Equity Index 20.16 62.31 107.00 230.95
Common Stock 19.43 60.08 103.26 223.29
Global 21.52 66.43 113.93 245.03
International 25.93 79.68 136.04 289.27
Aggressive Stock 19.43 60.08 103.26 223.29
Asset Allocation Series:
Conservative Investors 21.31 65.80 112.87 242.88
Balanced 19.43 60.08 103.26 223.29
Growth Investors 21.00 64.84 111.27 239.64
</TABLE>
- ------------
(1) The amount accumulated could not be paid in the form of an annuity at
the end of any of the periods shown in the examples. If the amount
applied to purchase an annuity is less than $2,000, or the initial
annuity payment is less than $20 we may pay the amount to the payee in
a single sum instead of as payments under an annuity form. See
"Distribution Options" in Part 6. In some cases, charges for state
premium or other taxes will be deducted from the amount applied, if
applicable.
(2) These expenses also apply to a Series 100 or 200 QP IRA purchased in a
state where group Contracts are issued.
(3) These expenses apply only to a Series 100 or 200 QP IRA purchased in a
state where individual Contracts are issued.
18
<PAGE>
TABLE 3: EQUI-VEST SERIES 300 AND 400
<TABLE>
<CAPTION>
Description of Expenses
- --------------------------------------------------------------------
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
SALES LOAD ON PURCHASES ........................................... NONE
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) .......................... 6%
MAXIMUM/CURRENT ANNUAL ADMINISTRATIVE CHARGE (2) .................. $65/30
MAXIMUM/CURRENT THIRD PARTY TRANSFER OR EXCHANGE FEE (3) .......... $65/25 PER OCCURRENCE
SEPARATE ACCOUNT ANNUAL EXPENSE
Mortality and Expense Risk Fees (including Death Benefit Charges) . 1.10%
Other Expenses (4) ................................................ .25%
-------------------------
Total Separate Account Annual Expenses (5) ....................... 1.35%
=========================
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY
MARKET SECURITIES BOND YIELD INCOME INDEX
-------- -------------- --------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
TRUST ANNUAL EXPENSES:
Investment Advisory Fees 0.40% 0.50% 0.55% 0.55% 0.55% 0.35%
Other Expenses 0.04% 0.07% 0.04% 0.05% 0.05% 0.13%
-------- -------------- --------- ------- ---------- --------
Total Trust Annual
Expenses (6) 0.44% 0.57% 0.59% 0.60% 0.60% 0.48%
</TABLE>
<TABLE>
<CAPTION>
COMMON AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
-------- -------- --------------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
TRUST ANNUAL EXPENSES:
Investment Advisory
Fees 0.35% 0.53% 0.90% 0.46% 0.55% 0.37% 0.52%
Other Expenses 0.03% 0.08% 0.13% 0.03% 0.04% 0.03% 0.04%
-------- -------- --------------- ------------ -------------- ---------- -----------
Total Trust Annual
Expenses (6) 0.38% 0.61% 1.03% 0.49% 0.59% 0.40% 0.56%
</TABLE>
- ------------
Notes:
(1) The contingent withdrawal charge is a percentage of specified
contributions. See "Contingent Withdrawal Charge" in Part 8. Important
exceptions and limitations eliminate or reduce the contingent
withdrawal charge.
(2) The Annual Administrative Charge is the lesser of $30 or 2% of the
Annuity Account Value (adjusted to include any withdrawals made during
that year) during the first two Contract Years; and $30 for each
Contract Year thereafter. See "Annual Administrative Charge" in Part 8.
We reserve the right to increase this fee in the future if our
administrative costs increase, but such fee may not exceed an annual
maximum of $65, subject to applicable law.
(3) There is a Third Party Transfer or Exchange Fee of $25 per occurrence.
We reserve the right to increase this fee in the future, but such fee
may not exceed a maximum of $65 per occurrence, subject to applicable
law.
(4) For a limited period of time, we will charge .24% against the assets of
the Intermediate Government Securities, Quality Bond, High Yield,
Growth & Income, Equity Index, Global, International, Conservative
Investors and Growth Investors Funds for expenses.
(5) The amounts shown in the Table under "Separate Account Annual Expenses"
are not permitted to exceed a total annual rate of 1.35% of the value
of the assets held in the Investment Funds. Separate Account expenses
are shown as a percentage of each Investment Fund's average value. See
"Limitation on Charges" in Part 8.
(6) Expenses shown for all Portfolios are for the fiscal year ended
December 31, 1995. The amount shown for the International Portfolio,
which was established on April 3, 1995, is annualized. The investment
advisory fee for each Portfolio may vary from year to year depending
upon the average daily net assets of the respective Portfolio of the
Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. The Trust expenses are shown as a
percentage of each Portfolio's average value. See "Trust Charges to
Portfolios" in Part 8.
19
<PAGE>
EXAMPLES: EQUI-VEST SERIES 300 AND 400
For each type of Series 300 and 400 Contract, the examples which follow
show the expenses that a hypothetical Contract Owner would pay in the
surrender and non-surrender situations noted below, assuming a single
contribution of $1,000 on the Contract Date invested in one of the
Investment Funds listed, a 5% annual return on assets and no waiver of the
contingent withdrawal charge.(1) For purposes of these examples the annual
administrative charge is computed by reference to the actual aggregate
annual administrative charges as a percentage of the total assets held
under all EQUI-VEST Contracts.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future
investment performance.
IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSE
WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Money Market $75.47 $120.39 $165.40 $227.68
Intermediate Government
Securities 76.67 123.98 171.80 240.72
Quality Bond 76.86 124.58 172.87 242.88
High Yield 76.96 124.88 173.40 243.95
Growth & Income 76.96 124.88 173.40 243.95
Equity Index 75.77 121.29 167.00 230.95
Common Stock 74.88 118.59 162.18 221.10
Global 77.06 125.18 173.93 245.03
International 81.23 137.67 196.04 289.27
Aggressive Stock 75.97 121.88 168.07 233.13
Asset Allocation Series:
Conservative Investors 76.86 124.58 172.87 242.88
Balanced 75.08 119.19 163.26 223.29
Growth Investors 76.57 123.68 171.27 239.64
IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE
EXPENSE WOULD BE:
1 Year 3 Years 5 Years 10 Years
-------- --------- --------- ----------
Money Market $19.85 $ 61.35 $105.40 $227.68
Intermediate Government
Securities 21.10 65.16 111.80 240.72
Quality Bond 21.31 65.80 112.87 242.88
High Yield 21.42 66.11 113.40 243.95
Growth & Income 21.42 66.11 113.40 243.95
Equity Index 20.16 62.31 107.00 230.95
Common Stock 19.22 59.44 102.18 221.10
Global 21.52 66.43 113.93 245.03
International 25.93 79.68 136.04 289.27
Aggressive Stock 20.37 62.94 108.07 233.13
Asset Allocation Series:
Conservative Investors 21.31 65.80 112.87 242.88
Balanced 19.43 60.08 103.26 223.29
Growth Investors 21.00 64.84 111.27 239.64
</TABLE>
- ------------
(1) The amount accumulated could not be paid in the form of an annuity at
the end of any of the periods shown in the examples. If the amount
applied to purchase an annuity is less than $2,000, or the initial
annuity payment is less than $20, we may pay the amount to the payee in
a single sum instead of as payments under an annuity form. See
"Distribution Options" in Part 6. In some cases, charges for state
premium or other taxes will be deducted from the amount applied, if
applicable.
20
<PAGE>
TABLE 4: MOMENTUM Program
<TABLE>
<CAPTION>
Description of Expenses
- --------------------------------------------
<S> <C>
CONTRACT TRANSACTION EXPENSES
SALES LOAD ON PURCHASES .................... NONE
TRANSFER FEES .............................. NONE
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) .. 6%
PLAN LOAN CHARGES (2) ....................... $25 WHEN LOAN IS MADE
+$6 PER QUARTER
ANNUAL ADMINISTRATIVE CHARGE (3) ............ $30 PER PARTICIPANT
ANNUAL BASIC RECORDKEEPING CHARGE (4) ...... $300 PER PLAN
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY GROWTH & EQUITY
MARKET SECURITIES BOND HIGH YIELD INCOME INDEX
---------- -------------- --------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND HUDSON
RIVER TRUST ANNUAL EXPENSES (5) 1.75% n/a n/a n/a n/a n/a
Separate Account Annual Expenses (6)
Mortality and Expense
Risk Fees 0.65% 0.50% 0.50% 0.50% 0.50% 0.50%
Other Expenses 0.84% 0.84% 0.84% 0.84% 0.84% 0.84%
---------- -------------- --------- ------------ ---------- --------
TOTAL SEPARATE ACCOUNT
ANNUAL EXPENSES 1.49%(5) 1.34% 1.34% 1.34% 1.34% 1.34%
Hudson River Trust Annual Expenses(6)
Investment Advisory Fee 0.40% 0.50% 0.55% 0.55% 0.55% 0.35%
Other Expenses 0.04% 0.07% 0.04% 0.05% 0.05% 0.13%
---------- -------------- --------- ------------ ---------- --------
TOTAL HUDSON RIVER TRUST
ANNUAL EXPENSES(7) 0.44%(5) 0.57% 0.59% 0.60% 0.60% 0.48%
</TABLE>
<TABLE>
<CAPTION>
COMMON AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
---------- -------- --------------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT
AND HUDSON RIVER TRUST
ANNUAL EXPENSES (5) 1.75% n/a n/a 1.75% n/a 1.75% n/a
Separate Account Annual
Expenses (6)
Mortality and Expense
Risk Fees 0.65% 0.50% 0.50% 0.50% 0.50% 0.65% 0.50%
Other Expenses 0.84% 0.84% 0.84% 0.84% 0.84% 0.84% 0.84%
---------- -------- --------------- ------------ -------------- ---------- -----------
TOTAL SEPARATE ACCOUNT
ANNUAL EXPENSES 1.49%(5) 1.34% 1.34% 1.34%(5) 1.34% 1.49%(5) 1.34%
Hudson River Trust Annual
Expenses(6)
Investment Advisory Fee 0.35% 0.53% 0.90% 0.46% 0.55% 0.37% 0.52%
Other Expenses 0.03% 0.08% 0.13% 0.03% 0.04% 0.03% 0.04%
-------- --------------- ------------ -------------- ---------- -----------
TOTAL HUDSON RIVER TRUST
ANNUAL EXPENSES (7) 0.38% 0.61% 1.03% 0.49%(5) 0.59% 0.40%(5) 0.56%
</TABLE>
(footnotes on next page)
21
<PAGE>
- ---------
Notes:
(1) The maximum contingent withdrawal charge is 6% of the lesser of the
amount withdrawn and the contributions made in the current and five prior
Participation Years. Important exceptions and limitations eliminate or reduce
the contingent withdrawal charge. See "Contingent Withdrawal Charge" in Part
8.
(2) Your Employer may elect to pay these charges and we have reserved the
right to increase them.
(3) The administrative charge is deducted quarterly and is currently $7.50
or, if less, .50% of your Retirement Account Value plus the amount of any
Active Loan. Your Employer may elect to pay this charge. This charge is not
currently assessed for any calendar quarter in which the Retirement Account
Value plus any Active Loan is $25,000 or more on the last Business Day of
that calendar quarter. We have reserved the right to increase this charge.
See "Quarterly Administrative Charge" in Part 8.
(4) This charge will be billed directly to the Employer if the basic plan
recordkeeping option has been elected. We charge a fee of $25 per check drawn
if the Employer elects to have Equitable Life directly distribute plan
benefits and withdrawals. We reserve the right to increase these charges upon
90 days written notice to the Employer or Plan Trustee. See "Charge for Plan
Recordkeeping Services" in Part 8.
(5) The amounts shown in the Table under "Separate Account Annual Expenses"
and "Hudson River Trust Annual Expenses," when added together, are not
permitted to exceed a total annual rate of 1.75% of the value of the assets
held in the Money Market, Balanced, Common Stock and Aggressive Stock Funds.
Without this expense limitation, total Separate Account Annual Expenses plus
Trust Annual Expenses for 1995 would have been 1.93%, 1.89%, 1.87%, and 1.83%
for the Money Market, Balanced, Common Stock and Aggressive Stock Funds,
respectively. See "Limitation on Charges" and "Charges to Investment Funds
for Expenses" in Part 8.
(6) Separate Account and Hudson River Trust expenses are shown as a
percentage of each Investment Fund's or Portfolio's average value. Separate
Account Annual Expenses are guaranteed not to exceed a total annual rate of
1.49% for the Money Market, Balanced and Common Stock Funds and an annual
rate of 1.34% for all other Investment Funds. "Mortality and Expense Risks
Fees" includes death benefit charges. "Other Expenses" under "Separate
Account Annual Expenses" includes financial accounting expenses. See
"Limitations on Charges," "Charges to Investment Funds for Expenses" and
"Hudson River Trust Charges to Portfolios" in Part 8.
(7) Amounts shown for all Portfolios are for the year ended December 31,
1995. The amount shown for the International Portfolio, which was established
on April 3, 1995 is annualized. The investment advisory fee for each
Portfolio may vary from year to year depending upon the average daily net
assets of the respective Portfolio of The Hudson River Trust. The maximum
investment advisory fees, however, cannot be changed without a vote of that
Portfolio's shareholders. The other direct operating expenses will also
fluctuate from year to year depending on actual expenses. The Hudson River
Trust expenses are shown as a percentage of each Portfolio's average value.
See "Hudson River Trust Charges to Portfolios" in Part 8.
22
<PAGE>
EXAMPLES: MOMENTUM
The examples below show the expenses that a hypothetical Participant would
pay in the surrender and non-surrender situations noted below, assuming a
single contribution of $1,000 on the Participation Date invested in one of
the Investment Funds listed, a 5% annual return on assets and no waiver of
the contingent withdrawal charge.(1) For purposes of these examples, the
annual administrative charge is computed by reference to the actual
aggregate annual administrative charges as a percentage of the total assets
held under the contracts. These examples do not reflect the $300 annual
charge for basic recordkeeping services, which is billed directly to the
Employer.
These examples should not be considered a representation of past or future
expenses for each Investment Funds or Portfolio. Actual expenses may be
greater or less than those shown.(2) Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future
investment performance.
IF YOUR PARTICIPATION UNDER THE MOMENTUM CONTRACT TERMINATES AT THE END OF
EACH PERIOD SHOWN, THE MAXIMUM EXPENSE WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Money Market $75.72 $121.12 $166.70 $230.34
Intermediate Government
Securities 77.30 125.90 175.22 247.64
Quality Bond 77.50 126.50 176.28 249.78
High Yield 77.60 126.80 176.81 250.85
Growth & Income 77.60 126.80 176.81 250.85
Equity Index 76.41 123.21 170.43 237.94
Common Stock 75.72 121.12 166.70 230.34
Global 77.70 127.09 177.34 251.92
International 81.86 139.56 199.38 295.84
Aggressive Stock 75.72 121.12 166.70 230.34
Asset Allocation Series:
Conservative Investors 77.50 126.50 176.28 249.78
Balanced 75.72 121.12 166.70 230.34
Growth Investors 77.20 125.60 174.69 246.56
IF YOUR PARTICIPATION UNDER THE MOMENTUM CONTRACT DOES NOT TERMINATE AT THE
END OF EACH PERIOD SHOWN, THE MAXIMUM EXPENSE WOULD BE:
1 Year 3 Years 5 Years 10 Years
-------- --------- --------- ----------
Money Market $20.10 $ 62.13 $106.70 $230.34
Intermediate Government
Securities 21.78 67.20 115.22 247.64
Quality Bond 21.99 67.83 116.28 249.78
High Yield 22.09 68.15 116.81 250.85
Growth & Income 22.09 68.15 116.81 250.85
Equity Index 20.84 64.35 110.43 237.94
Common Stock 20.10 62.13 106.70 230.34
Global 22.20 68.46 117.34 251.92
International 26.60 81.68 139.38 295.84
Aggressive Stock 20.10 62.13 106.70 230.34
Asset Allocation Series:
Conservative Investors 21.99 67.83 116.28 249.78
Balanced 20.10 62.13 106.70 230.34
Growth Investors 21.67 66.88 114.69 246.56
</TABLE>
- ------------
(1) The amount accumulated could not be paid to you in the form of an
annuity at the end of any of the periods shown in the examples. The
minimum amount applied to purchase an annuity must be $3,500. See
"Electing an Annuity Distribution Option" in Part 7. In some cases,
charges for state premium or other applicable state or local taxes will
be deducted from the amount applied, if applicable.
(2) Actual administrative charges may be less if you, as Employer, are
billed directly for the quarterly administrative charge or if the
charge does not apply to a Participant because the Retirement Account
Value plus the amount of any Active Loan is at least $25,000 on the
last Business Day of a calendar quarter.
23
<PAGE>
- -------------------------------------------------------------------------------
PART 2: SEPARATE ACCOUNT A AND
ITS INVESTMENT FUNDS
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT A
Separate Account A is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment
Company Act of 1940 (1940 ACT). This registration does not involve any
supervision by the SEC of the management or investment policies of the
Separate Account. The Separate Account has several Investment Funds, each of
which invests in shares of a corresponding Portfolio of the Trust. You may
allocate some or all contributions among the Investment Funds.
The assets of the Separate Account are our property. As a separate account
under the New York Insurance Law, the portion of the Separate Account's
assets equal to the reserves and other liabilities relating to the contracts
will not be chargeable with liabilities arising out of any other business we
may conduct. Accordingly, income, gains or losses, whether or not realized,
from assets of the Separate Account are credited to or charged against the
Separate Account without regard to our other income, gains or losses. We are
the issuer of the contracts, and the obligations set forth in the contracts
(other than those of Annuitants or Contract Owners) are our obligations.
In addition to contributions made under your contracts, we may allocate to
the Separate Account monies received under other annuity contracts,
certificates or agreements. Owners of all such contracts, certificates or
agreements will participate in the Separate Account in proportion to the
amounts they have in the Investment Funds that relate to their contracts,
certificates or agreements. We may retain in the Separate Account assets that
are in excess of the reserves and other liabilities relating to the Contracts
or to other contracts, certificates or agreements, or we may transfer them to
our general account.
We reserve the right, subject to compliance with applicable law, including
approval of Contract Owners, Participants and Plan Trustees if required, (1)
to add new Investment Funds (or sub-divisions of Investment Funds) to, or
remove Investment Funds (or sub-divisions of Investment Funds) from, the
Separate Account, (2) to combine any two or more Investment Funds or
sub-divisions thereof, (3) to transfer assets determined by us to be the
proportionate share of the class to which the contracts belong from any of
the Investment Funds to another Investment Fund by withdrawing the same
percentage of each investment in that Investment Fund with appropriate
adjustments to avoid odd lots and fractions, (4) to operate the Separate
Account or any Investment Fund as a management investment company under the
1940 Act (which may be directed by a committee which may be composed of a
majority of persons who are "interested persons" of Equitable Life under the
1940 Act, which committee may be discharged by us at any time) or in any
other form permitted by law, including a form that allows us to make direct
investments, (5) to deregister the Separate Account under the 1940 Act, (6)
to cause one or more Investment Funds to invest in a mutual fund other than
or in addition to the Trust, (7) to discontinue the sale of contracts, (8) to
terminate any employer or plan trustee agreement pursuant to its terms and
(9) to restrict or eliminate any voting rights of Contract Owners or other
people who have voting rights that affect the Separate Account.
If any changes are made that result in a material change in the underlying
investments of an Investment Fund, Contract Owners or MOMENTUM Employers will
be notified. We may make other changes in the contracts that do not reduce
any Cash Value, annuity benefit, Annuity Account Value, Retirement Account
Value or other accrued rights or benefits.
THE HUDSON RIVER TRUST
The Trust is an open-end, diversified management investment company, more
commonly called a mutual fund. As a "series" type of mutual fund, it issues
several different series of stock, each of which relates to a different
Portfolio of the Trust. The Trust commenced operations in January 1976 with a
predecessor of its Common Stock Portfolio. The Trust does not impose a sales
charge or "load" for buying and selling its shares. All dividend
distributions to the Trust are reinvested in full and fractional shares of
the Portfolio to which they relate.
More detailed information about the Trust, its investment objectives,
policies, restrictions, risks, expenses and all other aspects of its
operations, appears in its prospectus, or in its statement of additional
information.
24
<PAGE>
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Alliance Capital Management LP (ALLIANCE), which is
registered with the SEC as an investment adviser under the Investment
Advisers Act of 1940. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable Life. On December 31, 1995, Alliance
was managing over $146.5 billion in assets. Alliance acts as investment
adviser to various separate accounts and general accounts of Equitable Life
and other affiliated insurance companies. Alliance also provides management
and consulting services to mutual funds, endowments funds, insurance
companies, foreign entities, qualified and non-tax qualified corporate funds,
public and private pension and profit-sharing plans, foundations and
tax-exempt organizations.
Alliance's record as an investment manager is based, in part, on its ability
to provide a diversity of investment services to domestic, international and
global markets. Alliance prides itself on its ability to attract and retain a
quality, professional work force. Alliance employs 162 investment
professionals, including 81 research analysts. Portfolio managers have
average investment experience of more than 16 years.
Alliance's main office is located at 1345 Avenue of the Americas, New York,
New York 10105.
INVESTMENT POLICIES AND OBJECTIVES OF THE TRUST'S PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The policies and objectives of
each Portfolio will affect its return and its risks. There is no guarantee
that these objectives will be achieved.
The policies and objectives of the Trust's Portfolios are as follows:
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- -------------------- ---------------------------------------------- -------------------------------------------
<S> <C> <C>
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 High current income consistent with
Government guaranteed by the U.S. Government, its relative stability of principal
Securities agencies and instrumentalities. Each
investment will have a final maturity of not
more than 10 years or a duration not exceeding
that of a 10-year Treasury note
Quality Bond ........ Primarily investment grade fixed income High current income consistent with
securities preservation of capital
High Yield .......... Primarily a diversified mix of high yield, High return by maximizing current 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 & ............ Primarily income producing common High total return through a combination
Income stocks and securities convertible into common of current income and capital appreciation
stocks
Equity Index ........ Selected securities in the S&P 500 Index (the Total return performance (before trust
"Index") which the advisor believes will, in expenses) that approximates the investment
the aggregate, approximate the performance performance of the Index (including
results of the Index reinvestment of dividends) at risk level
consistent with that of the Index
25
<PAGE>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- -------------------- ---------------------------------------------- -------------------------------------------
Common Stock ........ Primarily common stock and other equity-type Long-term growth of capital and
instruments increasing income
Global .............. Primarily equity securities of non-United Long-term growth of capital
States as well as United States companies
International ....... Primarily equity securities selected Long-term growth of capital
principally to permit participation in
non-United States companies with prospects for
growth
Aggressive Stock ... Primarily common stocks and other equity-type Long-term growth of capital
securities issued by medium and other smaller
sized companies with strong growth potential
Asset Allocation Series:
Conservative
Investors ............ Diversified mix of publicly-traded, fixed- High total return without, in the
income and equity securities; asset mix and Adviser's opinion, undue risk to
security selection are primarily based upon principal
factors 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- High total return consistent with the
income and equity securities; asset mix and adviser's determination of reasonable
security selection based upon factors expected risk
to increase possibility of high long-term
return. The Portfolio is generally expected to
hold approximately 70% of its assets in equity
securities and 30% in fixed income securities.
</TABLE>
26
<PAGE>
- -------------------------------------------------------------------------------
PART 3: INVESTMENT PERFORMANCE
- -------------------------------------------------------------------------------
INVESTMENT FUND PERFORMANCE
In order to help show how the actual performance of the Investment Funds has
affected Annuity Account and Retirement Account Values, the following tables
provide a historical view of investment performance. The information
presented includes performance results for each Investment Fund along with
data representing unmanaged market indices and similarly managed funds.
Performance data for the Money Market, Balanced, Common Stock and Aggressive
Stock Funds shown in this section include periods prior to December 18, 1987,
when four predecessor open-end management separate accounts were reorganized
into the Separate Account in unit investment trust form. (See Part 9 of the
SAI.) The "since inception" figures are based on the date of inception of the
predecessor separate accounts. Also, the performance data shown from December
18, 1987 through December 31, 1990 reflects the investment results of The
Equitable Trust, which was replaced by the Trust on September 6, 1991. The
investment objectives and policies of the Portfolios are substantially
similar to those of the corresponding portfolios of The Equitable Trust. At
all times, Equitable Life and/or one of its subsidiaries has served as the
investment adviser to the four predecessor separate accounts, The Equitable
Trust and the Trust. Performance data for the remaining Investment Funds
reflect (i) the investment results of the corresponding Portfolios of the
Trust from the date of inception of those Portfolios, (ii) the actual
investment advisory fee and direct operating expenses of the relevant
Portfolio and (iii) the Separate Account asset charges.
The performance for all periods has been adjusted to reflect the Separate
Account asset charges as well as the Trust expenses.
Because amounts allocated to the Investment Funds are invested in a mutual
fund, investment return and principal will fluctuate and Accumulation Units
may be worth more or less than the original cost when redeemed. The results
shown are not an estimate or guarantee of future investment performance, and
do not reflect the actual experience of amounts invested under a particular
Contract.
HOW PERFORMANCE DATA ARE PRESENTED
The tables on the following pages compare annualized rates of return for each
Investment Fund along with appropriate benchmarks. These performance results
are based on the change in the accumulation unit value for each Investment
Fund for the periods shown.
Investment results in these tables are net of all charges and expenses
assessed against the Investment Funds (including investment advisory fees and
the direct operating expenses of the Trust and the expenses of the Contracts)
but excluding the annual administrative charge and any withdrawal charges
which would also reduce the actual return. There are variations in the fees
and charges among the Contracts offered in EQUI-VEST and in the MOMENTUM
Program. The rates of return shown for EQUI-VEST reflect the highest charges
that are currently being assessed. The tables under "Standardized Computation
of Performance" in the next Section show performance results after giving
effect to all charges including the annual administrative charge and the
contingent withdrawal charge. The illustrations for MOMENTUM are separate.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees
typically associated with a managed portfolio. Comparisons with these
benchmarks, therefore, are of limited use. We include them because they are
widely known and may help you to understand the universe of securities from
which each Portfolio manager is likely to make selections.
INCEPTION DATES AND COMPARATIVE
BENCHMARKS
MONEY MARKET: May 11, 1982; Salomon Brothers Three-Month T-Bill Index
(3-Month T-Bill).
INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman Intermediate
Government Bond Index (Lehman Intermediate Government).
QUALITY BOND: October 1, 1993; Lehman Aggregate Bond Index (Lehman
Aggregate).
HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master Index (Master
High Yield).
GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index (S&P 500)
and 25% Value Line Convertibles Index (75% S&P 500/25% Value Line Conv.).
27
<PAGE>
EQUITY INDEX: March 1, 1994; Standard & Poor's 500 Index (S&P 500)
COMMON STOCK: August 1, 1968; Standard & Poor's 500 Index (S&P 500)
GLOBAL: August 27, 1987; Morgan Stanley Capital International World Index
(MSCI World).
INTERNATIONAL: April 3, 1995; Morgan Stanley Capital International Europe,
Australia, Far East Index (MSCI EAFE).
AGGRESSIVE STOCK: May 1, 1984; 50% Russell 2000 Small Stock Index and 50% S&P
Mid-Cap Total Return (50% Russell 2000/50% S&P MidCap).
CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond Composite
Index and 30% S&P 500 Index (70% Lehman Treas./30% S&P 500).
BALANCED: May 1, 1984; 50% S&P 500 and 50% Lehman Government/Corporate Bond
Index (50% S&P 500/50% Lehman Corp.).
GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond Index
and 70% S&P 500 Index (30% Lehman Treas./70% S&P 500).
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity and variable
life products, including managed separate accounts of insurance companies.
According to Lipper Analytical Services, Inc., the data are presented net of
investment management fees, direct operating and asset-based charges
applicable under insurance policies or annuity contracts. Lipper data provide
a more accurate picture than market indices of EQUI-VEST and MOMENTUM
performance relative to other annuity products.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of
return reflect performance over a stated period of time. Annualized rates of
return represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
28
<PAGE>
- -------------------------------------------------------------------------------
EQUI-VEST ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
-------- --------- ---------
<S> <C> <C> <C>
MONEY MARKET 4.32% 2.83% 3.08%
Lipper Money Market 4.35 2.88 3.10
3-Month T-Bill 5.74 4.34 4.47
INTERMEDIATE GOVERNMENT
SECURITIES 11.81 4.79 --
Lipper U.S. Government 15.47 6.27 --
Lehman Intermediate Government 14.41 6.74 --
QUALITY BOND 15.46 -- --
Lipper Corporate Bond A-Rated 18.15 -- --
Lehman Aggregate 18.47 -- --
HIGH YIELD 18.32 11.30 13.40
Lipper High Yield 17.36 9.80 15.79
Master High Yield 19.91 11.57 17.17
GROWTH & INCOME 22.42 -- --
Lipper Growth & Income 31.18 -- --
75% S&P 500/25% Value Line
Conv. 34.93 -- --
EQUITY INDEX 34.66 -- --
Lipper S&P 500 Index Funds 35.31 -- --
S&P 500 37.54 -- --
COMMON STOCK 30.64 15.79 16.51
Lipper Growth 31.08 12.09 15.53
S&P 500 37.54 15.30 16.57
GLOBAL 17.23 16.63 14.93
Lipper Global 13.87 13.45 9.10
MSCI World 20.72 15.83 11.74
INTERNATIONAL* -- -- --
Lipper International -- -- --
MSCI EAFE -- -- --
AGGRESSIVE STOCK 29.87 12.38 20.14
Lipper Small Company Growth 28.19 15.26 25.72
50% Russell 2000/50% S&P MidCap 29.69 13.67 20.16
The Asset Allocation Series:
CONSERVATIVE INVESTORS 18.79 7.09 8.67
Lipper Income 21.25 9.65 11.99
70% Lehman Treas./30% S&P 500 24.11 10.41 11.73
BALANCED 18.13 5.90 9.77
Lipper Flexible Portfolio 21.58 9.32 11.43
50% S&P 500/50% Lehman Corp. 28.39 12.01 13.39
GROWTH INVESTORS 24.68 10.65 15.55
Lipper Flexible Portfolio 21.58 9.32 11.43
30% Lehman Corp./70% S&P 500 32.05 13.35 14.70
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SINCE INCEPTION
10 YEARS 20 YEARS INCEPTION DATE
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
MONEY MARKET 4.63% -- 5.64% 5/11/82
Lipper Money Market 4.71 -- 5.91
3-Month T-Bill 5.77 -- 6.68
INTERMEDIATE GOVERNMENT
SECURITIES -- -- 6.19 4/1/91
Lipper U.S. Government -- -- 7.87
Lehman Intermediate Government -- -- 8.17
QUALITY BOND -- -- 3.14 10/1/93
Lipper Corporate Bond A-Rated -- -- 4.58
Lehman Aggregate -- -- 6.46
HIGH YIELD -- -- 8.72 1/2/87
Lipper High Yield -- -- 8.87
Master High Yield -- -- 11.28
GROWTH & INCOME -- -- 8.20 10/1/93
Lipper Growth & Income -- -- 12.76
75% S&P 500/25% Value Line
Conv. -- -- 15.45
EQUITY INDEX -- -- 17.58 3/1/94
Lipper S&P 500 Index Funds -- -- 17.62
S&P 500 -- -- 19.89
COMMON STOCK 13.67 13.73% 10.65 8/1/68
Lipper Growth 12.05 12.79 N/A
S&P 500 14.87 14.59 11.18
GLOBAL -- -- 9.87 8/27/87
Lipper Global -- -- 2.52
MSCI World -- -- 6.75
INTERNATIONAL* -- -- 9.60* 4/3/95
Lipper International -- -- 12.21*
MSCI EAFE -- -- 9.17*
AGGRESSIVE STOCK 16.32 -- 17.85 5/1/84
Lipper Small Company Growth 16.42 -- 18.71
50% Russell 2000/50% S&P MidCap 13.66 -- N/A
The Asset Allocation Series:
CONSERVATIVE INVESTORS -- -- 8.18 10/2/89
Lipper Income -- -- 9.79
70% Lehman Treas./30% S&P 500 -- -- 10.55
BALANCED 8.93 -- 10.16 5/1/84
Lipper Flexible Portfolio 10.13 -- 11.57
50% S&P 500/50% Lehman Corp. 12.53 -- 13.94
GROWTH INVESTORS -- -- 14.51 10/2/89
Lipper Flexible Portfolio -- -- 9.44
30% Lehman Corp./70% S&P 500 -- -- 11.97
</TABLE>
- ------------
* Unannualized.
29
<PAGE>
- --------------------------------------------------------------------------------
EQUI-VEST CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
-------- --------- ---------
<S> <C> <C> <C>
MONEY MARKET 4.32% 8.74% 16.40%
Lipper Money Market 4.35 8.87 16.48
3-Month T-Bill 5.74 13.58 24.45
INTERMEDIATE GOVERNMENT
SECURITIES 11.81 15.08 --
Lipper U.S. Government 15.47 20.05 --
Lehman Intermediate Government 14.41 21.60 --
QUALITY BOND 15.46 -- --
Lipper Corporate Bond A-Rated 18.15 -- --
Lehman Aggregate 18.47 -- --
HIGH YIELD 18.32 37.86 87.54
Lipper High Yield 17.36 32.45 108.96
Master High Yield 19.91 38.89 120.85
GROWTH & INCOME 22.42 -- --
Lipper Growth & Income 31.18 -- --
75% S&P 500/25% Value Line Conv. 34.93 -- --
EQUITY INDEX 34.66 -- --
Lipper S&P 500 Index Funds 35.31 -- --
S&P 500 37.54 -- --
COMMON STOCK 30.64 55.23 114.65
Lipper Growth 31.08 41.29 107.30
S&P 500 37.54 53.30 115.25
GLOBAL 17.23 58.64 100.53
Lipper Global 13.87 46.36 55.44
MSCI World 20.72 55.39 74.20
INTERNATIONAL* -- -- --
Lipper International -- -- --
MSCI EAFE -- -- --
AGGRESSIVE STOCK 29.87 41.93 150.26
Lipper Small Company Growth 28.19 55.24 268.67
50% Russell 2000/50% S&P MidCap 29.69 46.89 150.49
The Asset Allocation Series:
CONSERVATIVE INVESTORS 18.79 22.82 51.55
Lipper Income 21.25 31.95 76.42
70% Lehman Treas./30% S&P 500 24.11 34.58 74.09
BALANCED 18.13 18.76 59.39
Lipper Flexible Portfolio 21.58 30.92 72.73
50% S&P 500/50% Lehman Corp. 28.39 40.53 87.43
GROWTH INVESTORS 24.68 35.48 106.02
Lipper Flexible Portfolio 21.58 30.92 72.73
30% Lehman Corp./70% S&P 500 32.05 45.64 98.56
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SINCE INCEPTION
10 YEARS 20 YEARS INCEPTION DATE
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
MONEY MARKET 57.24% -- 111.32% 5/11/82
Lipper Money Market 58.55 -- 119.52
3-Month T-Bill 75.23 -- 141.98
INTERMEDIATE GOVERNMENT
SECURITIES -- -- 32.99 4/1/91
Lipper U.S. Government -- -- 43.43
Lehman Intermediate Government -- -- 45.17
QUALITY BOND -- -- 7.20 10/1/93
Lipper Corporate Bond A-Rated -- -- 10.67
Lehman Aggregate -- -- 15.09
HIGH YIELD -- -- 112.16 1/2/87
Lipper High Yield -- -- 117.28
Master High Yield -- -- 161.50
GROWTH & INCOME -- -- 19.38 10/1/93
Lipper Growth & Income -- -- 31.42
75% S&P 500/25% Value Line Conv. -- -- 38.14
EQUITY INDEX -- -- 34.60 3/1/94
Lipper S&P 500 Index Funds -- -- 34.65
S&P 500 -- -- 39.30
COMMON STOCK 260.01 1,210.04% 1,504.82 8/1/68
Lipper Growth 215.49 1,036.49 N/A
S&P 500 300.11 1,425.04 1,728.76
GLOBAL -- -- 119.39 8/27/87
Lipper Global -- -- 23.09
MSCI World -- -- 72.38
INTERNATIONAL* -- -- 9.60* 4/3/95
Lipper International -- -- 12.21*
MSCI EAFE -- -- 9.17*
AGGRESSIVE STOCK 353.28 -- 579.47 5/1/84
Lipper Small Company Growth 357.25 -- 588.33
50% Russell 2000/50% S&P MidCap 259.88 -- 465.90
The Asset Allocation Series:
CONSERVATIVE INVESTORS -- -- 63.44 10/2/89
Lipper Income -- -- 79.42
70% Lehman Treas./30% S&P 500 -- -- 87.24
BALANCED 135.32 -- 209.23 5/1/84
Lipper Flexible Portfolio 163.91 -- 248.20
50% S&P 500/50% Lehman Corp. 225.59 -- 359.14
GROWTH INVESTORS -- -- 133.02 10/2/89
Lipper Flexible Portfolio -- -- 76.92
30% Lehman Corp./70% S&P 500 -- -- 102.72
</TABLE>
YEAR-BY-YEAR RATES OF RETURN
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY
MARKET SECURITIES BOND YIELD INCOME INDEX
-------- -------------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
1986 5.17% --% --% --% --% --%
1987 5.23 -- -- 3.27* -- --
1988 5.94 -- -- 8.25 -- --
1989 7.72 -- -- 3.71 -- --
1990 6.82 -- -- (2.43) -- --
1991 4.69 10.94* -- 22.78 -- --
1992 2.16 4.17 -- 10.80 -- --
1993 1.58 9.09 (0.84)* 21.48 (0.59)* --
1994 2.62 (5.65) (6.37) (4.09) (1.90) (0.04)*
1995 4.32 11.81 15.46 18.32 22.42 34.66
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
COMMON INTER- AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL NATIONAL STOCK INVESTORS BALANCED INVESTORS
-------- ---------- ---------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1986 15.43% --% --% 21.75% --% 11.70% --%
1987 6.08 (13.67)* -- (1.13) -- (5.05) --
1988 21.55 9.38 -- (0.39) -- 13.27 --
1989 24.07 25.02 -- 42.87 2.75* 24.60 3.65*
1990 (9.27) (7.33) -- 5.73 4.97 (1.46) 9.12
1991 35.81 28.79 -- 84.57 18.23 40.02 46.90
1992 1.82 (1.86) -- (4.47) 4.36 (4.15) 3.52
1993 23.11 30.34 -- 15.17 9.27 10.80 13.71
1994 (3.48) 3.82 -- (5.11) (5.38) (9.27) (4.44)
1995 30.64 17.23 9.60* 29.87 18.79 18.13 24.68
</TABLE>
- ------------
* Unannualized
30
<PAGE>
STANDARDIZED COMPUTATION OF
PERFORMANCE FOR EQUI-VEST
The performance data in the following tables, which are prepared in a manner
prescribed by the SEC for use when we advertise the performance of the
Separate Account, illustrate the average annual total return of the
Investment Funds over the periods shown assuming a single initial
contribution of $1,000 and termination of the Contract at the end of each
period under circumstances in which the contingent withdrawal charge applies.
The values shown are also net of all other charges and expenses assessed
against the Investment Funds. An Investment Fund's average annual total
return is the annual rate of growth of the Investment Fund that would be
necessary to achieve the ending value of a contribution kept in the
Investment Fund for the period specified.
Since charges under the Contracts may vary, we have assumed, for each charge,
the highest that might apply. Each calculation further assumes that the
$1,000 contribution was allocated to only one Investment Fund, no transfers
or additional contributions were made, no loans, and no amounts were
allocated to any other Investment Fund under the Contract.
In order to calculate the standardized performance information, we divide the
termination value (defined below) of a Contract which is terminated on
December 31, 1995 by the $1,000 investment made at the beginning of each
period illustrated. The result of that calculation is the total growth rate
for the period. Then we annualize that growth rate to obtain the average
annual percentage increase (decrease) during the period shown. When we
"annualize," we assume that a single rate of return applied each year during
the period will produce the ending value, taking into account the effect of
compounding. "Termination value" means the Annuity Account Value less the
contingent withdrawal charge, the annual administrative charge and all other
charges and expenses which are applied against an Investment Fund. See "Part
8: Deductions and Charges."
TABLE 1: GROWTH OF $1,000 FOR CONTRACTS TERMINATED ON DECEMBER 31, 1995
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-------------------------------------------------------------
INVESTMENT THREE SINCE
FUND ONE YEAR YEARS FIVE YEARS TEN YEARS INCEPTION*
- --------------- ---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Money Market $ 967.14 $ 959.58 $ 969.16 $1,238.28 --
Intermediate
Government
Securities 1,036.61 1,017.18 -- -- $1,129.47
Quality Bond 1,070.42 -- -- -- 966.87
High Yield 1,096.88 1,227.61 1,622.29 -- 1,717.29
Growth & Income 1,134.90 -- -- -- 1,079.01
Equity Index 1,248.40 -- -- -- 1,227.00
Common Stock 1,211.15 1,382.15 1,874.49 2,984.60 --
Global 1,086.81 1,413.78 1,744.84 -- 1,801.98
International -- -- -- -- 1,021.40
Aggressive
Stock 1,204.92 1,266.93 2,242.97 3,878.98 --
Asset Allocation Series:
Conservative
Investors 1,101.32 1,089.58 1,296.10 -- 1,376.50
Balanced 1,095.13 1,050.79 1,362.92 1,906.80 --
Growth
Investors 1,155.92 1,206.38 1,796.08 -- 2,005.22
</TABLE>
TABLE 2: AVERAGE ANNUAL TOTAL RETURN UNDER CONTRACTS TERMINATED ON DECEMBER
31, 1995
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Three Five Ten Since
Fund One Year Years Years Years Inception*
- --------------- --------- --------- --------- ------- ------------
Money Market (3.29)% (1.37)% (0.62)% 2.16% --
Intermediate
Government
Securities 3.66 0.57 -- -- 2.60 %
Quality Bond 7.04 -- -- -- (1.49)
High Yield 9.69 7.07 10.16 -- 6.20
Growth & Income 13.49 -- -- -- 3.44
Equity Index 24.84 -- -- -- 11.80
Common Stock 21.11 11.39 13.39 11.55 --
Global 8.68 12.23 11.78 -- 7.31
International -- -- -- 2.14
Aggressive
Stock 20.49 8.21 17.53 14.52 --
Asset Allocation Series:
Conservative
Investors 10.13 2.90 5.32 -- 5.25
Balanced 9.51 1.67 6.39 6.67 --
Growth
Investors 15.59 6.45 12.43 -- 11.79
</TABLE>
- --------
* Inception dates are as follows: Money Market (May 11, 1982);
Intermediate Government Securities (April 1, 1991); Quality Bond (October 1,
1993); High Yield (January 2, 1987); Growth & Income (October 1, 1993);
Equity Index (March 1, 1994); Common Stock (August 1, 1968); Global (August
27, 1987); International (April 3, 1995); Aggressive Stock (May 1, 1984);
Conservative Investors (October 2, 1989); Balanced (May 1, 1984) and Growth
Investors (October 2, 1989). The "Since Inception" number for the
International Fund is unannualized.
31
<PAGE>
- ------------------------------------------------------------------------------
MOMENTUM Annualized Rates of Return for Periods Ending December 31, 1995:
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
-------- --------- ---------
<S> <C> <C> <C>
MONEY MARKET 4.35% 2.85% 3.08%
Lipper Money Market 4.35 2.88 3.10
3-Month T-Bill 5.74 4.34 4.47
INTERMEDIATE GOVERNMENT
SECURITIES 11.81 4.80 --
Lipper U.S. Government 15.47 6.27 --
Lehman Intermediate Government 14.41 6.74 --
QUALITY BOND 15.46 -- --
Lipper Corporate Bond A-Rated 18.15 -- --
Lehman Aggregate 18.47 -- --
HIGH YIELD 18.32 11.30 13.41
Lipper High Yield 17.36 9.80 15.79
Master High Yield 19.91 11.57 17.17
GROWTH & INCOME 22.42 -- --
Lipper Growth & Income 31.18 -- --
75% S&P 500/25% Value Line
Conv. 34.93 -- --
EQUITY INDEX 34.66 -- --
Lipper S&P 500 Index Funds 35.31 -- --
S&P 500 37.54 -- --
COMMON STOCK 30.64 15.79 16.51
Lipper Growth 31.08 12.09 15.53
S&P 500 37.54 15.30 16.57
GLOBAL 17.23 16.63 14.94
Lipper Global 13.87 13.45 9.10
MSCI World 20.72 15.83 11.74
INTERNATIONAL* -- -- --
Lipper International -- -- --
MSCI EAFE -- -- --
AGGRESSIVE STOCK 29.97 12.48 20.23
Lipper Small Company Growth 28.19 15.26 25.72
50% Russell 2000/50% S&P MidCap 29.69 13.67 20.16
The Asset Allocation Series:
CONSERVATIVE INVESTORS 18.79 7.10 8.68
Lipper Income 21.25 9.65 11.99
70% Lehman Treas./30% S&P 500 24.11 10.41 11.73
BALANCED 18.13 5.90 9.77
Lipper Flexible Portfolio 21.58 9.32 11.43
50% S&P 500/50% Lehman Corp. 28.39 12.01 13.39
GROWTH INVESTORS 24.68 10.66 15.56
Lipper Flexible Portfolio 21.58 9.32 11.43
30% Lehman Corp./70% S&P 500 32.05 13.35 14.70
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SINCE INCEPTION
10 YEARS 20 YEARS INCEPTION DATE
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
MONEY MARKET 4.63% -- 5.64% 5/11/82
Lipper Money Market 4.71 -- 5.91
3-Month T-Bill 5.77 -- 6.68
INTERMEDIATE GOVERNMENT
SECURITIES -- -- 6.19 4/1/91
Lipper U.S. Government -- -- 7.87
Lehman Intermediate Government -- -- 8.17
QUALITY BOND -- -- 3.14 10/1/93
Lipper Corporate Bond A-Rated -- -- 4.58
Lehman Aggregate -- -- 6.46
HIGH YIELD -- -- 8.73 1/2/87
Lipper High Yield -- -- 8.87
Master High Yield -- -- 11.28
GROWTH & INCOME -- -- 8.20 10/1/93
Lipper Growth & Income -- -- 12.76
75% S&P 500/25% Value Line
Conv. -- -- 15.45
EQUITY INDEX -- -- 17.58 3/1/94
Lipper S&P 500 Index Funds -- -- 17.62
S&P 500 -- -- 19.89
COMMON STOCK 13.67 13.75% 10.69 8/1/68
Lipper Growth 12.05 12.79 N/A
S&P 500 14.87 14.59 11.18
GLOBAL -- -- 9.88 8/27/87
Lipper Global -- -- 2.52
MSCI World -- -- 6.75
INTERNATIONAL* -- -- 9.60* 4/3/95
Lipper International -- -- 12.21*
MSCI EAFE -- -- 9.17*
AGGRESSIVE STOCK 16.42 -- 17.97 5/1/84
Lipper Small Company Growth 16.42 -- 18.71
50% Russell 2000/50% S&P MidCap 13.66 -- N/A
The Asset Allocation Series:
CONSERVATIVE INVESTORS -- -- 8.19 10/2/89
Lipper Income -- -- 9.79
70% Lehman Treas./30% S&P 500 -- -- 10.55
BALANCED 8.93 -- 10.16 5/1/84
Lipper Flexible Portfolio 10.13 -- 11.57
50% S&P 500/50% Lehman Corp. 12.53 -- 13.94
GROWTH INVESTORS -- -- 14.51 10/2/89
Lipper Flexible Portfolio -- -- 9.44
30% Lehman Corp./70% S&P 500 -- -- 11.97
</TABLE>
- ------------
* Unannualized
32
<PAGE>
- --------------------------------------------------------------------------------
MOMENTUM Cumulative Rates of Return for Periods Ending December 31, 1995:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
-------- --------- ---------
<S> <C> <C> <C>
MONEY MARKET 4.35% 8.80% 16.40%
Lipper Money Market 4.35 8.87 16.48
3-Month T-Bill 5.74 13.58 24.45
INTERMEDIATE GOVERNMENT
SECURITIES 11.81 15.09 --
Lipper U.S. Government 15.47 20.05 --
Lehman Intermediate Government 14.41 21.60 --
QUALITY BOND 15.46 -- --
Lipper Corporate Bond A-Rated 18.15 -- --
Lehman Aggregate 18.47 -- --
HIGH YIELD 18.32 37.88 87.60
Lipper High Yield 17.36 32.45 108.96
Master High Yield 19.91 38.89 120.85
GROWTH & INCOME 22.42 -- --
Lipper Growth & Income 31.18 -- --
75% S&P 500/25% Value Line
Conv. 34.93 -- --
EQUITY INDEX 34.66 -- --
Lipper S&P 500 Index Funds 35.31 -- --
S&P 500 37.54 -- --
COMMON STOCK 30.64 55.23 114.65
Lipper Growth 31.08 41.29 107.30
S&P 500 37.54 53.30 115.25
GLOBAL 17.23 58.66 100.60
Lipper Global 13.87 46.36 55.44
MSCI World 20.72 55.39 74.20
INTERNATIONAL* -- -- --
Lipper International -- -- --
MSCI EAFE -- -- --
AGGRESSIVE STOCK 29.97 42.29 151.25
Lipper Small Company Growth 28.19 55.24 268.67
50% Russell 2000/50% S&P MidCap 29.69 46.89 150.49
The Asset Allocation Series:
CONSERVATIVE INVESTORS 18.79 22.83 51.59
Lipper Income 21.25 31.95 76.42
70% Lehman Treas./30% S&P 500 24.11 34.58 74.09
BALANCED 18.13 18.76 59.39
Lipper Flexible Portfolio 21.58 30.92 72.73
50% S&P 500/50% Lehman Corp. 28.39 40.53 87.43
GROWTH INVESTORS 24.68 35.49 106.08
Lipper Flexible Portfolio 21.58 30.92 72.73
30% Lehman Corp./70% S&P 500 32.05 45.64 98.56
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SINCE INCEPTION
10 YEARS 20 YEARS INCEPTION DATE
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
MONEY MARKET 57.24% -- 111.32% 5/11/82
Lipper Money Market 58.55 -- 119.52
3-Month T-Bill 75.23 -- 141.98
INTERMEDIATE GOVERNMENT
SECURITIES -- -- 33.03 4/1/91
Lipper U.S. Government -- -- 43.43
Lehman Intermediate Government -- -- 45.17
QUALITY BOND -- -- 7.20 10/1/93
Lipper Corporate Bond A-Rated -- -- 10.67
Lehman Aggregate -- -- 15.09
HIGH YIELD -- -- 112.31 1/2/87
Lipper High Yield -- -- 117.28
Master High Yield -- -- 161.50
GROWTH & INCOME -- -- 19.38 10/1/93
Lipper Growth & Income -- -- 31.42
75% S&P 500/25% Value Line
Conv. -- -- 38.14
EQUITY INDEX -- -- 34.60 3/1/94
Lipper S&P 500 Index Funds -- -- 34.65
S&P 500 -- -- 39.30
COMMON STOCK 260.01 215.12% 1,519.31 8/1/68
Lipper Growth 215.49 036.49 N/A
S&P 500 300.11 1,425.04 1,728.76
GLOBAL -- -- 119.53 8/27/87
Lipper Global -- -- 23.09
MSCI World -- -- 72.38
INTERNATIONAL* -- -- 9.60* 4/3/95
Lipper International -- -- 12.21*
MSCI EAFE -- -- 9.17*
AGGRESSIVE STOCK 357.25 -- 587.30 5/1/84
Lipper Small Company Growth 357.25 -- 588.33
50% Russell 2000/50% S&P MidCap 259.88 -- 465.90
The Asset Allocation Series:
CONSERVATIVE INVESTORS -- -- 63.51 10/2/89
Lipper Income -- -- 79.42
70% Lehman Treas./30% S&P 500 -- -- 87.24
BALANCED 135.32 -- 209.23 5/1/84
Lipper Flexible Portfolio 163.91 -- 248.20
50% S&P 500/50% Lehman Corp. 225.59 -- 359.14
GROWTH INVESTORS -- -- 133.12 10/2/89
Lipper Flexible Portfolio -- -- 76.92
30% Lehman Corp./70% S&P 500 -- -- 102.72
</TABLE>
YEAR-BY-YEAR RATES OF RETURN
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY
MARKET SECURITIES BOND YIELD INCOME INDEX
-------- -------------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
1986 5.27% --% --% --% --% --%
1987 5.27 -- -- 3.28* -- --
1988 5.94 -- -- 8.26 -- --
1989 7.72 -- -- 3.72 -- --
1990 6.82 -- -- (2.42) -- --
1991 4.69 10.94* -- 22.79 -- --
1992 2.19 4.18 -- 10.81 -- --
1993 1.59 9.10 (0.84) 21.50 (0.59)* --
1994 2.63 (5.65) (6.37) (4.09) (1.90) (0.04)*
1995 4.35 11.81 15.46 18.32 22.42 34.66
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
COMMON INTER- AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL NATIONAL STOCK INVESTORS BALANCED INVESTORS
-------- ---------- ---------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1986 15.49% --% --% 21.95% --% 11.77% --%
1987 6.14 (13.67)* -- (1.00) -- (5.02) --
1988 21.55 9.39 -- (0.30) -- 13.27 --
1989 24.07 25.04 -- 42.95 2.75* 24.60 3.65*
1990 (9.27) (7.32) -- 5.76 4.98 (1.46) 9.13
1991 35.81 28.81 -- 84.65 18.24 40.02 46.92
1992 1.82 (1.85) -- (4.37) 4.37 (4.15) 3.53
1993 23.11 30.36 -- 15.28 9.28 10.81 13.72
1994 (3.48) 3.82 -- (5.03) (5.38) (9.27) (4.44)
1995 30.64 17.23 9.60* 29.97 18.79 18.13 24.68
</TABLE>
- ------------
* Unannualized
33
<PAGE>
STANDARDIZED COMPUTATION OF
PERFORMANCE FOR MOMENTUM
The performance data in the following tables, which are prepared in a manner
prescribed by the SEC for use when we advertise the performance of the
Separate Account, illustrate the average annual total return of the
Investment Funds over the periods shown, assuming a single initial
contribution of $1,000 and termination of participation under the MOMENTUM
Contract at the end of each period under circumstances in which the
contingent withdrawal charge applies. The values shown are also net of all
other charges and expenses assessed against the Investment Funds. An
Investment Fund's average annual total return is the annual rate of growth of
the Investment Fund that would be necessary to achieve the ending value of a
contribution kept in the Investment Fund for the period specified.
For purposes of the tables below, deduction of a quarterly administrative
charge equal to $7.50 is assumed, even though this charge does not currently
apply if the Retirement Account Value plus the amount of any Active Loan is
at least $25,000 as of the end of the quarter. Each calculation further
assumes that the $1,000 contribution was allocated to only one Investment
Fund, no transfers or additional contributions were made, no loans, and no
amounts were allocated to any other Investment Fund and the Participant has
not taken any loans.
In order to calculate the standardized performance information, we divide the
termination value (defined below) as of December 31, 1995 by the $1,000
contribution made at the beginning of each period illustrated. The result of
that calculation is the total growth rate for the period. Then we annualize
that growth rate to obtain the average annual percentage increase (decrease)
during the period shown. When we "annualize," we assume that a single rate of
return applied each year during the period will produce the ending value,
taking into account the effect of compounding. "Termination value" means the
Retirement Account Value less the contingent withdrawal charge, the quarterly
administrative charge and all other charges and expenses which are applied
against Separate Account assets. The contingent withdrawal charge will never
be greater than 6%. See "Part 8: Deductions and Charges."
GROWTH OF $1,000 FOR PARTICIPANT TERMINATED ON DECEMBER 31, 1995
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
-------------------------------------------------------------
INVESTMENT THREE SINCE
FUND ONE YEAR YEARS FIVE YEARS TEN YEARS INCEPTION*
- --------------- ---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Money Market $ 967.55 $ 969.19 $ 996.14 $1,286.74 --
Intermediate
Government
Securities 1,036.77 1,025.22 -- -- $1,149.41
Quality Bond 1,071.69 -- -- -- 969.39
High Yield 1,099.67 1,238.27 1,640.09 -- 1,779.34
Growth & Income 1,139.87 -- -- -- 1,081.13
Equity Index 1,259.86 -- -- -- 1,233.08
Common Stock 1,220.48 1,401.72 1,890.59 3,057.26 --
Global 1,089.02 1,433.99 1,762.37 -- 1,860.98
International -- -- -- -- 1,021.37
Aggressive
Stock 1,213.90 1,279.87 2,246.95 3,939.40 --
Asset Allocation Series:
Conservative
Investors 1,104.37 1,096.63 1,311.33 -- 1,442.55
Balanced 1,097.82 1,058.25 1,381.82 1,951.87 --
Growth
Investors 1,162.09 1,215.83 1,813.57 -- 2,079.88
</TABLE>
AVERAGE ANNUAL TOTAL RETURN FOR PARTICIPANT
TERMINATED ON DECEMBER 31, 1995
<TABLE>
<CAPTION>
LENGTH OF INVESTMENT PERIOD
---------------------------------------------------
INVESTMENT THREE FIVE TEN SINCE
FUND ONE YEAR YEARS YEARS YEARS INCEPTION*
- --------------- -------- -------- -------- ------- ------------
<S> <C> <C> <C> <C> <C>
Money Market -3.25% -1.04% -0.08% 2.55% --
Intermediate
Government
Securities 3.68 0.83 -- -- 2.97%
Quality Bond 7.17 -- -- -- -1.37
High Yield 9.97 7.38 10.40 -- 6.62
Growth & Income 13.99 -- -- -- 3.53
Equity Index 25.99 -- -- -- 12.10
Common Stock 22.05 11.91 13.58 11.82 --
Global 8.90 12.77 12.00 -- 7.73
International -- -- -- -- 2.14
Aggressive
Stock 21.39 8.57 17.58 14.69 --
Asset Allocation Series:
Conservative
Investors 10.44 3.12 5.57 -- 6.04
Balanced 9.78 1.91 6.68 6.92 --
Growth
Investors 16.21 6.73 12.64 -- 12.44
</TABLE>
- -------
* Inception dates are as follows: Money Market (May 11, 1982);
Intermediate Government Securities (April 1, 1991); Quality Bond (October 1,
1993); High Yield (January 2, 1987); Balanced (May 1, 1984); Growth & Income
(October 1, 1993); Equity Index (March 1, 1994); Common Stock (August 1,
1968); Global (August 27, 1987); International (April 3, 1995); Aggressive
Stock (May 1, 1984); Conservative Investors (October 2, 1989); and Growth
Investors (October 2, 1989). The "Since Inception" number for the
International Fund is unannualized.
34
<PAGE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may
describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance of the Investment Funds
with (1) that of other insurance company separate accounts or mutual funds
included in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar Inc., VARDS or similar investment services that monitor the
performance of insurance company separate accounts or mutual funds, (2) other
appropriate indices of investment securities and averages for peer universes
of funds which are described in this prospectus on pages 27 and 28, or (3)
data developed by us derived from such indices or averages. The Morningstar
Variable Annuity/Life Report consists of over 700 variable life and annuity
funds, all of which report their data net of investment management fees,
direct operating expenses and separate account charges. VARDS is a monthly
reporting service that monitors over 2,500 variable life and variable annuity
funds on performance and account information. Advertisements or other
communications furnished to present or prospective Contract Owners may also
include evaluations of an Investment Fund or Portfolio by financial
publications that are nationally recognized such as Barron's, Morningstar's
Variable Annuity Sourcebook, Business Week, Chicago Tribune, Forbes, Fortune,
Institutional Investor, Investment Adviser, Investment Dealer's Digest,
Investment Management Weekly, Los Angeles Times, Money, Money Management
Letter, Kiplinger's Personal Finance, Financial Planning, National
Underwriter, Pension & Investments, USA Today, Investor's Daily, The New York
Times and The Wall Street Journal.
35
<PAGE>
- --------------------------------------------------------------------------------
PART 4: THE GUARANTEED INTEREST ACCOUNT
- --------------------------------------------------------------------------------
The Guaranteed Interest Account is part of our general account and pays
interest at a guaranteed rate. The general account supports all of our policy
and contract guarantees, 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, the
general account is not subject to regulation under the 1933 Act or the 1940
Act. 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 laws relating to the accuracy and
completeness of statements made in prospectuses.
The amount that you as a Participant or Contract Owner have in the Guaranteed
Interest Account at any time is equal to the sum of all contributions and
transfers that have been allocated to that Account on your behalf plus
interest, less the sum of all amounts that have been withdrawn, transferred
or deducted.
Interest is credited to the Account every day. There are three levels of
interest rates simultaneously in effect in the Guaranteed Interest Account:
the minimum interest rate guaranteed over the life of the contract, the
yearly guaranteed interest rate for the calendar year, and the current
interest rate. Current interest rates are set periodically by Equitable Life,
at its discretion, according to procedures that Equitable Life reserves the
right to change. All interest rates are effective annual rates, but before
deduction of applicable administrative or contingent withdrawal charges.
The setting of current interest rates is handled differently for EQUI-VEST
and MOMENTUM.
For the MOMENTUM Program, quarterly "current" rates are established. The
current rate applies to the entire amount you have in the Guaranteed Interest
Account during the calendar quarter for which it is declared. We may change
the duration of future interest guarantee periods, but no interest guarantee
period will exceed one year. We also reserve the right to assign different
current rates by Transaction Date and different current and yearly guaranteed
rates to different plans based upon when the plan became enrolled in the
MOMENTUM Program. Generally, all plans that become enrolled in the MOMENTUM
Program in the same calendar year will be in the same class. A plan will be
considered enrolled in the MOMENTUM Program as of the earliest Participation
Date applicable to a Participant in that plan. All Participants within the
same plan will be subject to the same interest rates. Plans that converted
from EQUI-VEST Corporate Trusteed to MOMENTUM will be considered in the same
class, regardless of the date of the plan's enrollment under EQUI-VEST.
For EQUI-VEST Contracts, an interest rate is assigned to each allocation to
the Guaranteed Interest Account and the rate is guaranteed for a certain
period of time, depending on when the allocation is made. Therefore, for
these Contracts, different interest rates may apply to different amounts in
this Account. (An exception to this approach is made for Corporate Trusteed
and EDC Contracts issued to governmental employers in New York whose EQUI-
VEST funding arrangements became effective on or after July 1, 1989).
For MOMENTUM and EQUI-VEST, the yearly guaranteed interest rate for 1996 is
4% and for 1997 is 4%. The yearly guaranteed interest rate will never be less
than the minimum Contract guarantee of 3% (4% for EQUI-VEST Corporate
Trusteed Contracts, Series 100 and 200 NQ group certificates, and for
Participants in plans that converted to MOMENTUM from our EQUI-VEST Corporate
Trusteed Contract). At least 15 days before the beginning of a calendar year,
we will notify you in writing of the guaranteed interest rate for the next
year.
36
<PAGE>
- --------------------------------------------------------------------------------
PART 5: THE EQUI-VEST FIXED MATURITY ACCOUNT
- --------------------------------------------------------------------------------
ALLOCATIONS TO FIXED MATURITY PERIODS
The Fixed Maturity Account is only available under the EQUI-VEST Series 400
Contracts.
Your Fixed Maturity Account contains the Fixed Maturity Periods to which you
have made a contribution or transfer. Each amount contributed (including
amounts transferred) to a Fixed Maturity Period and held to that Period's
Expiration Date accumulates interest at the Rate to Maturity in effect on the
date of your contribution to that Period. Thus, your Rate to Maturity is the
interest rate your contribution will earn if your money remains in that Fixed
Maturity Period until its Expiration Date.
Your Maturity Amount in a Fixed Maturity Period on its Expiration Date is
your original contribution plus interest, using the Rate to Maturity in
effect on the date of your contribution (or transfer) for the Fixed Maturity
Period (less appropriate adjustments for any charges or premature
withdrawals).
Before maturity, you have a Market Adjusted Amount in each Fixed Maturity
Period to which you have made a contribution. The Market Adjusted Amount is
the present value of your Maturity Amount, discounted at the Rate to Maturity
in effect for new contributions on the date of the calculation. It thus
reflects whatever market value adjustment (see details below) would apply on
that day were you to withdraw the entire amount in your Fixed Maturity
Period. (On the Expiration Date, your Market Adjusted Amount equals your
Maturity Amount.)
Contributions may be made to one or more Fixed Maturity Periods; however, you
may not make more than one contribution to any one Fixed Maturity Period. You
may not make a contribution to a Fixed Maturity Period which has an
Expiration Date beyond the date on which annuity payments are to commence
under your Contract. If you have contributed funds to one or more Fixed
Maturity Periods you must select Maximum Fund Choice; transfers out of the
Guaranteed Interest Account will be restricted. See "Transfers" in Part 6.
AVAILABILITY OF FIXED MATURITY PERIODS
Subject to state regulatory approval, Fixed Maturity Periods are available as
Investment Options only to Owners of Series 400 Contracts.
We offer Fixed Maturity Periods ending on June 15 (or the preceding Business
Day) for each of the maturity years 1996 through 2006. Not all Fixed Maturity
Periods will be available in all states. As Fixed Maturity Periods expire, we
expect to add maturity years so that generally ten are available in most
states at any time.
RATES TO MATURITY AND PRESENT VALUE PER $100 OF MATURITY AMOUNT
Because the Maturity Amount of a contribution to a Fixed Maturity Period can
be determined at the time it is made, you can determine the amount required
to be contributed to a Fixed Maturity Period in order to produce a target
Maturity Amount (assuming no transfers or withdrawals are made and no charges
are allocated to the Fixed Maturity Period). The required contribution is the
present value of that Maturity Amount discounted at the Rate to Maturity on
the Transaction Date for the contribution.
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Fixed Maturity Period in order to
create a series of constant Maturity Amounts for two or more years.
The Rates to Maturity that are available for new contributions can be
obtained from your agent or by calling (800) 841-0801.
OPTIONS AT EXPIRATION DATE
We will notify you at least 45 days before the Expiration Date of each Fixed
Maturity Period in which you have any money. You may elect one of the
following options to be effective at the Expiration Date:
(a) to transfer the Maturity Amount into any Fixed Maturity Period we
are then offering, or into any of our other Investment Options.
(b) to withdraw the Maturity Amount (subject to any contingent
withdrawal charge which may apply under your Contract).
If we have not received your election as of the Expiration Date, the Maturity
Amount in the expired Fixed Maturity Period will be transferred into the
Money Market Fund (or another Investment
37
<PAGE>
Option if required by state regulation). As to contracts issued in New York,
see New York Contracts--Fixed Maturity Account in Part 8: Deductions and
Charges.
MARKET VALUE ADJUSTMENT FOR TRANSFERS, WITHDRAWALS OR
TERMINATION PRIOR TO THE EXPIRATION DATE
Any withdrawal (including transfers, terminations and deductions) from a
Fixed Maturity Period prior to its Expiration Date will result in a positive
or negative market value adjustment, which is reflected in your Market
Adjusted Amount. The amount of the adjustment will depend on two factors: (a)
the difference between the Rate to Maturity on the date of your contribution
or transfer and the Rate to Maturity for the same Fixed Maturity Period on
the date of the calculation, and (b) the length of time remaining until the
Expiration Date. In general, if interest rates have risen between the time
when an amount was originally contributed to a Fixed Maturity Period and the
time it is withdrawn, the market value adjustment will be negative, and vice
versa; and the longer the period of time remaining until the Expiration Date,
the greater the impact of the interest rate difference. Therefore, it is
possible that a significant rise in interest rates could result in a
substantial reduction in your Market Adjusted Amount should you withdraw
before the Expiration Date.
The market value adjustment (positive or negative) resulting from a
withdrawal of all funds from a Fixed Maturity Period will be determined for
each contribution allocated to that Fixed Maturity Period as follows:
(1) We determine the Market Adjusted Amount on the Transaction Date as follows:
(a) We determine the Book Value that would be payable on the Expiration
Date, using the applicable Rate to Maturity. The Book Value equals
your contribution to the Fixed Maturity Period, reduced by any prior
withdrawals, transfers and charges and reflecting any prior market
value adjustments, accumulated at the Rate to Maturity on the date
of the contribution.
(b) We determine the time remaining in your Fixed Maturity Period (based
on the Transaction Date) and convert it to fractional years based on
a 365 day year (or on 366 day year in a leap year). For example
three years and 12 days becomes 3.0329.
(c) We determine the current Rate to Maturity which applies on the
Transaction Date to new contributions to the same Fixed Maturity
Period.
(d) We determine the present value of the Book Value payable at the
Expiration Date, using the period determined in (b) and the rate
determined in (c).
(2) We determine the Book Value as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market value
adjustment applicable to such Fixed Maturity Period, which may be positive
or negative.
The market value adjustment (positive or negative) resulting from a
withdrawal of a portion of the amount in a Fixed Maturity Period will be a
percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds from a Fixed Maturity Period. This percentage is
determined by (i) dividing the amount of the withdrawal or transfer from the
Fixed Maturity Period by (ii) the Market Adjusted Amount in such Fixed
Maturity Period prior to the withdrawal or transfer. See Appendix I for an
example.
The Rate to Maturity for new contributions to a Fixed Maturity Period is the
rate we have in effect for this purpose even if new allocations to that Fixed
Maturity Period would not be accepted at the time. If we do not have a Rate
to Maturity in effect for a Fixed Maturity Period to which the "current Rate
to Maturity" in (1)(c) would apply, we will use the rate at the next closest
Expiration Date. If we are no longer offering new Fixed Maturity Periods, the
"current Rate to Maturity" will be determined in accordance with our
procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.50% to the current rate
in (1)(c) above.
INVESTMENTS
Contributions received under the Contracts and allocated to Fixed Maturity
Periods will be held in a "nonunitized" separate account established by
Equitable Life under the laws of New York. The separate account provides an
additional measure of assurance that full payment of amounts due under the
Fixed Maturity Periods will be made. Under the New York Insurance Law, the
portion of the separate account's assets equal to the reserves and other
liabilities relating to the Contracts are not chargeable with liabilities
arising out of any other business we may conduct. Investments purchased with
amounts contributed to the Fixed Maturity Account
38
<PAGE>
(and any earnings on those amounts) are our property. Any favorable
investment performance on the assets held in the separate account accrues
solely to our benefit. Contract Owners do not participate in the performance
of the assets held in the separate account. We may, subject to applicable
state law, transfer all assets allocated to the separate account to our
general account. Regardless of whether assets supporting Fixed Maturity
Accounts are held in a separate account or our general account, all benefits
relating to the value in the Fixed Maturity Account are guaranteed by us.
We have no specific formula for establishing the Rates to Maturity for the
Fixed Maturity Periods. We expect the rates to be influenced by, but not
necessarily correspond to, among other things, the yields on the fixed income
securities to be acquired with amounts that are allocated to the Fixed
Maturity Periods at the time that the Rates to Maturity are established. Our
current plans are to invest such amounts in fixed income obligations,
including corporate bonds, mortgage backed and asset backed securities and
government and agency issues having durations in the aggregate consistent
with those of the Fixed Maturity Periods.
Although the foregoing generally describes our plans for investing the assets
supporting our obligations under the fixed portion of the Contracts, we are
not obligated to invest those assets according to any particular plan except
as may be required by state insurance laws nor will the Rates to Maturity we
establish be determined by the performance of the nonunitized separate
account. Interests held in the nonunitized separate account are registered
under the 1933 Act. See "Part 4: The Guaranteed Interest Account" for a
discussion of our general account.
39
<PAGE>
- --------------------------------------------------------------------------------
PART 6: PROVISIONS OF THE EQUI-VEST CONTRACTS
- --------------------------------------------------------------------------------
THE EQUI-VEST CONTRACT SERIES
EQUI-VEST is designed as a funding vehicle for either personal or
employer-sponsored retirement programs. EQUI-VEST may be offered either as an
individual Contract or as a group Contract with individual Certificates. The
difference is primarily one of state requirements; the basic provisions are
the same regardless of group or individual Contract form. Your Contract or
Certificate will indicate what form you have. Certain provisions of your
Conract may differ depending on the type of program purchased and the state
or date of issue. (See Part 1: "Summary" for a description of the types of
programs offered.) In this prospectus, we use a "series" number when
necessary to differentiate among Contracts. Currently, there are four series
of EQUI-VEST Contracts. You can identify the EQUI-VEST series you have by
referring to your confirmation notice, or you may contact your agent or call
our toll free number. In general, the series designations are:
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------- --------------
TSA, SEP, EDC, Annuitant Owned HR-10 Series 100
and Trusteed Contracts issued before
August 17, 1995.
IRA, QP IRA AND NQ Contracts issued
before January 3, 1994.
-------------------------------------------- ---------------
TSA, EDC, Annuitant Owned HR-10 and Series 200
Trusteed Contracts issued on or after
August 17, 1995. SEP Contracts issued
on or after August 17, 1995 and before
November 1, 1995. A Series 200 SEP
Contract will be issued in a state
where the Series 300 Contract has
not been approved.
-------------------------------------------- ---------------
IRA, QP IRA and NQ Contracts issued on or Series 300
after January 3, 1994 and before the date
Series 400 Contracts became available in
a state; and SEP Contracts issued on or
after November 1, 1995 in states which have
approved the Series 300 Contract.
--------------------------------------------- ---------------
IRA, QP IRA and NQ Contracts issued on or Series 400
after July 10, 1995 in states where approved.
--------------------------------------------- ---------------
</TABLE>
The provisions of your Contract may be restricted by any plan or agreement
relating to it or by applicable laws or regulations.
SELECTING INVESTMENT OPTIONS
You can choose one of the following two methods for selecting Investment
Options:
o Maximum Fund Choice, allowing you to allocate contributions to any
Investment Fund, the Guaranteed Interest Account and the Fixed Maturity
Periods; however, this election will result in restrictions in the
amount you can transfer out of the Guaranteed Interest Account; or
o Maximum Transfer Flexibility, allowing you to allocate contributions
only to the Balanced, Growth & Income, Equity Index, Common Stock,
Global, International, Aggressive Stock and Growth Investors Funds and
the Guaranteed Interest Account; and no transfer restrictions apply.
Once this selection is made, you may allocate contributions to, or transfer
among, only the Investment Options that you have chosen. After your Contract
is issued, you may request in writing to add any remaining Funds or eliminate
Funds that result in transfer restrictions, but we have the right to deny the
request. See "Transfers" elsewhere in this Section.
The Guaranteed Interest Account is always available as an Investment Option.
Subject to state regulatory approval, the Fixed Maturity Periods is available
to Owners of Series 400 Contracts. If you want to invest in the Fixed
Maturity Periods, you must select Maximum Fund Choice.
For Original Contracts, only the Guaranteed Interest Account and the Money
Market, Balanced, Common Stock and Aggressive Stock Funds are available. In
most cases, you may request to add additional Funds to your Original
Contract, although we have the right to deny such requests. See "Transfers"
elsewhere in this Section for the transfer restrictions applicable to
Original Contracts.
CONTRIBUTIONS UNDER THE CONTRACTS
Generally, contributions may be made at any time: in single sum amounts, on a
regular basis or as your financial situation permits. For some types of
retirement plans, contributions must be made by the employer.
40
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
Contributions are credited as of the Transaction Date, providing they are
accompanied with complete information. All contributions made by check must
be drawn on a bank in the U.S., in U.S. dollars and made payable to Equitable
Life. All checks are accepted subject to collection.
Minimum amounts that may be contributed are as follows:
o IRA
--Series 100 and 200--$20
--Series 300 and 400--$50
o QP IRA
--Series 100 and 200--$1,000
--Series 300 and 400--$2,500
o NQ
--$1,000 (initial); $50
(initial for payroll
deduction)
--$50 (ongoing)
o All others --$20
We reserve the right to change minimum and maximum contribution amounts upon
90 days prior written notice.
Special Limits
NQ: Subsequent contributions to Series 100 NQ Contracts will be restricted
for Annuitants age 59 and older in states where individual Contracts are
issued. Subsequent contributions to Series 300 and 400 NQ Contracts may not
generally be accepted for Annuitants age 80 and older.
TSA: In certain cases, provided the total annual contribution to the
EQUI-VEST TSA will be at least $200 annually, we may accept contributions of
less than $20. Currently we do not accept contributions via direct TSA to TSA
transfers under Rev. Rul. 90-24 where any such funds were invested in a
custodial account under Code Section 403(b)(7) and are still subject to its
restrictions.
IRA: Contributions to IRA Contracts may be subject to maximums, as discussed
below and in "Part 10: Federal Tax & ERISA Matters." Subsequent contributions
may be "regular" IRA contributions, "rollover" contributions or "direct
transfers." A $2,000 annual limit applies to regular contributions, but not
to rollovers or direct transfers.
"Regular" IRA contributions may no longer be made for the taxable year in
which you attain 70 1/2 and thereafter. Rollover and direct transfer
contributions may be made after you attain age 70 1/2. However, any amount
contributed must be net of your required minimum distibution for the year in
which the rollover or direct transfer contribution is made.
Contributions to the Investment Funds and the
Guaranteed Interest Account
We allocate contributions to the Investment Funds and the Guaranteed Interest
Account on the Transaction Date according to your allocation percentages.
Allocation percentages can be changed at any time by writing to our
Processing Office or by using TOPS. The change will be effective on the
Transaction Date and will remain in effect for future contributions unless
another change is requested.
A contribution allocated to an Investment Fund purchases Accumulation Units
in that Investment Fund. The number of Accumulation Units purchased equals
the dollar amount of the contribution divided by the Accumulation Unit Value
for that Investment Fund computed for the Transaction Date on which we
receive the contribution at our Processing Office. The number of Accumulation
Units purchased will not vary because of any later change in the Accumulation
Unit Value. A description of the computation of the Accumulation Unit Value
is found in the SAI.
Contributions allocated to the Guaranteed Interest Account become part of our
general account on the Transaction Date and begin to accrue interest at the
guaranteed interest rate then in effect.
Contributions to the Fixed Maturity Account (Series 400 Contracts only)
You must provide specific instructions for contributions to the Fixed
Maturity Account. Contributions (or transfers) to a Fixed Maturity Period
will have the Rate to Maturity for the specified Period offered on the
Transaction Date. Contributions may be made to one or more Fixed Maturity
Periods; however, you may not make more than one contribution (or transfer)
to any one Fixed Maturity Period. In no event may contributions be made to
Fixed Maturity Periods with maturities beyond the date on which annuity
payments are to commence under your Contract. See "Distribution Options"
elsewhere in this Section.
Automatic Investment Program
Our Automatic Investment Program (AIP) provides for a specified amount to be
automatically deducted from a bank checking account, bank money market
account or credit union checking account and to be
41
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
contributed into an NQ or IRA Contract on a monthly basis. AIP contributions
may be made to any Investment Option available under your Contract except the
Fixed Maturity Periods. You may elect AIP by properly completing the
appropriate form, which is available from your Equitable Life Agent, and
returning it to our Processing Office. You elect which day of the month
(other than the 29th, 30th or 31st) you wish to have your bank account
debited. That date, or the next Business Day if that day is a non-Business
Day, will be the Transaction Date. AIP is not available to QP IRA Contract
Owners.
You may cancel AIP at any time by notifying our Processing Office in writing.
Equitable Life is not responsible for any debits made to your account prior
to the time written notice of revocation is received at our Processing
Office.
ANNUITY ACCOUNT VALUE
Your Annuity Account Value for an EQUI-VEST Contract is the sum of your
amounts in the Investment Options, plus the amount in any loan reserve
account, including accrued interest. These amounts are defined below and
include your value in the Investment Funds, your value in the Guaranteed
Interest Account and your value in the Fixed Maturity Account. The loan
reserve account, applicable only to certain TSA and Corporate Trusteed
Contracts, is described in the SAI.
Value in the Investment Funds
Your value in an Investment Fund on any Business Day under your Contract is
equal to the number of your Accumulation Units in that Investment Fund times
the Accumulation Unit Value for that Fund for that date. Your number of
Accumulation Units in an Investment Fund at any time is equal to the sum of
Accumulation Units purchased by your contributions and transfers less any
Accumulation Units redeemed for withdrawals, transfers or deductions for
applicable charges.
The number of Accumulation Units you purchase or sell in any Investment Fund
is equal to the dollar amount of your transaction divided by the Accumulation
Unit Value for the Investment Fund on the Transaction Date. The number of
Accumulation Units you own will not vary because of any later change in the
Accumulation Unit Value. However, the Accumulation Unit Value varies with the
investment performance of the Fund, which in turn reflects the investment
income and realized and unrealized capital gains and losses of the
corresponding Portfolio, as well as Trust fees and expenses. The Accumulation
Unit Value is also stated after deduction of the Separate Account asset
charges relating to the Contracts. A description of the computation of the
Accumulation Unit Values is found in the SAI.
Accumulation Unit Values
The following tables show the Accumulation Unit Values, as of the last
Business Day for the periods shown, commencing with the initial offering of
each Fund under the Contracts indicated below.
EQUI-VEST: SERIES 100 AND 200*
<TABLE>
<CAPTION>
LAST INTERMEDIATE
BUSINESS MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY
DAY OF MARKET SECURITIES BOND YIELD INCOME INDEX
- ------------- ------ ------------ ------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C>
December 1986 $18.22 -- -- -- -- --
December 1987 19.18 -- -- -- -- --
December 1988 20.32 -- -- -- -- --
December 1989 21.89 -- -- -- -- --
December 1990 23.38 -- -- -- -- --
December 1991 24.48 -- -- -- -- --
December 1992 25.01 -- -- -- -- --
December 1993 25.41 -- -- -- -- --
December 1994 26.08 $ 98.19 $ 93.87 $ 95.88 $ 98.86 $100.95
December 1995 27.22 109.80 108.38 113.44 121.02 135.94
March 1996 27.47 108.56 106.45 119.41 123.33 142.60
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
LAST
BUSINESS COMMON INTER- AGGRESSIVE CONSERVATIVE GROWTH
DAY OF STOCK GLOBAL NATIONAL STOCK INVESTORS BALANCED INVESTORS
- ------------- ------ ------- -------- ---------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
December 1986 $ 52.10 -- -- $18.33 -- $14.69 --
December 1987 55.30 -- -- 18.15 -- 13.95 --
December 1988 67.22 -- -- 18.09 -- 15.80 --
December 1989 83.40 -- -- 25.86 -- 19.69 --
December 1990 75.67 -- -- 27.36 -- 19.40 --
December 1991 102.76 -- -- 50.51 -- 27.17 --
December 1992 104.63 -- -- 48.30 -- 26.04 --
December 1993 128.80 -- -- 55.68 -- 28.85 --
December 1994 124.32 $104.12 -- 52.88 $ 95.10 26.18 $ 96.31
December 1995 162.42 122.06 $104.15 68.73 112.97 30.92 120.08
March 1996 168.92 126.16 106.90 76.51 110.35 31.59 121.66
</TABLE>
42
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
EQUI-VEST: SERIES 300 AND 400*
<TABLE>
<CAPTION>
LAST INTERMEDIATE
BUSINESS MONEY GOVERNMENT QUALITY HIGH GROWTH EQUITY
DAY OF MARKET SERIES BOND YIELD &INCOME INDEX
- ------------- ------- ------------ ------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
December 1994 $102.61 $ 98.19 $ 93.87 $ 95.88 $ 98.86 $100.95
December 1995 107.04 109.80 108.38 113.44 121.02 135.94
March 1996 108.02 108.56 106.45 119.41 123.33 142.60
* Series 400 Contracts were initially offered on July 10, 1995
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
LAST
BUSINESS COMMON INTER- AGGRESSIVE CONSERVATIVE GROWTH
DAY OF STOCK GLOBAL NATIONAL STOCK INVESTORS BALANCED INVESTORS
- ------------- ------- ------- -------- ---------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
December 1994 $ 97.03 $104.12 -- $ 95.45 $ 95.10 $ 91.64 $ 96.31
December 1995 126.78 122.06 $104.15 123.95 112.97 108.26 120.08
March 1996 131.87 126.16 106.90 137.96 110.35 110.59 121.66
</TABLE>
Value in the Guaranteed Interest Account
Your value in the Guaranteed Interest Account on any Business Day is equal to
contributions and transfers made to the Guaranteed Interest Account plus
interest, less withdrawals, transfers and deductions for applicable charges.
Value in the Fixed Maturity Account
Your value in each Fixed Maturity Period on any Business Day is your Market
Adjusted Amount in that Period. See "Part 5: The Fixed Maturity Account."
TRANSFERS
You may transfer all or portions of your Annuity Account Value among the
Investment Options you have chosen at any time, subject to the restrictions
stated below. The amount transferred must be at least $300 or, if less, the
entire amount in the Investment Option.
o If you have selected to make only the Balanced, Growth & Income, Equity
Index, Common Stock, Global, International, Aggressive Stock and Growth
Investors Funds and the Guaranteed Interest Account available (Maximum
Transfer Flexibility), no transfer restrictions will apply among these
Funds and the Guaranteed Interest Account.
o If you have selected to make all Investment Options available (Maximum
Fund Choice), then the maximum amount which you may transfer in any
Contract Year from the Guaranteed Interest Account to any other
Investment Option is the greater of (a) 25% of the amount you had in the
Guaranteed Interest Account on the last day of the prior Contract Year
or (b) the total of all amounts you transferred from the Guaranteed
Interest Account to any other Investment Option in the prior Contract
Year.
o Transfers out of a Fixed Maturity Period other than at the Expiration
Date will result in a market value adjustment. See "Part 5: The Fixed
Maturity Account."
o Transfers may not be made to Fixed Maturity Periods to which you have
already made a contribution or transfer.
If you transfer money to the Guaranteed Interest Account from another
financial institution during your first Contract Year, and if you have
selected Maximum Fund Choice, you will be permitted, during the balance of
that Contract Year, to transfer up to 25% of such initial Guaranteed Interest
Account balance to any other Investment Option.
However, for Original Contract Owners, including Original Contract Owners who
elect to amend their Contract by selecting Maximum Transfer Flexibility, the
Money Market Fund is always available but we do not permit transfers into
that Fund from any other Investment Option. No other transfer limitations
apply to Original Contracts.
Upon 90 days advance notice, we have the right to change or establish
additional restrictions on transfers among the Investment Options.
A transfer request will be effective on the Transaction Date. Transfers in or
out of the Investment Funds will be at the Accumulation Unit Value next
computed after the Transaction Date. Transfers out of the Fixed Maturity
Periods will be at the Market Adjusted Amount on that Transaction Date.
Transfers into the Fixed Maturity Periods will be at the Rate to Maturity on
that Transaction Date. A transfer request does not change your percentages
for allocating current or future contributions among the Investment Options.
All transfers among the Investment Options will be confirmed in writing.
Written transfer requests should be sent directly to the Processing Office.
Your signed request for a transfer should specify your Contract number, the
43
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
amounts to be transferred and the Investment Options to and from which the
amounts are to be transferred. You can use our TOPS service to make transfers
among any Investment Options other than the Fixed Maturity Periods. Please
contact your Equitable Life Agent or the Processing Office to receive the
form necessary to obtain a special code number required for TOPS.
AUTOMATIC TRANSFER OPTIONS
INVESTMENT SIMPLIFIER
We offer two automatic options for transferring amounts from the Guaranteed
Interest Account to the Investment Funds: the Fixed-Dollar and the Interest
Sweep. You may select either, but not both, of these options.
o Fixed Dollar Option
Under the Fixed-Dollar Option you may elect to have a fixed dollar amount
transferred out of the Guaranteed Interest Account and into the Investment
Funds of your choosing (unless transfers to the Money Market Fund are
prohibited) on a monthly basis. You can either specify the number of
monthly transfers or instruct us to continue to make monthly transfers
until amounts in the Guaranteed Interest Account are depleted. In order to
elect this option you must have a minimum amount of $5,000 in the
Guaranteed Interest Account on the date we receive your election form at
our Processing Office and you must elect to transfer at least $50 per
month. The Fixed-Dollar Option is subject to the Guaranteed Interest
Account transfer limitation described in "Transfers" in this Section.
The Fixed-Dollar Option relies upon the principles of dollar cost
averaging. Dollar cost averaging is an investment strategy whereby equal
dollar amounts are invested at regular intervals. By allocating fixed
amounts on a regularly scheduled basis--as opposed to allocating the total
amount at one particular time--an investor may be less susceptible to the
impact of market fluctuations. Although dollar cost averaging is designed
to lessen the impact of market fluctuations, it does not assure a profit
nor protect against loss in a declining market.
o Interest Sweep
Under the Interest Sweep Option, the amount transferred each month will
equal the amount of interest that has been credited to amounts you have in
the Guaranteed Interest Account from the last Business Day of the prior
month to the last Business Day of the current month. To be eligible for
this option you must have at least $7,500 in the Guaranteed Interest
Account on the date we receive your election and on the last Business Day
of each month thereafter.
You may elect either option by completing an election form and sending it
to our Processing Office. You can obtain a form from your Equitable Life
Agent. For the Fixed Dollar Option, the first monthly transfer will occur
on the last Business Day of the month in which we receive your election
form at our Processing Office. For the Interest Sweep, the first monthly
transfer will occur on the last Business Day of the month following the
month in which we receive your election form at our Processing Office.
Termination of Automatic Options
Automatic transfer options will terminate:
-- Under the Fixed-Dollar Option, when either the number of designated monthly
transfers have been completed or the amount you have in the Guaranteed
Interest Account has been depleted, as applicable; or
-- Under the Interest Sweep, when the amount you have in the Guaranteed
Interest Account falls below $7,500 (determined on the last Business Day of
the month) for two consecutive months; or
-- Under either option, on the date we receive your written request to --
terminate automatic transfers at our Processing Office or on the date your
Contract terminates.
LOANS (FOR TSA AND CORPORATE
TRUSTEED ONLY)
Unless restricted by the employer's plan, loans are permitted against the
Annuity Account Value of certain TSA and Corporate Trusteed Contracts only.
Loans under a Corporate Trusteed Contract, however, may not be available in
all states. Loans under TSA and Corporate Trusteed Contracts are restricted
by the rules of the Code. In addition, ERISA rules may apply to loans under
Corporate Trusteed Contracts and, when offered in the future, loans under
individual TSA contracts where the TSA plan is subject to Title I of ERISA.
Loans are not available under University TSA Contracts and under any TSA when
the Required Mini-
44
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
mum Distributions Option has been elected. Also, loans are currently not
available under individual TSA Contracts where the TSA plan is subject to
Title I of ERISA; however, we expect to offer these loans beginning on or
after July 1, 1996 (approximately).
The EQUI-VEST program permits only one loan at any one time. Before a loan
can be made under either a Corporate Trusteed or TSA Contract, a properly
completed loan agreement and application must be signed. Participants should
read the terms and conditions contained in these documents carefully and
consult with a tax advisor before taking out a loan. A loan application form
can be obtained from your Equitable Life Agent, by writing to our Processing
Office or by calling our toll-free number. In the case of Corporate Trusteed
and certain TSA Contracts, the written consent of the Participant's spouse
will be required before a loan can be made. More details of the loan
provisions are stated in the Contract and on the loan agreement and
application form.
A loan will not be treated as a taxable distribution when made to the extent
that it conforms to Code limits. If the loan fails to qualify under Code
limits, or if interest and principal is not repaid when due, or in some
instances if service with the employer terminates, the amount borrowed and
not yet repaid may be treated as a taxable distribution.
The amount and terms of loans under TSA and Corporate Trusteed Contracts are
discussed in Part 4, "Additional Loan Provisions," in the SAI. The tax
consequences of failure to repay a loan are substantial and are discussed in
Part 10, "Federal Tax and ERISA Matters" and in Part 4 of the SAI.
ASSIGNMENT AND FUNDING CHANGES
Generally, the Contract Owner may not assign a Contract for any purpose;
however, an NQ Contract may be assigned for any purpose other than as
security for a loan. In addition, a trustee owner of a Trusteed Contract can
transfer ownership to the Annuitant. We will not be bound by an assignment
unless it is in writing and we have received it at the Processing Office. In
some cases, an assignment may have adverse tax consequences. See "Part 10:
Federal Tax and ERISA Matters."
An employer or trustee can change the funding vehicle for an EDC or Trusteed
Contract, respectively. You can change the funding vehicle for an NQ, TSA,
IRA or SEP Contract.
You may be able to move amounts you have invested with another carrier to
your EQUI-VEST Contract. To make such a change, funds must be remitted via
wire or check. Therefore, any assets accumulated under an existing program
will have to be liquidated. For example, existing insurance policies and
annuity Contracts funding a qualified plan must be converted into cash.
PARTIAL WITHDRAWALS AND
TERMINATION
You may withdraw funds from or terminate your Contract at any time before the
Contract annuitizes and while the Annuitant is alive. Subject to Code
restrictions you may withdraw funds from your Contract in any amount of at
least $300 but the Annuity Account Value should be at least $500 after the
withdrawal is made. Unless you specify otherwise, withdrawals will be taken
on a pro rata basis from the Investment Funds and the Guaranteed Interest
Account. We will make withdrawals from the Fixed Maturity Periods as you
direct. Partial withdrawals or terminations may result in a contingent
withdrawal charge, explained fully in "Part 8: Deductions and Charges."
Withdrawals are generally taxable and may be subject to tax penalty when the
withdrawal is taken prior to age 59 1/2 . In some cases, withdrawals or
termination may be prohibited or limited by the terms of your retirement
plan. We may be required to withhold income taxes from the amount withdrawn.
See Part 10: "Federal Tax and ERISA Matters." Partial withdrawals or
terminations of amounts held in the Fixed Maturity Periods prior to an
Expiration Date will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Termination Prior to the Expiration
Date" in Part 5.
To make a withdrawal or termination, you should complete a Request for
Disbursement form which leads you through the withdrawal process, step by
step. This form is available from your Agent or from our Processing Office.
In order to process your request, we may require additional information,
depending on the provisions of your Contract or retirement plan. If we have
received the information we require, the requested partial withdrawal or
termination will become effective on the Transaction Date and proceeds will
be mailed within seven days thereafter. If we receive only partially
completed information, we will return the request to you for completion prior
to processing.
We may terminate your Contract and pay your Annuity Account Value, less any
outstanding loan
45
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
(and accrued interest) (1) if no contributions are made for three Contract
Years and the Annuity Account Value is less than $500, or (2) if you request
a partial withdrawal that would result in the Annuity Account Value falling
below $500. We may also terminate your Contract if no contributions are made
within 120 days from the Contract Date. For group certificates, we may
terminate your certificate if no contributions are made within 120 days from
the issue date.
The amount of any outstanding loan balance plus any applicable contingent
withdrawal charge on the loan balance will be deducted from the proceeds paid
upon termination.
For participants in a Texas Optional Retirement Program, Texas law permits
withdrawals only after one of the following distributable events occur:
attainment of age 701/2, death, retirement, or termination of employment in
all Texas public institutions of higher education. To make a withdrawal, a
properly completed written acknowledgment must be received from the employer.
If a distributable event occurs prior to your being vested, any amounts
provided by an employer's first-year matching contribution will be refunded
to the employer. We reserve the right to change these provisions without your
consent, but only to the extent necessary to maintain compliance with
applicable law.
THIRD PARTY TRANSFERS OR EXCHANGES
You may request that your Contract be exchanged for another contract or
certificate of the same type issued by another carrier at any time by
completing the Transfer/Rollover of Assets or 1035 Exchange to Another
Carrier form. This form contains specific delivery instructions and is
available from your Agent.
A contingent withdrawal charge and third party transfer charge, if
applicable, may be imposed on your Annuity Account Value prior to the
transfer or exchange. Any higher investment return which you anticipate as a
result of this transfer or exchange may be outweighed by the cost of these
charges, if applicable. See "Part 8: Deductions and Charges." Consult your
tax or legal advisor before making any such transfers or exchanges.
REQUIREMENTS FOR DISTRIBUTIONS
Payouts may be subject to applicable withdrawal charges. See "Part 8:
Deductions and Charges." Distributions may also be taxable and subject to tax
penalties. See "Part 10: Federal Tax and ERISA Matters." Amounts in the Fixed
Maturity Periods that are applied to a distribution option prior to an
Expiration Date will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Termination Prior to the Expiration
Date" in Part 5.
IRA, EDC, Annuitant-Owned HR-10, SEP, TSA and Trusteed Contracts are subject
to the Code's minimum distribution requirements for qualified plans.
Generally, distributions from these Contracts must commence by April 1 of the
calendar year following the calendar year in which you attain age 70 1/2.
Subsequent distributions must be made by December 31st of each calendar year.
If the required minimum distribution is not made, a penalty tax in an amount
equal to 50% of the difference between the amount required to be withdrawn
and the amount actually withdrawn may apply. See "Part 10: Federal Tax and
ERISA Matters" for a discussion of various special rules concerning the
minimum distribution requirements.
In addition, distributions from a qualified plan, including our prototype
plans through which Annuitant-Owned HR-10 Contracts are issued, may be
subject to the provisions of the plan document.
DISTRIBUTION OPTIONS
The Contract is an annuity contract, even though you may elect to receive
your benefits in a non-annuity form. In addition to a lump sum distribution
option, two other types of distribution options are available: income annuity
and flexible payment distribution options.
An annuity form of distribution option or "annuitization" pays out
contributions and earnings under the Contract in installments over a
specified period or over the Annuitant's life. Annuitization payments, if
selected, are calculated as of the annuitization date chosen, which is on
file with our Processing Office. You can change this date by writing to our
Processing Office any time before the date, subject to certain restrictions
as described in the Contract.
Except for EDC, Trusteed and NQ Contracts, the Contract Owner is always the
Annuitant. In an EDC or Trusteed Contract, the Annuitant is generally the
covered employee. For EDC Contracts, the employer is the Contract Owner and,
for Trusteed Contracts, the Owner is the trustee. For NQ Contracts, Contract
Owners may name an Annuitant other than themselves if they wish.
46
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
For IRA retirement benefits subject to minimum distribution requirements, we
will send a form outlining the distribution options available before you
reach age 70 1/2 (if you have not annuitized before that time).
INCOME ANNUITY DISTRIBUTION OPTIONS:
o LIFE ANNUITY: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with
this annuity form, it provides the highest monthly payment of any of the
life annuity distribution options. This is the normal form of annuity
payment for Annuitants under IRA Contracts who do not have a spouse at
their retirement date, and for SEP, Trusteed, TSA, Annuitant-Owned HR-10
and EDC (other than governmental EDC plans in New York) Contracts.
o LIFE ANNUITY-PERIOD CERTAIN: This annuity form guarantees payments for
the rest of the Annuitant's life. In addition, if the Annuitant dies
before the end of a selected period of time (the "certain period"),
payments will continue to the beneficiary for the balance of the certain
period. The certain period cannot exceed life expectancy (or joint life
expectancy for qualified retirement plans). A life annuity with a
certain period of 10 years is the normal form of annuity under NQ
Contracts.
o LIFE ANNUITY-REFUND CERTAIN: This annuity form guarantees payments for
the rest of the Annuitant's life. In addition, if the Annuitant dies
before the amount applied to purchase this annuity option has been
recovered, payments will continue to the beneficiary until that amount
has been recovered. This annuity option is available only as a fixed
annuity.
o PERIOD CERTAIN ANNUITY: This annuity form guarantees payments for a
specific period of time, usually 5, 10, 15 or 20 years, and does not
involve life contingencies. It does not permit any prepayment of the
unpaid principal, so you could not elect to receive part of the payments
as a single sum payment with the rest paid in monthly annuity payments.
This is the normal form of annuity for Annuitants in governmental EDC
plans in New York. Currently, this annuity option is available only as a
fixed annuity.
o JOINT AND SURVIVOR LIFE ANNUITY: This annuity form guarantees payments
for the rest of the Annuitant's life and, after his or her death,
continuation of payments to the survivor. Generally, unless the
Annuitant elects otherwise with the written consent of the spouse, this
will be the normal form of annuity payment under qualified plans and
certain TSAs for married Annuitants.
All of the life annuity distribution options outlined above (with the
exception of Joint and Survivor Life Annuity) are available as either Single
or Joint life annuities. Life annuity distribution options are not available
for Annuitants in governmental EDC plans in New York.
FIXED AND VARIABLE ANNUITY FORMS:
We offer the annuity distribution options outlined above in both fixed and
variable form, unless otherwise indicated. Fixed annuity payments, funded
through our general account, do not change and will be based on the tables of
guaranteed annuity payments in your Contract or on our then current annuity
rates, whichever is more favorable for the Annuitant. For all Annuitants, the
normal form of annuity provides for fixed payments. Variable payments will be
funded through your choice of the 13 Investment Funds of the Hudson River
Trust through the purchase of annuity units. The amount of each variable
annuity payment may fluctuate, depending upon the performance of the
Investment Fund. Variable benefits are not allowed for governmental EDC plans
in New York. See "Annuity Unit Values" in the SAI.
We also make the variable annuity distribution option available to owners of
our single premium deferred annuity (SPDA) contracts. SPDA contractholders
who are considering purchasing a variable distribution option should also
review "Part 2: Separate Account A and its Investment Funds," "Part 3:
Investment Performance," the Hudson River Trust prospectus (directly
following this prospectus) and the sections of the Statement of Additional
Information which discuss the variable annuity distribution option.
We may offer other forms not outlined here. Your Equitable Life Agent can
provide details.
For each annuity distribution option, we will issue a separate written
agreement putting the option into effect. Before we pay any annuity benefit,
we require the return of the Contract. If your Contract is lost, you must
provide us with a written statement to this effect.
47
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
If, at the time you elect an annuity distribution option, the Annuity Account
Value is less than $2,000 or the initial payment under the option elected is
less than $20, we reserve the right to pay the Annuity Account Value in a
single sum rather than as payments under the annuity form chosen.
The size of the payments will depend on the form of annuity (fixed or
variable), the amount applied to purchase the annuity, the type of annuity
chosen and, in the case of a life annuity distribution option, the
Annuitant's age (or the Annuitant's and joint annuitant's ages) and in
certain instances, the sex of the Annuitant(s). Once an annuity distribution
option is chosen and payments have commenced, no change can be made, other
than transfers (if permitted in the future) among the investment funds if a
variable annuity is selected.
A $200 administrative charge currently applies if an income annuity
distribution option is chosen before five Contract Years have been completed.
This charge does not apply when our guaranteed rates are used to calculate
benefits. Beneficiaries do not pay this charge.
FLEXIBLE PAYMENT DISTRIBUTION OPTIONS:
o PARTIAL WITHDRAWALS: See "Partial Withdrawals and Termination" above.
O SYSTEMATIC WITHDRAWAL: You may elect either at the time of Contract
issue or any time thereafter to have an amount periodically withdrawn
from your Contract. (Currently not available for EDC, Trusteed, and
HR-10 Annuitant-Owned Contracts.) A check for the amount withdrawn will
be made payable to you and mailed to your address. You determine on
which day of the month (1st through 28th) you wish to have the
Systematic Withdrawal occur. A minimum Annuity Account Value in the
Investment Funds and the Guaranteed Interest Account of $20,000 is
required at the time this feature is elected and you may terminate it at
any time.
The amount withdrawn may be either the amount of interest earned under the
Guaranteed Interest Account or a fixed dollar amount of the Annuity Account
Value in the Investment Funds or in the Guaranteed Interest Account. When
the interest option is elected, a minimum of $20,000 must be maintained in
the Guaranteed Interest Account. No minimum Annuity Account Value is
required to be maintained when the fixed dollar option is elected.
Withdrawals may be scheduled monthly or quarterly, subject to minimum
amount of $300. Amounts withdrawn which are in excess of the 10% Free
Corridor amount are subject to the contingent withdrawal charge. See
"Contingent Withdrawal Charge" in Part 8.
o REQUIRED MINIMUM DISTRIBUTIONS OPTION: We offer a payment option, which
we call "Required Minimum Distributions Option," which is intended to
meet the minimum distribution requirements applicable to qualified
plans, IRAs, SEPs, TSAs, and EDC Contracts. See "Part 10, Federal Tax &
ERISA Matters." You may elect the Required Minimum Distributions Option
if the Annuitant is at least age 70 1/2 and your Contract has an Annuity
Account Value in the Investment Funds and the Guaranteed Interest
Account of at least $2,000. You can elect the Required Minimum
Distributions Option by filing the proper election form with us. If you
elect the Required Minimum Distributions Option, we will pay out of the
Annuity Account Value in the Investment Funds and the Guaranteed
Interest Account an amount which the Code requires to be distributed
from your Contract. If such amounts are insufficient and you hold
amounts in the Fixed Maturity Account, we will then pay out required
amounts from the Fixed Maturity Account. In performing this calculation,
we assume that the only funds subject to the Code's minimum distribution
requirements are those held under your Contract. We calculate the
Required Minimum Distributions Option amount based on the information
you give us, the various choices you make and certain assumptions.
Currently, the Required Minimum Distributions Option payments will be
made annually. We are not responsible for errors that result from
inaccuracies in the information you provide. The choices you can make
are described in Part 6 of the SAI.
You may elect the Required Minimum Distributions Option for each Contract
you own, subject to our rules then in effect. This election is revocable
except for EDC Contracts. The Required Minimum Distributions Option is not
available under Contracts that have an outstanding loan. Generally electing
this option does not restrict making partial withdrawals, or subsequently
electing an annuity distribution option.
The minimum check that will be sent is $300, or, if less, your Annuity
Account Value. If, after the deduction of the amount of the minimum distri-
48
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
bution, the total Annuity Account Value is less than $500, we may terminate
the Contract and pay the Cash Value. See "Partial Withdrawals and
Termination" above.
Any applicable withdrawal charges will be deducted in addition to the
amount distributed under the Required Minimum Distributions Option.
Withdrawal charges will be deducted on a pro rata basis from the Investment
Funds and the Guaranteed Interest Account or, if there is an insufficient
amount in these Options, on a pro rata basis from the Fixed Maturity
Periods. See "Contingent Withdrawal Charge" in Part 8.
If you have a TSA that was purchased before December 31, 1986 and
transferred to EQUI-VEST, the amount of your pre-1987 account balance is
not subject to the minimum distribution rules at age 70 1/2. However,
post-1986 salary reduction contributions and all earnings since that date
are subject to these minimum distribution requirements.
o DEPOSIT OPTION: This distribution option is for NQ Contracts only.
Proceeds from your NQ Contract can be deposited for a period selected
(including one for as long as the Annuitant lives), and will be credited
with a guaranteed rate of interest for that period.
GUARANTEED DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of due proof of the Annuitant's death, we will pay a
death benefit to the beneficiary named in your Contract. You designate the
beneficiary on the application. You may change your beneficiary by writing to
our Processing Office. The change is effective on the date the written
submission was signed. A beneficiary change request must be received by the
Processing Office before the submission of a death claim.
In general, the death benefit is equal to the greater of: (i) the Annuity
Account Value (less any outstanding loan and accrued interest, if any) and
(ii) the "minimum death benefit." The minimum death benefit will not be less
than all contributions made (less any applicable taxes and any outstanding
loan and accrued interest, if any) adjusted for total withdrawals. We will
pay the death benefit to the beneficiary in the form of an annuity
distribution option if you have chosen such form under your Contract. If no
annuity option is in effect at the Annuitant's death, the beneficiary will
receive the death benefit in a lump sum. However, subject to certain
exceptions in the Contract, our rules then in effect and any other applicable
legal requirements, the beneficiary may elect to: (a) apply the death benefit
to an annuity distribution option we offer, (b) apply the death benefit to
provide any other form of distribution option we offer, (c) elect any
combination of forms of distribution option, or (d) in certain circumstances,
continue the Contract.
For Series 300 and 400 Contracts only, if the Annuitant is also the Contract
Owner and the Owner/ Annuitant elects his or her spouse to be the sole
primary beneficiary and to be the Successor Annuitant and Contract Owner,
then the surviving spouse automatically becomes both the successor Contract
Owner and Annuitant, and no death benefit is payable until the surviving
spouse's death.
When the Contract Owner Dies Before the Annuitant (NQ Contracts Only)
For all NQ Contracts, when the Contract Owner is not the Annuitant and the
Contract Owner dies before any annuity distribution payments have begun, the
beneficiary named to receive the death benefit upon the Annuitant's death
will automatically succeed as Contract Owner. For Series 300 and 400
Contracts only, you have the right to designate a Successor Owner either on
the application form or in a written request sent to our Processing Office.
The Code requires that the original Contract Owner's entire interest in the
Contract be completely distributed to the named beneficiary by the fifth
anniversary of such Owner's death (unless an annuity distribution option is
elected and payments begin within one year after the Contract Owner's death
and are made over the beneficiary's life or over a period not exceeding the
beneficiary's life expectancy). If an annuity distribution option has not
been elected, as described above, we will pay any remaining Annuity Account
Value (less any applicable contingent withdrawal charge) on the fifth
anniversary of the Contract Owner's death. If the named beneficiary is the
Contract Owner's surviving spouse, no distributions are required as long as
both the surviving spouse and the Annuitant are living.
YOUR BENEFICIARY
You designate the beneficiary for the death benefit under the Contract on the
application. You may change your beneficiary by writing to our Processing
Office. The change is effective on the Transaction Date. The employer must be
the beneficiary under EDC plans and the trustee must be the beneficiary under
most Trusteed plans.
49
<PAGE>
PROVISIONS OF THE EQUI-VEST CONTRACTS (Continued)
The death benefit available to the beneficiary is determined as of the
Business Day due proof of death is received at our Processing Office. On that
Business Day, the Annuity Account Value is deducted from the Investment
Options and earns voluntary interest at an interest rate not less than the
rate required by law. If you have transferred the value of another Equitable
Life annuity contract to your EQUI-VEST Contract, the value of that
contract's minimum death benefit calculated as of the time of transfer will
be included in total contributions for purposes of calculating the minimum
death benefit.
If no benefit option is in effect at the Annuitant's death, the beneficiary
can select a lump sum option or one of the forms of annuity benefit. Under
certain circumstances the beneficiary may elect to continue the Contract. In
some cases, this may result in a deemed taxable distribution. Any option
selected must provide for distribution of the Annuity Account Value within
the period of time permitted by the Code. For EDC Contracts, benefits must be
distributed within a period not to exceed 15 years (or within the period of
the life expectancy of the surviving spouse if the spouse is the designated
beneficiary). See "Part 10: Federal Tax and ERISA Matters."
If a lump sum is selected, it is generally paid through the Equitable Life
Access Account(Trademark), an interest bearing checking account. A
beneficiary has immediate access to the proceeds by writing a check on the
account. We pay interest from the date the lump sum is deposited into the
Access Account until the date the Access Account is closed.
PROCEEDS
Application of proceeds from the Investment Funds to a variable annuity,
payment of a death benefit from the Investment Funds and payment of any
portion of the Annuity Account Value in the Investment Funds (less any
applicable withdrawal charge) will be made within seven days after the
Transaction Date. Payments or applications of proceeds from the Investment
Funds can be deferred for any period during which (1) the New York Stock
Exchange is closed or trading on it is restricted, (2) sales of securities or
determination of the fair value of an Investment Fund's assets is not
reasonably practicable because of an emergency, or (3) the SEC, by order,
permits us to defer payment in order to protect persons with interests in the
Investment Funds. We can defer payment of any portion of the Annuity Account
Value in the Guaranteed Interest Account and in the Fixed Maturity Account
for up to six months while you are living.
50
<PAGE>
- --------------------------------------------------------------------------------
PART 7: PROVISIONS OF THE MOMENTUM CONTRACT
AND SERVICES WE PROVIDE
- -------------------------------------------------------------------------------
UNDERSTANDING THE MOMENTUM PROGRAM
(EMPLOYERS AND PLAN TRUSTEES)
The MOMENTUM Program offers, pursuant to the terms of either the Master Trust
or the Pooled Trust, a group variable annuity contract as a funding vehicle
for Employers who sponsor qualified defined contribution plans. A defined
contribution plan is a retirement plan which provides for an individual
account for each plan participant and for benefits based solely on the
amounts contributed to such account and any income, expenses, gains and
losses. A qualified defined contribution plan is a defined contribution plan
that meets the requirements of Section 401(a) of the Code and applicable
Treasury regulations.
The Employer or Plan Trustee, as applicable, is responsible for determining
whether the MOMENTUM Contract is a suitable funding vehicle for its defined
contribution plan and should, therefore, carefully read this prospectus and
the MOMENTUM Contract before entering into the Contract.
As an Employer, subject to Equitable Life's underwriting requirements, you
can use the MOMENTUM Program to adopt the Master Plan and Trust, in which
case the Master Trust will be the sole funding vehicle for your plan. The
Master Trust is funded solely by the MOMENTUM Contract.
The Master Plan and Trust consists of Internal Revenue Service approved
master defined contribution plans all of which use the same basic plan
document. They include:
o a standardized and nonstandardized profit sharing plan (both with an
optional qualified cash or deferred arrangement pursuant to Section
401(k) of the Code); and
o a standardized and a nonstandardized defined contribution pension plan.
An Employer may adopt one or more of these plans. The plans are all
participant-directed, that is, the plan participants choose which Investment
Options to use for the investment of their plan accounts. The plans are
designed to meet the requirements of ERISA Section 404(c). See "Certain Rules
Applicable to Plans Designed to Comply With Section 404(c) of ERISA" in Part
10.
If you, as an Employer, elect our full service plan recordkeeping option,
then you must adopt our Master Plan and Trust. A description of such services
may be found under "Plan Recordkeeping Services" below. More information
about the Master Plan and Trust may be found in the SAI.
If you, as an Employer, want to use your own individually-designed or a
prototype qualified defined contribution plan, you may adopt the Pooled Trust
as a funding vehicle. The Pooled Trust is for investment only and may be used
as your plan's only funding vehicle or in addition to other funding vehicles.
The same group variable annuity contract (i.e., the MOMENTUM Contract) is
used under the Pooled Trust and the Master Plan and Trust. The Pooled Trust
is available for qualified defined contribution plans with either
participant-directed or trustee-directed investments. If you adopt the Pooled
Trust you will have elected our basic plan recordkeeping option. We may offer
to perform additional plan recordkeeping services for an additional charge.
Such services will be provided pursuant to the terms of a written service
agreement between us and the Plan Trustee.
Chase Manhattan Bank N.A. currently acts as the trustee under both the Pooled
Trust and the Master Plan and Trust. The sole responsibility of Chase
Manhattan Bank N.A. is to serve as a party to the MOMENTUM Contract. It has
no responsibility for the administration of the MOMENTUM Program or for any
distributions or duties under the MOMENTUM Contract. In certain states the
MOMENTUM Contract will only be issued directly to the Employer or Plan
Trustee and, accordingly, the Master Plan and Trust and the Pooled Trust will
not be available. As a consequence, Employers in those states will not be
able to use our full service plan recordkeeping option.
EMPLOYER'S RESPONSIBILITIES. If you adopt the Master Plan and Trust or if we
otherwise agree to provide the full service recordkeeping option pursuant to
a written service agreement, you, as the Employer and plan administrator,
will have certain responsibilities relating to the administration and
qualification of your plan, including:
o Sending us contributions at the proper time;
51
<PAGE>
PROVISIONS OF THE MOMENTUM Contract and Services We Provide (Continued)
o Determining the amount of all contributions for each Participant;
o Maintaining all personnel records necessary for administering your plan;
o Determining who is eligible to receive benefits;
o Forwarding to us all the forms that employees are required to submit;
o Arranging to have all reports distributed to employees and former
employees if you elect to have them sent to you;
o Arranging to have our prospectuses distributed;
o Filing an annual information return for your plan with the Internal
Revenue Service, if required;
o Providing us with the information needed for running special
non-discrimination tests, if you have a 401(k) plan or if your plan
accepts post-tax employee or employer matching contributions and making
any corrections if you do not pass the test;
o Selecting interest rates and monitoring default procedures, if you elect
to offer Participant loans in your plan; and
o Meeting the requirements of ERISA Section 404(c) if you, as Employer,
intend for your plan to comply with that section.
Other responsibilities of the Employer relating to the administration and
qualification of your plan are indicated in the plan recordkeeping services
agreement which is required for all plans that elect the full service plan
recordkeeping options.
We will give you guidance and assistance in the performance of your
responsibilities. The ultimate responsibility, however, rests with you.
If you, as an Employer, use an individually-designed or a prototype plan, you
already have most of these responsibilities, which generally will not be
increased in any way by your adoption of the Pooled Trust.
ADOPTING THE MOMENTUM PROGRAM
(EMPLOYERS AND PLAN TRUSTEES)
In addition to other installation forms and agreements, to adopt the Master
Plan and Trust, you, as the Employer, must complete a participation agreement
and have it executed on behalf of your company. To adopt the Pooled Trust, a
Plan Trustee must execute a Pooled Trust participation agreement. Return your
completed participation agreement to the address specified on the form. You
should keep copies of all completed forms for your own records. In addition,
either you, as Employer, or the Plan Trustee, as applicable, must complete a
contract application in order to participate in the MOMENTUM Contract.
Your Equitable Life Agent can help you complete the participation agreement
and the application for the MOMENTUM Contract. We recommend that the
participation agreement be reviewed by your tax or benefits advisor.
THE MOMENTUM CONTRACT
The MOMENTUM Program is funded through the MOMENTUM Contract, a combination
fixed and variable group annuity contract issued by Equitable Life. The
MOMENTUM Contract governs the Investment Options that are offered under the
MOMENTUM Program.
Bear in mind that the provisions of your plan or applicable laws or
regulations may be more restrictive than the MOMENTUM Contract. We reserve
the right to amend the MOMENTUM Contract without the consent of any other
person in order to comply with applicable laws and regulations. Such right
includes, but is not limited to, the right to conform the MOMENTUM Contract
to the Code, ERISA and applicable regulations.
SELECTING INVESTMENT OPTIONS
(EMPLOYERS AND PLAN TRUSTEES ONLY)
Subject to state regulatory approval, you, as Employer or Plan Trustee, can
elect to fund your plan with any number of the Investment Options available
under the Contract. This selection is made on the application. You may
request to change this selection subject to our rules then in effect. If you
elect to fund your plan with any one of the Intermediate Government
Securities, Quality Bond, High Yield or Conservative Investors Funds, you
must also select the Money Market Fund. If you select the above-listed Funds
and the Guaranteed Interest Account, certain restrictions will apply to
transfers out of the Guaranteed Interest Account. See "Transfers" in this
Section. Lastly, you, as Employer, must elect the Guaranteed Interest Account
as a funding option if you select only from among the Balanced, Growth &
Income, Equity Index, Common Stock, Global, International, Aggressive Stock
or Growth Investors Funds.
For Original Certificates, only the Guaranteed Interest Account and the Money
Market, Balanced,
52
<PAGE>
PROVISIONS OF THE MOMENTUM Contract and Services We Provide (Continued)
Common Stock and Aggressive Stock Funds are available and we do not permit
transfers into the Money Market Fund from any of the other Investment
Options.
CONTRIBUTIONS
Contributions may be made at any time and may be made only by the Employer or
Plan Trustee by either wire transfer or check. Participants should not send
contributions directly to Equitable Life. There is no minimum contribution.
All contributions made by check must be drawn on a bank in the U.S., in U.S.
dollars and made payable to Equitable Life. All checks are subject to
collection. Contributions are credited as of the Transaction Date, if they
are accompanied by properly completed forms. Failure to use the proper form,
or to complete the form properly, may result in a delay in crediting
contributions. Employers should send all contributions to Equitable Life at
the Processing Office. (See "Part 1: Summary.")
We allocate contributions to the Investment Options according to the
allocation percentages on the Participant's enrollment form or as later
changed. Under participant-directed plans, you, as Participant, will provide
those allocation percentages. In trustee-directed plans, the Plan Trustee
will provide those percentages. Employee and Employer contributions may be
allocated in different percentages.
By signing the enrollment form you are providing us with instructions to
allocate your contributions to the Money Market Fund (if that Fund has been
selected as an available Investment Option under your Employer's plan and) if
your allocation instructions on the form are incomplete (e.g., do not add up
to 100%). If your instructions add up to less than 100%, only the portion of
the contribution for which we do not have instructions will be allocated to
the Money Market Fund. If your instructions add up to more than 100%, the
entire amount of the contribution will be allocated to the Money Market Fund.
We will then notify your Employer or Plan Trustee and request that corrected
instructions be forwarded to us. If we do not receive corrected instructions
after three notices have been sent, but in no event later than 105 days from
the date a contribution is first credited to the Money Market Fund, we will
return to the Employer or Plan Trustee, as applicable, all contributions for
which notices had been sent, plus earnings.
If however, the Money Market Fund is not an available Investment Option under
your Employer's plan, we will return the contribution to the Employer or Plan
Trustee in five Business Days, if we have not received the signed form or
corrected allocation instructions, unless we have obtained your permission to
continue to hold the contribution.
If we receive your initial contribution before we receive your signed
enrollment form, we will allocate the initial contribution to the Guaranteed
Interest Account for five Business Days. If we do not receive either the
signed enrollment form or your consent to hold the initial contribution
pending receipt of the form by the fifth Business Day, we will return the
amount of the initial contribution to your Employer or Plan Trustee, as
applicable.
You, as a Participant, should review your confirmation notices carefully to
determine whether your contributions have been allocated correctly. A
certificate evidencing your participation under the MOMENTUM Contract will
also be sent to you.
Unless restricted by your Employer's plan, allocation percentages can be
changed at any time. To change your allocation instruction, you can file a
change of investment allocation form with your Employer or Plan Trustee. In
addition, your Employer may have opted to use our Telephone Operated Plan
Support (TOPS) system to enable you to change your allocation percentages
over the phone. The change will be effective on the Transaction Date and will
remain in effect for future contributions unless another change is requested.
A contribution allocated to an Investment Fund purchases Accumulation Units
in that Investment Fund based on the Accumulation Unit Value for that
Investment Fund computed for the Transaction Date on which we receive the
contribution at our Processing Office. Contributions allocated to the
Guaranteed Interest Account become part of our general account and begin to
accrue interest on the Transaction Date.
RETIREMENT ACCOUNT VALUE
The Retirement Account Value is the sum of the amounts that a Participant has
in the Guaranteed Interest Account and the Investment Funds. See "Part 4:
Guaranteed Interest Account".
The amount you have in an Investment Fund at any time is equal to the number
of Accumulation Units you have in that Investment Fund times the Accumulation
Unit Value for the Investment Fund for that Transaction Date. The number of
Accumulation Units in an Investment Fund at any time is equal to
53
<PAGE>
PROVISIONS OF THE MOMENTUM Contract and Services We Provide (Continued)
the sum of Accumulation Units purchased by contributions, transfers and loan
repayments (including principal and interest) less the sum of Accumulation
Units redeemed for withdrawals, transfers, loans or deductions for charges.
The number of Accumulation Units purchased or sold in any Investment Fund is
equal to the dollar amount of the transaction divided by the Accumulation
Unit Value for the Investment Fund for the applicable Transaction Date. The
number of Accumulation Units will not vary because of any later change in the
Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the corresponding Portfolios of The Hudson River
Trust, which in turn reflects the investment income and realized and
unrealized capital gains and losses of the Portfolios, as well as The Hudson
River Trust fees and expenses. The Accumulation Unit Value is also stated
after deduction of the Separate Account asset charges relating to the
MOMENTUM Contract. A description of the computation of the Accumulation Unit
Value is found in the SAI.
Accumulation Unit Values
The following table shows the Accumulation Unit Values, as of the last
Business Day for the periods shown, commencing with the initial offering of
each Fund under the MOMENTUM Contract.
<TABLE>
<CAPTION>
MOMENTUM
MONEY INTERMEDIATE
LAST BUSINESS MARKET GOVERNMENT QUALITY HIGH GROWTH & EQUITY
DAY OF FUND SECURITIES BOND YIELD INCOME INDEX
------------- ------ ------------ ------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C>
December 1993 $25.41 -- -- -- -- --
December 1994 26.08 $ 98.19 $ 93.87 $ 95.88 $ 98.86 $100.95
December 1995 27.22 109.80 108.38 113.44 121.02 135.94
March 1996 27.47 108.56 106.45 119.41 123.33 142.60
------------- ------ ------------ ------- ------ -------- -------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MOMENTUM
LAST BUSINESS COMMON AGGRESSIVE CONSERVATIVE GROWTH
DAY OF STOCK GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
------------- ------- ------- ------------- ---------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
December 1993 $128.80 -- -- $55.68 -- $28.85 --
December 1994 124.32 $104.12 -- 52.88 $ 95.10 26.18 $ 96.31
December 1995 162.42 122.06 $104.15 68.73 112.97 30.92 120.08
March 1996 168.92 126.16 106.90 76.51 110.35 31.59 121.66
------------- ------- ------- ------------- ---------- ------------ -------- ---------
</TABLE>
TRANSFERS
Subject to certain restrictions, the MOMENTUM Contract permits transfers of
all or a portion of your Retirement Account Value among the Investment
Options at any time. Your Employer's plan may, however, impose restrictions
on transfers. We also offer an automatic transfer service described under
"Investment Simplifier: Automatic Transfer Service" in this section. There is
no charge for transfers.
Participant transfer requests can be made by filing a written request to
transfer with your Employer or Plan Trustee. Transfers may also be arranged
through the TOPS service. Please contact your Equitable Life Agent or the
Processing Office to receive the form necessary to obtain a special code
number required for TOPS transfers.
A transfer request will be effective on the Transaction Date and the transfer
will be made at the Accumulation Unit Value for that Transaction Date. A
transfer request does not change your percentages for allocating current or
future contributions among the Investment Options. All transfers among the
Investment Options will be confirmed in writing.
If your Employer elects to fund your plan with the Guaranteed Interest
Account and any of the Money Market, Intermediate Government Securities,
Quality Bond, High Yield, or Conservative Investors Funds, certain
limitations will apply to funds transferred out of the Guaranteed Interest
Account. During a Transfer Period, the maximum amount that may be transferred
from the Guaranteed Interest Account to any other Fund is the greater of: (i)
25% of the amount you had in the Guaranteed Interest Account as of the last
Business Day of the calendar year immediately preceding the current calendar
quarter or (ii) the total of all amounts you transferred out of the
Guaranteed Interest Account during the same calendar year. A TRANSFER PERIOD
is the calendar quarter in which the transfer request is made and the
preceding three calendar quarters. Generally, this means that new
Participants will not be able to transfer funds out of the Guaranteed
Interest Account during the first calendar quarter of their participation
under the Contract.
Transfers out of the Guaranteed Interest Account that were made at a time
when no transfer limitation is in effect will not be counted for purposes of
determining the maximum transfer amount if the transfer limitation
subsequently goes into effect.
If assets have been transferred to the MOMENTUM Contract from another funding
vehicle by the Em-
54
<PAGE>
PROVISIONS OF THE MOMENTUM Contract and Services We Provide (Continued)
ployer or Plan Trustee, you may for the remainder of the calendar year in
which the assets have been transferred, transfer up to 25% of the amount that
is initially allocated to the Guaranteed Interest Account on your behalf.
However, for Original Certificates, we do not permit transfers into the Money
Market Fund from any of the other Investment Options. No other transfer
limitations apply to Original Certificates.
INVESTMENT SIMPLIFIER: AUTOMATIC
TRANSFER OPTIONS
Your Employer can elect to provide two automatic transfer options out of the
Guaranteed Interest Account: the Fixed-Dollar Option and the Interest Sweep.
Except for Original Certificates, the Fixed-Dollar Option is subject to the
Guaranteed Interest Account transfer limitation described in "Transfers" in
this Section.
Under the Fixed-Dollar Option you may elect to have a fixed dollar amount
transferred out of the Guaranteed Interest Account and into the Investment
Funds of your choosing (except Money Market for Original Certificates) on a
monthly basis. You can either specify the number of monthly transfers or
instruct us to continue to make monthly transfers until amounts in the
Guaranteed Interest Account are depleted. In order to elect this option you
must have a minimum amount of $5,000 in the Guaranteed Interest Account on
the date we receive your election form and you must elect to transfer at
least $50 per month.
Under the Interest Sweep Option, the amount transferred each month will equal
the amount of interest that has been credited to amounts you have in the
Guaranteed Interest Account from the last Business Day of the prior month to
the last Business Day of the current month. To be eligible for this option
you must have at least $7,500 in the Guaranteed Interest Account on the date
we receive your election and on the last Business Day of each month
thereafter.
You may elect either option by filing an election form with your Employer or
Plan Trustee. For the Fixed Dollar Option, the first monthly transfer will
occur on the last Business Day of the month in which we receive your election
form at our Processing Office. For the Interest Sweep, the first monthly
transfer will occur on the last Business Day of the month following the month
in which we receive your election form at our Processing Office. Automatic
transfers will terminate:
o Under the Fixed-Dollar Option, when either the number of designated
monthly transfers have been completed or the amount you have in the
Guaranteed Interest Account has been depleted, as applicable; or
o Under the Interest Sweep, when the amount you have in the Guaranteed
Interest Account falls below $7,500 (determined on the last Business Day
of the month) for two consecutive months; or
o Under either option, on the date we receive your written request to
terminate automatic transfers or on the date your participation under
the MOMENTUM Contract terminates.
LOANS
The MOMENTUM Contract permits your Employer, or Plan Trustee, to withdraw
funds from your Retirement Account Value, without incurring a contingent
withdrawal charge, in order to make a loan to you under your Employer's plan.
Your Employer can tell you whether loans are available under your plan.
Employers who adopt the Master Plan and Trust may choose to offer its loan
feature. The availability of loans under an individually designed or
prototype plan depends on the terms of the plan.
If you are a partner who owns more than 10% of the business or a
shareholder-employee of an S Corporation who owns more than 5% of the
business, you presently may not borrow from your vested Retirement Account
Value without first obtaining a prohibited transaction exemption from the
Department of Labor (DOL). Consult with your attorney or tax advisor
regarding the advisability and procedures for obtaining such an exemption.
Participants should apply for a plan loan through their Employer or the Plan
Trustee, as applicable. Prior to the making of any plan loan, the Employer or
Plan Trustee, as applicable, and the Participant must first properly complete
and sign a loan agreement and application. Employers and Plan Trustees can
obtain loan application forms from their Equitable Life Agent, by writing to
our Processing Office or calling our toll-free number. Before taking a plan
loan, married Participants must generally obtain written spousal consent. In
addition, Participants should always consult their tax advisor before taking
out a plan loan.
Only one outstanding plan loan will be permitted at any time; any number of
takeover loans will be permitted at any time. The minimum loan is $1,000 and
the maximum is a percentage of your vested
55
<PAGE>
PROVISIONS OF THE MOMENTUM Contract and Services We Provide (Continued)
Retirement Account Value. See Part 4: Additional Loan Provisions in the SAI
and Part 10: Federal Tax and ERISA Matters of the prospectus. However, you
may not have both takeover loans and plan loans outstanding simultaneously.
While you have a plan loan outstanding, an amount equal to 10% of your loan
balance will be restricted, and may not be withdrawn from your Retirement
Account Value. Also you should refer to "Plan Loan Charges" in Part 8 for a
description of charges associated with plan loans.
The interest rate applicable to your plan loan will be set by your Employer
or the Plan Trustee under the terms of your Employer's plan. It is the
responsibility of each Employer or Plan Trustee to determine the interest
rate applicable to each loan. All interest (as well as principal) that you
pay will be added to your Retirement Account Value. The interest paid in
repaying a loan may not be deductible, but amounts paid as interest on your
loan will be taxable on distribution.
Plan loan repayments covering interest and principal will be due in
accordance with the repayment schedule determined in accordance with the
terms of the Employer's plan. Participants should send plan loan repayments
to the plan administrator and not to Equitable Life. All plan loan payments
made by the plan administrator to us must be made by check or wire transfer.
Checks must be drawn on a bank in the U.S., in U.S. dollars, made payable to
Equitable Life and are subject to collection.
A plan loan may be prepaid in whole or in part at any time. Any payments we
receive will first be applied to interest, with the balance applied to
repayment of the loan. Plan loan repayments will be allocated to the
Investment Options in accordance with the same allocation instructions used
in making the loan. However, a Participant may elect, in writing, to override
these instructions and allocate all plan loan repayments to the Guaranteed
Interest Account.
A plan loan will be in default if the amount of any scheduled repayment is
not received by us within 90 days of its due date, or if the Participant dies
or participation under the MOMENTUM Contract is terminated. We will then
treat the loan principal as a withdrawal subject to the contingent withdrawal
charge. See "Contingent Withdrawal Charge" in Part 8. See "Part 10: Federal
Tax and ERISA Matters" for the consequences of defaulting a plan loan and
other applicable tax matters.
WITHDRAWALS AND TERMINATION
Subject to any restrictions in your Employer's plan, the MOMENTUM Contract
allows your Employer or Plan Trustee, as applicable, to make a withdrawal
from a Retirement Account Value on behalf of a Participant by writing to our
Processing Office. Your request for withdrawal must be on the proper form
which is available from your Employer. If we have received the information we
require, the requested withdrawal will become effective on the Transaction
Date and proceeds will be mailed within seven days. Withdrawal proceeds will
be sent to your Employer or Plan Trustee, unless your Employer has elected
our full service plan recordkeeping option which provides for direct
distribution to Participants. If we receive only partially completed
information, we will return the request to the Employer or Plan Trustee for
completion prior to processing.
As a deterrent to premature withdrawal (generally prior to age 59 1/2 ) the
Code provides certain restrictions on and penalties for early withdrawals. In
addition, for payments made directly to Participants, we withhold income
taxes from the amount withdrawn unless an exception applies. See "Part 10:
Federal Tax and ERISA Matters."
The Employer or Plan Trustee may also terminate its entire participation
under the MOMENTUM Contract by writing to our Processing Office. In addition,
if your plan is found not to qualify under the Code, or, if you fail to
provide us with the Participant data necessary to administer the MOMENTUM
Contract, we may return the plan assets to the Employer or Plan Trustee.
Withdrawals or terminations may result in a contingent withdrawal charge,
explained fully in "Part 8: Deductions and Charges."
While you have a loan outstanding, an amount equal to 10% of your loan
balance will be restricted, and may not be withdrawn from your Retirement
Account Value.
FORFEITURES
Forfeitures can arise when a Participant who is not fully vested under a plan
terminates employment. Under the terms of the Master Plan and Trust and the
Pooled Trust, Equitable Life is directed under these circumstances to
withdraw the unvested portion of the Retirement Account Value and deposit
such amount in a Forfeiture Account, which is to be allocated to the Default
Option.
56
<PAGE>
PROVISIONS OF THE MOMENTUM Contract and Services We Provide (Continued)
We will re-allocate amounts in the Forfeiture Account as contributions in
accordance with instructions received by the Employer or Plan Trustee, as
applicable. Special rules apply to the application of the contingent
withdrawal charge when forfeitures have occurred. See "MOMENTUM Contract--
Contingent Withdrawal Charge" in Part 8.
DISTRIBUTION OPTIONS
The MOMENTUM Contract is an annuity contract, even though you may elect to
receive your benefits in another form.
Subject to the terms of your Employer's plan, payout options under the
MOMENTUM Contract include:
o Lump sum or partial withdrawals;
o Payments for as long as you live;
o Payments for as long as both you and your joint annuitant live; or
o Payments for a specific length of time (not longer than your life
expectancy or that of the joint life expectancy of you and your
designated beneficiary).
You may also be eligible for our "Automatic Minimum Withdrawal" feature,
which is designed to help you satisfy the Code's "minimum distribution"
requirements. Qualified plans are subject to the Code's minimum distribution
requirements. Generally, such distributions must commence by April 1 of the
calendar year following the calendar year in which the Participant attains
age 70 1/2. The plan administrator is responsible for complying with the
Code's minimum distribution requirements. For more information about the
minimum distribution requirements, see "Part 10: Federal Tax and ERISA
Matters."
Your choice may be subject to applicable withdrawal charges. see "Part 8:
Deductions and Charges."
ANNUITY DISTRIBUTION OPTIONS
The annuity distribution options available under the MOMENTUM Contract
include:
o LIFE ANNUITY: An annuity which guarantees payments to you for the rest
of your life. Payments end with the last monthly payment before your
death. Because there is no death benefit associated with this annuity
form, it provides the highest monthly payment of any of the life annuity
distribution options.
o LIFE ANNUITY-PERIOD CERTAIN: This annuity form also guarantees payments
to you for the rest of your life. In addition, if you die before a
previously selected minimum payment period (the "certain period") has
ended, payments will continue to your beneficiary for the balance of the
period certain. The minimum period is usually 5, 10, 15 or 20 years.
o LIFE ANNUITY-REFUND CERTAIN: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments
will continue to your beneficiary until that amount has been recovered.
This option is available only as a fixed annuity.
o PERIOD CERTAIN ANNUITY: This annuity form guarantees payments to you for
a specific period of time, usually 5, 10, 15 or 20 years. If you die
before the period certain has ended, payments will continue to your
beneficiary for the balance of the period certain.
o QUALIFIED JOINT AND SURVIVOR LIFE ANNUITY: This annuity form guarantees
life income to you and, after your death, continuation of income to your
surviving spouse. Generally, unless married Participants elect otherwise
with the written consent of their spouse, this will be the normal form
of annuity payment for plans such as the Master Plan and Trust. See Part
10: "Federal Tax and ERISA Matters."
All of the life annuity distribution options outlined above (with the
exception of Qualified Joint and Survivor Life Annuity) are available as
either Single or Joint life annuities.
The MOMENTUM Contract also offers both fixed and variable annuity
distribution options. Fixed annuity payments, funded through our general
account, do not change and will be based on the tables of guaranteed annuity
values in the MOMENTUM Contract or on our current annuity rates, whichever is
more favorable for the Participant. For all Participants, our normal form of
annuity provides for fixed payments. Variable payments will be funded through
your choice of the 13 Investment Funds of the Hudson River Trust through the
purchase of annuity units.
We offer other forms not outlined here. Your Equitable Life Agent can provide
details.
ELECTING AN ANNUITY DISTRIBUTION
OPTION
In order to elect an annuity distribution option, a Retirement Account Value
must be at least $3,500.
57
<PAGE>
PROVISIONS OF THE MOMENTUM Contract and Services We Provide (Continued)
The size of the payments will depend on the amount applied to purchase the
annuity, the type of annuity chosen and, in the case of a life contingency
annuity distribution option, the Participant's age (or the Participant's and
joint annuitant's ages).
Once you choose an annuity distribution option and payments have commenced,
no change can be made, other than transfers among the investment funds if
permitted in the future and if a variable annuity is selected. Remember, as a
deterrent to premature withdrawal (generally prior to age 59 1/2) the Code
provides certain restrictions on and penalties for early withdrawals. See
"Part 10: Federal Tax and ERISA Matters."
MINIMUM DISTRIBUTIONS
(AUTOMATIC MINIMUM WITHDRAWAL)--OVER AGE 70 1/2
Under the Code, distributions from qualified plans must generally begin no
later than April 1st of the calendar year following the calendar year in
which the plan participant attains age 70 1/2 (the "required beginning
date"). Subsequent distributions must be made by December 31st of each
calendar year (including the calendar year of your required beginning date).
If the minimum distribution is not made, the plan participant may be required
to pay a penalty tax in an amount equal to 50% of the difference between the
amount required to be distributed and the amount actually distributed. See
"Part 10: Federal Tax and ERISA Matters" for a discussion of various special
rules concerning the minimum distribution requirements.
We offer a payment option which we call "Automatic Minimum Withdrawal," which
is intended to meet minimum distribution requirements. You may elect
Automatic Minimum Withdrawal if you, the Participant, are at least age 70 1/2
and have a Retirement Account Value of at least $3,500. You can elect
Automatic Minimim Withdrawal by filing the proper election form with your
Employer. If you elect Automatic Minimum Withdrawal, we will withdraw the
amount which the Code requires you to withdraw from your Retirement Account
Value. We calculate the Automatic Minimum Withdrawal amount based on the
information you give us, the various choices you make and certain
assumptions. In performing this calculation, we assume that the only funds
subject to the Code's minimum distribution requirements are those held under
the MOMENTUM Contract. In addition, we rely on the information you provide to
us, and we will not be responsible for errors that result from inaccuracies
in this information. The choices you can make are described in Part 6 of the
SAI.
Your Automatic Minimum Withdrawal election is revocable. Automatic Minimum
Withdrawal is not available to Participants who have an outstanding loan.
Generally, electing this option does not restrict you from taking additional
partial withdrawals or subsequently electing an annuity distribution option.
The minimum check that will be sent is $300, or, if less, your Retirement
Account Value.
Any applicable withdrawal charges will be deducted from your Retirement
Account Value in addition to the amount of the Automatic Minimum Withdrawal.
See "MOMENTUM Contract--Contingent Withdrawal Charge" in Part 8.
DEATH BENEFIT
In general, the death benefit is equal to the greater of: (i) the Retirement
Account Value and (ii) the "minimum death benefit."
The Master Plan and Trust and the Pooled Trust direct the automatic transfer
of a Retirement Account Value to the Default Option on the date Equitable
Life receives due proof of a Participant's death, unless the beneficiary
provides contrary instructions. All amounts are held in the default option
until your beneficiary requests a distribution or transfer.
The minimum death benefit equals all contributions made less withdrawals of
contributions (including loans that default upon death). For example, assume
that a $1,000 contribution is made, and that the contribution earns $1,000
(for a balance of $2,000). A $1,500 withdrawal is then made leaving a balance
of $500. Assume that a new $500 contribution is subsequently made. If the
participant subsequently dies, the minimum death benefit will be $500 because
there was a $500 contribution that had not been withdrawn, borrowed or
forfeited.
The law requires the distribution of benefits to be completed no more than
five years after the date of your death, unless payments of your benefit to a
designated beneficiary commence within one year after your death and are made
over the beneficiary's life or over a period not exceeding the beneficiary's
life expectancy. If the beneficiary is your surviving spouse, the spouse can
elect to begin distributions over the spouse's life or over a period not
exceeding the spouse's life expectancy at any time up to when
58
<PAGE>
PROVISIONS OF THE MOMENTUM Contract and Services We Provide (Continued)
you would have attained age 70 1/2. If you had already begun to receive
benefits, your beneficiary can continue to receive benefits based on the
payment option you selected. To designate a beneficiary or to change an
earlier designation, you should file a beneficiary designation with your plan
administrator. Your spouse must consent in writing to a designation of any
non-spouse beneficiary, as explained in "Distributions from Qualified Plans
and TSAs--Spousal Consent Rules" in Part 10.
If the Participant dies while a loan is outstanding, the loan will
automatically default and be subject to Federal income tax as a plan
distribution. This defaulted loan will also be treated as a withdrawal for
purposes of calculating the minimum death benefit. Defaulted takeover loans
will not, however, be considered withdrawals for this purpose.
The beneficiary may elect, subject to certain exceptions explained below,
Equitable Life's rules then in effect and any other applicable requirements
under the Code to: (a) receive the death benefit in a single sum, (b) apply
the death benefit to an annuity distribution option offered by Equitable
Life, (c) apply the death benefit to provide any other form of benefit
payment offered by Equitable Life, or (d) have the death benefit credited to
an account under the MOMENTUM Contract maintained on behalf of the
beneficiary in accordance with the beneficiary's investment allocation
instructions. If the beneficiary elects (d) then (1) the beneficiary will be
entitled to delay distribution of his or her account as permitted under the
terms of the Employer's plan and the minimum distribution rules under the
Code; (2) the value of the beneficiary's account will be determined at the
time of distribution to the beneficiary and, depending upon investment gains
or losses, may be worth more or less than the value of the beneficiary's
initial account and (3) if the beneficiary dies prior to taking a
distribution of his or her entire account the beneficiary of the deceased
beneficiary will be entitled to a death benefit as though the deceased
beneficiary were a Participant, based on the deceased beneficiary's initial
account.
If you die before your entire vested benefit has been distributed to you, any
remaining benefits will be payable to your beneficiary.
Our consultants can explain these and other requirements affecting death
benefits if you call them at 1-800-528-0204.
PAYMENTS OF PROCEEDS
Payments of proceeds from the Investment Funds will be made within seven days
of the Transaction Date. Payments or applications of proceeds from the
Investment Funds can be deferred for any period during which (1) the New York
Stock Exchange has been closed or trading on it is restricted, (2) sales of
securities or determination of the fair market value of an Investment Fund's
assets is not reasonably practicable because of an emergency, or (3) the SEC,
by order, permits us to defer payment in order to protect persons with
interests in the Investment Funds.
We can defer payment of any portion of your Retirement Account Value in the
Guaranteed Interest Account for up to six months while you are living.
PLAN RECORDKEEPING SERVICES
Equitable Life offers two plan recordkeeping options, one of which must be
elected for each plan. Employers can elect our basic plan recordkeeping
service option, which includes:
o Accounting by Participant;
o Accounting by Source;
o Provision of annual 5500 series Schedule A report information for use in
making the plan's annual report to the Internal Revenue Service (IRS)
and DOL; and
o Plan loan processing, if applicable.
As an added service under our Basic Recordkeeping Service, Employers may
enter into a written agreement with Equitable Life whereby Equitable Life,
based on information submitted by Employers, direct distribution of plan
benefits and withdrawals to participants, including tax withholding and
reporting to the IRS. The written agreement specifies the fees for such
service.
The MOMENTUM Program also offers a full service plan recordkeeping option;
Employers who elect this option must adopt the Master Plan and Trust. This
option is only available to Employers who have adopted the Master Plan and
Trust. If this option is chosen, Equitable Life will provide the following
plan recordkeeping services in addition to the services described above:
o Master Plan and Trust documents approved by the Internal Revenue Service
(IRS);
o Assistance in interpreting the Master Plan and Trust, including plan
installation and ongoing administrative support;
o Assistance in annual reporting with the IRS and DOL;
59
<PAGE>
PROVISIONS OF THE MOMENTUM Contract and Services We Provide (Continued)
o Plan administration manual and forms (including withdrawal, transfer,
loan processing, and account allocation forms);
o Performance of vesting calculations;
o Performance of special non-discrimination tests applicable to Code
Section 401(k) plans;
o Tracking of hardship withdrawal amounts in Code Section 401(k) plans;
and
o Direct distribution of plan benefits and withdrawals to Participants,
including tax withholding and reporting to the IRS.
Any additional services that Equitable Life will provide are indicated in the
plan recordkeeping services agreement. This agreement is required for
Employers or Plan Trustees who elect the full service recordkeeping option
and specifies the fees for the services to be provided. See "MOMENTUM
Contract--Charge for Plan Recordkeeping Services" in Part 8.
60
<PAGE>
- --------------------------------------------------------------------------------
PART 8: DEDUCTIONS AND CHARGES
- --------------------------------------------------------------------------------
ALL CONTRACTS
Most charges applied to your Contract apply to all Investment Options.
However, Trust Charges to Portfolios and Charges to Investment Funds do not
apply to the Guaranteed Interest Account or to the Fixed Maturity Account.
See "Allocation of Certain Charges to the Fixed Maturity Account" below.
TRUST CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against the Trust's assets, direct
operating expenses of the Trust (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investment-related expenses of the Trust
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
maximum investment advisory fees paid annually by the Portfolios cannot be
increased without a vote of that Portfolio's shareholders. The maximum fees
are as follows:
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
-------------------------------
FIRST
$350 NEXT $400 OVER $750
MILLION MILLION MILLION
--------- --------- ---------
<S> <C> <C> <C>
Common Stock,
Money Market
and Balanced ...... .400% .375% .350%
Aggressive Stock
and Intermediate
Government
Securities ........ .500% .475% .450%
High Yield, Global,
Conservative
Investors and
Growth Investors . .550% .525% .500%
</TABLE>
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
-------------------------------
FIRST
$500 NEXT $500 OVER $1
MILLION MILLION BILLION
--------- --------- ---------
<S> <C> <C> <C>
Quality Bond and
Growth and
Income ......... .550% .525% .500%
</TABLE>
<TABLE>
<CAPTION>
FIRST
$750 NEXT $750 OVER $1.5
MILLION MILLION BILLION
--------- --------- ---------
<S> <C> <C> <C>
EQUITY INDEX . .350% .300% .250%
</TABLE>
<TABLE>
<CAPTION>
FIRST
$500 NEXT $1 OVER $1.5
MILLION BILLION BILLION
--------- --------- ---------
<S> <C> <C>
International . .900% .850% .800%
</TABLE>
Investment advisory fees are established under investment advisory agreements
between the Trust and its investment adviser, Alliance. All of these fees and
expenses are described more fully in the Trust prospectus. Since Trust shares
are purchased at their net asset value, these fees and expenses are, in
effect, passed on to the Separate Account and are reflected in the
Accumulation Unit Values for the Investment Funds.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
Currently, we deduct a charge for applicable taxes, such as state or local
premium taxes, from the amount applied to provide an annuity distribution
option if elected. The current tax charge that might be imposed varies by
state and ranges from 0% to 3.5%; however, the rate is 1% in Puerto Rico and
5% in the Virgin Islands.
We reserve the right to deduct any such charge from each contribution or from
distributions or upon termination. If we have deducted any applicable tax
charges from contributions, we will not deduct a charge for the same taxes at
a later time. If, however, an additional tax is later imposed upon us when
you withdraw from, terminate or annuitize, we reserve the right to deduct a
charge at such time.
- --------------------------------------------------------------------------------
EQUI-VEST IRA, QP IRA, SEP AND NQ CONTRACTS (SERIES 300 AND 400 ONLY)
- --------------------------------------------------------------------------------
CHARGES TO INVESTMENT FUNDS
We make a daily charge at a guaranteed maximum effective annual rate of 1.35%
against the assets held in each of the Investment Funds. This charge is
reflected in the Accumulation Unit Values for the particular Investment Fund
and covers mortality and expense risk charges of 1.10% and expenses of .25%.
For a limited period of time we will charge .24% against the assets of the
Intermediate Government Securities, Quality Bond, High Yield, Growth
61
<PAGE>
EQUI-VEST IRA, QP IRA, SEP AND NQ CONTRACTS (SERIES 300 AND 400 ONLY)
(Continued)
& Income, Equity Index, Global, International, Conservative Investors and
Growth Investors Funds for expenses.
The mortality and expense risk charge is comprised of .60% for mortality risk
and .50% for expense risk, although the allocation of these risk charges may
vary. We assume a mortality risk by (a) our obligation to pay a death benefit
that will not be less than the total value of all contributions made (less
any applicable taxes) adjusted for total withdrawals, (b) our obligation to
make annuity payments for the life of the Annuitant under guaranteed fixed
annuity options, regardless of the Annuitant's longevity, (c) our guarantees
relating to annuity purchase rates, the actuarial basis for which can be
changed only for new contributions and only on the fifth anniversary of the
Contract Date and every five years thereafter, and (d) our obligation to
waive the contingent withdrawal charge upon the payment of a death benefit.
The expense risk we assume is the risk that, over time, our actual expense of
administering the Contracts may exceed the amounts realized from the expense
charge and the annual administrative expense charge. Part of the mortality
and expense risk charge may be considered to be an indirect reimbursement for
certain sales and promotional expenses relating to the Contracts to the
extent that the charge is not needed to meet the actual expenses incurred.
The charge for expenses, together with the annual administrative charge
described below, is designed to reimburse us for our costs in providing
administrative services in connection with the Contracts, and is not designed
to include an element of profit.
ANNUAL ADMINISTRATIVE CHARGE
On the last Business Day of each Contract Year, we deduct from the Annuity
Account Value an annual administrative charge equal to the lesser of $30 or
2% of the Annuity Account Value on such Business Day for the first two
Contract Years, and $30 for each Contract Year thereafter. This charge is
deducted on a pro rata basis from the Investment Funds and the Guaranteed
Interest Account, and from the Fixed Maturity Account should collection from
the other Options be insufficient and we have not been otherwise reimbursed.
This charge will be prorated for a fractional year if, before the end of the
Contract Year, you surrender your Contract, the Annuitant dies or you elect
an annuity distribution option. Accumulation Units will be redeemed in order
to pay any portion of the charge deducted from an Investment Fund. Any
portion of the charge deducted from the Guaranteed Interest Account or Fixed
Maturity Account is withdrawn in dollars.
We reserve the right to increase this charge if our administrative costs
increase, but the charge is guaranteed never to exceed $65 annually, subject
to applicable law. We also reserve the right to eliminate the administrative
charge for IRA, SEP, SARSEP Contracts and NQ Contracts having a minimum
Annuity Account Value of a specified amount currently set at $20,000 (IRA,
SEP, and SARSEP) and $25,000 (NQ), on the last Business Day of each Contract
Year. We also reserve the right to deduct this charge on a quarterly, rather
than annual, basis.
CONTINGENT WITHDRAWAL CHARGE
No sales charges are deducted from contributions. However, to assist us in
defraying the various sales and promotional expenses incurred in connection
with selling the Contracts, we assess a charge on amounts withdrawn when you
make a partial withdrawal or terminate your Contract if the amount withdrawn
is in excess of the free corridor amount (defined below) or if no exception
applies. The amount of the withdrawal and the applicable withdrawal charge
are deducted pro rata from the Investment Funds and the Guaranteed Interest
Account and from the Fixed Maturity Account should collection from the other
Options be insufficient. The amount deducted to pay the withdrawal charge is
also subject to the withdrawal charge.
The contingent withdrawal charge is equal to 6% of the amount attributable to
withdrawn contributions which have been made in the current and five prior
Contract Years. In the case of a termination, we will pay the greater of (i)
the Annuity Account Value after the withdrawal charge has been imposed, as
described above or (ii) the free corridor amount plus 94% of the remaining
Annuity Account Value. For purposes of calculating the withdrawal charge (i)
we treat contributions as being withdrawn before earnings on a first-in,
first-out basis, and (2) amounts withdrawn up to the free corridor amount are
not considered a withdrawal of contributions. Although we treat contributions
as withdrawn before earnings for purposes of calculating the withdrawal
charge, the Federal income tax law treats earnings on NQ Contracts as
withdrawn first. See "Part 10: Federal Tax and ERISA Matters."
We reserve the right to change the amount of the contingent withdrawal
charge, provided that it will not exceed 6% of the amount deemed attributable
to withdrawn contributions. Applicable regulations
62
<PAGE>
EQUI-VEST IRA, QP IRA, SEP AND NQ CONTRACTS (SERIES 300 AND 400 ONLY)
(Continued)
would not permit such a change where it would be unfairly discriminatory to
any person. Moreover, the withdrawal charge will be reduced if needed in
order to comply with any state law that applies. See New York
Contracts--Fixed Maturity Account below. The tax consequences of withdrawals
are discussed under "Part 10: Federal Tax and ERISA Matters."
Free Withdrawal Amount (Free Corridor)
No withdrawal charge will be applied during any Contract Year in which the
amount withdrawn is less than or equal to 10% of the Annuity Account Value at
the time the withdrawal is requested minus any amount previously withdrawn
during that Contract Year. This 10% portion is called the FREE CORRIDOR
AMOUNT. Any withdrawal requested that exceeds the free corridor amount will
be subject to the contingent withdrawal charge, unless one of the following
exceptions applies.
Exceptions to the Contingent Withdrawal Charge
A contingent withdrawal charge will not apply upon any of the events listed
below.
o the Annuitant dies and a death benefit is payable to the beneficiary, or
o we receive a properly completed election form providing for the Annuity
Account Value to be used to buy a life contingent annuity.
A contingent withdrawal charge will not apply in the following events.
However, we reserve the right to impose a contingent withdrawal charge, in
accordance with your Contract and applicable state law, for pre-existing
conditions or conditions which began within 12 months of your Contract Date
for these events:
o the Annuitant has qualified to receive Social Security disability
benefits as certified by the Social Security Administration, or
o we receive proof satisfactory to us that the Annuitant's life expectancy
is six months or less (such proof must include, but is not limited to,
certification by a licensed physician), or
o the Annuitant has been confined to a nursing home for more than a 90 day
period (or such other period, if required in your state) as verified by
a licensed physician. A nursing home for this purpose means one which is
(a) approved by Medicare as a provider of skilled nursing care service,
or (b) licensed as a skilled nursing home by the state or territory in
which it is located (it must be within the United States, Puerto Rico,
U.S. Virgin Islands, or Guam) and meets all of the following:
-- its main function is to provide skilled, intermediate, or custodial
nursing care;
-- it provides continuous room and board to three or more persons;
-- it is supervised by a registered nurse or licensed practical nurse;
-- it keeps daily medical records of each patient;
-- it controls and records all medications dispensed; and
-- its primary service is other than to provide housing for residents.
Additionally, a withdrawal charge will not apply to an IRA, QP IRA, or SEP
Contract upon the following events:
o the Annuitant has completed at least six Contract Years and has attained
age 59 1/2 or
o a request is made for a refund of a contribution in excess of amounts
allowed to be contributed under the Code within one month of the date on
which the contribution is made.
New York Contracts--Fixed Maturity Account
For Contracts issued in New York, the contingent withdrawal charge applicable
to contributions to the Fixed Maturity Account (including amounts transferred
to that Account from the other Investment Options) and which are withdrawn
from the Fixed Maturity Account, will never exceed 6%; however, the
contingent withdrawal charge could be lower.
For the Fixed Maturity Account, the contingent withdrawal charge will be the
greater of that determined by applying the New York Declining Scale
("Declining Scale") and the New York Alternative Scale ("Alternative Scale"),
not to exceed 6%. As to the withdrawal of amounts that have been transferred
within the Fixed Maturity Account from one Maturity Period to another, the
Alternative Scale is applied if it produces a higher charge than the
Declining Scale.
63
<PAGE>
EQUI-VEST IRA, QP IRA, SEP AND NQ CONTRACTS (SERIES 300 AND 400 ONLY)
(Continued)
<TABLE>
<CAPTION>
DECLINING SCALE ALTERNATIVE SCALE
- ------------------------- -------------------------
<S> <C> <C> <C>
Year of Investment in Year of Transfer within
Fixed Maturity Account* Fixed Maturity Account*
Within Year 1 6% Within Year 1 5%
2 6% 2 4%
3 5% 3 3%
4 4% 4 2%
5 3% 5 1%
6 2% After Year 5 0%
After Year 6 0%
Not to exceed 1% times
the number of years
remaining in Maturity
Period, rounded to the
higher number of years.
In other words, if 4.3
years remain, it would be
a 5% charge.
- ----------------- ------ -------------------------
</TABLE>
* Measured from the Contract Anniversary Date prior to the date of the
contribution or transfer.
For example, compare the withdrawal charge that would be applicable to a
withdrawal from a Series 400 Contract that has an Annuity Account Value of
$10,000--$8,000 from contributions made three years ago and $2,000 from
positive investment performance.
o For any contributions withdrawn in the first six years after they are
made, the normal Series 400 withdrawal charge would be $480 (6% of
$8,000). However, if the contributions were made to the Fixed Maturity
Account, the withdrawal charge would be lower. According to the New York
Declining Scale described above, in the third year, the withdrawal
charge would be limited to 5% of the $8,000, or $400.
o Now assume that, although the contributions had been made to the Fixed
Maturity Account three years ago, they were transferred to a new
Maturity Period within the Fixed Maturity Account in the third year, and
further assume that there is exactly one year remaining in the Maturity
Period to which the amounts were transferred. Because there was a
transfer within the Fixed Maturity Account, the New York Alternative
Scale may now apply. Based on this Scale, a contribution that was so
transferred will be subject to a 5% withdrawal charge, if withdrawn in
the year of the transfer, such charge not to exceed 1% for each year
remaining in the Maturity Period. Since, in this example, the time
remaining is exactly one year, the Alternative Scale would limit the
withdrawal charge to 1%. However, New York regulations allow that the
greater of the Declining Scale or the Alternative Scale is used.
Therefore, the withdrawal charge would be 5%, or $400, based on the
Declining Scale.
o In no event would the contingent withdrawal charge exceed that otherwise
applicable under the Contract; application of the New York Scale can
only result in a lower charge. Thus, if a contribution had been in the
Contract for more than six years and was thus exempt from a withdrawal
charge, no such charge would be applicable.
o For withdrawals from an Investment Option other than the Fixed Maturity
Account, the amount available for withdrawal without a contingent
withdrawal charge is reduced by the amount of contributions in the Fixed
Maturity Account to which no withdrawal charge applies.
o As of any date on which 50% or more of your Annuity Account Value is
held in the Fixed Maturity Account, the Free Corridor Amount is zero.
o If you have not made a prior election for the reinvestment of your
Maturity Amount when it reaches the Expiration Date, such Amount will be
reinvested in whichever Fixed Maturity Period then offered has the
nearest Expiration Date; if no Fixed Maturity Periods are being offered,
it will be reinvested in the Money Market Fund.
The potential for the contingent withdrawal charge applicable to withdrawals
from the Fixed Maturity Account to be lower than the otherwise applicable
charge and the potential for the Free Corridor Amount to also be lower than
that which would otherwise apply should be considered in making allocations
to, or transfers to or from, the Fixed Maturity Account.
ALLOCATION OF CERTAIN CHARGES TO THE
FIXED MATURITY ACCOUNT
The annual administration charge and the contingent withdrawal charge will be
deducted from the Guaranteed Interest Account and the Investment Funds, as
discussed above. In the event that amounts in those Options are insufficient
to cover these charges, we reserve the right to deduct those charges from the
Fixed Maturity Periods. Charges applied to the Fixed Maturity Periods are
considered withdrawals and, as such, will result in a market value
adjustment. See "Part 5: The Fixed Maturity Account."
CHARGE ON THIRD PARTY TRANSFER OR EXCHANGE
If you ask us to make a direct transfer to a third party of amounts under
your Contract, or request that your Contract be exchanged for another con-
64
<PAGE>
EQUI-VEST IRA, QP IRA, SEP AND NQ CONTRACTS (SERIES 300 AND 400 ONLY)
(Continued)
tract or certificate issued by another carrier, we deduct from the Annuity
Account Value both a contingent withdrawal charge as described above (if any)
and a charge of $25 per occurrence. We reserve the right to increase this $25
fee to a maximum of $65 for each direct transfer or exchange.
- --------------------------------------------------------------------------------
ALL EQUI-VEST EDC, TSA AND TRUSTEED CONTRACTS PLUS IRA, QP IRA, SEP AND NQ
(SERIES 100 AND 200 ONLY)
- --------------------------------------------------------------------------------
LIMITATION ON CHARGES
Under the terms of these Contracts, for the Money Market, Balanced, Common
Stock and Aggressive Stock Funds, the aggregate amount of the Separate
Account charge made to those Funds, the Trust charges for investment advisory
fees and the direct operating expenses of the Trust may not exceed a total
effective annual rate of 1.75% of the value of the assets held in those
Investment Funds.
CHARGES TO INVESTMENT FUNDS
We make a daily charge against the assets held in each of the Investment
Funds. This charge is reflected in the Accumulation Unit Values for the
particular Investment Fund and covers expenses, expense risks, mortality
risks (for the annuity rate guarantee), death benefits (for the minimum death
benefit) and financial accounting. For the Money Market, Balanced and Common
Stock Funds, the charge is made at an annual rate guaranteed not to exceed
1.49%. For all other Investment Funds, the charge is made at an annual rate
guaranteed not to exceed 1.34%.
Specific charges for each series are set forth below:
<TABLE>
<CAPTION>
SERIES 100
- -----------------------------------------------
MONEY MARKET,
BALANCED, COMMON OTHER
STOCK FUNDS FUNDS
---------------- -------
<S> <C> <C>
Expenses .60% .60%
Expense Risks .30 .15
Mortality Risks .30 .30
Death Benefits .05 .05
Financial Accounting .24 .24
- -------------------- ---------------- -------
</TABLE>
<TABLE>
<CAPTION>
SERIES 200
- -------------------------------------------------
MONEY MARKET,
BALANCED, COMMON OTHER
STOCK FUNDS FUNDS
<S> <C> <C>
Expenses and Financial
Accounting .25% .25%
Expense Risks .55 .49
Mortality Risks and
Death Benefits .60 .60
- ---------------------- ---------------- -------
</TABLE>
The charge for expenses is designed to reimburse us for various research and
development costs and for administrative expenses that exceed the annual
administrative charge described below. The expense risk we assume is the risk
that, over time, our actual administrative expense may exceed the amounts
realized from the expense and the annual administrative expense charges,
which may not be increased. We assume a mortality risk by (a) our obligation
to pay a death benefit that will not be less than the total value of all
contributions made (less any applicable taxes) adjusted for total
withdrawals, (b) our obligation to make annuity payments for the life of the
Annuitant under guaranteed fixed annuity options, regardless of the
Annuitant's longevity, (c) our guarantees relating to annuity purchase rates,
the actuarial basis for which can be changed only for new contributions and
only on the fifth anniversary of the Contract Date and every five years
thereafter, and (d) our obligation to waive the contingent withdrawal charge
upon the payment of a death benefit. The charge for financial accounting
services is designed to reimburse us for our costs in providing those
services in connection with the Contracts, and, like the charge for expenses,
is not designed to include an element of profit. The total of these charges
may be reallocated among the categories of charges shown above; however, we
intend to limit any possible reallocation to include only the charges for
expense risks, mortality risks and death benefits.
Part of the respective charges for expense risks, mortality risks and death
benefits may be considered to be an indirect reimbursement for certain sales
and promotional expenses relating to the Contracts to the extent that the
charges are not needed to meet the actual expenses incurred.
ANNUAL ADMINISTRATIVE CHARGE
Except as discussed below, on the last Business Day of each Contract Year we
deduct from the Annuity Account Value an annual administrative charge equal
to the lesser of $30 or 2% of the Annuity Account Value on such Business Day
(adjusted to include any withdrawals made during the year). This charge is
deducted from each Investment Option on a pro rata basis. This charge will be
prorated
65
<PAGE>
ALL EQUI-VEST EDC, TSA AND TRUSTEED CONTRACTS PLUS IRA, QP IRA, SEP AND NQ
(SERIES 100 AND 200 ONLY) (Continued)
for a fractional year if, before the end of the Contract Year, you surrender
your Contract, the Annuitant dies or you elect an annuity distribution
option. Accumulation Units will be redeemed in order to pay any portion of
the charge deducted from an Investment Fund.
Any portion of the charge deducted from the Guaranteed Interest Account is
withdrawn in dollars.
Exceptions to Annual Administrative Charge
For IRA, QP IRA, NQ, SEP, Unincorporated Trusteed, and Annuitant-Owned HR-10
Contracts, the charge is zero if the Annuity Account Value is at least
$10,000 at the end of the Contract Year.
For TSA, EDC and Corporate Trusteed Contracts, the charge is zero if the
Annuity Account Value is at least $25,000 at the end of the Contract Year.
CONTINGENT WITHDRAWAL CHARGE
No sales charges are deducted from contributions. However, to assist us in
defraying the various and promotional expenses incurred in connection with
selling the Contracts, we assess a charge on amounts withdrawn when you make
a partial withdrawal or terminate your Contract if the amount withdrawn is in
excess of the free corridor amount (defined below) or if no exception
applies. The withdrawal charge is deducted pro rata from the Annuity Account
Value in addition to the amount of the requested withdrawal; the amount
deducted which is applied to pay the withdrawal charge is also subject to the
withdrawal charge.
Free Withdrawal Amount (Free Corridor)
For NQ, Trusteed, TSA and QP IRA Contracts, (but not IRA or QP IRA group
Contracts), no withdrawal charge will be applied during any Contract Year in
which the amount withdrawn is less than or equal to 10% of the Annuity
Account Value at the time the withdrawal is requested minus any amount
previously withdrawn during that Contract Year. This 10% portion is called
the FREE CORRIDOR AMOUNT. For EDC, SEP, IRA and QP IRA Series 100 and 200
group Contracts, the free corridor amount is available only after three
Contract Years have been completed or the Annuitant has reached age 59 1/2.
HOW THE CONTINGENT WITHDRAWAL CHARGE IS APPLIED FOR SERIES 100 AND 200 NQ AND
TRUSTEED CONTRACTS
Partial withdrawals in excess of the free corridor amount will be subject to
a withdrawal charge of 6% of the amount of the contributions made during the
current and five prior Contract Years. In the case of a termination, we will
pay the greater of (i) the Annuity Account Value after the withdrawal charge
has been imposed, as described above and after giving effect to any
outstanding loan balance (including accrued interest), or (ii) the free
corridor amount plus 94% of the remaining Annuity Account Value. For NQ
Contracts issued to Annuitants age 59 or older, this percentage will be 95%
in the fifth Contract Year and 96% in the sixth Contract Year. For Trusteed
Contracts issued to Annuitants age 60 or older, this percentage is 95% in the
fifth Contract Year. For NQ and Trusteed group Contracts, there is no
reduction in the contingent withdrawal charge for older Annuitants (referred
to above) in the fifth and sixth Contract Year.
For purposes of calculating the withdrawal charge, (1) we treat contributions
as being withdrawn before earnings, on a first-in first-out basis, and (2)
amounts withdrawn up to the free corridor amount are not considered a
withdrawal of any contributions. Although we treat contributions as withdrawn
before earnings for purposes of calculating the withdrawal charge, the
federal income tax law treats earnings on NQ Contracts as withdrawn first.
See "Part 10: Federal Tax and ERISA Matters."
No charge will be applied to any amount withdrawn from an NQ or Trusteed
Contract if:
o the amount withdrawn is applied to the election of a life annuity
distribution option; or
o the Annuitant dies and the death benefit is made available to the
beneficiary.
No charge will be applied to any amount withdrawn from a Trusteed Contract
if:
o the Owner has completed at least five Contract Years and the Annuitant
has reached age 59 1/2; or
o a request is made for a refund of an excess contribution within one
month of the date on which the contribution is made.
No charge will be applied to any amount withdrawn from a Corporate Trusteed
Contract if the Annuitant has reached age 59 1/2 and has either retired or
terminated employment, regardless of the number of completed Contract Years.
HOW THE CONTINGENT WITHDRAWAL CHARGE
IS APPLIED FOR SERIES 100 AND 200 IRA, SEP, TSA, EDC AND ANNUITANT-OWNED
HR-10 CONTRACTS
Withdrawals under these Contracts and defaulted loan amounts under TSA
Contracts (in excess of the free corridor amount, if applicable) may be
subject to
66
<PAGE>
ALL EQUI-VEST EDC, TSA AND TRUSTEED CONTRACTS PLUS IRA, QP IRA, SEP AND NQ
(SERIES 100 AND 200 ONLY) (Continued)
a charge of up to 6% of the amount withdrawn or the defaulted loan amount, as
the case may be. The percentage charged will be based on the Contract Year in
which the withdrawal is made, as shown below:
<TABLE>
<CAPTION>
CONTRACT
YEAR(S) CHARGE
- ---------------- ----------
<S> <C>
1 through 5 6%*
6 through 8 5
9 4
10 3
11 2
12 1
13 and later 0
</TABLE>
* This percentage will be reduced to 5% for Contracts issued to Annuitants,
in year 5, if age 60 or older under individual Contracts only.
The total of all withdrawal charges assessed will not exceed 8% of all
contributions made during the current Contract Year and the nine prior
Contract Years before the withdrawal is made.
No charge will be applied to any amount withdrawn from an IRA, QP IRA, SEP,
TSA, EDC or Annuitant-Owned HR-10 Contract if:
o the Contract Owner has completed at least five Contract Years and the
Annuitant has reached age 59 1/2;
o a request is made for a refund of an excess contribution within one
month of the date on which the contribution is made;
o the Annuitant dies and the death benefit is made available to the
beneficiary;
o the Contract Owner has completed at least five Contract Years, the
Annuitant has reached age 55 and the amount withdrawn is used to
purchase from us a period certain annuity that extends beyond the
Annuitant's age 59 1/2 and allows no prepayment;
o the Contract Owner has completed at least three Contract Years and the
amount withdrawn is used to purchase from us a period certain annuity
for a term of at least 10 years that allows no prepayment;
o the amount withdrawn is applied to the election of a life contingent
annuity distribution option (this form of payment is not available for
Annuitants in governmental EDC plans in New York);
o the amount withdrawn is applied to the election of a period certain
annuity of at least 15 years, but not in excess of the Annuitant's life
expectancy, that allows no prepayment (this provision is available only
for Annuitants in governmental EDC plans in New York).
No charge will be applied to any amount withdrawn from a TSA Contract if:
o the Contract Owner has completed at least five Contract Years, has
reached age 55 and has separated from service.
No charge will be applied to any amount withdrawn from a SEP Contract funding
SARSEP arrangements if:
o the amount withdrawn is a distribution of deferrals disallowed (plus or
minus any gain or loss) by reason of the employer's failure to meet the
Code's requirement that 50% of eligible employees elect SARSEP within
the plan year and the request for withdrawal is made by the April 15th
of the calendar year following the calendar year in which you were
notified of such disallowance; or
o the amount withdrawn is an "excess contribution" (as such term is
defined in Section 408(k)(6)(C)(ii) of the Code), plus or minus any gain
or loss, and the request for withdrawal is made by the April 15th of the
calendar year following the calendar year in which the excess
contributions were made; or
o the amount withdrawn is an "excess deferral" (as such term is defined in
Section 402(g)(2) of the Code), plus or minus any gain or loss, and the
request for withdrawal is made by the April 15th of the calendar year
following the calendar year in which such excess deferrals were made.
We reserve the right to reduce or eliminate the withdrawal charge in certain
cases, including transfers to an IRA or QP IRA from another EQUI-VEST
Contract. In no event would such reduction or elimination be permitted where
it would be unfairly discriminatory to any person.
The tax consequences of withdrawals are discussed under "Part 10: Federal Tax
and ERISA Matters."
As a result of regulations which apply to EDC plans of governmental employers
in New York (NY EDC PLANS), EQUI-VEST Contracts which fund New York EDC Plans
contain special provisions which apply to all NY EDC Plans whose EQUI-VEST
funding arrangements became effective or were renewed on or after July 1,
1989.
67
<PAGE>
ALL EQUI-VEST EDC, TSA AND TRUSTEED CONTRACTS PLUS IRA, QP IRA, SEP AND NQ
(SERIES 100 AND 200 ONLY) (Continued)
These provisions permit the automatic termination of all Contracts issued in
connection with a NY EDC Plan five years after the effective date (or any
renewal date) of its EQUI-VEST funding arrangement without the deduction of
any contingent withdrawal charges. If agreed to by the employer and us, the
period may be shorter than five years. A decision to permit the automatic
termination of all Contracts would result in the transfer of each Contract's
Annuity Account Value to a successor funding vehicle designated by the
employer.
The employer sponsoring a NY EDC Plan can prevent such a termination and
transfer by renewing the EQUI-VEST funding arrangement in a written notice to
us which includes a certification of compliance with procedures under the
applicable regulations. We are not responsible for the validity of any
certification by the employer. The written notice must be received at our
Processing Office and accepted by us not later than seven days before the
date on which a transfer would otherwise occur.
No further investment experience, whether positive or negative, will be
credited under a NY EDC Plan Contract once the Contract terminates. As with
other tax-favored retirement programs in which the funding is affected by
actions of a sponsoring employer, we are not required to provide Annuitants
with information relating to an employer's decision to exercise any
termination right.
- -------------------------------------------------------------------------------
MOMENTUM CONTRACT
- -------------------------------------------------------------------------------
LIMITATION ON CHARGES
Under the terms of the MOMENTUM Contract for the Money Market, Balanced,
Common Stock and Aggressive Stock Funds, the aggregate amount of the Separate
Account charge made to those Funds, the Trust charges for investment advisory
fees and the direct operating expenses of the Trust may not exceed a total
effective annual rate of 1.75% of the value of the assets held in those Funds
for the MOMENTUM Contract.
CHARGES TO INVESTMENT FUNDS
We make a daily charge against the assets held in each of the Investment
Funds for expenses of the MOMENTUM Contract. This charge is reflected in the
Accumulation Unit Values for the particular Investment Fund and covers
expenses, expense risks, mortality (for the annuity rate guarantee), death
benefits (for the minimum death benefit) and financial accounting. For the
Money Market, Balanced and Common Stock Funds, the charge is made at an
annual rate not to exceed 1.49% which consists of .60% for expenses, .30% for
expense risks, .30% for mortality risks, .05% for death benefits and .24% for
financial accounting. For all other Investment Funds, the charge is made at
an annual rate not to exceed 1.34% which consists of .60% for expenses, .15%
for expense risks, .30% for mortality risk, .05% for death benefits and .24%
for financial accounting.
The charge for expenses is designed to reimburse us for various research and
development costs and for administrative expenses that exceed the quarterly
administrative charge described below. The expense risk we assume is the risk
that, over time, our actual expense of administering the MOMENTUM Contract
may exceed the amounts realized from the expense and the quarterly
administrative expense charges. We assume a mortality risk by (a) our
obligation to pay a death benefit that will not be less than the total value
of all contributions made (less any applicable taxes) adjusted for total
withdrawals, (b) our obligation to make annuity payments for the life of the
Annuitant under guaranteed fixed annuity options, regardless of the
Annuitant's longevity, (c) our guarantees relating to annuity purchase rates,
the actuarial basis for which can be changed only for new contributions and
only on the fifth anniversary of the Contract Date and every five years
thereafter, and (d) our obligation to waive the contingent withdrawal charge
upon the payment of a death benefit. The charge for financial accounting
services is designed to reimburse us for our costs in providing those
services in connection with the MOMENTUM Contract, and, like the charge for
expenses, is not designed to include an element of profit.
Under the MOMENTUM Contract, the total of these charges may be reallocated
among the categories of charges discussed above. However, notwithstanding
provisions of the Momentum Contract, we intend to limit any possible
reallocation to include only the charges for expense risks, mortality risks
and death benefits.
Part of the respective charges for expense risks, mortality risks and death
benefits may be considered to be an indirect reimbursement for certain
68
<PAGE>
MOMENTUM CONTRACT (Continued)
sales and promotional expenses relating to the MOMENTUM Contract to the
extent that the charges are not needed to meet the actual expenses incurred.
QUARTERLY ADMINISTRATIVE CHARGE
Except as discussed below, on the last Business Day of each calendar quarter
we deduct from each Retirement Account Value an administrative charge which
is currently equal to $7.50 or, if less, .50% of the total of the Retirement
Account Value plus the amount of any Active Loan. This charge is deducted by
Source from each Investment Option in a specified order described under "How
We Deduct the Quarterly Administrative Charge" in the SAI.
Any portion of the charge deducted from an Investment Fund will reduce the
number of Accumulation Units you have in that Investment Fund. Any portion of
the charge deducted from the Guaranteed Interest Account is withdrawn in
dollars.
There is currently no charge for any calendar quarter in which the Retirement
Account Value plus any Active Loan is at least $25,000 as of the last
Business Day of that quarter. We reserve the right to increase this charge if
our administrative costs increase. We will give Employers or Plan Trustees 90
days written notice of any increase. We may also reduce this charge under
certain circumstances. See "Special Circumstances" in this Section.
You, as Employer, may choose to have this quarterly administrative charge
billed to you directly.
CHARGE FOR PLAN RECORDKEEPING
SERVICES
The annual charge for the basic plan recordkeeping option is $300 (pro-rated
in the first year) and will be billed directly to the Employer. The $300
charge is not imposed on plans that converted to the MOMENTUM Contract from
our EQUI-VEST Corporate Trusteed Contract. Employers may enter into a written
agreement with Equitable Life for direct distribution of plan benefits and
withdrawals to Participants, including tax withholding and reporting to the
IRS. For this service, a $25 checkwriting fee shall be charged by Equitable
Life for each check drawn. We reserve the right to increase these charges if
our plan recordkeeping costs increase. We will give Employers or Plan
Trustees 90 days written notice of any increase.
There are additional charges if the Employer or Plan Trustee elects to use
our full service plan recordkeeping option; these additional charges will
depend upon the service used. Employers will be required to execute an
agreement governing additional recordkeeping services and related charges.
CONTINGENT WITHDRAWAL CHARGE
No sales charges are deducted from contributions. However, to assist us in
defraying the various sales and promotional expenses incurred in connection
with selling the MOMENTUM Contract, we assess a sales charge on amounts
withdrawn from Retirement Account Values. Under certain conditions, the
contingent withdrawal charge will not apply to some or all of the amount
withdrawn.
Free Withdrawal Amount (Free Corridor)
Subject to certain restrictions, no withdrawal charge will be applied during
any Participation Year in which the amount withdrawn does not exceed 10% of
the sum of the Retirement Account Value and any Active Loan at the time the
withdrawal is requested, minus any amount previously withdrawn during that
Participation Year (including any defaulted loan amounts and forfeited
amounts). This 10% portion is called the FREE CORRIDOR AMOUNT.
If you, as the Employer, have transferred your plan assets to the MOMENTUM
Program from another qualified plan and we have not yet received from you the
allocation of values among Participants, we will treat the total amount we
hold as one Retirement Account Value. Withdrawals from this Retirement
Account Value will not have the benefit of a free corridor amount. However,
once the amount we hold is allocated among the various Participants,
withdrawals will have the benefit of the free corridor amount.
How the Contingent Withdrawal Charge is
Applied
Partial withdrawals in excess of the free corridor amount will be subject to
a withdrawal charge of 6% of the lesser of (i) such excess or (ii) the amount
of the withdrawal attributable to contributions made by or on behalf of the
Participant during the current and five prior Participation Years.
In the case of a full withdrawal of a Retirement Account Value, the plan will
receive from us the greater of your Retirement Account Value after the
withdrawal charge of 6% has been imposed upon the amount of the contributions
made by or on behalf of a Participant during the current and five prior
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MOMENTUM CONTRACT (Continued)
Participation Years, or the free corridor amount plus 94% of the sum of the
remaining Retirement Account Value and any Active Loan, less the Active Loan.
This charge will also apply in the case of a termination of participation
under the MOMENTUM Contract by the Employer or Plan Trustee.
The withdrawal charge described above is deducted from the Retirement Account
Value in addition to the amount of the requested withdrawal; the portion of
the amount withdrawn that is applied to pay the withdrawal charge is also
subject to the withdrawal charge.
For purposes of calculating the withdrawal charge, (1) the oldest
contributions will be treated as the first withdrawn and more recent
contributions next, (2) amounts withdrawn up to the free corridor amount will
not be considered a withdrawal of any contributions and (3) Active Loans do
not include takeover loans for this purpose.
If a portion of your Retirement Account Value is forfeited under the terms of
your plan, we will assess a withdrawal charge only against vested
contribution amounts. Under Basic Service, the Plan Trustee must tell us the
vested balance. The balance of the withdrawal charge will be waived at that
time. However, if you, as the Employer or Plan Trustee, withdraw the
forfeited amount from the MOMENTUM Contract before it is reallocated to other
Participants, you will incur the balance of the withdrawal charge at that
time.
No charge will be applied to any amount withdrawn, if:
o the amount withdrawn is applied to the election of a life annuity
distribution option;
o you die;
o you have been a Participant for at least five Participation Years and
have reached age 59 1/2;
o you have reached age 59 1/2 and have separated from service (regardless
of the number of Participation Years);
o the amount withdrawn is the result of a request for a refund of "excess
contributions" or "excess aggregate contributions" as such terms are
defined in Section 401(k)(8)(B) and 401(m)(6)(B), respectively, of the
Code, including any gains or losses, and the withdrawal is made no later
than the end of the plan year following the plan year for which such
contributions were made;
o the amount withdrawn is a request for a refund of "excess deferrals" as
such term is defined in Section 402(g)(2) of the Code, including any
gains or losses, provided the withdrawal is made no later than April 15,
following the calendar year in which such excess deferrals were made;
o the amount withdrawn is a request for a refund of contributions made due
to mistake of fact made in good faith, provided the withdrawal is made
within 12 months of the date such mistake of fact contributions were
made and any earnings attributable to such contributions are not
included in such withdrawal;
o the amount withdrawn is a request for a refund of contributions
disallowed as a deduction by the Employer for Federal income tax
purposes, provided such withdrawal is made within 12 months after the
disallowance of the deduction has occurred and no earnings attributable
to such contributions are included in such withdrawal; or
o the amount withdrawn is a withdrawal for disability as defined in
Section 72(m) of the Code.
In addition, there will be no contingent withdrawal charge imposed on any
Annuity Account Value under an EQUI-VEST Corporate Trusteed certificate when
it is converted to a MOMENTUM Contract. For purposes of calculating any
contingent withdrawal charge under the MOMENTUM Contract, we will carry over
the history of the contributions made under a converted EQUI-VEST
certificate. For example, if an EQUI-VEST Corporate Trusteed certificate was
purchased on behalf of a Participant on June 1, 1987 with a single $5,000
contribution, we will continue to treat the $5,000 contribution as made on
June 1, 1987 under the MOMENTUM Contract. This means that you will not lose
the benefit of "aging" contributions by converting EQUI-VEST certificates to
the MOMENTUM Contract.
PLAN LOAN CHARGES
A $25 loan set-up charge will be deducted from your Retirement Account Value
at the time a plan loan is made. Also, we will deduct a recordkeeping charge
of $6 from your Retirement Account Value on the last Business Day of each
calendar quarter if there is an Active Loan on that date. The $6 per quarter
recordkeeping charge, but not the $25 set-up charge, will be applicable to
takeover loans and to loans converted from EQUI-VEST Corporate Trusteed to
MOMENTUM.
Your employer may elect to pay these charges. These charges are intended to
reimburse us for the added
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MOMENTUM CONTRACT (Continued)
administrative costs associated with processing loans. We reserve the right
to increase these administrative charges if our costs increase. We will give
Employers or Plan Trustees 90 days written notice of any increase.
Any defaulted loan amount will incur a contingent withdrawal charge as
described above under "Contingent Withdrawal Charge."
SPECIAL CIRCUMSTANCES
Subject to any necessary governmental or regulatory approvals, the contingent
withdrawal charge, quarterly administrative charge, loan charges and basic
plan recordkeeping fee for a particular plan participating under the Contract
may be reduced or eliminated when sales are made in a manner that results in
savings of sales or administrative expenses. The entitlement to such a
reduction or elimination will be determined by us based on factors such as
the number of Participants, performance of sales or administrative functions
by the Employer or plan administrator, frequency of contributions or the use
of automated techniques in transmitting data.
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PART 9: VOTING RIGHTS
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TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of the Trust. Since we own
the assets of the Separate Account, we are the legal owner of the shares and,
as such, have the right to vote on certain matters. Among other things, we
may vote:
o to elect the Trust's Board of Trustees,
o to ratify the selection of independent auditors for the Trust, and
o on any other matters described in the Trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because the Trust is a Massachusetts business trust, annual meetings are not
required. Whenever a shareholder vote is taken, we will give Contract Owners
and Employers, if appropriate, the opportunity to instruct us how to vote the
number of shares attributable to their Contracts. If we do not receive
instructions in time from all Contract Owners and Employers, if appropriate,
we will vote the shares of a Portfolio for which no instructions have been
received in the same proportion as we vote shares of that Portfolio for which
we have received instructions. We will also vote any shares that we are
entitled to vote directly because of amounts we have in an Investment Fund in
the same proportions that Contract Owners vote.
All Trust shares are entitled to one vote. Fractional shares will be counted.
Voting generally is on a Portfolio-by-Portfolio basis except that shares will
be voted on an aggregate basis when universal matters, such as election of
Trustees and ratification of independent auditors, are voted upon. However,
if the Trustees determine that shareholders in a Portfolio are not affected
by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
SEPARATE ACCOUNT VOTING RIGHTS
Under the 1940 Act, certain actions (such as some of those described under
"Changes in Applicable Law and Otherwise," below) may require Contract Owner
approval. In that case, Contract Owners will be entitled to one vote for each
Accumulation Unit they have in the Investment Funds. We will cast votes
attributable to any amounts we have in the Investment Divisions in the same
proportion as votes cast by Contract Owners.
VOTING RIGHTS OF OTHERS
Currently, we control the Trust. Trust shares are held by other separate
accounts of ours and by separate accounts of insurance companies affiliated
and unaffiliated with us. Shares held by these separate accounts will
probably be voted according to the instructions of the owners of insurance
policies and contracts issued by those insurance companies. While this will
dilute the effect of the voting instructions of Contract Owners, we currently
do not foresee any disadvantages arising out of this. The Trust's Board of
Trustees intends to monitor events in order to identify any material
irreconcilable conflicts that possibly may arise and to determine what
action, if any, should be taken in response. If we believe that the Trust's
response to any of those events insufficiently protects our Contract Owners,
we will see to it that appropriate action is taken to protect our Contract
Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
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PART 10: FEDERAL TAX AND ERISA MATTERS
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ANNUITIES
This prospectus briefly describes our understanding of the current Federal
income tax rules that apply to an annuity purchased with after-tax dollars
(non-qualified annuity) and some of the special tax rules that apply to an
annuity purchased to fund a tax-favored retirement program (qualified
annuity). A qualified annuity may be purchased under a TSA, IRA, QP IRA, SEP
or EDC plan (EQUI-VEST only) or qualified plan (plans funded by Trusteed and
Annuitant-Owned HR-10 contracts and the MOMENTUM program). Rights and
benefits of the Annuitant or Participant under an annuity purchased to fund a
tax-favored retirement program may be restricted in order to qualify for its
special treatment under Federal tax law.
Additional tax information appears in the SAI. This prospectus and the SAI do
not provide detailed tax information and do not address state and local
income and other taxes, or federal gift and estate taxes. Not every Contract
has every feature discussed in this section. Please consult a tax adviser
when considering the tax aspects of your Contract.
TAXATION OF EQUI-VEST NON-QUALIFIED ANNUITIES
Equitable has designed the EQUI-VEST Contract to qualify as an "annuity" for
purposes of Federal income tax law.
Gains in the Annuity Account Value of the Contract generally will not be
taxable to an individual until a distribution occurs, either by a withdrawal
of part or all of its value or as a series of periodic payments. However,
there are some exceptions to these rules (1) if a Contract fails investment
diversification requirements; (2) if an individual transfers a Contract as a
gift to someone other than a spouse (or divorced spouse), any gain in its
Annuity Account Value will be taxed at the time of transfer; (3) the
assignment or pledge of any portion of the value of a Contract will be
treated as a distribution of that portion of the Contract; and (4) when an
insurance company (or its affiliate) issues more than one non-qualified
deferred annuity Contract during any calendar year to the same taxpayer, the
contracts are required to be aggregated in computing the taxable amount of
any distribution.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Contract unless
an exception under the Code applies.
Prior to the annuity starting date, any partial withdrawals are taxable to
the Contract Owner to the extent that there has been a gain in the Annuity
Account Value. The balance of the distribution is treated as a return of the
"investment" or "basis" in the Contract and is not taxable. Generally, the
investment or basis in the Contract equals the contributions made less any
amounts previously withdrawn which were not taxable.
If you surrender your Contract, the distribution is taxable to the extent it
exceeds the investment in the Contract.
Once annuity payments begin, a portion of each payment is considered to be a
tax-free return of investment based on the ratio of the investment to the
expected return under the Contract. The remainder of each payment will be
taxable. In the case of a variable annuity, special rules apply if the
payments received in a year are less than the amount permitted to be
recovered tax-free. After the total investment has been recovered, future
payments are fully taxable. If payments cease as a result of death, a
deduction for any unrecovered investment will be allowed.
The taxable portion of a distribution is treated as ordinary income and is
subject to income tax withholding. See "Federal and State Income Tax
Withholding," below. In addition, a penalty tax of 10% applies to the taxable
portion of a distribution unless the distribution is (1) made on or after the
date the taxpayer attains age 59-1/2, (2) made on or after the death of the
Contract Owner, (3) attributable to the disability of the taxpayer, (4) part
of a series of substantially equal installments as an annuity for the life
(or life expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of the taxpayer and a beneficiary, or (5) with respect to
income allocable to amounts contributed to an annuity contract prior to
August 14, 1982 which are transferred to the Contract in a tax-free exchange.
If, as a result of the Annuitant's death, the beneficiary is entitled to
receive the death benefit described in Part 6, the beneficiary is generally
subject
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to the same tax treatment as the Contract Owner (discussed above), had the
Contract Owner surrendered the contract.
If the beneficiary elects to take the death benefit in the form of a life
income or installment option, the election should be made within 60 days
after the day on which a lump sum death benefit first becomes payable and
before any benefit is actually paid. The tax computation will reflect your
investment in the Contract.
Special distribution requirements apply upon the death of the owner of a
non-qualified annuity. See "Part 5--Tax Rules: Special Aspects" in the SAI.
SPECIAL RULES FOR TAX-FAVORED
RETIREMENT PROGRAMS
An annuity contract may be used to fund certain employer-sponsored retirement
programs.
The Code describes how a retirement program can qualify for tax-favored
status and sets requirements for various features including: participation,
nondiscrimination, vesting and funding; limits on contributions,
distributions and benefits; penalties; and withholding, reporting and
disclosure. This section provides a brief description of the various tax-
favored retirement programs which can be funded through EQUI-VEST and
MOMENTUM. More information appears in the SAI. Certain tax advantages of a
tax-favored retirement program may not be available under state and local tax
laws.
TAX-QUALIFIED RETIREMENT PLANS
(QUALIFIED PLANS)
Corporations, partnerships and sole proprietorships may establish qualified
plans for the working owners and their employees which provide for
contributions to be made to the Contracts. Both employer and employee
contributions to these plans are subject to a variety of limitations, some of
which are discussed here briefly. Certain penalties for violating
contribution limits are discussed further in the SAI. Qualified plans must
not discriminate in favor of highly compensated employees. In addition, "top
heavy" rules apply to plans where more than 60% of the account balances are
allocated to "key employees" as defined in the Code. See your tax adviser for
more information.
The annual limit of employer and employee contributions (as defined in
Section 415(c) of the Code) which may be made on behalf of an employee to all
of the defined contribution plans of an employer is the lesser of $30,000 or
25% of compensation or earned income. Compensation or earned income in excess
of $150,000 cannot be considered in calculating contributions to the plan.
This amount may be adjusted for cost of living changes in future years. Any
reallocated forfeitures and voluntary nondeductible employee contributions
will generally be included for purposes of the contribution limit. Salary
reduction contributions made under a cash or deferred arrangement (401(K)
PROGRAM) are limited to $7,000, as adjusted annually for cost of living
changes. In 1996, the annual dollar limit on these "elective deferrals" is
$9,500. This limit applies to the aggregate of all elective deferrals under
all tax-favored plans in which the individual participates, including those
made under SARSEPs, EDC plans and TSAs.
Special limits on contributions apply to anyone who participates in more than
one qualified plan or who controls another trade or business. There is also
an overall limit on the total amount of contributions and benefits under all
tax-favored retirement programs in which a person participates.
In certain cases a Contract may be funded by a tax-deferred rollover
contribution not subject to the above limits.
TAX-SHELTERED ANNUITY
(TSAS) ARRANGEMENTS
An employee of an employer which is either (i) an organization described in
Section 501(c)(3) of the Code which is exempt from Federal income tax under
Section 501(a) of the Code or (ii) a state, political subdivision of a state,
or an agency or instrumentality of any one or more of these entities (but
only where the employee performs services for an educational organization
described in Section 170(b)(1)(A)(ii) of the Code) may exclude from Federal
gross income for a tax year contributions made by the employer to a TSA
Contract. Some or all of the contributions may be made under a salary
reduction agreement between the employee and the employer, subject to certain
limitations. Generally, the contribution limit is the lowest of the
following: (1) the annual exclusion allowance for the employee (20% of
includable salary times years of service less previous contributions to
qualified plans, TSAs and EDC plans), (2) the annual limit on employer
contributions to defined contribution plans and (3) the annual limit on all
elective deferrals. Items 2 and 3 are discussed in "Tax Qualified Retirement
Plans (Qualified Plans)," above. Contributions to a TSA Contract under a
salary reduction agreement cannot exceed $9,500 per year. Special provisions
may allow "catch-up" contributions to compensate for smaller contributions
made in previous years. In addition, there may be adverse tax consequences
for excess elective deferrals. See "Penalties for Excess Defer-
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rals" in Part 5 of the SAI. Tax-free transfer or rollover contributions from
another TSA arrangement are not subject to the above limits. Note, however,
that the maximum salary reduction contribution that may be made by an
annuitant who participates both in a TSA arrangement and an EDC plan will be
limited to the maximum allowed under Code Section 457 (i.e., generally
$7,500).
Employees are permitted to enter into only one salary reduction agreement per
year with each Employer. Because the salary reduction agreement is between
the TSA plan participant and the Employer, Equitable Life and its Agents are
not responsible for monitoring such agreements.
DISTRIBUTIONS FROM QUALIFIED PLANS
AND TSAS
Amounts held under qualified plans and TSAs are generally not subject to
Federal income tax until benefits are distributed. Generally, amounts
distributed are fully taxable as ordinary income. For rules requiring 20%
Federal income tax withholding applicable to certain distributions from
qualified plans or TSAs, see "Federal and State Income Tax Withholding"
below. In addition, qualified plan and TSA distributions may be subject to
additional tax penalties. For information regarding tax penalties which may
apply, see "Penalty Tax on Early Distributions" and "Tax Penalties for
Insufficient Distributions" later in this section. The SAI contains
additional information about qualified plan distributions, including
penalties on excessive retirement plan distributions.
Loans may be made from a qualified plan or TSA plan, which permits them,
without being treated as a distribution. However, if the amount of the loan
exceeds permissible limits under the Code when made, the amount of the excess
is treated (solely for tax purposes) as a taxable distribution. Additionally,
if the loan is not repaid at least quarterly amortizing interest and
principal, the amount not repaid when due may be treated as a taxable
distribution. Under Proposed Treasury Regulations which are not yet
effective, the IRS would require the entire unpaid balance of the loan to be
includible in income in the year of the default. See the discussion in Part 6
under "Loans (for TSA and Corporate Trusteed only)," the discussion below and
in Part 4 of the SAI for certain additional Equitable Life, Code and ERISA
rules covering loans from qualified plans or TSAs.
In certain cases, direct transfers between TSA issuers are not treated as
taxable distributions. A tax-deferred rollover, if permitted, can also
postpone taxation. See "Tax-Free Rollover," in this section.
If a Contract is surrendered for its value, the distribution is taxable to
the extent the amount received exceeds the basis (if any). A taxpayer will
have a basis in the Contract if, for example, after-tax contributions have
been made.
The amount of any partial distribution from a qualified plan or a TSA prior
to the annuity starting date is generally taxable, except to the extent that
the distribution is treated as a withdrawal of after-tax contributions.
Distributions are normally treated as pro rata withdrawals of after-tax
contributions and earnings on those contributions.
If an annuity distribution option is elected, any basis will be recovered
under the rules which apply to non-qualified annuities. See "Taxation of Non-
qualified Annuities."
Qualified plan distributions (but not TSAs) may be eligible for the special
tax treatment accorded lump sum distributions (favorable five-year averaging,
and in certain cases, favorable ten-year averaging and long-term capital gain
treatment). This treatment is not available unless the balance to the credit
of a plan participant who has participated in the plan for at least five
years is paid to the recipient within one taxable year, and is payable (i)
after the participant attains age 59-1/2 or (ii) on account of the
participant's (a) death, (b) separation from service (not applicable to
self-employed individuals), or (c) disability (applicable only to
self-employed individuals).
The rules governing taxation of distributions made on account of the death of
the Annuitant in a qualified plan or TSA are similar to those governing death
benefit distributions in non-qualified annuities. See "Taxation of
Non-Qualified Annuities," above. In some instances, distributions from a
qualified plan or TSA made to a surviving spouse may be rolled over to an IRA
or other individual retirement arrangement on a tax-deferred basis. See "Tax
Free Rollover," and "Tax-Qualified Individual Retirement Annuities (IRAs),"
below.
Tax Free Rollover
Any distribution from a qualified plan or a TSA which is an "eligible
rollover distribution" may be rolled over into another eligible retirement
plan, either as a direct rollover or a rollover within 60 days of receiving
the distribution. To the extent a distribution is rolled over, it remains tax
deferred.
A distribution from a qualified plan may be rolled over to another qualified
plan which will accept rollover contributions or an individual retirement
arrangement; a TSA distribution may be rolled over to another TSA or
individual retirement arrange-
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ment. Death benefits received by a spousal beneficiary may only be rolled
over to an IRA.
The taxable portion of most distributions will be eligible for rollover,
except as specifically excluded under the Code. Distributions which cannot be
rolled over generally include periodic payments for life or for a period of
10 years or more, and minimum distributions required under Section 401(a)(9)
of the Code (discussed below). Eligible rollover distributions are discussed
in greater detail under "Federal and State Income Tax Withholding", below.
Minimum Distributions After Age 70 1/2
The minimum distribution rules mandate qualified retirement plan participants
and TSA annuitants to start taking annual distributions from their retirement
plans by age 70 1/2. The distribution requirements are designed to use up
the participant's interest in the plan over the individual's life expectancy.
Whether the correct amount has been distributed is calculated on a year by
year basis; there are no provisions to allow amounts taken in excess of the
required amount to be carried over or carried back and credited to other
years.
Generally, an individual must take the first required minimum distribution
with respect to the calendar year in which the individual turns age 70 1/2.
The individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2, or to delay taking it
until the three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date,"
which is the April 1st of the calendar year following the calendar year in
which the individual turns age 70 1/2.) If the individual chooses to delay
taking the first annual minimum distribution, then the individual will have
to take two minimum distributions in that year--the delayed one for the first
year and the one actually for that year. Once minimum distributions begin,
they must be made at some time every year.
Some individuals may be entitled to delay commencement of required minimum
distributions for all or part of their account balance until after age
70 1/2. Consult your tax adviser to determine whether you may qualify for this
exception.
There are two general ways to take minimum distributions--"account based" or
"annuity based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
You should discuss with your tax adviser which minimum distribution options
are best for your own personal situation. Individuals who are participants in
more than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Generally, the minimum distribution must be calculated annually for, and
taken from, each tax qualified retirement plan and TSA. Distributions in
excess of the amount required in any year from a qualified plan, for example,
will not satisfy the required amount for a TSA the individual also
participates in. In Notice 88-38, the IRS indicated that an individual
maintaining more than one Code Section 403(b) arrangement may choose to take
the annual required minimum distribution for all TSAs from any one or more
TSAs the individual maintains, as long as the required distribution is
calculated separately for each TSA and all the minimum distribution amounts
are added together.
An account based minimum distribution method may be a lump sum payment, or a
periodic withdrawal made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. In the alternative, an individual could meet
the minimum distribution requirements by applying the Retirement Account
Value or Annuity Account Value to an annuity over the individual's life or
the joint lives of the individual and a designated beneficiary, or over a
period certain not extending beyond applicable life expectancies.
If an individual dies before the Required Beginning Date or before
distributions in the form of an annuity begin, distributions of the entire
interest under the contract must be completed within five years after death,
unless payments to a designated beneficiary begin within one year of the
Annuitant's death and are made over the beneficiary's life or over a period
certain which does not extend beyond the Beneficiary's life expectancy. If
the surviving spouse is the designated beneficiary, the spouse may delay the
commencement of such payments up until the individual would have attained age
70-1/2. In the alternative, such spouse can roll over the death benefit to an
IRA. See "Tax-Free Rollover" above. If an individual dies after the Required
Beginning Date or after distributions in the form of an annuity have begun,
payments after death must continue to be made at least as rapidly as the
payments made before the death of the Annuitant. Distributions received by a
beneficiary are generally given the same tax treatment the Annuitant would
have received if distribution had been made to the Annuitant.
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Limitations on Distributions
Restrictions apply to the salary reduction (elective deferral) portion of a
TSA or 401(k) program, including both contributions and earnings.
Distributions of restricted salary reduction amounts generally may be made
only if the Annuitant attains age 59-1/2, dies, is disabled, separates from
service or on account of financial hardship. Hardship withdrawals are limited
to the amount actually contributed under a salary reduction agreement,
without earnings. These restrictions do not apply to the amount of your TSA
Contract as of December 31, 1988 attributable to salary reduction
contributions and earnings (or to the extent such amount is properly carried
over from an existing TSA to an EQUI-VEST TSA Contract). To take advantage of
this grandfathering you must properly notify us in writing at our Processing
Office of your December 31, 1988 account balance if you have qualifying
amounts transferred to your TSA Contract.
Spousal consent rules
In the case of many qualified plans and certain TSAs, if an Annuitant is
married at the time a loan, withdrawal, or other distribution is requested
under the Contract, spousal consent is required. In addition, unless the
Annuitant elects otherwise with the written consent of the spouse, the
retirement benefits payable under the plan or arrangement must be paid in the
form of a "qualified joint and survivor annuity" (QJSA). A QJSA is an annuity
payable for the life of the Annuitant with a survivor annuity for the life of
the spouse in an amount which is not less than one-half of the amount payable
to the Annuitant during his or her lifetime. In addition, a married
Annuitant's beneficiary must be the spouse, unless the spouse consents in
writing to the designation of a different beneficiary.
TAX-QUALIFIED INDIVIDUAL RETIREMENT
ANNUITIES (IRAS)
Your Contract is designed to qualify as an IRA under Section 408(b) of the
Code. Your rights under the Contract cannot be forfeited.
This prospectus contains the information which the IRS requires to be
disclosed to an individual before he or she purchases an IRA. This section of
Part 10 covers some of the special tax rules that apply to individual
retirement arrangements. You should be aware that an IRA is subject to
certain restrictions in order to qualify for its special treatment under the
Federal tax law.
Further information on IRA tax matters can be obtained from any IRS district
office. Additional information regarding IRAs, including a discussion of
required distributions, can be found in Internal Revenue Service Publication
590, entitled "Individual Retirement Arrangements (IRAs)," which is generally
updated annually.
We have received favorable opinion letters from the IRS approving the forms
of the individual Contract and group certificates for all EQUI-VEST Contracts
as an IRA. Such IRS approval is a determination only as to the form of the
annuity and does not represent a determination of the merits of the annuity
as an investment. The Contract is also subject to certain state regulatory
requirements.
Cancellation
You can cancel a Contract issued as an IRA by following the directions in
Part 1 under "10-Day Free Look." Since there may be adverse tax consequences
if a Contract is cancelled (and because we are required to report to the IRS
certain IRA distributions from cancelled IRAs), you should consult with a tax
adviser before making any such decision.
Contributions to IRAs
Individuals may make three different types of contributions to purchase an
IRA, or as later additions to an existing IRA: "regular" contributions out of
earnings, tax-free "rollover" contributions from tax-qualified plans, or
direct custodian-to-custodian transfers from other individual retirement
arrangements ("direct transfers"). See "Contributions Under the Contracts" in
Part 6. The immediately following discussion relates to "regular" IRA
contributions. Transfer and rollover contributions are discussed below under
"Tax Free Transfers and Rollovers."
Generally, $2,000 is the maximum amount of deductible and nondeductible
contributions which may be made to all IRAs by an individual in any taxable
year. The above limit may be less where the individual's earnings are below
$2,000. This limit does not apply to rollover or direct transfer
contributions into an IRA.
If the individual's spouse does not work or elects to be treated as having no
compensation, the individual and the individual's spouse may contribute up to
$2,250 to individual retirement arrangements (but no more than $2,000 to any
one individual retirement arrangement). The non-working spouse owns his or
her individual retirement arrangements, even if the working spouse makes
contributions to purchase the spousal individual retirement arrangements.
The amount of IRA contribution for a tax year that an individual can deduct
depends on whether the
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individual (or the individual's spouse, if a joint return is filed) is
covered by an employer-sponsored tax-favored retirement plan (including a
qualified plan, TSA or SEP, but not an EDC plan). If neither the individual
nor the individual's spouse is covered during any part of the taxable year by
such a plan, then regardless of adjusted gross income (AGI), each working
spouse may make a deductible contribution to an IRA for each tax year
(MAXIMUM PERMISSIBLE DOLLAR DEDUCTION) up to the lesser of $2,000 or 100% of
compensation.
In certain cases, individuals covered by a tax-favored retirement plan
include persons eligible to participate in the plan although not actually
participating. Whether or not a person is covered by a retirement plan will
be reported on an employee's Form W-2.
If the individual is single and covered by such a plan during any part of the
taxable year, the deduction for IRA contributions phases out with AGI between
$25,000 and $35,000. If the individual is married and files a joint return,
and either the individual or the spouse is covered by such a plan during any
part of the taxable year, the deduction for IRA contributions phases out with
AGI between $40,000 and $50,000. If the individual is married, files a
separate return and is covered by a tax-favored retirement plan during any
part of the taxable year, the IRA deduction phases out with AGI between $0
and $10,000. Married individuals filing separate returns must take into
account the retirement plan coverage of the other spouse, unless the couple
has lived apart for the entire taxable year. If AGI is below the phase-out
range, an individual is entitled to the Maximum Permissible Dollar Deduction.
In computing the partial IRA deduction the individual must round the amount
of the deduction to the nearest $10. The permissible deduction for IRA
contributions is a minimum of $200 if AGI is less than the amount at which
the deduction entirely phases out.
If the individual (or the individual's spouse, unless the couple has lived
apart the entire taxable year and their filing status is married, filing
separately) is covered by a tax-favored retirement plan, the deduction for
IRA contributions must be computed using one of two methods. Under the first
method, the individual determines AGI and subtracts $25,000 if the individual
is a single person, $40,000 if the individual is married and files a joint
return with the spouse, or $0 if the individual is married and files a
separate return. The resulting amount is the individual's Excess AGI. The
individual then determines the limit on the deduction for IRA contributions
using the following formula:
<TABLE>
<CAPTION>
<S> <C> <C>
$10,000-Excess AGI
----------------------- Maximum Permissible Adjusted Dollar
$10,000 x Dollar Deduction = Deduction Limit
</TABLE>
Under the second method, the individual determines his or her Excess AGI and
then refers to the following chart originally prepared by the IRS to
determine the deduction.
78
<PAGE>
IRS Chart
- -----------------------------------------------------------------------------
ESTIMATED DEDUCTION TABLE
If your Maximum Permissible Dollar Deduction is $2,000, use this table to
estimate the amount of your contribution which will be deductible.
<TABLE>
<CAPTION>
EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION EXCESS AGI DEDUCTION
- ------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 $2,000 $2,550 $1,490 $5,050 $990 $ 7,550 $490
50 1,990 2,600 1,480 5,100 980 7,600 480
100 1,980 2,650 1,470 5,150 970 7,650 470
150 1,970 2,700 1,460 5,200 960 7,700 460
200 1,960 2,750 1,450 5,250 950 7,750 450
250 1,950 2,800 1,440 5,300 940 7,800 440
300 1,940 2,850 1,430 5,350 930 7,850 430
350 1,930 2,900 1,420 5,400 920 7,900 420
400 1,920 2,950 1,410 5,450 910 7,950 410
450 1,910 3,000 1,400 5,500 900 8,000 400
500 1,900 3,050 1,390 5,550 890 8,050 390
550 1,890 3,100 1,380 5,600 880 8,100 380
600 1,880 3,150 1,370 5,650 870 8,150 370
650 1,870 3,200 1,360 5,700 860 8,200 360
700 1,860 3,250 1,350 5,750 850 8,250 350
750 1,850 3,300 1,340 5,800 840 8,300 340
800 1,840 3,350 1,330 5,850 830 8,350 330
850 1,830 3,400 1,320 5,900 820 8,400 320
900 1,820 3,450 1,310 5,950 810 8,450 310
950 1,810 3,500 1,300 6,000 800 8,500 300
1,000 1,800 3,550 1,290 6,050 790 8,550 290
1,050 1,790 3,600 1,280 6,100 780 8,600 280
1,100 1,780 3,650 1,270 6,150 770 8,650 270
1,150 1,770 3,700 1,260 6,200 760 8,700 260
1,200 1,760 3,750 1,250 6,250 750 8,750 250
1,250 1,750 3,800 1,240 6,300 740 8,800 240
1,300 1,740 3,850 1,230 6,350 730 8,850 230
1,350 1,730 3,900 1,220 6,400 720 8,900 220
1,400 1,720 3,950 1,210 6,450 710 8,950 210
1,450 1,710 4,000 1,200 6,500 700 9,000 200
1,500 1,700 4,050 1,190 6,550 690 9,050 200
1,550 1,690 4,100 1,180 6,600 680 9,100 200
1,600 1,680 4,150 1,170 6,650 670 9,150 200
1,650 1,670 4,200 1,160 6,700 660 9,200 200
1,700 1,660 4,250 1,150 6,750 650 9,250 200
1,750 1,650 4,300 1,140 6,800 640 9,300 200
1,800 1,640 4,350 1,130 6,850 630 9,350 200
1,850 1,630 4,400 1,120 6,900 620 9,400 200
1,900 1,620 4,450 1,110 6,950 610 9,450 200
1,950 1,610 4,500 1,100 7,000 600 9,500 200
2,000 1,600 4,550 1,090 7,050 590 9,550 200
2,050 1,590 4,600 1,080 7,100 580 9,600 200
2,100 1,580 4,650 1,070 7,150 570 9,650 200
2,150 1,570 4,700 1,060 7,200 560 9,700 200
2,200 1,560 4,750 1,050 7,250 550 9,750 200
2,250 1,550 4,800 1,040 7,300 540 9,800 200
2,300 1,540 4,850 1,030 7,350 530 9,850 200
2,350 1,530 4,900 1,020 7,400 520 9,900 200
2,400 1,520 4,950 1,010 7,450 510 9,950 200
2,450 1,510 5,000 1,000 7,500 500 10,000 0
2,500 1,500
</TABLE>
- ------------
Excess AGI = Your AGI minus your THRESHOLD LEVEL:
If you are single, your Threshold Level is $25,000.
If you are married, your Threshold Level is $40,000.
If you are married and file a separate tax return, your
Excess AGI = your AGI.
79
<PAGE>
Contributions may be made for a tax year until the deadline for filing a
Federal income tax return for that tax year (without extensions). No
contributions are allowed for the tax year in which an individual attains age
70-1/2 or any tax year after that. A working spouse age 70-1/2 or over,
however, can contribute up to the lesser of $2,000 or 100% of "earned income"
to a spousal IRA for a non-working spouse until the year in which the
non-working spouse reaches age 70-1/2.
An individual not eligible to deduct part or all of the IRA contribution may
still make nondeductible contributions on which earnings will accumulate on a
tax-deferred basis. The deductible and nondeductible contributions may not,
however, together exceed the lesser of the $2,000 limit (or $2,250 spousal
limit) or 100% of compensation for each tax year. See "Excess Contributions."
Individuals must keep their own records of deductible and nondeductible
contributions in order to prevent double taxation on the distribution of
previously taxed amounts. See "Distributions from IRA Contracts."
An individual making nondeductible contributions in any taxable year, or
receiving amounts from any IRA to which he or she has made nondeductible
contributions, must file the required information with the IRS. Moreover,
individuals making nondeductible IRA contributions must retain all income tax
returns and records pertaining to such contributions until interests in such
IRAs are fully distributed.
Excess Contributions
Excess contributions to an IRA are subject to a 6% excise tax for the year in
which made and for each year thereafter until withdrawn. In the case of
"regular" IRA contributions any contribution in excess of the lesser of
$2,000 or 100% of compensation or earned income is an "excess contribution,"
(without regard to the deductibility or nondeductibility of IRA contributions
under this limit). Also, any "regular" contributions made after you reach age
70 1/2 are excess contributions. In the case of rollover IRA contributions,
excess contributions are amounts which are not eligible to be rolled over
(for example, after-tax contributions to a qualified plan or minimum
distributions required to be made after age 70 1/2). An excess contribution
(rollover or "regular") which is withdrawn, however, before the time for
filing the individual's federal income tax return for the tax year (including
extensions) is not includable in income and is not subject to the 10% penalty
tax on early distributions (discussed below under "Penalty Tax on Early
Distributions"), provided any earnings attributable to the excess
contribution are also withdrawn and no tax deduction is taken for the excess
contribution. The withdrawn earnings on the excess contribution, however,
would be includable in the individual's gross income for the tax year in
which the excess contribution from which they arose was made and would be
subject to the 10% penalty tax. If excess contributions are not withdrawn
before the time for filing the individual's federal income tax return for the
tax year (including extensions), the "regular" contributions may still be
withdrawn after that time if the IRA contribution for the tax year did not
exceed $2,250 and no tax deduction was taken for the excess contribution; in
that event, the excess contribution would not be includable in gross income
and would not be subject to the 10% penalty tax. Lastly, excess "regular"
contributions may also be reduced by underutilizing the allowable
contribution limits for a later year.
If excess rollover contributions are not withdrawn before the time for filing
the individual's Federal tax return for the year (including extensions) and
the excess contribution occurred as a result of incorrect information
provided by the plan, any such excess amount can be withdrawn if no tax
deduction was taken for the excess contribution. As above, excess rollover
contributions withdrawn under those circumstances would not be includable in
gross income and would not be subject to the 10% penalty tax.
Tax-Free Transfers and Rollovers
Rollover contributions may be made to an IRA from these sources: (i)
qualified plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii)
other individual retirement arrangements.
The rollover amount must be transferred to the Contract either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within
60 days of the date the proceeds from another individual retirement
arrangement or an eligible rollover distribution from a qualified plan or TSA
were received. Generally the taxable portion of any distribution from a
qualified plan or TSA is an eligible rollover distribution and may be rolled
over tax-free to an IRA unless the distribution is (i) a required minimum
distribution under Section 401(a)(9) of the Code; or (ii) one of a series of
substantially equal periodic payments made (not less frequently than
annually) (a) for the life (or life expectancy) of the plan participant or
the joint lives (or joint life expectancies) of the plan participant and his
or her designated beneficiary, or (b) for a specified period of ten years or
more. See "Federal and State Income Tax Withholding--Mandatory Withholding
from Qualified Plans and TSAs," below.
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<PAGE>
Under some circumstances, amounts from a Contract may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" IRA treatment, the
source of funds used to establish the IRA must be a rollover contribution
from the qualified plan and the entire amount received from the IRA
(including any earnings on the rollover contribution) must be
rolled over into another qualified plan within 60 days of the date received.
Similar rules apply in the case of a TSA.
We offer a separate IRA contract subject to separate charges, designed to
serve as a "conduit" IRA for this purpose (QP IRA Contract). Therefore
amounts in a QP IRA contract which are not commingled with "regular" IRA
Contributions or nonqualified plan funds (or TSA funds, as the case may be)
may be eligible to be rolled over into another qualified plan (or TSA, as the
case may be) which accepts such contributions.
Under the conditions and limitations of the Code, an individual may elect for
each IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers
and can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Contract
and rolled over into other individual retirement arrangements unless the
distribution was received under an inherited IRA.
Tax-free rollovers are also available to the surviving spouse beneficiary, of
a deceased individual, or a spousal alternate payee of a qualified domestic
relations order applicable to a qualified plan or TSA. In some cases, IRAs
can be transferred on a tax-free basis between spouses or former spouses
incidental to a judicial decree of divorce or separation.
Distributions from IRA Contracts
Income or gains on contributions under IRAs are not subject to Federal income
tax until benefits are distributed to the individual. Distributions include
withdrawals from your Contract, surrender of your Contract and annuity
payments from your Contract. Death benefits are also distributions. Except as
discussed below, the amount of any distribution from an IRA is fully
includable by the individual in gross income.
If the individual makes nondeductible IRA contributions, those contributions
are recovered tax-free when distributions are received. The individual must
keep records of all nondeductible contributions. At the end of each tax year
in which the individual has received a distribution, the individual
determines a ratio of the total nondeductible IRA contributions (less any
amounts previously withdrawn tax-free) to the total account balances of all
IRAs held by the individual at the end of the tax year (including rollover
IRAs and SEPs) plus all IRA distributions made during such tax year. The
resulting ratio is then multiplied by all distributions from the IRA during
that tax year to determine the nontaxable portion of each distribution.
In addition, a distribution (other than a required minimum distribution
discussed below is not taxable if (1) the amount received is a return of
excess contributions which are withdrawn, as described under "Excess
Contributions," (2) the entire amount received is rolled over to another
individual retirement arrangement (see "Tax-Free Transfers and Rollovers") or
(3) in certain limited circumstances, where the IRA acts as a "conduit," the
entire amount is paid into a qualified plan or TSA that accepts such
contributions.
Distributions from an IRA are not entitled to the special favorable five-year
averaging method (or, in certain cases, favorable ten-year averaging and
long-term capital gain treatment) available in certain cases to
distributions from qualified plans.
Minimum Distributions After Age 70 1/2
The minimum distribution rules discussed above under "Qualified Plans and
TSAs--Minimum Distributions After Age 70 1/2" also generally apply to IRAs.
Individuals who are participants in more than one individual retirement
arrangement or other tax favored retirement plan may be able to choose
different distribution options for each arrangement. Your minimum
distribution for any taxable year is calculated by adding together the
separate minimum distribution amounts from each of your individual retirement
arrangements. The IRS, however, does not require that you take out the
minimum distribution from each individual retirement arrangement that you
maintain. As long as the total amount distributed annually for all IRAs
satisfies your overall minimum distribution requirement for IRAs, you may
choose to take your annual required distribution for IRAs from any one or
more individual retirement arrangements that you maintain.
This special rule applies only to IRAs and TSAs and does not apply to
qualified plans. A distribution from a TSA will not satisfy a distribution
requirement for IRAs.
If the individual dies after distribution in the form of an annuity has
begun, or after the Required Beginning Date, payment of the remaining
interest must be made at least as rapidly as under the method used prior to
the individual's death. The IRS has indicated that an exception to this rule
may apply if the beneficiary of the IRA is the surviving spouse. In some
circumstances, the surviving spouse may elect to "make the IRA his or her
own" and halt distributions until he or she reaches age 70 1/2. If an
individual dies before the Required Beginning Date and before distributions
in the form of an annuity begin,
81
<PAGE>
distributions of the individual's entire interest under the Contract must be
completed within five years after death, unless payments to a designated
beneficiary begin within one year of the individual's death and are made over
the beneficiary's life or over a period certain which does not extend beyond
the beneficiary's life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay
the commencement of such payments up until the individual would have attained
age 70-1/2. In the alternative, a surviving spouse may elect to roll over the
inherited IRA into the surviving spouse's own IRA. Under Series 300 and 400
Contracts, if you elect to have your spouse be the sole primary beneficiary
and to be the Successor Annuitant and Contract Owner, then your surviving
spouse automatically becomes both the successor Contract Owner and Annuitant,
and no death benefit is payable until the surviving spouse's death.
If there is an insufficient distribution in any year, a 50% tax may be
imposed on the amount by which the minimum required to be distributed exceeds
the amount actually distributed. The penalty tax may be waived by the
Secretary of the Treasury in certain limited circumstances. Failure to have
distributions made as the Code and Treasury regulations require may result in
disqualification of your IRA. See "Tax Penalty for Insufficient
Distributions" below.
Taxation of Death Benefit
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if distribution had been made to
the individual.
Prohibited Transaction
An IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the IRA is borrowed against or used as collateral, its tax-
favored status will be lost as of the first day of the tax year in which the
event occurred. If this happens, the individual must include in Federal gross
income for that year an amount equal to the fair market value of the IRA
Contract as of the first day of that tax year, less the amount of any
nondeductible contributions not previously withdrawn. Also, the early
distribution penalty tax of 10% will apply if the individual has not reached
age 59-1/2 before the first day of that tax year. See "Penalty Tax on Early
Distributions."
Illustration of Guaranteed Rates
The following two tables which the IRS requires us to furnish to prospective
IRA Contract Owners illustrate guaranteed rates for contributions assumed to
be allocated entirely to the Guaranteed Interest Account under Series 300 and
400 Contracts. Table I illustrates a $1,000 contribution made annually on the
Contract Date and on each subsequent anniversary, assuming no withdrawals or
transfers were made from the Contract. Table II assumes a single initial
contribution of $1,000, with no further contributions, withdrawals or
transfers. The 3% guaranteed rate is the minimum guaranteed interest rate in
the Contract.
As explained in "Part 8: Deductions and Charges," the values shown assume the
contingent withdrawal charge applies. These values reflect the effect of the
annual administrative charge deducted at the end of each Contract Year in
which the Annuity Account Value is less than $20,000.
To find the appropriate value for the end of the Contract Year at any
attained age, subtract the issue age (age nearest birthday) from the attained
age and enter the table at the corresponding year. Years that correspond to
an attained age in excess of 70 should be ignored.
The information shown in the tables should be considered in light of your
present age and (with respect to Table I) your ability to contribute $1,000
annually. You should also understand that in order to avoid severe tax
penalties, distribution of the values under your Contract generally must
commence not later than April 1st of the calendar year after the calendar
year you attain age 70-1/2. Subsequent distributions must be made by December
31st of each calendar year. See "Penalty Tax on Early Distributions" and "Tax
Penalties for Insufficient Distributions." Any change in the amounts
contributed annually, or in the amount of the single contribution, would, of
course, change the results shown.
82
<PAGE>
TABLE I
ANNUITY ACCOUNT VALUES AND
CASH VALUES
(Assuming $1,000 Contributions Made Annually
at the beginning of the Contract Year)
<TABLE>
<CAPTION>
3% MINIMUM GUARANTEE
- --------------------------------------
ANNUITY
CONTRACT ACCOUNT
YEAR END VALUE CASH VALUE
- ---------- ------------ ------------
<S> <C> <C>
1 $ 1,009.40 $ 954.89
2 2,039.68 1,929.54
3 3,100.87 2,933.43
4 4,193.90 3,967.43
5 5,319.72 5,032.45
6 6,479.31 6,129.42
7 7,673.69 7,313.69
8 8,903.90 8,543.90
9 10,171.01 9,811.01
10 11,476.14 11,116.14
11 12,820.43 12,460.43
12 14,205.04 13,845.04
13 15,631.19 15,271.19
14 17,100.13 16,740.13
15 18,613.13 18,253.13
16 20,201.53 19,841.53
17 21,837.57 21,477.57
18 23,522.70 23,162.70
19 25,258.38 24,898.38
20 27,046.13 26,686.13
21 28,887.52 28,527.52
22 30,784.14 30,424.14
23 32,737.67 32,377.67
24 34,749.80 34,389.80
25 36,822.29 36,462.29
26 38,956.96 38,596.96
27 41,155.67 40,795.67
28 43,420.34 43,060.34
29 45,752.95 45,392.95
30 48,155.53 47,795.53
31 50,630.20 50,270.20
32 53,179.11 52,819.11
33 55,804.48 55,444.48
34 58,508.61 58,148.61
35 61,293.87 60,933.87
36 64,162.69 63,802.69
37 67,117.57 66,757.57
38 70,161.10 69,801.10
39 73,295.93 72,935.93
40 76,524.81 76,164.81
41 79,850.55 79,490.55
42 83,276.07 82,916.07
43 86,804.35 86,444.35
44 90,438.48 90,078.48
45 94,181.64 93,821.64
46 98,037.08 97,677.08
47 102,008.20 101,648.20
48 106,098.44 105,738.44
49 110,311.40 109,951.40
50 114,650.74 114,290.74
</TABLE>
TABLE II
ANNUITY ACCOUNT VALUES AND
CASH VALUES
(Assuming a Single Contribution of $1,000 and
No Further Contribution)
<TABLE>
<CAPTION>
3% MINIMUM GUARANTEE
- ---------------------------------------------
ANNUITY
CONTRACT ACCOUNT
YEAR END VALUE CASH VALUE
- -------------------- ----------- ----------
<S> <C> <C>
1 $1,009.40 $ 954.89
2 1,018.89 963.87
3 1,019.46 964.40
4 1,020.04 964.96
5 1,020.64 965.53
6 1,021.26 966.11
7 1,021.90 1,021.90
8 1,022.55 1,022.55
9 1,023.23 1,023.23
10 1,023.93 1,023.93
11 1,024.65 1,024.65
12 1,025.38 1,025.38
13 1,026.15 1,026.15
14 1,026.93 1,026.93
15 1,027.74 1,027.74
16 1,028.57 1,028.57
17 1,029.43 1,029.43
18 1,030.31 1,030.31
19 1,031.22 1,031.22
20 1,032.16 1,032.16
21 1,033.12 1,033.12
22 1,034.11 1,034.11
23 1,035.14 1,035.14
24 1,036.19 1,036.19
25 1,037.28 1,037.28
26 1,038.40 1,038.40
27 1,039.55 1,039.55
28 1,040.73 1,040.73
29 1,041.96 1,041.96
30 1,043.22 1,043.22
31 1,044.51 1,044.51
32 1,045.85 1,045.85
33 1,047.22 1,047.22
34 1,048.64 1,048.64
35 1,050.10 1,050.10
36 1,051.60 1,051.60
37 1,053.15 1,053.15
38 1,054.74 1,054.74
39 1,056.39 1,056.39
40 1,058.08 1,058.08
41 1,059.82 1,059.82
42 1,061.61 1,061.61
43 1,063.46 1,063.46
44 1,065.37 1,065.37
45 1,067.33 1,067.33
46 1,069.35 1,069.35
47 1,071.43 1,071.43
48 1,073.57 1,073.57
49 1,075.78 1,075.78
50 1,078.05 1,078.05
</TABLE>
83
<PAGE>
SIMPLIFIED EMPLOYEE PENSIONS (SEPS)
An employer can establish a SEP for its employees and can make contributions
to a Contract for each eligible employee. A SEP Contract is a form of IRA
Contract, owned by the employee-Annuitant and most of the rules applicable to
IRAs discussed above apply. A major difference is the amount of permissible
contributions. Rules similar to those discussed above under "Tax Qualified
Retirement Plans" (Qualified Plans) apply. Due to statutory limits, in 1996
an employer can annually contribute an amount for an employee up to the
lesser of $22,500 or 15% of the employee's compensation, determined without
taking into account the employer's contribution to the SEP. This $22,500
maximum, based on the statutory compensation limit of $150,000, may be
adjusted for cost of living changes in future years. Under our current
practice, IRA contributions by the employee may not be made under a SEP
Contract and are put into a separate IRA Contract. Employers with 25 or fewer
eligible employees may allow such employees to make salary reduction
contributions to a SEP (SARSEP). SARSEP programs are subject to a number of
special rules, some of which are discussed in the SAI.
SEP plans are available under EQUI-VEST Series 300 in most states. EQUI-VEST
SEP Series 200 are available in states where the 300 Series is not available.
PUBLIC AND TAX-EXEMPT ORGANIZATION
EMPLOYEE DEFERRED COMPENSATION
PLANS (EDC PLANS)
Employees and independent contractors who perform services for a state
(including any subdivision or agency of the state) or other tax-exempt
employer may exclude from Federal gross income certain salary reduction
amounts. To qualify, the employer must maintain an EDC plan satisfying the
requirements of Section 457 of the Code. EQUI-VEST Series 100 or 200
Contracts are used to fund EDC plans that must be owned by the employer, and
are subject to the claims of the employer's general creditors. However, the
EDC plan may permit the employee to choose among various investment options.
Tax-exempt, non-governmental employers are generally subject to ERISA, and
may be required by the provisions of that Act to limit participation in an
EDC plan to a select group of management or highly compensated employees.
Generally, the maximum contribution amount that can be excluded from gross
income in any tax year under an EDC plan is 33 1/3% of the employee's
"includable compensation," up to $7,500. Special rules may permit "catch-up"
contributions during the three years preceding normal retirement age under
the EDC plan.
In general, no amounts may be withdrawn from an EDC plan prior to the
calendar year in which the employee attains age 70-1/2, separates from
service or in the event of an unforeseen emergency. Income or gains on
contributions under an EDC plan are subject to Federal income tax when
amounts are distributed or made available to the employee or beneficiary.
Distributions from EDC plans generally must commence no later than April 1st
of the calendar year following the calendar year in which the employee
attains 70-1/2. Special rules apply, however, to employees in EDC plans which
are governmental plans.
If the Annuitant does not commence minimum distributions in the calendar year
in which the Annuitant attains age 70 1/2, and waits until the three month
(January 1-April 1) period in the next calendar year to commence minimum
distributions, then the Annuitant must take two required minimum
distributions in that calendar year.
Distributions from an EDC plan may not be rolled over or transferred to an
IRA.
Distributions to an EDC plan participant are characterized as "wages" for
income tax reporting and withholding purposes. No election out of withholding
is possible. See "Federal and State Income Tax Withholding," below. These
amounts are not subject to FICA tax, if FICA tax was withheld by the employer
when wages were deferred. In certain circumstances, receipt of payments from
an EDC plan may result in a reduction of an employee's Social Security
benefits.
If the EDC plan so provides, a deceased employee's beneficiary may be able to
elect to receive death benefits in installments instead of a lump sum, and
will be taxed as the payments are received. However, the death benefits must
be received within 15 years of the date of the deceased employee's death (or
within the period of the life expectancy of the surviving spouse if the
spouse is the designated beneficiary).
Due to unrelated business income tax rules, annuity Contracts may not be an
appropriate funding vehicle for an EDC plan maintained by any organization
exempt from tax under the following Code Sections: 501(c)(7) (social club);
501(c)(9) (VEBA); 501(c)(17) (supplemental unemployment compensation benefit
plan trust); or 501(c)(20) (legal services plan trust). Please contact your
tax adviser to see if these limits may apply to your EDC plan.
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PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of distributions from a qualified plan or TSA will be
subject to a 10% penalty tax unless the distribution is made on or after the
Annuitant's death, attributable to the Annuitant becoming disabled, or when
the Annuitant reaches age 59-1/2. The penalty tax will also not apply if the
Annuitant (i) separates from service and elects a payout over his or her life
or life expectancy (or joint and survivor lives or life expectancies), (ii)
has attained age 55 and separates from service, or (iii) uses the
distribution to pay certain extraordinary medical expenses. The taxable
portion of IRA and SEP distributions are also subject to the 10% penalty tax
unless the distribution is made (1) on or after your death, (2) because you
have become disabled, (3) on or after the date when you reach age 59 1/2, or
(4) in the form of a substantially equal periodic payout over your life or
life expectancy (or joint and survivor lives or life expectancies), to be
made at least annually is also not subject to penalty tax.
This penalty tax does not apply to employees in an EDC plan.
TAX PENALTY FOR INSUFFICIENT
DISTRIBUTIONS
Failure to make required distributions may cause the disqualification of the
IRA, SEP, TSA, qualified plan, or EDC plan. Disqualification results in
current taxation of the Annuitant's entire benefit. In addition, a 50%
penalty tax is imposed on the difference between the required distribution
amount and the amount actually distributed, if any.
It is the plan administrator's responsibility to see that minimum
distributions from a qualified plan are made. It is the TSA or IRA owner's
responsibility to see that the minimum distributions are made with respect to
a contract. We do not automatically make distributions from a Contract before
the Retirement Date unless a request has been made. We will notify you when
our records show that your age 70 1/2 is approaching. In the case of IRA and
TSA contracts, if you do not select a method, we will assume you are taking
your minimum distribution from another TSA or IRA that you maintain. You
should consult with your tax adviser concerning these rules and their proper
application to your situation. See "Distributions From Qualified Plans and
TSAs and Tax Qualified IRAs--Minimum Distributions After Age 70 1/2"
elsewhere in this section.
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable Life is required to withhold Federal income tax on the taxable
portion of qualified plan payments and payments from annuity contracts. The
rate of withholding will depend on the type of distribution and, in certain
cases, the amount of the distribution. (In the case of MOMENTUM and Trusteed
Contracts which continue to be owned by the trustee, any required Federal
income tax withholding is the responsibility of the plan administrator.)
Unless the payment is an "eligible rollover distribution" from a qualified
plan or a TSA, the recipient generally may elect not to be subject to income
tax withholding. Compare "Elective Withholding" and "Mandatory Withholding
From Qualified Plans and TSAs," below. However, payments under EDC plans are
also subject to mandatory wage withholding rules; no election out is
permitted. The employer (and not Equitable Life) is generally responsible for
such wage withholding.
Certain states have indicated that pension and annuity withholding will apply
to payments made to residents. Generally, an election out of Federal
withholding will also be considered an election out of state withholding. In
some states, a recipient may elect out of state withholding, even if Federal
withholding applies. It is not clear whether such states may require
mandatory withholding with respect to eligible rollover distributions
(described below). Contact your tax adviser to see how state income tax
withholding may apply to your payment.
Special withholding rules apply to foreign recipients and United States
citizens residing outside the United States. See your tax adviser if you may
be affected by such rules. Withholding may also apply to taxable amounts paid
under a 10-day free look cancellation.
Elective Withholding
Requests not to withhold Federal income tax must be made in writing prior to
receiving benefits under the Contract. The Processing Office will provide
forms for this purpose. No election out of withholding is valid unless the
recipient provides us with the correct taxpayer identification number and a
United States residence address.
If a recipient does not have sufficient income tax withheld or does not make
sufficient estimated income tax payments, the recipient may incur penalties
under the estimated income tax rules. Recipients should consult their tax
advisers to determine whether they should elect out of withholding.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were wages by an employer to an employee) unless the
recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will
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<PAGE>
generally be made as if the recipient is married and claiming three
withholding exemptions. There is an annual threshold of taxable income from
periodic payments which is exempt from withholding based on this assumption.
For 1996 a recipient of periodic payments (e.g., monthly or annual payments
which are not "eligible rollover distributions") which total less than
$14,075 taxable amount will generally be exempt from Federal income tax
withholding, unless the recipient specifies a different choice of withholding
exemption. If a recipient fails to provide a correct taxpayer identification
number, withholding is made as if the recipient is single with no exemptions.
A recipient of a partial or total non-periodic distribution (other than
"eligible rollover distributions" discussed below) will generally be subject
to withholding at a flat 10% rate. A recipient who provides a United States
residence address and a correct taxpayer identification number will generally
be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right, if any, to make
withholding elections.
Mandatory Withholding From Qualified Plans and TSAs
All "eligible rollover distributions" are subject to mandatory Federal income
tax withholding of 20% unless the employee elects to have the distribution
directly rolled over to a qualified plan or individual retirement
arrangement. The following are not eligible rollover distributions subject to
mandatory 20% withholding:
o any distribution to the extent that the distribution is a "required
minimum distribution" under Section 401(a)(9) of the Code;
o any distribution which is one of a series of substantially equal
periodic payments made (not less frequently than annually (1) for the
life (or life expectancy) of the employee or the joint lives (or joint
life expectancies) of the employee and his or her designated
beneficiary, or (2) for a specified period of 10 years or more;
o certain corrective distributions under Code Sections 401(k), 401(m) and
402(g);
o loans that are treated as deemed distributions;
o P.S. 58 costs (incurred if the plan provides life insurance protection
for participants); and
o a distribution to a beneficiary other than to a surviving spouse or a
current or former spouse under a qualified domestic relations order.
If a distribution is made to a plan participant's surviving spouse, or to a
current or former spouse under a qualified domestic relations order, the
distribution may be an eligible rollover distribution, subject to mandatory
20% withholding, unless one of the exceptions described above applies.
If a distribution is not an "eligible rollover distribution," the rules on
elective withholding described above, apply.
OTHER WITHHOLDING
In certain cases Equitable may be required to withhold, or temporarily hold
back, an amount of death benefit due to potential application of state
inheritance or estate tax rules or federal "generation skipping tax," which
is a form of estate tax. The potential application of these rules varies
depending on the amount of the death benefit, the relationship of the
beneficiaries to the deceased, and the residence of the parties. You should
consult with your tax or legal adviser concerning potential application of
these rules to your own personal situation.
SPECIAL RULES FOR NQ AND TRUSTEED CONTRACTS ISSUED IN PUERTO RICO
Only NQ and Trusteed Contracts are available in Puerto Rico.
EQUI-VEST TRUSTEED--The tax treatment of qualified plans by the United States
and by Puerto Rico is similar in many respects, but may not be identical.
Please consult your tax adviser to determine any differences which may affect
your own situation.
NQ--Under current law, Equitable Life treats income from such Contracts as
U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents
is excludable from U.S. taxation. Income from these Contracts is also subject
to Puerto Rico tax. The computation of the taxable portion of amounts
distributed from a Contract may differ in the two jurisdictions. Therefore,
an individual might have to file both U.S. and Puerto Rico tax returns,
showing different amounts of income for each. Puerto Rico generally provides
a credit against Puerto Rico tax for U.S. tax paid. Depending on an
individual's personal situation and the timing of the different tax
liabilities, an individual may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules
to your own tax situation.
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<PAGE>
IMPACT OF TAXES TO EQUITABLE LIFE
The Contracts provide that we may charge the Separate Account for taxes. We
can also set up reserves for taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
There will not be any tax liability if you transfer the Annuity Account Value
among the Investment Funds, the Guaranteed Interest Account and the Fixed
Maturity Account.
TAX CHANGES
The United States Congress has in the past considered, and may in the future
consider legislative proposals that, if enacted, could change the tax
treatment of annuities and retirement plans. In addition, the Treasury
Department may amend existing regulations, issue new regulations, or adopt
new interpretations of existing laws. State tax laws or, if you are not a
United States resident, foreign tax laws, may affect the tax consequences to
you or the beneficiary. These laws may change from time to time without
notice and, as a result, the tax consequences may be altered. There is no way
of predicting whether, when or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
ERISA MATTERS
ERISA rules are designed to save and protect qualified retirement plan assets
to be paid to plan participants when they retire.
Qualified Plans under 401 of the Code are generally subject to ERISA. Some
TSAs may be subject to Title I of ERISA, generally dependent on the level of
employer involvement, for example if the employer makes matching
contributions.
CERTAIN RULES APPLICABLE TO PLAN LOANS
Qualified plans and TSA loans are subject to Code limits and may also be
subject to the limits of the applicable plan. Code requirements apply even if
the plan is not subject to ERISA. For example loans offered by certain
qualified plans and TSAs are subject to the following conditions:
o The amount of a loan to a participant, when aggregated with all other
loans to the participant from all qualified plans of the employer,
cannot exceed the greater of $10,000 or 50% of the participant's
non-forefeitable accrued benefits, and cannot exceed $50,000 in any
event. This $50,000 limit is reduced by the excess (if any) of the
highest outstanding loan balance over the previous twelve months over
the outstanding balance of plan loans on the date the loan was made.
o In general, the term of the loan cannot exceed five years unless the
loan is used to acquire the participant's primary residence. EQUI-VEST
Contracts have a term limit of 10 years for loans used to acquire the
participant's primary residence.
o All principal and interest must be amortized in substantially level
payments over the term of the loan, with payments being made at least
quarterly.
o If the loan does not qualify under the conditions above, the participant
fails to repay the interest or principal when due, or in some instances,
if the participant separates from service or the plan is terminated, the
amount borrowed or not repaid may be treated as a distribution. The
participant may be required to include as ordinary income the unpaid
amount due and a 10% penalty tax on early distributions may apply. The
plan should report the amount of the unpaid loan balance to the IRS as a
distribution.
o Many plans provide that the participant's spouse must consent in writing
to the loan.
o Except to the extent permitted in accordance with the terms of a
prohibited transaction exemption issued by DOL defined below, loans are
not available (i) in a Keogh (non-corporate) plan to an owner-employee
or a partner who owns more than 10% of a partnership or (ii) to 5%
shareholders in an S corporation.
In addition, certain loan rules apply only to loans under ERISA plans:
o For contracts which are subject to ERISA, the trustee or sponsoring
employer is responsible for insuring that any loan meets applicable
Department of Labor (DOL) requirements. It is the responsibility of the
plan administrator, the trustee of the qualified plan and/or the
employer, and not Equitable Life, to properly administer any loan made
to plan participants. With respect to specific loans made by the plan to
a plan participant, the plan administrator determines the interest rate,
the maximum term and all other terms and conditions of the loan.
o With respect to specific loans made by the plan to a plan participant,
the plan administrator determines the interest rate, the maximum term
and all other terms and conditions of the loan.
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<PAGE>
o Only 50% of the participant's vested account balance may serve as
security for a loan. To the extent that a participant borrows an amount
which should be secured by more than 50% of the participant's vested
account balance, it is the responsibility of the trustee or plan
administrator to obtain the additional security.
o Each new or renewed loan must bear a reasonable rate of interest
commensurate with the interest rates charged by persons in the business
of lending money for loans that would be made under similar
circumstances.
o Loans must be available to all plan Participants, former Participants
who still have account balances under the plan, beneficiaries (after the
death of a Participant) and alternate payees on a reasonably equivalent
basis.
CERTAIN RULES APPLICABLE TO PLANS
DESIGNED TO COMPLY WITH SECTION
404(C) OF ERISA.
Section 404(c) of ERISA, and the related DOL regulation, provide that if a
plan participant or beneficiary exercises control over the assets in his or
her plan account, plan fiduciaries will not be liable for any loss that is
the direct and necessary result of the plan participant's or beneficiary's
exercise of control. As a result, if the plan complies with Section 404(c)
and the DOL regulation thereunder, the plan participant can make and is
responsible for the results of his or her own investment decisions.
Section 404(c) plans must provide, among other things that a broad range of
investment choices are available to plan participants and beneficiaries and
must provide such plan participants and beneficiaries with enough information
to make informed investment decisions. Compliance with the Section 404(c)
regulation is completely voluntary by the plan sponsor, and the plan sponsor
may choose not to comply with Section 404(c).
The EQUI-VEST Trusteed, HR-10 Annuitant-Owned and TSA and the MOMENTUM
programs provide the broad range of investment choices and information needed
in order to meet the requirements of the Section 404(c) regulation. If the
plan is intended to be a Section 404(c) plan, it is, however, the plan
sponsor's responsibility to see that the requirements of the DOL regulation
are met. Equitable Life and its Agents shall not be responsible if a plan
fails to meet the requirements of Section 404(c).
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<PAGE>
- --------------------------------------------------------------------------------
PART 11: INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
The consolidated financial statements of Equitable Life for the years ended
December 31, 1995, 1994, and 1993 included in Equitable Life's Annual Report
on Form 10-K for the year ended December 31, 1995, incorporated by reference
in the prospectus, have been audited by Price Waterhouse LLP, independent
accountants, whose report thereon is incorporated herein by reference. Such
consolidated financial statements have been incorporated herein by reference
in reliance upon the report of Price Waterhouse LLP given upon their
authority as experts in accounting and auditing.
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<PAGE>
- -------------------------------------------------------------------------------
APPENDIX I: AN EXAMPLE OF EQUI-VEST MARKET VALUE ADJUSTMENT
- -------------------------------------------------------------------------------
The example below shows how the market value adjustment would be
determined and how it would be applied to a withdrawal, assuming that
$100,000 were to be invested on June 14, 1996 to a Fixed Maturity Period with
an Expiration Date of June 15, 2005 at a Rate to Maturity of 7.00% resulting
in a Maturity Amount at the Expiration Date of $183,846. We further assume
that a withdrawal of $50,000 will be made on June 15, 2000. See "Part 5: The
Fixed Maturity Account" for a description of the market value adjustment.
<TABLE>
<CAPTION>
ASSUMED
FIXED MATURITY RATE ON
JUNE 15, 2000
----------------------
5.00% 9.00%
---------- ----------
<S> <C> <C>
As of June 15, 2000 (Before Withdrawal)
- -------------------------------------------------
(1) Market Adjusted Amount ........................ $144,048 $119,487
(2) Book Value .................................... 131,080 131,080
(3) Market Value Adjustment: (1)-(2) .............. 12,968 (11,593)
On June 15, 2000 (After Withdrawal)
- -------------------------------------------------
(4) Portion of Market Value Adjustment Associated
with Withdrawal: (3) X [$50,000 / (1)] ....... 4,501 (4,851)
(5) Reduction in Book Value: [$50,000-(4)] ....... 45,499 54,851
(6) Book Value: (2)-(5) ........................... 85,581 76,229
(7) Maturity Amount ............................... 120,032 106,915
(8) Revised Market Adjusted Amount ................ 94,048 69,487
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased from 7.00% to 9.00% (right column), a negative market value
adjustment is realized. On the other hand, if a withdrawal is made when rates
have decreased from 7.00% to 5.00% (left column), a positive market value
adjustment is realized.
90
<PAGE>
- -----------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
PART 1: ADDITIONAL INFORMATION ABOUT THE MOMENTUM PROGRAM Page 3
PART 2: HOW WE DEDUCT THE MOMENTUM QUARTERLY
ADMINISTRATIVE CHARGE Page 3
PART 3: DESCRIPTION OF CONTRIBUTION SOURCES FOR THE MOMENTUM Page 4
PROGRAM
PART 4: ADDITIONAL LOAN PROVISIONS Page 4
PART 5: TAX RULES: SPECIAL ASPECTS Page 7
PART 6: REQUIRED MINIMUM DISTRIBUTIONS OPTION/AUTOMATIC
MINIMUM WITHDRAWAL OPTION Page 9
PART 7: ACCUMULATION UNIT VALUES Page 10
PART 8: CALCULATION OF ANNUITY PAYMENTS Page 10
PART 9: THE REORGANIZATION Page 12
PART 10: MONEY MARKET FUND YIELD INFORMATION Page 12
PART 11: OTHER YIELD INFORMATION Page 13
PART 12: DISTRIBUTION Page 13
PART 13: KEY FACTORS IN RETIREMENT PLANNING Page 13
PART 14: LONG TERM MARKET TRENDS Page 18
PART 15: CUSTODIAN AND INDEPENDENT ACCOUNTANTS Page 20
PART 16: FINANCIAL STATEMENTS Page 20
</TABLE>
HOW TO OBTAIN THE EQUI-VEST AND MOMENTUM STATEMENT OF
ADDITIONAL INFORMATION
Send this request form to:
FOR EQUI-VEST
Individual Annuity Center
The Equitable
P.O. Box 2996
New York, NY 10116-2996
FOR MOMENTUM
Momentum Administrative Services
P.O. Box 2919
New York, NY 10116
Please send me a Statement of Additional Information
- -----------------------------------------------------------------------------
Name
- -----------------------------------------------------------------------------
Address
- -----------------------------------------------------------------------------
City State Zip
91
<PAGE>
EQUI-VEST(REGISTERED TRADEMARK) AND MOMENTUM
PERSONAL RETIREMENT PROGRAMS
AND EMPLOYER SPONSORED RETIREMENT PROGRAMS
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1996
VARIABLE ANNUITY CONTRACTS FUNDED THROUGH THE
INVESTMENT FUNDS OF SEPARATE ACCOUNT A
O MONEY MARKET O GROWTH & INCOME ASSET ALLOCATION SERIES:
O INTERMEDIATE O EQUITY INDEX O CONSERVATIVE INVESTORS
GOVERNMENT O COMMON STOCK O BALANCED
SECURITIES O GLOBAL O GROWTH INVESTORS
O QUALITY BOND O INTERNATIONAL
O HIGH YIELD O AGGRESSIVE STOCK
ISSUED BY:
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
- -----------------------------------------------------------------------------
Home Office: 787 Seventh Avenue, New York, NY 10019
Processing Offices: The addresses for our Processing
Offices are in Part 1 of the prospectus
under the heading "Services We
Provide."
- -----------------------------------------------------------------------------
This statement of additional information (SAI) is not a prospectus. It should
be read in conjunction with the Separate Account A prospectus for
EQUI-VEST/MOMENTUM, dated May 1, 1996. Definitions of special terms used in
the SAI are found in the prospectus.
A copy of the prospectus is available free of charge by writing the
Processing Office, by calling toll-free, 1-800-628-6673 for EQUI-VEST or
1-800-528-0204 for MOMENTUM, or by contacting your Equitable Life Agent.
- -----------------------------------------------------------------------------
Copyright 1996 The Equitable Life Assurance Society of the United States, New
York, New York 10019
All rights reserved.
_________________
Cat. No. 126940
888-1110
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- ----------- ------------------------------------------------------------ --------
<S> <C> <C>
Part 1 Additional Information about the MOMENTUM Program 3
- ----------- ------------------------------------------------------------ --------
Part 2 How We Deduct the MOMENTUM Quarterly Administrative Charge 3
- ----------- ------------------------------------------------------------ --------
Part 3 Description of Contribution Sources for the MOMENTUM Program 4
- ----------- ------------------------------------------------------------ --------
Part 4 Additional Loan Provisions 4
- ----------- ------------------------------------------------------------ --------
Part 5 Tax Rules: Special Aspects 7
- ----------- ------------------------------------------------------------ --------
Part 6 Required Minimum Distributions Option/Automatic Minimum
Withdrawal Option 9
- ----------- ------------------------------------------------------------ --------
Part 7 Accumulation Unit Values 10
- ----------- ------------------------------------------------------------ --------
Part 8 Calculation of Annuity Payments 10
- ----------- ------------------------------------------------------------ --------
Part 9 The Reorganization 12
- ----------- ------------------------------------------------------------ --------
Part 10 Money Market Fund Yield Information 12
- ----------- ------------------------------------------------------------ --------
Part 11 Other Yield Information 13
- ----------- ------------------------------------------------------------ --------
Part 12 Distribution 13
- ----------- ------------------------------------------------------------ --------
Part 13 Key Factors in Retirement Planning 13
- ----------- ------------------------------------------------------------ --------
Part 14 Long Term Market Trends 18
- ----------- ------------------------------------------------------------ --------
Part 15 Custodian and Independent Accountants 20
- ----------- ------------------------------------------------------------ --------
Part 16 Financial Statements 20
- ----------- ------------------------------------------------------------ --------
</TABLE>
2
<PAGE>
PART 1--ADDITIONAL INFORMATION ABOUT THE MOMENTUM PROGRAM
MASTER PLAN ELIGIBILITY REQUIREMENTS.
Under the Master Plan, the Employer specifies the eligibility requirements
for its plan in the participation agreement. The Employer may exclude any
employee who has not attained a specified age (not to exceed 21) and
completed a specified number of years (not to exceed two) in each of which he
completed 1,000 hours of service. No more than one year of eligibility
service may be required for a 401(k) plan.
VESTING UNDER THE MASTER PLAN.
Vesting refers to the nonforfeitable portion of a Participant's Retirement
Account Value and loans attributable to Employer and matching contributions,
under the Master Plan. The Participant's Retirement Account Value
attributable to salary-deferral contributions, post-tax employee
contributions, prior plan contributions, qualified non-elective and qualified
matching contributions is nonforfeitable at all times.
A Participant will become fully vested in all benefits if still employed at
death, disability, attainment of normal retirement age or upon termination of
the plan. If the Participant terminates employment before that time, any
benefits that have not yet become vested under the plan's vesting schedule
will be forfeited.
Except as described below in the case of certain non-top heavy plans,
benefits must vest in accordance with any of the schedules below or one at
least as favorable to Participants as Schedule B or C:
<TABLE>
<CAPTION>
SCHEDULE A SCHEDULE B SCHEDULE C
YEARS OF VESTED VESTED VESTED
SERVICE PERCENTAGE PERCENTAGE PERCENTAGE
- ---------- ------------ ------------ ------------
<S> <C> <C> <C>
1 0% 0% 0%
2 100 20 0
3 100 40 100
4 100 60 100
5 100 80 100
6 100 100 100
</TABLE>
If the plan requires more than one year of service for participation, it must
use Schedule A or one at least as favorable to Participants.
Provided the Employer plan is not "top-heavy" and does not require more than
one year of service for participation, an Employer may, in accordance with
provisions of the Master Plan instead elect one of the following vesting
schedules or one at least as favorable to Participants:
<TABLE>
<CAPTION>
SCHEDULE F SCHEDULE G
YEARS OF VESTED VESTED
SERVICE PERCENTAGE PERCENTAGE
- ------------- ------------ ------------
<S> <C> <C>
less than 3 0% 0%
3 20 0
4 40 0
5 60 100
6 80 100
7 100 100
</TABLE>
BENEFIT DISTRIBUTIONS.
In order for you to begin receiving benefits (including annuity payments)
under a Master Plan, your Employer must send us your properly completed
election of benefits form and, if applicable, beneficiary designation form.
If we receive your properly completed forms on or before the 15th of the
month, your benefits will commence as of the close of business on the first
Business Day of the next month; if your forms arrive after the 15th, your
benefits will commence as of the close of business on the first Business Day
of the second following month.
In order for you to begin receiving benefits (including annuity payments)
under an individually-designed or prototype defined contribution plan, your
Employer must send us a properly completed request for disbursement form. We
will send single sum payments to your Plan Trustee as of the close of
business on the Business Day we receive a properly completed form. If you
wish to receive annuity payments, your Plan Trustee may purchase an annuity
contract from us. The annuity contract will be purchased on the Business Day
we receive a properly completed form, and payments will commence on that
Business Day.
PART 2--HOW WE DEDUCT
THE MOMENTUM QUARTERLY ADMINISTRATIVE CHARGE
Each calendar quarter we currently deduct an administrative charge of $7.50
or, if less, .50% of the total of your Retirement Account Value
3
<PAGE>
plus the amount of any Active Loan from your Retirement Account Value. No
deduction is made, however, if your Retirement Account Value equals or
exceeds $25,000. We will deduct this charge in a specified order of Sources
and Investment Options. The order of Sources is: employer contributions,
matching contributions, qualified non-elective and qualified matching
contributions, prior plan contributions, elective contributions and post-tax
contributions. The order of Investment Options is: Guaranteed Interest
Account, Common Stock, Balanced, Aggressive Stock, Money Market, Intermediate
Government Securities, Growth Investors, Conservative Investors, High Yield,
Global, Growth & Income, Equity Index, Quality Bond and International Funds.
For example, on the last Business Day of a calendar quarter we will first
attempt to deduct the administrative charge from employer contributions
within the Guaranteed Interest Account. If there is no money in the
Guaranteed Interest Account, we will attempt to deduct the charge from the
Common Stock Fund, then Balanced, etc. If there are no employer contributions
in any of the Investment Options, we will go to the next Source, employer
matching contributions, and attempt to deduct the charge from the Investment
Options in the same order described above.
PART 3--DESCRIPTION OF CONTRIBUTION SOURCES
FOR THE MOMENTUM PROGRAM
There are six types of sources of contributions under qualified plans:
EMPLOYER CONTRIBUTIONS
These are contributions made to a plan for the benefit of Participants and
beneficiaries by the Employer not covered by the remaining sources.
MATCHING CONTRIBUTIONS
These are Employer Contributions which are allocated to a Participant's
account under a plan by reason of the Participant's post-tax contributions or
elective contributions to the plan.
POST-TAX CONTRIBUTIONS
These are after-tax contributions made by a Participant in accordance with
the terms of a plan.
SALARY-DEFERRAL CONTRIBUTIONS
These are contributions to a plan that are made pursuant to a cash or
deferred election (normally in accordance with the terms of a qualified cash
or deferred arrangement under Section 401(k) of the Code).
PRIOR PLAN CONTRIBUTIONS
These are contributions that are transferred or rolled over from another
qualified plan or a conduit IRA (as described in Section 408(d)(3)(A)(ii) of
the Code).
QUALIFIED NON-ELECTIVE AND QUALIFIED
MATCHING CONTRIBUTIONS
These are employer contributions made pursuant to the terms of a plan subject
to either or both of the special nondiscrimination tests applicable to plans
that are subject to Section 401(k) (qualified cash or deferred arrangements)
or Section 401(m) (applicable to plans that accept matching contributions
and/or post- tax contributions) of the Code. Such qualified non-elective and
qualified matching contributions are made by an Employer in order to meet the
requirements of either or both of the nondiscrimination tests set forth in
Section 401(k) and 401(m) of the Code. This Source is called the Employer
401(k) Account in the Master Plan.
PART 4--ADDITIONAL LOAN PROVISIONS
MOMENTUM
Under the MOMENTUM Contract, (1) the minimum amount of the loan is $1,000 and
(2) the maximum amount of the loan is 50% of the Participant's vested
Retirement Account Value. In no event may any plan loan be greater than
$50,000 less the highest outstanding loan balance in the preceding twelve
calendar months. You may specify from which Investment Options the plan loan
is to be deducted when you
4
<PAGE>
request the loan. The loan term must comply with applicable law. See the
prospectus "Part 10: Federal Tax and ERISA Matters."
If there is a loan outstanding under an EQUI- VEST Corporate Trusteed
Contract and you convert it to the MOMENTUM Contract, the retirement Account
Value established for the Participant under the MOMENTUM Contract will be
equal to the Annuity Account Value under the EQUI-VEST Contract, less the
principal amount of the loan outstanding on the effective date of conversion.
That is, the annuity Account Value under the EQUI-VEST Contract will be
reduced by the principal amount of the loan. Amounts that were in the
EQUI-VEST loan reserve account in excess of the principal balance of the loan
may be withdrawn or transferred, subject to any restrictions in the MOMENTUM
Contract.
If you, as the employer, are transferring plan assets to the MOMENTUM
Program, outstanding plan loans may also be transferred to the MOMENTUM
Contract. We refer to these loans as "takeover loans." There will be no
contingent withdrawal charge imposed if a takeover loan defaults. Nor will
such loans, if defaulted, be deemed withdrawals for purposes of calculating
the minimum death benefits. Repayments of takeover loans will be allocated to
the Guaranteed Interest Account. Loans converted from EQUI-VEST Corporate
Trusteed to MOMENTUM are not takeover loans.
EQUI-VEST
The EQUI-VEST Corporate Trusteed and non- ERISA TSA Loans have the following
features in common:
The term of a TSA or Corporate Trusteed loan is five years unless the loan is
used to acquire the Participant's primary residence. Our contract limit for
loans used to purchase the Participant's primary residence is 10 years.
The loan term under Corporate Trusteed and TSA Contracts may not extend
beyond the earliest of: (1) election and commencement of annuity benefits,
(2) the date of termination of the Contract and (3) the date a death benefit
is paid.
Payment to us to cover loan interest and to amortize a loan will be due
beginning the first day of the third month following the effective date of
the loan and quarterly thereafter. All loan payments made by check must be
drawn on a bank in the U.S., in U.S. dollars and made payable to Equitable
Life. Loan payments received prior to the due date will be credited only on
the next payment due date. Any payments we receive will first be applied to
interest, with the balance applied to repayment of the loan.
Only one loan is permitted at any one time. At anytime after the loan has
been issued, a loan may be repaid in full and terminated earlier than
scheduled.
Many plans provide that the Participant's spouse must consent in writing to
the loan.
On the loan effective date, we will transfer to a loan reserve account an
amount equal to the loan plus 25% of the loaned amount. The additional 25% is
intended as a reserve to cover the contingencies including unpaid interest
and applicable withdrawal charges. Initially an amount equal to the loan
amount will be held in our general account and will earn interest at an
effective annual rate of 4% during the loan term, whereas the additional 25%
reserve will be held in the general account but will earn interest at the
Guaranteed Interest Account's current guaranteed interest rate applicable to
the contract.
You may specify from which Investment Options the loan and loan reserve are
to be deducted when you request the loan. If not specified, we will prorate
the amounts withdrawn from the Investment Options based on the amounts in
each Investment Option. No partial withdrawals or transfers from the loan
reserve account are permitted.
On the first day of the third month following the effective date of the loan
and quarterly thereafter (or on the first Business Day thereafter, if such
day is not a Business Day), the amount of interest earned at 4% annually
during the prior quarter will be transferred to the Guaranteed Interest
Account.
Any loan payment will result in a transfer of the amount of principal repaid
from the portion of the loan reserve account that earns 4% interest to the
Guaranteed Interest Account, and then may be withdrawn (if otherwise
permitted) or transferred to one or more Investment Funds.
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Upon full repayment of the loan, any amounts remaining in the loan reserve
account will be transferred to the Guaranteed Interest Account and may then
be withdrawn (if otherwise permitted) or transferred among the Investment
Funds.
EQUI-VEST Corporate Trusteed Loans
The EQUI-VEST Trusteed Loan Agreement and Application is entered into between
the Participant and the trustee. Equitable performs services specified in the
Agreement on behalf of the Trustee. The Trustee (or employer, or other plan
administrator and not Equitable) is responsible for monitoring compliance
with Code and ERISA requirements and the requirements of the particular plan.
The Trustee makes repayment to Equitable.
The trustee of a qualified plan purchasing a Corporate Trusteed Contract may
set any interest rate for a loan so long as it is not less than 6% nor more
than the maximum rate permitted by applicable law. The trustee (Contract
Owner) must bill the plan participant (Annuitant) for the difference, if any,
between 6% and the rate the trustee charges. Under the terms of the Code and
ERISA, if an unreasonably high or low rate of interest is charged for loans,
the plan may be disqualified and the amount of the loan may be treated as a
taxable distribution. In that case, the trustee would be required to report
the "deemed" distribution to the Internal Revenue Service (IRS).
For Corporate Trusteed Contracts, the "loan effective date" means either (1)
the first day of the month following the date the loan agreement, properly
completed and signed by the plan participant (Annuitant), is approved by the
trustee (Contract Owner) and received and accepted by us at our Processing
Office, if the loan agreement is received on or before the 15th day of the
month, or (2) the first day of the second month following the date the loan
agreement, properly completed and signed by the plan participant (Annuitant),
is approved by the trustee (Contract Owner) and received and accepted by us
at our Processing Office, if the loan agreement is received after the 15th
day of the month.
The loan amount is based on the Participant's vested interest in the Plan and
the Annuity Account Value of the EQUI-VEST Contract on the loan effective
date.
If loan interest (except interest due at the end of the loan term) or
required principal repayments are not received at our Processing Office
within fifteen days after the due date, or if any loan principal and accrued
interest are due at the end of the loan term, the loan is in default. We will
make a partial withdrawal from the additional loan reserve account in an
amount sufficient to pay the amount due plus any applicable withdrawal
charges and any required income tax withholding. Such a withdrawal could
result in a penalty tax or the disqualification of your Trusteed Contract or
the qualified plan.
The trustee is required to report to the IRS the amount of the default as a
deemed taxable distribution which may also be subject to penalty tax.
EQUI-VEST Non-ERISA TSA Loans
The EQUI-VEST TSA Loan Agreement permits only one loan outstanding under the
contract at any time. It further provides that the minimum loan amount is
$3,000 and the maximum is $50,000 (less the highest outstanding loan balance
in the preceding twelve calendar months). The maximum amount of the loan is
80% of the Annuity Account Value, if the amount of the Annuity Account Value
is at least $3,750 but less than $12,500; $10,000 if the amount of the
Annuity Account Value is at least $12,500 but less than $20,000; or 50% of
the Annuity Account Value if the amount of the Annuity Account Value is
$20,000 or more.
The Annuity Account Value is measured on the "Loan Effective Date" which is
the first day of the month following the date we approve a properly completed
loan agreement form.
If a required loan repayment on a TSA Contract is not made, we will treat the
amount equal to the interest and principal payment due as a default. We will
also deduct a default charge (as described below) and, if applicable, any
required income tax withholding. We will treat such amount (plus any required
income tax withholding) as a "deemed distribution." Such amount will be
taxable and also may be subject to a penalty tax.
The default charge on the amount of deemed distribution is equal to the
applicable withdrawal charge which would have applied if such amount had been
withdrawn from the Contract.
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Amounts in default will be in the loan reserve account in suspense until
Federal tax rules permit such amounts to be deducted from the TSA Contract to
repay your obligation to us.
Currently we default your loan missed- payment-by-missed-payment, but under
Federal proposed income tax regulations, we may be required to default the
entire unpaid loan balance and unpaid interest at the time of the default.
Under these proposed regulations, we could be required to treat the entire
remaining outstanding balance of the loan (including any unpaid interest) as
a deemed taxable distribution in the year of the default which is subject to
income tax reporting and early distribution tax penalty. See Part 10 of the
Prospectus. If your contract is subject to Federal income tax withdrawal
restrictions at the time you default, because of the interplay between
Federal income tax rules and State insurance law requisites, we may be
required to continue to charge interest and credit interest on the unpaid
loan balance until such defaulted payment liability can be satisfied by an
actual distribution. This may result in additional taxable income to you
without any additional offset. Interest credited on amounts in default could
result in additional taxable income in the amount of the interest credited
and could be subject to a penalty tax. See "Penalty Tax on Early
Distributions" and "Distributions from Qualified Plans and TSAs" in Part 10
of the Prospectus.
ERISA TSA Loans
(beginning on or about 7/96)
Loans under ERISA TSA plans are expected to be permitted beginning around
July 1996 in those states where approved. Interested Contract Owners will be
notified of the details of forms and other special rules at that time.
However, the rules will be governed by ERISA regulations and therefore are
expected to be similar to those described above for Corporate Trusteed loans.
Equitable will set a reasonable interest rate for plan loans as defined
below, unless the plan administrators notify us of their intent to set their
own rate. If we set the rate, it will be equal to the Prime Rate (the base
rate on corporate loans posted by at least 75% of the nation's 30 largest
banks) as published in the Wall Street Journal on the first Monday of the
last month of the calendar quarter prior to the effective date of the loan,
plus one percentage point (1.00%).
PART 5--TAX RULES:
SPECIAL ASPECTS
EQUI-VEST ONLY
DISTRIBUTIONS AFTER DEATH OF THE CONTRACT
OWNER OF A NON-QUALIFIED ANNUITY
If a Contract Owner dies after distributions in the form of an annuity have
begun but prior to the time the entire interest in the Contract has been
distributed, the remaining portion of that interest must be distributed at
least as rapidly as under the method of distribution in effect at the time of
the Contract Owner's death.
If the Contract Owner is not the Annuitant and dies prior to the annuity
starting date, the entire interest must be (1) distributed within five years
after the death of the Contract Owner, or (2) distributed as annuity payments
for the life of the Contract Owner's beneficiary (or over a period that does
not extend beyond the life expectancy of the Contract Owner's beneficiary),
provided distributions begin within one year of the Contract Owner's death.
An exception to this rule applies, however, if the Contract Owner's spouse is
the Contract Owner's designated beneficiary for this purpose. In such case
the spouse may continue the contract as the new Contract Owner.
If the Contract Owner and the Annuitant are the same and a Successor
Annuitant-Owner has not been elected, the death benefit provisions of the
contract discussed in the prospectus, will apply on the death of the Contract
Owner-Annuitant. Any optional mode of settlement selected under those
provisions must also satisfy the above distribution rules.
NON-QUALIFIED ANNUITY CONTRACT
AGGREGATION RULES
We are required to aggregate (link together and treat as one contract)
certain nonqualified annuity contracts. Aggregation is required only for the
purpose of calculating the taxable
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amount on any distribution, including surrenders, from one or more "linked"
contracts. For this reason, the amount subject to income tax withholding and
tax information reporting may indicate a different taxable amount than the
Contract Owner might otherwise anticipate.
Contracts purchased after October 21, 1988 must be aggregated if they are
purchased in the same calendar year. Contracts are required to be linked if
they are issued by the same insurance company or by a related affiliated
company (for example, Equitable Life and its wholly-owned subsidiary
Equitable Variable Life Insurance Company).
CERTAIN DISTRIBUTIONS FROM
TRUSTEED CONTRACTS
In the case of an EQUI-VEST Trusteed Contract, the trustee, as Contract
Owner, may transfer ownership of the Contract to the Annuitant in certain
circumstances. This transfer constitutes a distribution from a qualified
plan. Although the Annuitant will receive a tax information report on the
distribution from the plan administrator, this transaction is not a taxable
event to the Annuitant until any payments are made under the transferred
Contract. The transfer of ownership from the Trustee to the Annuitant is not
an IRA rollover. If they otherwise qualify as "eligible rollover
distributions," amounts distributed from the Contract, however, may
subsequently be directly rolled over into an individual retirement
arrangement.
SIMPLIFIED EMPLOYEE PENSION PLAN
(SEPS)
When an employer establishes a SEP for its employees, contributions for each
eligible employee can be made under a Contract issued as an IRA.
Employers with 25 or fewer eligible employees for the prior taxable year may
allow such employees to make salary reduction contributions to a SEP
(SARSEP). SARSEP arrangements can be offered only if at least 50% of the
eligible employees elect to participate in the SARSEP. Special
nondiscrimination rules apply to highly compensated employees in a SARSEP.
The percentage of compensation deferred by any eligible highly compensated
employee cannot exceed 125% of the average deferred compensation percentage
for all eligible non-highly compensated employees. In addition, rules similar
to those applicable to 401(k) programs and salary reduction TSAs apply to
distributions of excess elective deferrals and excess contributions.
Contributions. Due to statutory limits, in 1996 an employer's contribution to
a SEP for an employee, including any salary reduction contributions, cannot
exceed the lesser of $22,500 or 15% of the employee's compensation. The
employee's compensation is determined without taking into account the
employer's contribution to the SEP, and is statutorily limited to $150,000.
This figure may be adjusted for cost of living changes in future years.
The employer must make a contribution for each employee who has reached age
21 and has worked for the employer during at least three of the preceding
five years. Contributions are not required for employees who (1) earn less
than $300 as indexed for inflation ($400 in 1996) in a year, (2) are covered
by a collective bargaining agreement or (3) are non-resident aliens who
receive no earned income from the employer from sources within the United
States. Generally, SEP plans are maintained on a calendar year basis.
Employer contributions must be made under a written program which provides
that (i) withdrawals are permitted, (ii) contributions are made under an
allocation formula and (iii) bear a uniform relationship to compensation. As
noted above, compensation is limited to $150,000. Contributions cannot
discriminate in favor of highly compensated employees. Contributions to the
SEP may take employer-paid Social Security benefits into account, provided
the level of integration satisfies the limits contained in the Code.
Except as otherwise indicated in this section, all of the IRA rules discussed
in Part 10 of the prospectus, including those relating to revocation,
distributions and penalties for early, minimum and excess distributions,
apply to SEPs.
EQUI-VEST AND MOMENTUM
LIMITS ON DISTRIBUTIONS
A 15% excise tax applies to an individual's aggregate excess distributions
from all tax-
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favored retirement plans (not including EDC plans). The excise tax is in
addition to the ordinary income tax due but is reduced by the amount (if any)
of the early distribution penalty tax imposed by the Code. The aggregate
distributions in any year will be subject to excise tax if they exceed
$155,000 in 1996.
In addition, in certain cases the estate tax imposed on a deceased
individual's estate will be increased if the accumulated value of the
individual's interests in qualified annuities and tax favored retirement
plans is excessive. Whether a lump sum distribution is excessive for excise
tax purposes is separately calculated. The applicable limits are five times
the above limits.
PENALTIES FOR EXCESS DEFERRALS
If an individual's aggregate elective deferrals under 401(k) programs,
SARSEPs and TSAs exceed the permitted elective deferral limit in any taxable
year (generally $7,000 as indexed; $9,500 in 1996), the individual will be
taxed twice on the excess deferral--once in the year of the deferral and
again when a distribution occurs. If the individual notifies the affected
plan or plans and, by April 15 of the following year, receives a distribution
of the excess deferral and related income, the excess deferral will only be
taxed in the year of deferral. Any related income will be taxed in the year
of the distribution. The distribution of the excess deferral plus income is
not treated as a withdrawal of restricted funds, is not subject to the 10%
penalty tax on early retirement distributions and is not an eligible rollover
distribution subject to 20% mandatory federal income tax withholding. If
excess deferrals remain in the plan, the plan may be disqualified.
PENALTIES IMPOSED ON EMPLOYERS FOR
EXCESS CONTRIBUTIONS
A non-tax-exempt employer is subject to a 10% penalty tax for nondeductible
contributions to a qualified plan or SEP.
If a 401(k) program or defined contribution plan with an employer matching
feature receives employer contributions for highly compensated employees
which exceed applicable nondiscrimination limits for any plan year, the
employer is subject to a 10% penalty on any such excess contributions. The
employer may avoid the penalty if the plan distributes the excess, plus
income, within 2 1/2 months after the close of the plan year.
Unless the amount distributed is under $100, the recipient of the
distribution is taxed on the distribution and the related income in the year
the contribution was made. Such a distribution is not treated as a withdrawal
of restricted funds, is not subject to the 10% penalty tax on early
retirement distributions and is not an eligible rollover distribution subject
to 20% mandatory Federal income tax withholding.
PART 6--REQUIRED MINIMUM DISTRIBUTIONS OPTION/AUTOMATIC MINIMUM
WITHDRAWAL OPTION
If you elect this feature designed for Annuitants and Participants age 70 1/2
or older, described in the prospectus, each year we calculate your minimum
distribution amount by using the Annuity Account Value or Retirement Account
Value, as appropriate, as of December 31 of the prior calendar year and then
calculating the minimum distribution amount based on the various choices you
make.
You may choose whether the Required Minimum Distribution Option (EQUI-VEST)
or Automatic Minimum Withdrawal Option (MOMENTUM) will be calculated based on
your life expectancy alone, or based on the joint life expectancies of you
and your spouse. You may also choose (1) to have us recalculate your life
expectancy (or joint life expectancy) each year, or (2) not recalculate your
life expectancy. If you have chosen a joint-life expectancy method of
calculation with your spouse, you may choose to either have both lives
recalculated or not recalculated.
When we recalculate life expectancy, that means that each calendar year we
see what each individual's life expectancy is under Treasury Regulations. If
life expectancy is not recalculated, it means that it is determined once, for
the initial year, and in every subsequent year that number is reduced by one
more year.
If you do not specify a method, we will base a calculation on your life
expectancy alone, recal-
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culating it each year. If you do not specify that we should recalculate life
expectancy, you cannot later apply your Annuity Account Value/ Retirement
Account Value to an annuity payout.
The minimum distribution calculation takes into account partial withdrawals
made during the current calendar year but prior to the date we determine your
minimum distribution amount, except that when the Required Minimum
Distribution is elected in the year in which the Annuitant attains age 71 1/2,
no adjustment for partial withdrawals will be made for any withdrawals made
between January 1 and April 1 of the year in which the election is made.
Our Options should not be elected if the Annuitant continues to work beyond
age 70 1/2 and contributions continue to be made into the Contract. To do so
could result in an insufficient distribution. You must request the amount to
be separately calculated each year to ensure that you withdraw the correct
amount.
Note that our automated Options do not provide for all the flexibility
provided by Federal law. For example, Federal law permits you to recalculate
your life expectancy and not your spouse's and to choose the joint life
expectancy method with a beneficiary other than your spouse. See your tax
advisor.
PART 7--ACCUMULATION
UNIT VALUES
Accumulation Unit Values are determined at the end of each Valuation Period
for each of the Investment Funds. The Accumulation Unit Values for EQUI-VEST
and MOMENTUM may vary. The method of calculating Accumulation Unit Values is
set forth below.
The Accumulation Unit Value for an Investment Fund for any Valuation Period
is equal to the Accumulation Unit Value for the preceding Valuation Period
multiplied by the Net Investment Factor for that Investment Fund for that
Valuation Period. The NET INVESTMENT FACTOR is (a/b)- c where:
(a) is the value of the Investment Fund's shares of the corresponding
Portfolio at the end of the Valuation Period before giving effect to
any amounts allocated to or withdrawn from the Investment Fund for the
Valuation Period. For this purpose, we use the share value reported to
us by The Hudson River Trust. This share value is after deduction for
investment advisory fees and direct expenses of The Hudson River Trust.
(b) is the value of the Investment Fund's shares of the corresponding
Portfolio at the end of the preceding Valuation Period (after any
amounts allocated or withdrawn for that Valuation Period).
(c) is the daily Separate Account asset charge for the expenses of the
contracts times the number of calendar days in the Valuation Period,
plus any charge for taxes or amounts set aside as a reserve for taxes.
PART 8--CALCULATION OF ANNUITY PAYMENTS
The calculation of monthly annuity payment under a Contract takes into
account the number of annuity units of each Investment Fund credited under a
Contract, their respective annuity unit values, and a Net Investment Factor.
The annuity unit values used for EQUI- VEST and MOMENTUM may vary, although
the method of calculating annuity unit values set forth below applies to all.
Annuity unit values will also vary by Investment Fund.
For each Valuation Period, the adjusted Net Investment Factor is equal to the
Net Investment Factor for the Fund reduced for each day in the Valuation
Period by:
o .00013366 of the Net Investment Factor for a Contract with an assumed base
rate of net investment return of 5% a year; or
o .00009425 of the Net Investment Factor for a Contract with an assumed base
rate of net investment return of 3 1/2 %.
Because of this adjustment, the annuity unit value rises and falls depending
on whether the actual rate of net investment return (after charges) is higher
or lower than the assumed base rate.
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The assumed base rate will be 5%, except in states where that rate is not
permitted. Annuity payments based upon an assumed base rate of 3 1/2 % will
at first be smaller than those based upon a 5% assumed base rate. Payments
based upon a 3 1/2 % rate, however, will rise more rapidly when unit values
are rising, and payments will fall more slowly when unit values are falling
than those based upon a 5% rate.
The amounts of variable annuity payments are determined as follows:
Payments normally start on the Business Day specified on your election form,
or on such other future date as specified therein. The first three monthly
payments are the same. Each of the first three payments will be based on the
amount specified in the Tables Of Guaranteed Annuity Payments in the
applicable EQUI- VEST or MOMENTUM Contract.
The first three payments depend on the assumed base rate of net investment
return and the form of annuity chosen (and any fixed period). If the annuity
involves a life contingency, the risk class and the age of the Annuitants
will affect payments.
Payments after the first three will vary according to the investment
performance of the Investment Fund(s) selected to fund the variable payments.
After that, each monthly payment will be calculated by multiplying the number
of annuity units credited by the average annuity unit value for the selected
fund for the second calendar month immediately preceding the due date of the
payment. The number of units is calculated by dividing the first monthly
payment by the annuity unit value for the Valuation Period which includes the
due date of the first monthly payment. The average annuity unit value is the
average of the annuity unit values for the Valuation Periods ending in that
month.
Illustration of Calculation of Annuity Payments. To show how we determine
variable annuity payments, assume that the Annuity Account Value for an
EQUI-VEST Series 100 Contract on a retirement date is enough to fund an
annuity with a monthly payment of $100 and that the annuity unit value of the
selected Investment Fund for the Valuation Period that includes the due date
of the first annuity payment is $3.74. The number of annuity units credited
under the Contract would be 26.74 (100 divided by 3.74 = 26.74). Based on a
hypothetical average annuity unit value of $3.56 in October 1995, the annuity
payment due in December 1995 would be $95.19 (the number of units (26.74)
times $3.56).
The examples below show what the annuity payment would have been for December
31, 1995 for each base rate of net investment return, assuming that $100,000
was applied at the beginning of each period shown, for a female age 75, to
purchase a variable Life Annuity with 10 Years Period Certain, with initial
payment of $714.56 and $793.28, using assumed base rates of 3.5% and 5.0%
respectively:
<TABLE>
<CAPTION>
BASE THREE SINCE
RATE ONE YEAR YEARS FIVE YEARS TEN YEARS INCEPTION
------- -------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Money Market 3.50% 719.38 700.11 699.04 794.68 --
5.00% 789.41 746.10 724.04 765.62 --
Intermediate
Government
Securities 3.50% 759.92 730.08 -- -- 794.34
5.00% 834.01 778.23 -- -- 825.35
Quality Bond 3.50% 777.42 -- -- -- 691.37
5.00% 853.21 -- -- -- 745.08
High Yield 3.50% 795.57 865.32 1,098.83 -- 1,083.47
5.00% 873.13 922.39 1,137.58 -- 1,058.18
Growth & Income 3.50% 817.45 -- -- -- 763.55
5.00% 897.14 -- -- -- 822.87
Equity Index 3.50% 885.52 -- -- -- 859.98
5.00% 971.85 -- -- -- 932.40
Common Stock 3.50% 875.39 970.87 1,252.91 1,768.49 --
5.00% 960.92 1,035.81 1,299.97 1,709.63 --
Global 3.50% 791.20 999.48 1,179.34 -- 1,149.98
5.00% 868.34 1,065.40 1,220.94 -- 1,133.82
International 3.50% -- -- -- -- 740.62
5.00% -- -- -- -- 815.85
Aggressive
Stock 3.50% 857.12 875.87 1,443.36 2,210.63 --
5.00% 940.24 931.75 1,489.41 2,111.67 --
The Asset
Allocation
Series:
Conservative
Investors 3.50% 794.63 766.91 883.31 -- 912.69
5.00% 872.10 817.48 914.46 -- 927.86
Balanced 3.50% 793.46 744.55 932.60 1,158.75 --
5.00% 870.94 793.97 967.04 1,119.89 --
Growth
Investors 3.50% 835.74 847.68 1,203.30 -- 1,303.89
5.00% 917.23 903.59 1,245.75 -- 1,325.57
</TABLE>
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PART 9--THE REORGANIZATION
Equitable Life established Separate Account A as a stock account on August 1,
1968. It was one of four separate investment accounts used to fund retirement
benefits under variable annuity certificates issued by us. Each of these
separate accounts, which included the predecessors to the Money Market Fund,
the Balanced Fund, the Common Stock Fund and the Aggressive Stock Fund, was
organized as an open-end management investment company, with its own
investment objectives and policies. Collectively these separate accounts, as
well as two other separate accounts which had been used to fund retirement
benefits under certain other annuity contracts, are called the Predecessor
Separate Accounts.
On December 18, 1987, the Predecessor Separate Accounts were combined in part
and reorganized into the Money Market, Balanced, Common Stock and Aggressive
Stock Funds of the Separate Account. In connection with the Reorganization,
all of the assets and investment-related liabilities of the Predecessor
Separate Accounts were transferred to a corresponding portfolio of The
Equitable Trust in exchange for shares of the portfolios of The Equitable
Trust, which were issued to these corresponding Investment Funds of the
Separate Account. As described in "Part 3: Investment Performance" in the
prospectus, on September 6, 1991, all of the shares of The Equitable Trust
held by these Investment Funds were replaced by shares of Portfolios of The
Hudson River Trust corresponding to these Investment Funds of the Separate
Account.
PART 10--MONEY MARKET
FUND YIELD INFORMATION
The Money Market Fund calculates yield information for seven-day periods. To
determine the seven-day rate of return, the net change in an Accumulation
Unit Value is computed by subtracting the Accumulation Unit Value at the
beginning of the period from an Accumulation Unit Value, exclusive of capital
changes, at the end of the period.
The net change is then reduced by the average administrative charge factor
for your contract. This reduction is made to recognize the deduction of the
annual administrative charge, which is not reflected in the unit value. See
the applicable "Administrative Charge" section in Part 8 of the prospectus.
Accumulation Unit Values reflect all other accrued expenses of the Money
Market Fund.
The adjusted net change is divided by the Accumulation Unit Value at the
beginning of the period to obtain the adjusted base period rate of return.
This seven-day adjusted base period return is then multiplied by 365/7 to
produce an annualized seven-day current yield figure carried to the nearest
one-hundredth of one percent.
The actual dollar amount of the annual administrative charge for EQUI-VEST or
quarterly administrative charge for MOMENTUM that is deducted from the Money
Market Fund will vary for each contract and the percentage of the aggregate
Annuity Account Value allocated to the Money Market Fund. To determine the
effect of the annual administrative charge on the yield, we start with the
total dollar amount of the charges deducted from the Money Market Fund on the
last day of the prior year. This amount is multiplied by 7/365 to produce an
average administrative charge factor which is used in weekly yield
computations for the ensuing year. The average administrative charge is then
divided by the number of Money Market Fund Accumulation Units for the
MOMENTUM or EQUI-VEST Series Contract as of the end of the prior calendar
year, and the resulting quotient is deducted from the net change in
Accumulation Unit Value for the seven-day period.
The effective yield is obtained by modifying the current yield to give effect
to the compounding nature of the Money Market Fund's investments, as follows:
the unannualized adjusted base period return is compounded by adding one to
the adjusted base period return, raising the sum to a power equal to 365
divided by 7, and subtracting one from the result, i.e., effective yield =
(base period return +1) 365/7 -1. The Money Market Fund yields will fluctuate
daily. Accordingly, yields for any given period are not necessarily
representative of future results. In addition, the value of Accumulation
Units of the Money Market Fund will fluctuate and not remain constant.
12
<PAGE>
The Money Market Fund yields reflect charges that are not normally reflected
in the yields of other investments and therefore may be lower when compared
with yields of other investments. Money Market Fund yields should not be
compared to the return on fixed rate investments which guarantee rates of
interest for specified periods, such as the Guaranteed Interest Account or
bank deposits. The yield should not be compared to the yield of money market
funds made available to the general public because their yields usually are
calculated on the basis of a constant $1 price per share and they pay out
earnings in dividends which accrue on a daily basis.
While the Money Market Fund yields will vary among the different EQUI-VEST
Contracts and MOMENTUM, the same method of calculating Money Market Fund
yields applies. The seven- day current yield and effective yield figures set
forth below reflect the highest charges that are currently being assessed
under any EQUI- VEST Contract and the actual MOMENTUM charges and are for
illustrative purposes only.
The seven-day current yield for the Money Market Fund was 3.99% for EQUI-VEST
and 3.89% for MOMENTUM for the period ended December 31, 1995. The effective
yield for the Money Market Fund for that period was 4.00% for EQUI-VEST and
3.90% for MOMENTUM. Because these yields reflect the deduction of Separate
Account expenses, including the annual or quarterly administrative charge,
they are lower than the corresponding yield figures for the Money Market
Portfolio which reflect only the deduction of Trust-level expenses.
PART 11--OTHER YIELD
INFORMATION
Thirty-day yields may vary according to the series of your EQUI-VEST Contract
and from EQUI-VEST to MOMENTUM, although the same method of calculating Fund
yields applies. The yield figures set forth below reflect the highest charges
that are currently being assessed under any series of EQUI-VEST Contract.
MOMENTUM yields are separate.
The effective yield is obtained by giving effect to the compounding nature of
the Fund's investments, as follows: the sum of the 30-day adjusted return,
plus one, is raised to a power equal to 365 divided by 30, and subtracting
one from the result.
The 30-day yields for the period ended December 31, 1995 were 4.94% for
EQUI-VEST and 4.83% for MOMENTUM for the Intermediate Government Securities
Fund, 3.98% for EQUI- VEST and 3.86% for MOMENTUM for the Quality Bond Fund
and 9.15% for EQUI-VEST and 9.04% for MOMENTUM for the High Yield Fund.
Because these yields reflect the deduction of Separate Account expenses,
including the annual administrative charge, they are lower than the yield
figures for the corresponding Portfolios which reflect only the deduction of
Trust-level expenses.
PART 12--DISTRIBUTION
Equico Securities, Inc. (Equico), a wholly- owned subsidiary of Equitable
Life, performs all sales functions for the Separate Account and may be deemed
to be its principal underwriter under the 1940 Act. On or about May 1, 1996
Equico will change its name to EQ Financial Consultants Inc. Equico is also
the principal underwriter of The Hudson River Trust. Equico is registered
with the SEC as a broker- dealer under the Securities Exchange Act of 1934
(Exchange Act) and is a member of the National Association of Securities
Dealers, Inc. Equico's principal business address is 1755 Broadway, New York,
New York 10019. The EQUI-VEST and MOMENTUM Contracts are sold by Equitable
Agents who are registered representatives of Equico. For EQUI-VEST Series 400
IRA and NQ Contracts, broker-dealer compensation will not exceed 7% of total
contributions made under such Contracts.
PART 13: KEY FACTORS IN RETIREMENT PLANNING
INTRODUCTION
Equitable offers retirement programs that are available to help meet the
retirement needs of individuals and of employers, businesses, and certain
tax-exempt organizations. In assessing these retirement needs, some key
factors need to be addressed: (1) the impact of inflation on fixed retirement
incomes; (2) the importance of
13
<PAGE>
starting to plan early for retirement; (3) the benefits of tax-deferral; and
(4) the selection of an appropriate investment strategy. Each of these
factors is addressed below.
Unless otherwise noted, all of the following presentations use an assumed
annual rate of return of 7.5% compounded annually. This rate of return is for
illustrative purposes only and is not intended to represent an expected or
guaranteed rate of return for any investment vehicle. In addition, unless
otherwise noted, none of the illustrations reflect any charges that may be
applied under a particular investment vehicle. Such charges would effectively
reduce the actual return under any investment vehicle.
All earnings in these presentations are assumed to accumulate tax-deferred
unless otherwise noted. Most programs designed for retirement savings offer
tax-deferral. Amounts withdrawn generally are taxable and a 10% penalty tax
may apply to premature withdrawals. Certain retirement programs prohibit
early withdrawals. See "Part 10: Federal Tax and ERISA Matters." Where taxes
are taken into consideration in these presentations, a 28% tax rate is
assumed.
The source of the data used by us to compile the charts which appear in this
Part 13 (other than charts 1, 2, 3 and 4) is Ibbotson Associates, Inc.
Chicago. Stocks, Bonds, Bills and Inflation 1996 Yearbook (TM). All rights
reserved.
In reports or other communications or in advertising material we may make use
of these or other graphic or numerical illustrations that we prepare showing
the impact of inflation, planning early for retirements, tax-deferral,
diversification and other concepts important to retirement planning.
INFLATION
Inflation erodes purchasing power. This means that, in an inflationary
period, the dollar is worth less as time passes. Because many people live on
a fixed income during retirement, inflation is of particular concern to them.
The charts below illustrate the detrimental impact of inflation over an
extended period of time. Between 1965 and 1995, the average annual inflation
rate was 5.39%. As demonstrated in Chart 1, this 5.39% average annual rate of
inflation would cause the purchasing power of $35,000 to decrease to only
$7,246 after 30 years.
In Chart 2, the impact of inflation is examined from another perspective.
Specifically, the chart illustrates the additional income needed to maintain
the purchasing power of $35,000 over a thirty year period. Again, the
1965-1995 historical inflation rate of 5.39% is used. In this case, an
additional $134,064 would be required to maintain the purchasing power of
$35,000 after 30 years.
CHART 1
GRAPHIC OMITTED
CHART 2
GRAPHIC OMITTED
STARTING EARLY
The impact of inflation accentuates the need to begin a retirement program
early. The value of starting early is illustrated in the following charts. As
shown in Chart 3, if an individual
14
<PAGE>
makes annual contributions of $2,500 to his retirement program beginning at
age 30, he would accumulate $414,551 by age 65 under the assumptions
described earlier. If that individual waited until age 50, he would only
accumulate $70,193 by age 65 under the same assumptions.
CHART 3
GRAPHIC OMITTED
In Table 1, the impact of starting early is demonstrated in another format.
For example, if an individual invests $300 monthly, he would accumulate
$387,193 in thirty years under our assumptions. In contrast, if that
individual invested the same $300 per month for 15 years, he would accumulate
only $97,804 under our assumptions.
Table 1
<TABLE>
<CAPTION>
MONTHLY
CONTRI-
BUTION YEAR 10 YEAR 15 YEAR 20 YEAR 25 YEAR 30
- --------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 20 $ 3,532 $ 6,520 $ 10,811 $ 16,970 $ 25,813
50 8,829 16,301 27,027 42,425 64,532
100 17,659 32,601 54,053 84,851 129,064
200 35,317 65,202 108,107 169,701 258,129
300 52,976 97,804 162,160 254,552 387,193
</TABLE>
Chart 4 presents an additional way to demonstrate the significant impact of
starting to make contributions to a retirement program earlier rather than
later. It assumes that an individual had a goal to accumulate $250,000
(pre-tax) by age 65. If he starts at age 30, under our assumptions he could
reach the goal by making a monthly pre-tax contribution of $130 (equivalent
to $93 after taxes). The total net cost for the 30 year old in this
hypothetical example would be $39,265. If the individual in this hypothetical
example waited until age 50, he would have to make a monthly pre-tax
contribution of $747 (equivalent to $552 after taxes) to attain the goal,
illustrating the importance of starting early.
CHART 4
Goal: $250,000 by age 65
GRAPHIC OMITTED
TAX-DEFERRAL
Contributing to a retirement plan early is part of an effective strategy for
addressing the impact of inflation. Another part of such a strategy is to
carefully select the types of retirement programs in which to invest. In
deciding where to invest retirement contributions, there are three basic
types of programs.
The first type offers the most tax benefits, and therefore is potentially the
most beneficial for accumulating funds for retirement. Contributions are made
with pre-tax dollars or are tax-deductible and earnings grow income tax-
deferred. Examples of this type of program that permit individuals to make
contributions through personal savings or indirectly through employer-offered
salary deferrals are deductible Individual Retirement Annuities (IRAs);
15
<PAGE>
Tax-Sheltered Annuities (TSAs); Employee Deferred Compensation plans (EDCs);
401(k) plans; and Salary Reduction Simplified Employee Pensions (SARSEPs).
Of course, not every individual is eligible to take advantage of these
programs. Examples of this type of program which are employer funded are
qualified defined contribution plans, SEPs and HR-10 (Keogh) Plans.
The second type of program also provides for tax-deferred earnings growth,
however, contributions are made with after-tax dollars. Examples of this type
of program are non- deductible IRAs and non-qualified annuities.
The third approach to retirement savings is fully taxable. Contributions are
made with after-tax dollars and earnings are taxed each year. Examples of
this type of program include certificates of deposit, savings accounts, and
taxable stock, bond or mutual fund investments.
Consider an example. For the type of retirement program that offers both
pre-tax contributions and tax-deferral, assume that a $2,500 annual pre-tax
contribution is made for thirty years. In this example, the retirement funds
would be $199,607 after thirty years (assuming a 7.5% rate of return, no
withdrawals and assuming the deduction of a 1.75% Separate Account daily
asset and Trust annual expense charges and a $30 administrative charge--but
no contingent withdrawal charge) and such funds would be $277,886 without the
effect of any charges. Assuming a lump sum withdrawal was made in year thirty
and a 28% tax bracket, these amounts would be $143,717 and $200,078,
respectively.
For the type of program that offers only tax- deferral, assume an after-tax
annual contribution of $1,800 for thirty years and the same rate of return.
This after-tax contribution is derived by taxing the $2,500 pre-tax
contribution again assuming a 28% tax bracket. In this example, the
retirement funds would be $143,468 after thirty years assuming the deduction
of charges and no withdrawals, and $200,078 without the effect of charges.
Assuming a lump sum withdrawal in year thirty, the total after-tax amount
would be $118,417 with charges deducted and $159,176 without charges.
For the fully taxable investment, assume an after- tax contribution of $1,800
for thirty years. Earnings are taxed annually. After thirty years, the amount
of this fully taxable investment is $135,058. Keep in mind that taxable
investments have fees and charges too (investment advisory fees,
administrative charges, 12b-1 fees, sales loads, brokerage commissions, etc).
We have not attempted to apply these fees and charges to the fully taxable
amounts since this is intended merely as an example of tax deferral. Were
such charges applied, the amounts in the fully taxable example would be
lower.
Again, it must be emphasized that the assumed rate of return of 7.5%
compounded annually used in these examples is for illustrative purposes only
and is not intended to represent a guaranteed or expected rate of return on
any investment vehicle. Moreover, early withdrawals of tax-deferred
investments are generally subject to a 10% penalty tax.
INVESTMENT OPTIONS
Selecting an appropriate retirement program is clearly an important part of
an effective retirement planning strategy. Carefully choosing among
investment options is another essential component.
As demonstrated in Chart 5, during the 1965- 1995 period, common stock
average annual returns outperformed the average annual returns of fixed
investments such as long-term government bonds and Treasury Bills (T-Bills).
See "Notes" at the end of this section. Common stocks earned an average
annual return of 10.68% over this period, in contrast to 6.72% and 7.92% for
the other two investment categories. Significantly, common stock returns also
outpaced inflation which grew at 5.39% over this period.
16
<PAGE>
CHART 5
GRAPHIC OMITTED
While Chart 5 illustrates that investments in common stocks outperformed
fixed-income investments for the 1965-1995 period, many people prefer to
diversify their investments by selecting a mix of fixed income and growth
investments. In Chart 6, the growth of a $1,000 investment is shown given
various mixes of fixed income and growth investments. See "Notes" on the
following page.
CHART 6
GRAPHIC OMITTED
Although common stock returns have historically outpaced returns of fixed
investments, people often allocate a significant percentage of their
retirement funds to fixed return investments. Their primary concern is the
preservation of principal. Given this concern, Chart 7 illustrates the impact
of exposing only the interest generated by a fixed investment to the stock
market. In this illustration, the fixed investment is represented by a
Treasury Bill return and the stock investment is represented by the Standard
& Poor's 500 ("S&P 500").
The chart assumes that a $20,000 fixed investment was made on January 1,
1980. If the interest on that investment were to accumulate based upon the
return of the S&P 500, the total investment would have been worth $131,033 in
1995. Had the interest been reinvested in the fixed investment, the fixed
investment would have grown to $62,379. As illustrated in Chart 7,
significant opportunities for growth exist while preserving principal. See
"Notes" on the following page.
CHART 7
GRAPHIC OMITTED
Another variation of the example in Chart 7 is to gradually transfer
principal from a fixed investment into the stock market. Chart 8 assumes that
a $20,000 fixed investment was made on January 1, 1980. For the next two
years, $540 is transferred monthly into the stock market (represented by the
S&P 500). The total investment, given this strategy, would have grown to
$139,695 in 1995. In contrast, had the principal not been transferred, the
fixed investment would have grown to $62,379. See "Notes" on the following
page.
17
<PAGE>
CHART 8
GRAPHIC OMITTED
Notes
1. Common Stocks: Standard & Poor's (S&P) Composite Index is an unmanaged
weighted index of the stock performance of 500 industrial,
transportation, utility and financial companies. Results shown assume
reinvestment of dividends. Both market value and return on common stock
will vary.
2. U.S. Government Securities: Long-term Government Bonds are measured
using a one- bond portfolio constructed each year containing a bond with
approximately a 20-year maturity and a reasonably current coupon. U.S.
Treasury Bills are measured by rolling over each month a one-bill
portfolio containing, at the beginning of each month, the bill having
the shortest maturity not less than one month. U.S. Government
securities are guaranteed as to principal and interest, and if held to
maturity, offer a fixed rate of return.
However, market value and return on such securities will fluctuate prior to
maturity.
EQUI-VEST or MOMENTUM can be effective for diversifying ongoing investments
between various asset categories. In addition, for individuals investing a
lump sum, special features are offered which help address the risk associated
with timing the equity markets. Specifically, an interest sweep function is
offered whereby an individual can initially contribute a lump sum in the
Guaranteed Interest Account and then sweep the interest generated by the
investment into any of the growth-oriented options over a specified period of
time. In addition, a fixed dollar principal transfer function is offered
whereby an individual can initially contribute a lump sum in the Guaranteed
Interest Account and then transfer a fixed dollar amount of the principal
into the growth-oriented options over a specified period of time. Neither of
these features can guarantee a profit or assure against loss in a declining
market.
PART 14--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 charts present historical return
trends for various types of securities. The information presented, while not
directly related to the performance of the Investment Funds, helps 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 (e.g., the length of time until you retire, your
financial requirements at retirement), you may be able to better determine
how you wish to allocate plan contributions among the Investment Options
available under your plan.
Historically, the long-term investment performance of common stocks has
generally been superior to that of long or short-term debt securities. For
those investors who have many years until retirement, or whose primary focus
is on long-term growth potential and protection against inflation, there may
be advantages to allocating some or all of their Annuity or Retirement
Account Value to those Investment Funds that invest in stocks.
18
<PAGE>
Growth of $1 Invested on January 1, 1955
(Values are as of last business day)
GRAPHIC OMITTED
Over shorter periods of time, however, common stocks tend to be subject to
more dramatic changes in value than fixed income (debt) securities. Investors
who are nearing retirement age, or who have a need to limit short-term risk,
may find it preferable to allocate a smaller percentage of their Annuity or
Retirement Account Value to those Investment Funds that invest in common
stocks. The following graph illustrates the monthly fluctuations in value of
$1 based on monthly returns of the Standard & Poor's 500 during 1990, a year
that represents more typical volatility than 1995.
Growth of $1 invested on January 1, 1990
(Values are as of last business day).
GRAPHIC OMITTED
The following chart illustrates average annual rates of return over selected
time periods between December 31, 1926 and December 31, 1995 for different
types of securities: common stocks, long-term government bonds, long-term
corporate bonds, intermediate-term government bonds and U.S. Treasury Bills.
For comparison purposes, the Consumer Price Index is shown as a measure of
inflation. The average annual returns shown in the chart reflect capital
appreciation and assume the reinvestment of dividends and interest. No
investment management fees or expenses, and no charges typically associated
with deferred annuity products, are reflected. The information presented is
merely a summary of past experience for unmanaged groups of securities and is
neither an estimate nor guarantee of future performance. Any investment in
securities, whether equity or debt, involves varying degrees of potential
risk, in addition to offering varying degrees of potential reward.
The rates of return illustrated do not represent returns of the Separate
Account. In addition, there is no assurance that the performance of the
Investment Funds will correspond to rates of return such as those illustrated
in the chart.
For a comparative illustration of performance results of the Investment Funds
(which reflect The Hudson River Trust and Separate Account charges), see
"Investment Fund Performance" in Part 3 of the prospectus.
19
<PAGE>
MARKET TRENDS:
ILLUSTRATIVE ANNUAL RATES OF RETURN
<TABLE>
<CAPTION>
FOR THE FOLLOWING LONG-TERM INTERMEDIATE-
PERIODS COMMON LONG-TERM CORPORATE TERM GOVT. U.S. TREASURY CONSUMER
ENDING 12/31/95: STOCKS GOVT. BONDS BONDS BONDS BILLS PRICE INDEX
- ------------------------ -------- ------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 Year .................. 37.43 31.67 26.39 16.80 5.60 2.74
3 Years ................. 15.26 12.82 10.47 7.22 4.13 2.72
5 Years ................. 16.57 13.10 12.07 8.81 4.29 2.83
10 Years ................ 14.84 11.92 11.25 9.08 5.55 3.48
20 Years ................ 14.59 10.45 10.54 9.69 7.28 5.23
30 Years ................ 10.68 7.92 8.17 8.36 6.72 5.39
40 Years ................ 10.78 6.38 6.75 7.02 5.73 4.46
50 Years ................ 11.94 5.35 5.75 5.87 4.80 4.36
60 Years ................ 11.34 5.20 5.46 5.34 4.01 4.10
Since 1926 .............. 10.54 5.17 5.69 5.25 3.72 3.12
Inflation adjusted since
1926 ................... 7.20 1.99 2.49 2.07 0.58 0.00
</TABLE>
SOURCE: Ibbotson, Roger G., and Rex A. Sinquefield, Stocks, Bonds, Bills, and
Inflation (SBBI), 1982, updated in Stocks, Bonds, Bills and Inflation 1996
Yearbook, 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 1969-1995, 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 Brothers
for 1969-1995; for the period 1927-1945, 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.
PART 15--CUSTODIAN AND INDEPENDENT ACCOUNTANTS
Equitable Life is the custodian for the shares of The Hudson River Trust
owned by the Separate Account.
The financial statements of the Separate Account and of Equitable Life
included in this SAI have been audited for the years-ended December 31, 1995,
December 31, 1994 and December 31, 1993 by Price Waterhouse LLP, as stated in
its reports. The financial statements of the Separate Account and of
Equitable Life for the years ended December 31, 1995 and December 31, 1994
included in this SAI 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.
PART 16--FINANCIAL STATEMENTS
The consolidated financial statements of The Equitable Life Assurance Society
of the United States included herein should be considered only as bearing
upon the ability of Equitable Life to meet its obligations under the
Contracts.
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of The
Equitable Life Assurance Society of the United States and its subsidiaries
("Equitable Life") at December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of Equitable
Life's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 2 to the consolidated financial statements, Equitable
Life changed its methods of accounting for loan impairments in 1995, for
postemployment benefits in 1994 and for investment securities in 1993.
PRICE WATERHOUSE LLP
New York, New York
February 7, 1996
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 15,899.9 $ 7,586.0
Held to maturity, at amortized cost..................................... - 5,223.0
Mortgage loans on real estate............................................. 3,638.3 4,018.0
Equity real estate........................................................ 3,916.2 4,446.4
Policy loans.............................................................. 1,976.4 1,731.2
Other equity investments.................................................. 621.1 678.5
Investment in and loans to affiliates..................................... 636.6 560.2
Other invested assets..................................................... 706.1 489.3
----------------- -----------------
Total investments..................................................... 27,394.6 24,732.6
Cash and cash equivalents................................................... 774.7 693.6
Deferred policy acquisition costs........................................... 3,083.3 3,221.1
Amounts due from discontinued GIC Segment................................... 2,097.1 2,108.6
Other assets................................................................ 2,713.1 2,078.6
Closed Block assets......................................................... 8,612.8 8,105.5
Separate Accounts assets.................................................... 24,566.6 20,469.5
----------------- -----------------
TOTAL ASSETS................................................................ $ 69,242.2 $ 61,409.5
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 21,752.6 $ 21,238.0
Future policy benefits and other policyholders' liabilities................. 4,171.8 3,840.8
Short-term and long-term debt............................................... 1,899.3 1,337.4
Other liabilities........................................................... 3,379.5 2,300.1
Closed Block liabilities.................................................... 9,507.2 9,069.5
Separate Accounts liabilities............................................... 24,531.0 20,429.3
----------------- -----------------
Total liabilities..................................................... 65,241.4 58,215.1
----------------- -----------------
Commitments and contingencies (Notes 10, 12, 13, 14 and 15)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares authorized, issued
and outstanding........................................................... 2.5 2.5
Capital in excess of par value.............................................. 2,913.6 2,913.6
Retained earnings........................................................... 781.6 484.0
Net unrealized investment gains (losses).................................... 338.2 (203.0)
Minimum pension liability................................................... (35.1) (2.7)
----------------- -----------------
Total shareholder's equity............................................ 4,000.8 3,194.4
----------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY.................................. $ 69,242.2 $ 61,409.5
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 771.0 $ 715.0 $ 644.5
Premiums...................................................... 606.8 625.6 599.1
Net investment income......................................... 2,127.7 2,030.9 2,599.3
Investment gains, net......................................... 5.3 91.8 533.4
Commissions, fees and other income............................ 886.8 845.4 1,717.2
Contribution from the Closed Block............................ 124.4 151.0 128.3
----------------- ----------------- -----------------
Total revenues.......................................... 4,522.0 4,459.7 6,221.8
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,244.2 1,201.3 1,330.0
Policyholders' benefits....................................... 1,011.3 920.6 1,003.9
Other operating costs and expenses............................ 1,856.5 1,943.1 3,584.2
----------------- ----------------- -----------------
Total benefits and other deductions..................... 4,112.0 4,065.0 5,918.1
----------------- ----------------- -----------------
Earnings before Federal income taxes and cumulative
effect of accounting change................................. 410.0 394.7 303.7
Federal income taxes.......................................... 112.4 101.2 91.3
----------------- ----------------- -----------------
Earnings before cumulative effect of accounting change........ 297.6 293.5 212.4
Cumulative effect of accounting change, net of Federal
income taxes................................................ - (27.1) -
----------------- ----------------- -----------------
Net Earnings.................................................. $ 297.6 $ 266.4 $ 212.4
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Common stock, at par value, beginning of year................. $ 2.5 $ 2.5 $ 2.0
Increase in par value......................................... - - .5
----------------- ----------------- -----------------
Common stock, at par value, end of year....................... 2.5 2.5 2.5
----------------- ----------------- -----------------
Capital in excess of par value, beginning of year............. 2,913.6 2,613.6 2,273.9
Additional capital in excess of par value..................... - 300.0 340.2
Increase in par value......................................... - - (.5)
----------------- ----------------- -----------------
Capital in excess of par value, end of year................... 2,913.6 2,913.6 2,613.6
----------------- ----------------- -----------------
Retained earnings, beginning of year.......................... 484.0 217.6 5.2
Net earnings.................................................. 297.6 266.4 212.4
----------------- ----------------- -----------------
Retained earnings, end of year................................ 781.6 484.0 217.6
----------------- ----------------- -----------------
Net unrealized investment (losses) gains, beginning of year... (203.0) 131.9 78.8
Change in unrealized investment gains (losses)................ 541.2 (334.9) (9.5)
Effect of adopting new accounting standard.................... - - 62.6
----------------- ----------------- -----------------
Net unrealized investment gains (losses), end of year......... 338.2 (203.0) 131.9
----------------- ----------------- -----------------
Minimum pension liability, beginning of year.................. (2.7) (15.0) -
Change in minimum pension liability........................... (32.4) 12.3 (15.0)
----------------- ----------------- -----------------
Minimum pension liability, end of year........................ (35.1) (2.7) (15.0)
----------------- ----------------- -----------------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR....................... $ 4,000.8 $ 3,194.4 $ 2,950.6
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Net earnings.................................................. $ 297.6 $ 266.4 $ 212.4
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Net change in trading activities and broker-dealer
related receivables/payables.............................. - - (4,177.8)
Increase in matched resale agreements....................... - - (2,900.5)
Increase in matched repurchase agreements................... - - 2,900.5
Investment gains, net of dealer and trading gains........... (5.3) (91.8) (160.8)
Change in amounts due from discontinued GIC Segment......... - 57.3 47.8
General Account policy charges.............................. (769.7) (711.9) (623.4)
Interest credited to policyholders' account balances........ 1,244.2 1,201.3 1,330.0
Changes in Closed Block assets and liabilities, net......... (69.6) (95.1) (73.3)
Other, net.................................................. 627.1 7.8 (416.1)
----------------- ----------------- -----------------
Net cash provided (used) by operating activities.............. 1,324.3 634.0 (3,861.2)
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 1,863.1 2,319.7 3,479.6
Sales....................................................... 8,901.4 5,661.9 7,399.2
Return of capital from joint ventures and limited
partnerships.............................................. 65.2 39.0 119.5
Purchases................................................... (11,675.5) (7,417.6) (11,184.2)
Decrease (increase) in loans to discontinued GIC Segment.... 1,226.9 (40.0) (880.0)
Cash received on sale of 61% interest in DLJ................ - - 346.7
Other, net.................................................. (625.5) (371.1) (317.0)
----------------- ----------------- -----------------
Net cash (used) provided by investing activities.............. (244.4) 191.9 (1,036.2)
----------------- ----------------- -----------------
Cash flows from financing activities: Policyholders' account balances:
Deposits.................................................. 2,414.9 2,082.7 2,410.7
Withdrawals............................................... (2,692.7) (2,887.4) (2,433.5)
Net (decrease) increase in short-term financings............ (16.4) (173.0) 4,717.2
Additions to long-term debt................................. 599.7 51.8 97.7
Repayments of long-term debt................................ (40.7) (199.8) (64.4)
Proceeds from issuance of Alliance units.................... - 100.0 -
Payment of obligation to fund accumulated deficit of
discontinued GIC Segment.................................. (1,215.4) - -
Capital contribution from the Holding Company............... - 300.0 -
Other, net.................................................. (48.2) - -
----------------- ----------------- -----------------
Net cash (used) provided by financing activities.............. (998.8) (725.7) 4,727.7
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... 81.1 100.2 (169.7)
Cash and cash equivalents, beginning of year.................. 693.6 593.4 763.1
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 774.7 $ 693.6 $ 593.4
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 89.6 $ 34.9 $ 1,437.2
================= ================= =================
Income Taxes (Refunded) Paid................................ $ (82.7) $ 49.2 $ 41.0
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") converted to a stock life insurance company on July 22, 1992
and became a wholly owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). Equitable Life's insurance
business, which is comprised of an Individual Insurance and Annuities
segment and a Group Pension segment is conducted principally by
Equitable Life and its wholly owned life insurance subsidiary,
Equitable Variable Life Insurance Company ("EVLICO"). Equitable Life's
investment management business, which comprises the Investment
Services segment, is conducted principally by Alliance Capital
Management L.P. ("Alliance"), Equitable Real Estate Investment
Management, Inc. ("EREIM") and Donaldson, Lufkin and Jenrette, Inc.
("DLJ"), an investment banking and brokerage affiliate. AXA, a French
holding company for an international group of insurance and related
financial services companies is the Holding Company's largest
shareholder, owning approximately 60.6% at December 31, 1995 (63.5%
assuming conversion of Series E Convertible Preferred Stock held by
AXA and 54.2% if all securities convertible into, or options on,
common stock were to be converted or exercised).
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
-----------------------------------------------------
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles ("GAAP").
The accompanying consolidated financial statements include the
accounts of Equitable Life and its wholly owned life insurance
subsidiaries (collectively, the "Insurance Group"); non-insurance
subsidiaries, principally Alliance, an investment advisory subsidiary
and EREIM, a real estate investment management subsidiary; and those
partnerships and joint ventures in which the Company has control and a
majority economic interest (collectively, including its consolidated
subsidiaries, the "Company"). The consolidated statement of earnings
and cash flow for the year ended December 31, 1993 include the results
of operations and cash flow of DLJ, an investment banking and
brokerage affiliate, on a consolidated basis through December 15, 1993
(see Note 20). Subsequent to that date, DLJ is accounted for on the
equity basis. The Closed Block assets and liabilities and results of
operations are presented in the consolidated financial statements as
single line items (see Note 6). Unless specifically stated, all
disclosures contained herein supporting the consolidated financial
statements exclude the Closed Block related amounts.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
All significant intercompany transactions and balances have been
eliminated in consolidation other than intercompany transactions and
balances with the Closed Block and the discontinued Guaranteed
Interest Contract ("GIC") Segment (see Note 7).
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1995 presentation.
F-6
<PAGE>
Closed Block
------------
As of July 22, 1992, Equitable Life established the Closed Block for
the benefit of certain classes of individual participating policies
for which Equitable Life had a dividend scale payable in 1991 and
which were in force on that date. Assets were allocated to the Closed
Block in an amount which, together with anticipated revenues from
policies included in the Closed Block, was reasonably expected to be
sufficient to support such business, including provision for payment
of claims, certain expenses and taxes, and for continuation of
dividend scales payable in 1991, assuming the experience underlying
such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of
the holders of policies included in the Closed Block and will not
revert to the benefit of the Holding Company. The plan of
demutualization prohibits the reallocation, transfer, borrowing or
lending of assets between the Closed Block and other portions of
Equitable Life's General Account, any of its Separate Accounts or to
any affiliate of Equitable Life without the approval of the New York
Superintendent of Insurance. Closed Block assets and liabilities are
carried on the same basis as similar assets and liabilities held in
the General Account.
The excess of Closed Block liabilities over Closed Block assets
represents the expected future post-tax contribution from the Closed
Block which would be recognized in income over the period the policies
and contracts in the Closed Block remain in force. If the actual
contribution from the Closed Block in any given period equals or
exceeds the expected contribution for such period as determined at the
establishment of the Closed Block, the expected contribution would be
recognized in income for that period. Any excess of the actual
contribution over the expected contribution would also be recognized
in income to the extent that the aggregate expected contribution for
all prior periods exceeded the aggregate actual contribution. Any
remaining excess of actual contribution over expected contributions
would be accrued in the Closed Block as a liability for future
dividends to be paid to the Closed Block policyholders. If, over the
period the policies and contracts in the Closed Block remain in force,
the actual contribution from the Closed Block is less than the
expected contribution from the Closed Block, only such actual
contribution would be recognized in income.
Discontinued Operations
-----------------------
In 1991, the Company's management adopted a plan to discontinue the
business operations of the GIC Segment, consisting of the Guaranteed
Interest Contract and Group Non-Participating Wind-Up Annuities lines
of business. The Company established a pre-tax provision for the
estimated future losses of the GIC line of business and a premium
deficiency reserve for the Group Non-Participating Wind-Up Annuities.
Subsequent losses incurred have been charged to the allowance for
future losses and the premium deficiency reserve. Total allowances are
based upon management's best judgment and there is no assurance that
the ultimate losses will not differ.
Accounting Changes
------------------
In the first quarter of 1995, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 114, "Accounting by
Creditors for Impairment of a Loan". This statement applies to all
loans, including loans restructured in a troubled debt restructuring
involving a modification of terms. This statement addresses the
accounting for impairment of a loan by specifying how allowances for
credit losses should be determined. Impaired loans within the scope of
this statement are measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate, at
the loan's observable market price or the fair value of the collateral
if the loan is collateral dependent. The Company provides for
impairment of loans through an allowance for possible losses. The
adoption of this statement did not have a material effect on the level
of these allowances or on the Company's consolidated statements of
earnings and shareholder's equity.
F-7
<PAGE>
In the fourth quarter of 1994 (effective as of January 1, 1994), the
Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," which required employers to recognize the
obligation to provide postemployment benefits. Implementation of this
statement resulted in a charge for the cumulative effect of accounting
change of $27.1 million, net of a Federal income tax benefit of $14.6
million.
At December 31, 1993, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," which expanded
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 $62.6 million, net of deferred policy acquisition costs,
amounts attributable to participating group annuity contracts and
deferred Federal income tax. Beginning coincident with issuance of
SFAS No. 115 implementation guidance in November 1995, the Financial
Accounting Standards Board ("FASB") permitted companies a one-time
opportunity, through December 31, 1995, to reassess the
appropriateness of the classification of all securities held at that
time. On December 1, 1995, the Company transferred $4,794.9 million of
securities classified as held to maturity to the available for sale
portfolio. As a result consolidated shareholder's equity increased by
$126.2 million, net of deferred policy acquisition costs, amounts
attributable to participating group annuity contracts and deferred
Federal income tax.
New Accounting Pronouncements
-----------------------------
In January 1995, the FASB issued SFAS No. 120, "Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance
Enterprises for Certain Long-Duration Participating Contracts," which
permits, but does not require, stock life insurance companies with
participating life contracts to account for those contracts in
accordance with Statement of Position No. 95-1, "Accounting for
Certain Insurance Activities of Mutual Life Insurance Enterprises".
The Company has decided to retain the existing methodology to account
for traditional participating policies and, therefore, will not adopt
this statement.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," which requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate the carrying amount of such assets
may not be recoverable. The Company will implement this statement as
of January 1, 1996. The cumulative effect of this accounting change
will be a charge of $23.4 million, net of a Federal income tax benefit
of $12.1 million, due to the writedown to fair value of building
improvements relating to facilities being vacated beginning in 1996.
The Company currently provides allowances for possible losses for
other assets under the scope of this statement. Management has not yet
determined the impact of this statement on assets to be held and used.
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights," which requires a mortgage banking enterprise to
recognize rights to service mortgage loans for others as separate
assets however those servicing rights are acquired. It further
requires capitalized mortgage servicing rights be assessed for
impairment based on the fair value of those rights. The Company will
implement this statement as of January 1, 1996. Implementation of this
statement will not have a material effect on the Company's
consolidated financial statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation". This statement defines a fair value based
method of accounting for stock-based employee compensation plans while
continuing to allow an entity to measure compensation cost for such
plans using the intrinsic value based method of accounting. Management
has decided to retain the current compensation cost methodology
prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees".
F-8
<PAGE>
Valuation of Investments
------------------------
Fixed maturities, which the Company has both the ability and the
intent to hold to maturity, are stated principally at amortized cost.
Fixed maturities identified as available for sale are reported at
estimated fair value. The amortized cost of fixed maturities is
adjusted for impairments in value deemed to be other than temporary.
Mortgage loans on real estate are stated at unpaid principal balances,
net of unamortized discounts and valuation allowances. Effective with
the adoption of SFAS No. 114 on January 1, 1995, the valuation
allowances are based on the present value of expected future cash
flows discounted at the loan's original effective interest rate or the
collateral value if the loan is collateral dependent. However, if
foreclosure is or becomes probable, the measurement method used is
collateral value. Prior to the adoption of SFAS No. 114, the valuation
allowances were based on losses expected by management to be realized
on transfers of mortgage loans to real estate (upon foreclosure or
in-substance foreclosure), on the disposition or settlement of
mortgage loans and on mortgage loans management believed may not be
collectible in full. In establishing valuation allowances, management
previously considered, among other things the estimated fair value of
the underlying collateral.
Real estate, including real estate acquired in satisfaction of debt,
is stated at depreciated cost less valuation allowances. At the date
of foreclosure (including in-substance foreclosure), real estate
acquired in satisfaction of debt is valued at estimated fair value.
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 the Company's cost of funds;
valuation allowances on real estate available for sale are computed
using the lower of current estimated fair value, net of disposition
costs, or depreciated cost.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which the Company does not
have control and a majority economic interest are reported on the
equity basis of accounting and are included either with equity real
estate or other equity investments, as appropriate.
Common stocks are carried at estimated fair value and are included in
other equity investments.
Short-term investments are stated at amortized cost which approximates
fair value and are included with other invested assets.
Cash and cash equivalents includes cash on hand, amounts due from
banks and highly liquid debt instruments purchased with an original
maturity of three months or less.
All securities are recorded in the consolidated financial statements
on a trade date basis.
Investment Results and Unrealized Investment Gains (Losses)
-----------------------------------------------------------
Net investment income and realized investment gains and losses
(collectively, "investment results") related to certain participating
group annuity contracts are passed through to the contractholders as
interest credited to policyholders' account balances.
Realized investment gains and losses are determined by specific
identification and are presented as a component of revenue. Valuation
allowances are netted against the asset categories to which they apply
and changes in the valuation allowances are included in investment
gains or losses.
Unrealized investment gains and losses on fixed maturities available
for sale and equity securities held by the Company are accounted for
as a separate component of shareholder's equity, net of related
deferred Federal income taxes, amounts attributable to the
discontinued GIC Segment, Closed Block, participating group annuity
contracts and deferred policy acquisition costs related to universal
life and investment-type products.
F-9
<PAGE>
Recognition of Insurance Income and Related Expenses
----------------------------------------------------
Premiums from universal life and investment-type contracts are
reported as deposits to policyholders' account balances. Revenues from
these contracts consist of amounts assessed during the period against
policyholders' account balances for mortality charges, policy
administration charges and surrender charges. Policy benefits and
claims that are charged to expense include benefit claims incurred in
the period in excess of related policyholders' account balances.
Premiums from traditional life and annuity policies with life
contingencies generally are recognized as income when due. Benefits
and expenses are matched with such income so as to result in the
recognition of profits over the life of the contracts. This match is
accomplished by means of the provision for liabilities for future
policy benefits and the deferral and subsequent amortization of policy
acquisition costs.
For contracts with a single premium or a limited number of premium
payments due over a significantly shorter period than the total period
over which benefits are provided, premiums are recorded as income when
due with any excess profit deferred and recognized in income in a
constant relationship to insurance in force or, for annuities, the
amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income
over the period to which the premiums relate in proportion to the
amount of insurance protection provided.
Deferred Policy Acquisition Costs
---------------------------------
The costs of acquiring new business, principally commissions,
underwriting, agency and policy issue expenses, all of which vary with
and are primarily related to the production of new business, are
deferred. 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 effect on the amortization of deferred policy acquisition
costs of revisions to estimated gross profits is reflected in earnings
in the period such estimated gross profits are revised. The effect on
the deferred policy acquisition cost asset that would result from
realization of unrealized gains (losses) is recognized with an offset
to unrealized gains (losses) in consolidated shareholder's equity as
of the balance sheet date.
For traditional life and annuity policies with life contingencies,
deferred policy acquisition costs are amortized in proportion to
anticipated premiums. Assumptions as to anticipated premiums are
estimated at the date of policy issue and are consistently applied
during the life of the contracts. Deviations from estimated experience
are reflected in earnings in the period such deviations occur. For
these contracts, the amortization periods generally are for the
estimated life of the policy.
For individual health benefit insurance, deferred policy acquisition
costs are amortized over the expected average life of the contracts
(10 years for major medical policies and 20 years for disability
income products) in proportion to anticipated premium revenue at time
of issue.
Policyholders' Account Balances and Future Policy Benefits
----------------------------------------------------------
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account
values represent an accumulation of gross premium payments plus
credited interest less expense and mortality charges and withdrawals.
F-10
<PAGE>
For traditional life insurance policies, future policy benefit and
dividend liabilities are estimated using a net level premium method on
the basis of actuarial assumptions as to mortality, persistency and
interest established at policy issue. Assumptions established at
policy issue as to mortality and persistency are based on the
Insurance Group's experience which, together with interest and expense
assumptions, provide a margin for adverse deviation. When the
liabilities for future policy benefits plus the present value of
expected future gross premiums for a product are insufficient to
provide for expected future policy benefits and expenses for that
product, deferred policy acquisition costs are written off and
thereafter, if required, a premium deficiency reserve is established
by a charge to earnings. Benefit liabilities for traditional annuities
during the accumulation period are equal to accumulated
contractholders' fund balances and after annuitization are equal to
the present value of expected future payments. Interest rates used in
establishing such liabilities range from 2.25% to 11.5% for life
insurance liabilities and from 2.25% to 13.5% for annuity liabilities.
Individual health benefit liabilities for active lives are estimated
using the net level premium method, and assumptions as to future
morbidity, withdrawals and interest which provide a margin for adverse
deviation. Benefit liabilities for disabled lives are estimated using
the present value of benefits method and experience assumptions as to
claim terminations, expenses and interest.
Claim reserves and associated liabilities for individual disability
income and major medical policies were $639.6 million, $570.6 million
at December 31, 1995 and 1994, respectively. Incurred benefits
(benefits paid plus changes in claim reserves) and benefits paid for
individual disability income and major medical policies are summarized
as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 176.0 $ 188.6 $ 193.1
Incurred benefits related to prior years........... 67.8 28.7 106.1
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 243.8 $ 217.3 $ 299.2
================= ================ =================
Benefits paid related to current year.............. $ 37.0 $ 43.7 $ 48.9
Benefits paid related to prior years............... 137.8 132.3 123.1
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 174.8 $ 176.0 $ 172.0
================= ================ =================
</TABLE>
The amount of policyholders' dividends to be paid (including those on
policies included in the Closed Block) is determined annually by
Equitable Life's Board of Directors. The aggregate amount of
policyholders' dividends is related to actual interest, mortality,
morbidity and expense experience for the year and judgment as to the
appropriate level of statutory surplus to be retained by Equitable
Life.
Equitable Life is subject to limitations on the amount of statutory
profits which can be retained with respect to certain classes of
individual participating policies that were in force on July 22, 1992
which are not included in the Closed Block and with respect to
participating policies issued subsequent to July 22, 1992. Excess
statutory profits, if any, will be distributed over time to such
policyholders and will not be available to Equitable Life's
shareholder. Earnings in excess of limitations are accrued as
policyholders' dividends.
At December 31, 1995, participating policies including those in the
Closed Block represent approximately 27.2% ($58.4 billion) of directly
written life insurance in force, net of amounts ceded. Participating
policies represent primarily all of the premium income as reflected in
the consolidated statements of earnings and in the results of the
Closed Block.
F-11
<PAGE>
Federal Income Taxes
--------------------
Equitable Life and its life insurance and non-life insurance
subsidiaries file a consolidated Federal income tax return with the
Holding Company and its non-life insurance subsidiaries. Current
Federal income taxes are charged or credited to operations based upon
amounts estimated to be payable or recoverable as a result of taxable
operations for the current year. Deferred income tax assets and
liabilities are recognized based on the difference between financial
statement carrying amounts and income tax bases of assets and
liabilities using enacted income tax rates and laws.
Separate Accounts
-----------------
Separate Accounts are established in conformity with the New York
State Insurance Law and generally are not chargeable with liabilities
that arise from any other business of the Insurance Group. Separate
Accounts assets are subject to General Account claims only to the
extent the value of such assets exceeds the Separate Accounts
liabilities.
Assets and liabilities of the Separate Accounts, representing net
deposits and accumulated net investment earnings less fees, held
primarily for the benefit of contractholders, and for which the
Insurance Group does not bear the investment risk, are shown as
separate captions in the consolidated balance sheets. The Insurance
Group bears the investment risk on assets held in one Separate
Account, therefore, such assets are carried on the same basis as
similar assets held in the General Account portfolio. Assets held in
the other Separate Accounts are carried at quoted market values or,
where quoted values are not available, at estimated fair values as
determined by the Insurance Group.
The investment results of Separate Accounts on which the Insurance
Group does not bear the investment risk are reflected directly in
Separate Accounts liabilities. For the years ended December 31, 1995,
1994 and 1993, investment results of such Separate Accounts were
$1,956.3 million, $676.3 million and $1,676.5 million, respectively.
Deposits to all Separate Accounts are reported as increases in
Separate Accounts liabilities and are not reported in revenues.
Mortality, policy administration and surrender charges on all Separate
Accounts are included in revenues.
F-12
<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, 1995 Fixed Maturities:
Available for Sale:
Corporate.......................... $ 10,910.7 $ 617.6 $ 118.1 $ 11,410.2
Mortgage-backed.................... 1,838.0 31.2 1.2 1,868.0
U.S. Treasury securities and
U.S. government and
agency securities................ 2,257.0 77.8 4.1 2,330.7
States and political subdivisions.. 45.7 5.2 - 50.9
Foreign governments................ 124.5 11.0 .2 135.3
Redeemable preferred stock......... 108.1 5.3 8.6 104.8
----------------- ----------------- ---------------- ---------------
Total Available for Sale............... $ 15,284.0 $ 748.1 $ 132.2 $ 15,899.9
================= ================= ================ ===============
Equity Securities:
Common stock......................... $ 97.3 $ 49.1 $ 18.0 $ 128.4
================= ================= ================ ===============
December 31, 1994
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 5,663.4 $ 34.6 $ 368.0 $ 5,330.0
Mortgage-backed.................... 686.0 2.9 44.8 644.1
U.S. Treasury securities and
U.S. government and
agency securities................ 1,519.3 6.7 71.9 1,454.1
States and political subdivisions.. 23.4 .1 .7 22.8
Foreign governments................ 43.8 .3 4.2 39.9
Redeemable preferred stock......... 108.4 .4 13.7 95.1
----------------- ----------------- ---------------- ---------------
Total Available for Sale............... $ 8,044.3 $ 45.0 $ 503.3 $ 7,586.0
================= ================= ================ ===============
Held to Maturity:
Corporate.......................... $ 4,661.0 $ 67.9 $ 233.8 $ 4,495.1
U.S. Treasury securities and
U.S. government and
agency securities................ 428.9 4.6 44.2 389.3
States and political subdivisions.. 63.4 .9 3.7 60.6
Foreign governments................ 69.7 4.2 2.0 71.9
================= ================= ================ ===============
Total Held to Maturity................. $ 5,223.0 $ 77.6 $ 283.7 $ 5,016.9
================= ================= ================ ===============
Equity Securities:
Common stock......................... $ 126.4 $ 31.2 $ 23.5 $ 134.1
================= ================= ================ ===============
</TABLE>
F-13
<PAGE>
For publicly traded fixed maturities and equity securities, estimated
fair value is determined using quoted market prices. For fixed
maturities without a readily ascertainable market value, the Company
has determined an estimated fair value using a discounted cash flow
approach, including provisions for credit risk, generally based upon
the assumption 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 the Company. Such estimated fair values do not necessarily
represent the values for which these securities could have been sold
at the dates of the consolidated balance sheets. At December 31, 1995
and 1994, securities without a readily ascertainable market value
having an amortized cost of $3,748.9 million and $3,980.4 million,
respectively, had estimated fair values of $3,981.8 million and
$3,858.7 million, respectively.
The contractual maturity of bonds at December 31, 1995 is shown below:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
------------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less................................................ $ 357.9 $ 360.0
Due in years two through five.......................................... 3,773.1 3,847.1
Due in years six through ten........................................... 4,709.8 4,821.8
Due after ten years.................................................... 4,497.1 4,898.2
Mortgage-backed securities............................................. 1,838.0 1,868.0
---------------- -----------------
Total.................................................................. $ 15,175.9 $ 15,795.1
================ =================
</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 prepayment
penalties.
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 284.9 $ 355.6 $ 512.0
Additions charged to income........................ 136.0 51.0 92.8
Deductions for writedowns and asset dispositions... (95.6) (121.7) (249.2)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 325.3 $ 284.9 $ 355.6
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 65.5 $ 64.2 $ 144.4
Equity real estate............................... 259.8 220.7 211.2
----------------- ---------------- -----------------
Total.............................................. $ 325.3 $ 284.9 $ 355.6
================= ================ =================
</TABLE>
Deductions for writedowns and asset dispositions for 1993 include an
$87.1 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, 1995, 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 $37.2
million of fixed maturities and $84.7 million of mortgage loans on
real estate.
F-14
<PAGE>
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher
than normal credit risks associated with such securities by monitoring
the total investments in any single issuer or total investment in a
particular industry group. Certain of these corporate high yield
securities are classified as other than investment grade by the
various rating agencies, i.e., a rating below Baa or National
Association of Insurance Commissioners ("NAIC") designation of 3
(medium grade), 4 or 5 (below investment grade) or 6 (in or near
default). At December 31, 1995, approximately 15.57% of the $15,139.9
million aggregate amortized cost of bonds held by the Insurance Group
were considered to be other than investment grade.
In addition to its holdings of corporate high yield securities, the
Insurance Group is an equity investor in limited partnership interests
which primarily invest in securities considered to be other than
investment grade.
The Company has restructured or modified the terms of certain fixed
maturity investments. The fixed maturity portfolio, based on amortized
cost, includes $15.9 million and $30.5 million at December 31, 1995
and 1994, 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 $1.6 million
and $9.7 million as of December 31, 1995 and 1994, respectively. Gross
interest income that would have been recorded in accordance with the
original terms of restructured fixed maturities amounted to $3.0
million, $7.5 million and $11.7 million in 1995, 1994 and 1993,
respectively. Gross interest income on these fixed maturities included
in net investment income aggregated $2.9 million, $6.8 million and
$9.7 million in 1995, 1994 and 1993, respectively.
At December 31, 1995 and 1994, 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 $87.7 million (2.4% of total
mortgage loans on real estate) and $96.9 million (2.3% 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
$531.5 million and $447.9 million at December 31, 1995 and 1994,
respectively. These amounts include $3.8 million and $1.0 million of
problem mortgage loans on real estate at December 31, 1995 and 1994,
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 $52.1 million, $44.9 million
and $51.8 million in 1995, 1994 and 1993, respectively. Gross interest
income on these loans included in net investment income aggregated
$37.4 million, $32.8 million and $46.0 million in 1995, 1994 and 1993,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31, 1995
-------------------
(IN MILLIONS)
<S> <C>
Impaired mortgage loans with provision for losses....................................... $ 310.1
Impaired mortgage loans with no provision for losses.................................... 160.8
-------------------
Recorded investment in impaired mortgage loans.......................................... 470.9
Provision for losses.................................................................... 62.7
-------------------
Net Impaired Mortgage Loans............................................................. $ 408.2
===================
</TABLE>
F-15
<PAGE>
Impaired mortgage loans with no provision for losses are loans where
the fair value of the collateral or the net present value of the loan
equals or exceeds the recorded investment. Interest income earned on
loans where the collateral value is used to measure impairment is
recorded on a cash basis. Interest income on loans where the present
value method is used to measure impairment is accrued on the net
carrying value amount of the loan at the interest rate used to
discount the cash flows. Changes in the present value attributable to
changes in the amount or timing of expected cash flows are reported as
investment gains or losses.
During the year ended December 31, 1995, the Company's average
recorded investment in impaired mortgage loans was $429.0 million.
Interest income recognized on these impaired mortgage loans totaled
$27.9 million for the year ended December 31, 1995, including $13.4
million recognized on a cash basis.
At December 31, 1995, investments owned of any one issuer, including
its affiliates, for which the aggregate carrying values are 10% or
more of total shareholders' equity, were $508.3 million relating to
Trammell Crow and affiliates (including holdings of the Closed Block
and the discontinued GIC Segment). The amount includes restructured
mortgage loans on real estate with an amortized cost of $152.4
million. A $294.0 million commercial loan package which was in
bankruptcy at the beginning of the year was resolved in 1995, with
part of the package reclassified as restructured and the remainder
reclassified as equity real estate.
The Insurance Group's investment in equity real estate is through
direct ownership and through investments in real estate joint
ventures. At December 31, 1995 and 1994, the carrying value of equity
real estate available for sale amounted to $255.5 million and $447.8
million, respectively. For the years ended December 31, 1995, 1994 and
1993, respectively, real estate of $35.3 million, $189.8 million and
$261.8 million was acquired in satisfaction of debt. At December 31,
1995 and 1994, the Company owned $862.7 million and $1,086.9 million,
respectively, of real estate acquired in satisfaction of debt.
Depreciation of real estate is computed using the straight-line method
over the estimated useful lives of the properties, which generally
range from 40 to 50 years. Accumulated depreciation on real estate was
$662.4 million and $703.1 million at December 31, 1995 and 1994,
respectively. Depreciation expense on real estate totaled $121.7
million, $117.0 million and $115.3 million for the years ended
December 31, 1995, 1994 and 1993, respectively.
F-16
<PAGE>
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information of real estate joint
ventures (38 and 47 individual ventures as of December 31, 1995 and
1994, respectively) and of limited partnership interests accounted for
under the equity method, in which the Company has an investment of
$10.0 million or greater and an equity interest of 10% or greater is
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
FINANCIAL POSITION
Investments in real estate, at depreciated cost........................ $ 2,684.1 $ 2,786.7
Investments in securities, generally at estimated fair value........... 2,459.8 3,071.2
Cash and cash equivalents.............................................. 489.1 359.8
Other assets........................................................... 270.8 398.7
---------------- -----------------
Total assets........................................................... 5,903.8 6,616.4
---------------- -----------------
Borrowed funds - third party........................................... 1,782.3 1,759.6
Borrowed funds - the Company........................................... 220.5 238.0
Other liabilities...................................................... 593.9 987.7
---------------- -----------------
Total liabilities...................................................... 2,596.7 2,985.3
---------------- -----------------
Partners' Capital...................................................... $ 3,307.1 $ 3,631.1
================ =================
Equity in partners' capital included above............................. $ 902.2 $ 964.2
Equity in limited partnership interests not included above............. 212.8 224.6
Excess (deficit) of equity in partners' capital over investment cost
and equity earnings.................................................. 3.6 (1.8)
Notes receivable from joint venture.................................... 5.3 6.1
---------------- -----------------
Carrying Value......................................................... $ 1,123.9 $ 1,193.1
================ =================
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 463.5 $ 537.7 $ 602.7
Revenues of other limited partnership interests.... 242.3 103.4 319.1
Interest expense - third party..................... (135.3) (114.9) (118.8)
Interest expense - the Company..................... (41.0) (36.9) (52.1)
Other expenses..................................... (397.7) (430.9) (531.7)
----------------- ---------------- -----------------
Net Earnings....................................... $ 131.8 $ 58.4 $ 219.2
================= ================ =================
Equity in net earnings included above.............. $ 49.1 $ 18.9 $ 71.6
Equity in net earnings of limited partnerships
interests not included above..................... 44.8 25.3 46.3
Excess of earnings in joint ventures over equity
ownership percentage and amortization of
differences in bases............................. .9 1.8 9.2
Interest on notes receivable....................... .1 - .5
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 94.9 $ 46.0 $ 127.6
================= ================ =================
</TABLE>
F-17
<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,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,151.0 $ 1,024.5 $ 981.7
Trading account securities......................... - - 709.3
Securities purchased under resale agreements....... - - 533.8
Mortgage loans on real estate...................... 329.0 384.3 457.4
Equity real estate................................. 560.4 561.8 539.1
Other equity investments........................... 76.9 35.7 110.4
Policy loans....................................... 144.4 122.7 117.0
Broker-dealer related receivables.................. - - 292.2
Other investment income............................ 279.7 336.3 304.9
----------------- ---------------- -----------------
Gross investment income.......................... 2,541.4 2,465.3 4,045.8
----------------- ---------------- -----------------
Interest expense to finance short-term trading
instruments...................................... - - 983.4
Other investment expenses.......................... 413.7 434.4 463.1
----------------- ---------------- -----------------
Investment expenses.............................. 413.7 434.4 1,446.5
----------------- ---------------- -----------------
Net Investment Income.............................. $ 2,127.7 $ 2,030.9 $ 2,599.3
================= ================ =================
</TABLE>
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ 119.9 $ (14.1) $ 123.1
Mortgage loans on real estate...................... (40.2) (43.1) (65.1)
Equity real estate................................. (86.6) 20.6 (18.5)
Other equity investments........................... 12.8 76.0 119.5
Dealer and trading gains........................... - - 372.5
Sales of newly issued Alliance Units............... - 52.4 -
Other.............................................. (.6) - 1.9
----------------- ---------------- -----------------
Investment Gains, Net.............................. $ 5.3 $ 91.8 $ 533.4
================= ================ =================
</TABLE>
Writedowns of fixed maturities amounted to $46.7 million, $30.8
million and $5.4 million for the years ended December 31, 1995, 1994
and 1993, respectively.
For the years ended December 31, 1995 and 1994, respectively, proceeds
received on sales of fixed maturities classified as available for sale
amounted to $8,206.0 million and $5,253.9 million. Gross gains of
$211.4 million and $65.2 million and gross losses of $64.2 million and
$50.8 million, respectively, were realized on these sales. The change
in unrealized investment gains (losses) related to fixed maturities
classified as available for sale for the years ended December 31, 1995
and 1994 amounted to $1,077.2 million and $(742.2) million,
respectively.
Gross gains of $188.5 million and gross losses of $145.0 million were
realized on sales of investments in fixed maturities held for
investment and available for sale for the year ended December 31,
1993.
F-18
<PAGE>
During each of the years ended December 31, 1995 and 1994, one
security classified as held to maturity was sold and during the eleven
months ended November 30, 1995 and the year ended December 31, 1994,
respectively, twelve and six securities so classified were transferred
to the available for sale portfolio. All actions were taken as a
result of a significant deterioration in creditworthiness. The
aggregate amortized cost of the securities sold were $1.0 million and
$19.9 million with a related investment gain of $-0- million and $.8
million recognized in 1995 and 1994, respectively; the aggregate
amortized cost of the securities transferred was $116.0 million and
$42.8 million with gross unrealized investment losses of $3.2 million
and $3.1 million charged to consolidated shareholders' equity for the
eleven months ended November 30, 1995 and the year ended December 31,
1994, respectively. On December 1, 1995, the Company transferred
$4,794.9 million of securities classified as held to maturity to the
available for sale portfolio. As a result, unrealized gains on fixed
maturities increased $307.0 million, offset by deferred policy
acquisition costs of $73.7 million, amounts attributable to
participating group annuity contracts of $39.2 million and deferred
Federal income tax of $67.9 million.
Investment gains from other equity investments for the year ended
December 31, 1993, included $79.9 million generated by DLJ's
involvement in long-term corporate development investments.
For the years ended December 31, 1995, 1994 and 1993, investment
results passed through to certain participating group annuity
contracts as interest credited to policyholders' account balances
amounted to $131.2 million, $175.8 million and $243.2 million,
respectively.
During 1995, Alliance entered into an agreement to acquire the
business of Cursitor-Eaton Asset Management Company and Cursitor
Holdings Limited (collectively, "Cursitor") for approximately $141.5
million consisting of $84.9 million in cash, 1,764,115 of Alliance's
publicly traded units ("Alliance Units"), 6% notes aggregating $21.5
million payable ratably over four years, and substantial additional
consideration which will be determined at a later date. The
transaction, which is expected to be completed during the first
quarter of 1996, is subject to the receipt of consents, regulatory
approvals, and certain other closing conditions, including client
approval of the transfer of Cursitor accounts. Upon completion of this
transaction, the Company's ownership percentage of Alliance will be
reduced.
In 1994, Alliance sold 4.96 million newly issued Alliance Units to
third parties at prevailing market prices. The sales decreased the
Company's ownership of Alliance's Units from 63.2% to 59.2%. In
addition, the Company continues to hold its 1% general partnership
interest in Alliance. The Company recognized an investment gain of
$52.4 million as a result of these transactions.
The Company's ownership interest in Alliance will be further reduced
upon the exercise of options granted to certain Alliance employees. At
December 31, 1995, Alliance had options outstanding to purchase an
aggregate of 4.8 million Alliance Units at a price ranging from
$6.0625 to $22.25 per unit. Options are exercisable at a rate of 20%
on each of the first five anniversary dates from the date of grant.
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of equity and the changes for the
corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year......................... $ (203.0) $ 131.9 $ 78.8
Changes in unrealized investment (losses) gains.... 1,117.7 (823.8) (14.1)
Effect of adopting SFAS No. 115.................... - - 283.9
Changes in unrealized investment (gains) losses attributable to:
Participating group annuity contracts.......... (78.1) 40.8 (36.2)
Deferred policy acquisition costs.............. (208.4) 269.5 (150.5)
Deferred Federal income taxes.................. (290.0) 178.6 (30.0)
----------------- ---------------- -----------------
Balance, End of Year............................... $ 338.2 $ (203.0) $ 131.9
================= ================ =================
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, end of year comprises:
Unrealized investment (losses) gains on:
Fixed maturities............................... $ 615.9 $ (461.3) $ 283.9
Other equity investments....................... 31.1 7.7 75.8
Other.......................................... 31.6 14.5 25.0
----------------- ---------------- -----------------
Total........................................ 678.6 (439.1) 384.7
Amounts of unrealized investment (gains)
losses attributable to:
Participating group annuity contracts........ (72.2) 5.9 (34.9)
Deferred policy acquisition costs............ (89.4) 119.0 (150.5)
Deferred Federal income taxes................ (178.8) 111.2 (67.4)
----------------- ---------------- -----------------
Total.............................................. $ 338.2 $ (203.0) $ 131.9
================= ================ =================
</TABLE>
6) CLOSED BLOCK
Summarized financial information of the Closed Block follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$3,662.8 and $1,270.3)........................................... $ 3,896.2 $ 1,197.0
Held to maturity, at amortized cost (estimated fair value of
$1,785.0 in 1994)................................................ - 1,927.8
Mortgage loans on real estate........................................ 1,368.8 1,543.7
Policy loans......................................................... 1,797.2 1,827.9
Cash and other invested assets....................................... 440.9 442.5
Deferred policy acquisition costs.................................... 823.6 878.1
Other assets......................................................... 286.1 288.5
----------------- -----------------
Total Assets......................................................... $ 8,612.8 $ 8,105.5
================= =================
Liabilities
Future policy benefits and policyholders' account balances........... $ 9,346.7 $ 8,965.3
Other liabilities.................................................... 160.5 104.2
----------------- -----------------
Total Liabilities.................................................... $ 9,507.2 $ 9,069.5
================= =================
</TABLE>
F-20
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 753.4 $ 798.1 $ 860.2
Investment income (net of investment
expenses of $26.7, $19.0 and $17.3).............. 538.9 523.0 526.5
Investment losses, net............................. (20.2) (24.0) (15.0)
----------------- ---------------- -----------------
Total revenues............................... 1,272.1 1,297.1 1,371.7
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,085.1 1,075.6 1,141.4
Other operating costs and expenses................. 62.6 70.5 102.0
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,147.7 1,146.1 1,243.4
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 124.4 $ 151.0 $ 128.3
================= ================ =================
</TABLE>
The fixed maturity portfolio, based on amortized cost, includes $4.3
million and $23.8 million at December 31, 1995 and 1994, respectively,
of restructured securities which includes problem fixed maturities of
$1.9 million and $6.4 million, respectively.
During the eleven months ended November 30, 1995, one security
classified as held to maturity was sold and ten securities classified
as held to maturity were transferred to the available for sale
portfolio. All actions resulted from a significant deterioration in
creditworthiness. The amortized cost of the security sold was $4.2
million. The aggregate amortized cost of the securities transferred
was $81.3 million with gross unrealized investment losses of $.1
million transferred to equity. At December 1, 1995, $1,750.7 million
of securities classified as held to maturity were transferred to the
available for sale portfolio. As a result, unrealized gains of $88.5
million on fixed maturities were recognized and offset by an increase
to the deferred dividend liability. Implementation of SFAS No. 115 for
the valuation of fixed maturities at December 31, 1993 resulted in the
recognition of a deferred dividend liability of $49.6 million.
At December 31, 1995 and 1994, problem mortgage loans on real estate
had an amortized cost of $36.5 million and $27.6 million,
respectively, and mortgage loans on real estate for which the payment
terms have been restructured had an amortized cost of $137.7 million
and $179.2 million, respectively. At December 31, 1995 and 1994, the
restructured mortgage loans on real estate amount included $8.8
million and $.7 million, respectively, of problem mortgage loans on
real estate.
Valuation allowances amounted to $18.4 million and $46.2 million on
mortgage loans on real estate and $4.3 million and $2.6 million on
equity real estate at December 31, 1995 and 1994, respectively.
Writedowns of fixed maturities amounted to $16.8 million and $15.9
million and $1.7 million for the years ended December 31, 1995, 1994
and 1993, respectively.
Many expenses related to Closed Block operations are charged to
operations outside of the Closed Block; accordingly, the contribution
from the Closed Block does not represent the actual profitability of
the Closed Block operations. Operating costs and expenses outside of
the Closed Block are, therefore, disproportionate to the business
outside of the Closed Block.
F-21
<PAGE>
7) DISCONTINUED OPERATIONS
Summarized financial information of the GIC Segment follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Mortgage loans on real estate........................................ $ 1,485.8 $ 1,730.5
Equity real estate................................................... 1,122.1 1,194.8
Other invested assets................................................ 665.2 978.8
Other assets......................................................... 579.3 529.5
----------------- -----------------
Total Assets......................................................... $ 3,852.4 $ 4,433.6
================= =================
Liabilities
Policyholders' liabilities........................................... $ 1,399.8 $ 1,924.0
Allowance for future losses.......................................... 164.2 185.6
Amounts due to continuing operations................................. 2,097.1 2,108.6
Other liabilities.................................................... 191.3 215.4
----------------- -----------------
Total Liabilities.................................................... $ 3,852.4 $ 4,433.6
================= =================
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Investment income (net of investment expenses
of $143.8, $174.0 and $175.8).................... $ 325.1 $ 395.0 $ 535.1
Investment (losses) gains, net..................... (22.9) 26.8 (22.6)
Policy fees, premiums and other income............. .7 .3 8.7
----------------- ---------------- -----------------
Total revenues..................................... 302.9 422.1 521.2
Benefits and other deductions...................... 328.0 443.8 545.9
----------------- ---------------- -----------------
Losses Charged to Allowance for Future Losses...... $ (25.1) $ (21.7) $ (24.7)
================= ================ =================
</TABLE>
In 1991, the Company established a pre-tax provision of $396.7 million
for the estimated future losses of the GIC Segment. At December 31,
1993, implementation of SFAS No. 115 for the valuation of fixed
maturities resulted in a benefit of $13.1 million, offset by a
corresponding addition to the allowance for future losses.
The amounts due to continuing operations at December 31, 1994
consisted of $3,324.0 million borrowed by the GIC Segment from
continuing operations, offset by $1,215.4 million representing an
obligation of continuing operations to provide assets to fund the
accumulated deficit of the GIC Segment. In January 1995, continuing
operations transferred $1,215.4 million in cash to the GIC Segment in
settlement of its obligation. Subsequently, the GIC Segment remitted
$1,155.4 million in cash to continuing operations in partial repayment
of borrowings by the GIC Segment. No gains or losses were recognized
on these transactions. Amounts due to continuing operations at
December 31, 1995, consisted of $2,097.1 million borrowed by the
discontinued GIC Segment.
F-22
<PAGE>
Investment income included $88.2 million and $97.7 million of interest
income for the years ended December 31, 1994 and 1993, respectively,
on amounts due from continuing operations. Benefits and other
deductions includes $154.6 million, $219.7 million and $197.1 million
of interest expense related to amounts borrowed from continuing
operations in 1995, 1994 and 1993, respectively.
Valuation allowances amounted to $19.2 million and $50.2 million on
mortgage loans on real estate and $77.9 million and $74.7 million on
equity real estate at December 31, 1995 and 1994, respectively.
Writedowns of fixed maturities amounted to $8.1 million, $17.8 million
and $1.1 million for the years ended December 31, 1995, 1994 and 1993,
respectively.
The fixed maturity portfolio, based on amortized cost, includes $15.1
million and $43.3 million at December 31, 1995 and 1994, respectively,
of restructured securities. These amounts include problem fixed
maturities of $6.1 million and $9.7 million at December 31, 1995 and
1994, respectively.
At December 31, 1995 and 1994, problem mortgage loans on real estate
had amortized costs of $35.4 million and $14.9 million, respectively,
and mortgage loans on real estate for which the payment terms have
been restructured had amortized costs of $289.3 million and $371.2
million, respectively.
At December 31, 1995 and 1994, the GIC Segment had $310.9 million and
$312.2 million, respectively, of real estate acquired in satisfaction
of debt.
8) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Short-term debt...................................................... $ - $ 20.0
----------------- -----------------
Long-term debt:
Equitable Life:
Surplus notes, 6.95%, scheduled to mature 2005..................... 399.3 -
Surplus notes, 7.70%, scheduled to mature 2015..................... 199.6 -
Eurodollar notes, 10.375% due 1995................................. - 34.6
Eurodollar notes, 10.5% due 1997................................... 76.2 76.2
Zero coupon note, 11.25% due 1997.................................. 120.1 107.8
Other.............................................................. 16.3 14.3
----------------- -----------------
Total Equitable Life........................................... 811.5 232.9
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 4.98% - 12.75% due through 2019.................... 1,084.4 1,080.6
----------------- -----------------
Alliance:
Other.............................................................. 3.4 3.9
----------------- -----------------
Total long-term debt................................................. 1,899.3 1,317.4
----------------- -----------------
Total Short-term and Long-term Debt.................................. $ 1,899.3 $ 1,337.4
================= =================
</TABLE>
Short-term Debt
---------------
Equitable Life has a $350.0 million bank credit facility available to
fund short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of
borrowing options with varying interest rates. The interest rates are
based on external indices dependent on the type of borrowing and at
December 31, 1995 range from 5.8% (the London Interbank Offering Rate
plus 22.5 basis points) to 8.5% (the prime rate). There were no
borrowings outstanding under this bank credit facility at December 31,
1995.
F-23
<PAGE>
Equitable Life has a commercial paper program with an issue limit of
$500.0 million. This program is available for general corporate
purposes used to support Equitable Life's liquidity needs and is
supported by Equitable Life's existing $350.0 million five-year bank
credit facility. There were no borrowings outstanding under this
program at December 31, 1995.
In 1994, Alliance established a $100.0 million revolving credit
facility with several banks. On March 31, 1997, the revolving credit
facility converts into a term loan payable in quarterly installments
through March 31, 1999. Outstanding borrowings generally bear interest
at the Eurodollar rate plus .875% per annum through March 31, 1997 and
at the Eurodollar rate plus 1.125% per annum after conversion through
March 31, 1999. In addition, a quarterly commitment fee of .25% per
annum is paid on the average daily unused amount. At December 31,
1995, there were no amounts outstanding under the facility.
In 1994, Alliance also established a $100.0 million commercial paper
program and entered into a three-year $100.0 million revolving credit
facility with a group of commercial banks to support commercial paper
to be issued under the program and for general corporate purposes.
Amounts outstanding under the facility bear interest at an annual rate
ranging from the Eurodollar rate plus .225% to the Eurodollar rate
plus .2875%. A fee of .125% per annum is paid quarterly on the entire
facility. At December 31, 1995, Alliance had not issued any commercial
paper and there were no amounts outstanding under the revolving credit
facility.
During 1994, EREIM established two bank lines of credit totaling $30.0
million of which $20.0 million was outstanding at December 31, 1994.
Long-term Debt
--------------
Several of the long-term debt agreements have restrictive covenants
related to the total amount of debt, net tangible assets and other
matters. The Company is in compliance with all debt covenants.
On December 18, 1995, Equitable Life issued, in accordance with
Section 1307 of the New York Insurance Law, $400.0 million of surplus
notes having an interest rate of 6.95% scheduled to mature in 2005 and
$200.0 million of surplus notes having an interest rate of 7.70%
scheduled to mature in 2015. Proceeds from the issuance of the surplus
notes were $596.6 million, net of related issuance costs. The
unamortized discount on the surplus notes was $1.1 million at December
31, 1995. Payments of interest on or principal of the surplus notes
are subject to prior approval by the New York Insurance Department.
The Company has pledged real estate, mortgage loans, cash and
securities amounting to $1,629.7 million and $1,744.4 million at
December 31, 1995 and 1994, respectively, as collateral for certain
long-term debt.
At December 31, 1995, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1996 and the succeeding
four years are $124.0 million, $466.6 million, $309.5 million, $15.8
million, respectively, and $1,015.0 million thereafter.
9) FEDERAL INCOME TAXES
A summary of the Federal income tax expense (benefit) in the
consolidated statements of earnings is shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ (11.7) $ 4.0 $ 115.8
Deferred......................................... 124.1 97.2 (24.5)
----------------- ---------------- -----------------
Total.............................................. $ 112.4 $ 101.2 $ 91.3
================= ================ =================
</TABLE>
F-24
<PAGE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings
before Federal income taxes and cumulative effect of accounting change
by the expected Federal income tax rate of 35%. The sources of the
difference and the tax effects of each are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 143.5 $ 138.1 $ 106.3
Differential earnings amount....................... - (16.8) (23.2)
Adjustment of tax audit reserves................... 4.1 (4.6) 22.9
Tax rate adjustment................................ - - (5.0)
Other.............................................. (35.2) (15.5) (9.7)
----------------- --------------- -----------------
Federal Income Tax Expense......................... $ 112.4 $ 101.2 $ 91.3
================= ================ =================
</TABLE>
Prior to the date of demutualization, Equitable Life reduced its
deduction for policyholder dividends by the differential earnings
amount. This amount was computed, for each tax year, by multiplying
Equitable Life's average equity base, as determined for tax purposes,
by an estimate of the excess of an imputed earnings rate for stock
life insurance companies over the average mutual life insurance
companies' earnings rate. The differential earnings amount for each
tax year was subsequently recomputed when actual earnings rates were
published by the Internal Revenue Service. As a stock life insurance
company, Equitable Life is no longer required to reduce its
policyholder dividend deduction by the differential earnings amount,
but differential earnings amounts for pre-demutualization years were
still being recomputed in 1994 and 1993.
The components of the net deferred Federal income tax asset are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 December 31, 1994
--------------------------------- ---------------------------------
ASSETS LIABILITIES Assets Liabilities
--------------- ---------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Deferred policy acquisition costs,
reserves and reinsurance............. $ - $ 303.2 $ - $ 220.3
Investments............................ - 326.9 - 18.7
Compensation and related benefits...... 293.0 - 307.3 -
Other.................................. - 32.3 - 5.8
--------------- ---------------- --------------- ---------------
Total.................................. $ 293.0 $ 662.4 $ 307.3 $ 244.8
=============== ================ =============== ===============
</TABLE>
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,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Deferred policy acquisition costs, reserves
and reinsurance.................................. $ 55.1 $ 13.0 $ (46.7)
Investments........................................ 13.0 89.3 60.4
Compensation and related benefits.................. 30.8 10.0 (50.1)
Other.............................................. 25.2 (15.1) 11.9
----------------- ---------------- -----------------
Deferred Federal Income Tax Expense (Benefit)...... $ 124.1 $ 97.2 $ (24.5)
================= ================ =================
</TABLE>
F-25
<PAGE>
The Internal Revenue Service completed its audit of the Company's
Federal income tax returns for the years 1984 through 1988. There was
no material effect on the Company's consolidated results of
operations.
10) REINSURANCE AGREEMENTS
The Insurance Group assumes and cedes reinsurance with other insurance
companies. The Insurance Group evaluates the financial condition of
its reinsurers to minimize its exposure to significant losses from
reinsurer insolvencies. The effect of reinsurance (excluding group
life and health) is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums.................................... $ 474.2 $ 476.7 $ 458.8
Reinsurance assumed................................ 171.3 180.5 169.9
Reinsurance ceded.................................. (38.7) (31.6) (29.6)
----------------- ---------------- -----------------
Premiums........................................... $ 606.8 $ 625.6 $ 599.1
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 38.9 $ 27.5 $ 33.7
================= ================ =================
Policyholders' Benefits Ceded...................... $ 48.2 $ 20.7 $ 72.3
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 28.5 $ 25.4 $ 24.1
================= ================ =================
</TABLE>
In February 1993, management established a practice limiting the risk
retention on new policies issued by the Insurance Group to a maximum
of $5.0 million. In addition, effective January 1, 1994, all in force
business above $5.0 million was reinsured. The Insurance Group also
reinsures the entire risk on certain substandard underwriting risks as
well as in certain other cases.
The Insurance Group cedes 100% of its group life and health business
to a third party insurance company. Premiums ceded totaled $260.6
million, $241.0 million and $895.1 million for the years ended
December 31, 1995, 1994 and 1993, respectively. Ceded death and
disability benefits totaled $188.1 million, $235.5 million and $787.8
million for the years ended December 31, 1995, 1994 and 1993,
respectively. Insurance liabilities ceded totaled $724.2 million and
$833.4 million at December 31, 1995 and 1994, respectively.
11) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified
part-time employees), managers and certain agents. The pension plans
are non-contributory and benefits are based on a cash balance formula
or years of service and final average earnings, if greater, under
certain grandfathering rules in the plans. The Company's funding
policy is to make the minimum contribution required by the Employee
Retirement Income Security Act of 1974.
Components of net periodic pension (credit) cost for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 30.0 $ 30.3 $ 29.8
Interest cost on projected benefit obligations..... 122.0 111.0 108.0
Actual return on assets............................ (309.2) 24.4 (178.6)
Net amortization and deferrals..................... 155.6 (142.5) 55.3
----------------- ---------------- -----------------
Net Periodic Pension (Credit) Cost................. $ (1.6) $ 23.2 $ 14.5
================= ================ =================
</TABLE>
F-26
<PAGE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Actuarial present value of obligations:
Vested............................................................... $ 1,642.4 $ 1,295.5
Non-vested........................................................... 10.9 8.7
--------------- -----------------
Accumulated Benefit Obligation......................................... $ 1,653.3 $ 1,304.2
================ =================
Plan assets at fair value.............................................. $ 1,503.8 $ 1,193.5
Projected benefit obligation........................................... 1,743.0 1,403.4
---------------- -----------------
Projected benefit obligation in excess of plan assets.................. (239.2) (209.9)
Unrecognized prior service cost........................................ (25.5) (33.2)
Unrecognized net loss from past experience different from that
assumed.............................................................. 368.2 298.9
Unrecognized net asset at transition................................... (7.3) (20.8)
Additional minimum liability........................................... (51.9) (37.8)
---------------- -----------------
Prepaid (Accrued) Pension Cost......................................... $ 44.3 $ (2.8)
================ =================
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of projected benefit
obligations were 7.25% and 4.50%, respectively, at December 31, 1995
and 8.75% and 4.88%, respectively, at December 31, 1994. As of January
1, 1995 and 1994, the expected long-term rate of return on assets for
the retirement plan was 11% and 10%, respectively.
The Company recorded, as a reduction of shareholder's equity, an
additional minimum pension liability of $35.1 million and $2.7
million, net of Federal income taxes, at December 31, 1995 and 1994,
respectively, representing the excess of the accumulated benefit
obligation over the fair value of plan assets and accrued pension
liability.
The pension plan's assets include corporate and government debt
securities, equity securities, equity real estate and shares of Group
Trusts managed by Alliance.
As of December 31, 1993, the Company changed the method of determining
the market-related value of plan assets from fair value to a
calculated value. This change in estimate had no material effect on
the Company's consolidated statements of earnings.
Prior to 1987, the qualified plan funded participants' benefits
through the purchase of non-participating annuity contracts from
Equitable Life. Benefit payments under these contracts were
approximately $36.4 million, $38.1 million and $39.9 million for the
years ended December 31, 1995, 1994 and 1993, respectively.
The Company provides certain medical and life insurance benefits
(collectively, "postretirement benefits") for qualifying employees,
managers and agents retiring from the Company on or after attaining
age 55 who have at least 10 years of service. The life insurance
benefits are related to age and salary at retirement. The costs of
postretirement benefits are recognized in accordance with the
provisions of SFAS No. 106. The Company continues to fund
postretirement benefits costs on a pay-as-you-go basis and, for the
years ended December 31, 1995, 1994 and 1993, the Company made
estimated postretirement benefits payments of $31.1 million, $29.8
million and $29.7 million, respectively.
F-27
<PAGE>
The following table sets forth the postretirement benefits plan's
status, reconciled to amounts recognized in the Company's consolidated
financial statements:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 4.0 $ 3.9 $ 5.3
Interest cost on accumulated postretirement
benefits obligation.............................. 34.7 28.6 29.2
Unrecognized prior service cost.................... (2.3) (3.9) (6.9)
Net amortization and deferrals..................... - - 1.5
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 36.4 $ 28.6 $ 29.1
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefits obligation:
Retirees............................................................. $ 391.8 $ 300.4
Fully eligible active plan participants.............................. 50.4 33.0
Other active plan participants....................................... 64.2 44.0
---------------- -----------------
506.4 377.4
Unrecognized benefit of plan amendments................................ - 3.2
Unrecognized prior service cost........................................ 56.3 61.9
Unrecognized net loss from past experience different from that
assumed and from changes in assumptions.............................. (181.3) (64.7)
---------------- -----------------
Accrued Postretirement Benefits Cost................................... $ 381.4 $ 377.8
================ =================
</TABLE>
In 1993, the Company amended the cost sharing provisions of
postretirement medical benefits. At January 1, 1994, medical benefits
available to retirees under age 65 are the same as those offered to
active employees and medical benefits will be limited to 200% of 1993
costs for all participants.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefits obligation was 10% in 1995,
gradually declining to 3.5% in the year 2008 and in 1994 was 10%,
gradually declining to 5% in the year 2004. The discount rate used in
determining the accumulated postretirement benefits obligation was
7.25% and 8.75% at December 31, 1995 and 1994, respectively.
If the health care cost trend rate assumptions were increased by 1%,
the accumulated postretirement benefits obligation as of December 31,
1995 would be increased 6.5%. The effect of this change on the sum of
the service cost and interest cost would be an increase of 6.7%.
12) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
-----------
The Insurance Group primarily uses derivatives for asset/liability
risk management and for hedging individual securities. Derivatives
mainly are utilized to reduce the Insurance Group's exposure to
interest rate fluctuations. Accounting for interest rate swap
transactions is on an accrual basis. Gains and losses related to
interest rate swap transactions are amortized as yield adjustments
over the remaining life of the underlying hedged security. Income and
expense resulting from interest rate swap activities are reflected in
net investment income except for hedging transactions related to
insurance liabilities. The notional amount of matched interest rate
swaps outstanding at December 31, 1995 was $1,120.8 million. The
average unexpired terms at December 31, 1995 range from 2.5 to 3.0
years. At December 31, 1995, the cost of terminating outstanding
matched swaps in a loss position was $15.9 million and the unrealized
gain on
F-28
<PAGE>
outstanding matched swaps in a gain position was $19.0 million. The
Company has no intention of terminating these contracts prior to
maturity. During 1995, 1994 and 1993, net gains (losses) of $1.4
million, $(.2) million and $-0- million, respectively, were recorded
in connection with interest rate swap activity. Equitable Life has
implemented an interest rate cap program designed to hedge crediting
rates on interest-sensitive individual annuities contracts. The
outstanding notional amounts at December 31, 1995 of contracts
purchased and sold were $2,625.0 million and $300.0 million,
respectively. The net premium paid by Equitable Life on these
contracts was $12.5 million and is being amortized ratably over the
contract periods ranging from 3 to 5 years. Income and expense
resulting from this program are reflected as an adjustment to interest
credited to policyholders' account balances.
Substantially all of DLJ's business related derivatives is by its
nature trading activities which are primarily for the purpose of
customer accommodations. DLJ's derivative activities consist of option
writing and trading in forward and futures contracts. Derivative
financial instruments have both on-and-off balance sheet implications
depending on the nature of the contracts. DLJ's involvement in swap
contracts is not significant.
Fair Value of Financial Instruments
-----------------------------------
The Company defines fair value as the quoted market prices for those
instruments that are actively traded in financial markets. In cases
where quoted market prices are not available, fair values are
estimated using present value or other valuation techniques. The fair
value estimates are made at a specific point in time, based on
available market information and judgments about the financial
instrument, including estimates of timing, amount of expected future
cash flows and the credit standing of counterparties. Such estimates
do not reflect any premium or discount that could result from offering
for sale at one time the Company's entire holdings of a particular
financial instrument, nor do they consider the tax impact of the
realization of unrealized gains or losses. In many cases, the fair
value estimates cannot be substantiated by comparison to independent
markets, nor can the disclosed value be realized in immediate
settlement of the instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts.
Fair market value of off-balance-sheet financial instruments of the
Insurance Group was not material at December 31, 1995 and 1994.
Fair value for mortgage loans on real estate are estimated by
discounting future contractual cash flows using interest rates at
which loans with similar characteristics and credit quality would be
made. Fair values for foreclosed mortgage loans and problem mortgage
loans are limited to the estimated fair value of the underlying
collateral if lower.
The estimated fair values for the Company's liabilities under GIC and
association plan contracts are estimated using contractual cash flows
discounted based on the T. Rowe Price GIC Index Rate for the
appropriate duration. For durations in excess of the published index
rate, the appropriate Treasury rate is used plus a spread equal to the
longest duration GIC rate spread published.
The estimated fair values for those group annuity contracts which are
classified as investment contracts are measured at the estimated fair
value of the underlying assets. Deposit administration contracts
(included with group annuity contracts) classified as insurance
contracts are measured at estimated fair value of the underlying
assets. The estimated fair values for single premium deferred
annuities ("SPDA") are estimated using projected cash flows discounted
at current offering rates. The estimated fair values for supplementary
contracts not involving life contingencies ("SCNILC") and annuities
certain are derived using discounted cash flows based upon the
estimated current offering rate.
Fair value for long-term debt is determined using published market
values, where available, or contractual cash flows discounted at
market interest rates. The estimated fair values for non-recourse
mortgage debt are determined by discounting contractual cash flows at
a rate which takes into account the level of current market interest
rates and collateral risk. The estimated fair values for recourse
mortgage debt are determined by discounting contractual cash flows at
a rate based upon current interest rates of other companies with
credit ratings similar to the Company. The Company's fair value of
short-term borrowings approximates their carrying value.
F-29
<PAGE>
The following table discloses carrying value and estimated fair value
for financial instruments not otherwise disclosed in Notes 3, 6 and 7:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------
1995 1994
--------------------------------- ---------------------------------
CARRYING ESTIMATED Carrying Estimated
VALUE FAIR VALUE Value Fair Value
--------------- ---------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Consolidated Financial Instruments:
-----------------------------------
Mortgage loans on real estate.......... $ 3,638.3 $ 3,973.6 $ 4,018.0 $ 3,919.4
Other joint ventures................... 492.7 492.7 544.4 544.4
Policy loans........................... 1,976.4 2,057.5 1,731.2 1,676.6
Policyholders' account balances:
Association plans.................... 101.0 100.0 141.0 141.0
Group annuity contracts.............. 2,335.0 2,395.0 2,450.0 2,469.0
SPDA................................. 1,265.8 1,272.0 1,744.3 1,732.7
Annuities certain and SCNILC......... 649.1 680.7 599.1 624.7
Long-term debt......................... 1,899.3 1,962.9 1,317.4 1,249.2
Closed Block Financial Instruments:
-----------------------------------
Mortgage loans on real estate.......... 1,368.8 1,461.4 1,543.7 1,477.8
Other equity investments............... 151.6 151.6 179.5 179.5
Policy loans........................... 1,797.2 1,891.4 1,827.9 1,721.9
SCNILC liability....................... 34.8 34.5 39.5 37.0
GIC Segment Financial Instruments:
----------------------------------
Mortgage loans on real estate.......... 1,485.8 1,666.1 1,730.5 1,743.7
Fixed maturities....................... 107.4 107.4 219.3 219.3
Other equity investments............... 455.9 455.9 591.8 591.8
Guaranteed interest contracts.......... 329.0 352.0 835.0 855.0
Long-term debt......................... 135.1 136.0 134.8 127.9
</TABLE>
13) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements
include commitments by the Company, under certain conditions: to make
liquidity advances to cover delinquent principal and interest and
property protection expenses with respect to loan servicing agreements
for securitized mortgage loans which at December 31, 1995 totaled $2.8
billion (as of December 31, 1995, $4.0 million have been advanced
under these commitments); to make capital contributions of up to
$246.7 million to affiliated real estate joint ventures; to provide
equity financing to certain limited partnerships of $129.4 million at
December 31, 1995, under existing loan or loan commitment agreements;
and to provide short-term financing loans which at December 31, 1995
totaled $45.8 million. Management believes the Company will not incur
any material losses as a result of these commitments.
Equitable Life is the obligor under certain structured settlement
agreements which it had entered into with unaffiliated insurance
companies and beneficiaries. To satisfy its obligations under these
agreements, Equitable Life owns single premium annuities issued by
previously wholly owned life insurance subsidiaries. Equitable Life
has directed payment under these annuities to be made directly to the
beneficiaries under the structured settlement agreements. A contingent
liability exists with respect to these agreements should the
previously wholly owned subsidiaries be unable to meet their
obligations. Management believes the satisfaction of those obligations
by Equitable Life is remote.
At December 31, 1995, the Insurance Group had $29.0 million of letters
of credit outstanding.
F-30
<PAGE>
14) LITIGATION
A number of lawsuits have been filed against life and health insurers
in the jurisdictions in which Equitable Life and its subsidiaries do
business involving insurers' sales practices, alleged agent
misconduct, failure to properly supervise agents, and other matters.
Some of the lawsuits have resulted in the award of substantial
judgments against other insurers, including material amounts of
punitive damages, or in substantial settlements. In some states juries
have substantial discretion in awarding punitive damages. Equitable
Life and its insurance subsidiaries, like other life and health
insurers, from time to time are involved in such litigation. To date,
no such lawsuit has resulted in an award or settlement of any material
amount against the Company. Among litigations pending against
Equitable Life and its insurance subsidiaries of the type referred to
in this paragraph are the litigations described in the following two
paragraphs.
An action entitled Golomb et al. v. The Equitable Life Assurance
Society of the United States was filed on January 20, 1995 in New York
County Supreme Court. The action purports to be brought on behalf of a
class of persons insured after 1983 under Lifetime Guaranteed
Renewable Major Medical Insurance Policies issued by Equitable Life
(the "policies"). The complaint alleges that premium increases for
these policies after 1983, all of which were filed with and approved
by the New York State Insurance Department and certain other state
insurance departments, breached the terms of the insurance policies,
and that statements in the policies and elsewhere concerning premium
increases constituted fraudulent concealment, misrepresentations in
violation of New York Insurance Law Section 4226 and deceptive
practices under New York General Business Law Section 349. The
complaint seeks a declaratory judgment, injunctive relief restricting
the methods by which Equitable Life increases premiums on the policies
in the future, a refund of premiums, and punitive damages. Plaintiffs
also have indicated that they will seek damages in an unspecified
amount. Equitable Life has moved to dismiss the complaint in its
entirety on the grounds that it fails to state a claim and that
uncontroverted documentary evidence establishes a complete defense to
the claims. That motion is awaiting decision by the court. In January
1996, separate actions were filed in Pennsylvania and Texas state
courts (entitled, respectively, Malvin et al. v. The Equitable Life
Assurance Society of the United States and Bowler et al. v. The
Equitable Life Assurance Society of the United States), making claims
similar to those in the New York action described above. These new
actions are asserted on behalf of proposed classes of Pennsylvania
issued or renewed policyholders and Texas issued or renewed
policyholders, insured under the policies. The Pennsylvania and Texas
actions seek compensatory and punitive damages and injunctive relief
restricting the methods by which Equitable Life increases premiums in
the future based on the common law and statutes of those states.
Although the outcome of any litigation cannot be predicted with
certainty, particularly in the early stages of an action, Equitable
Life's management believes that the ultimate resolution of those
litigations should not have a material adverse effect on the financial
position of the Company. Due to the early stage of such litigation,
Equitable Life's management cannot make an estimate of loss, if any,
or predict whether or not such litigation will have a material adverse
effect on the Company's results of operations in any particular
period.
An action was instituted on April 6, 1995 against Equitable Life and
its wholly owned subsidiary, The Equitable of Colorado, Inc. ("EOC"),
in New York State Court, entitled Sidney C. Cole et al. v. The
Equitable Life Assurance Society of the United States and The
Equitable of Colorado, Inc., No. 95/108611 (N.Y. County). The action
is brought by the holders of a joint survivorship whole life policy
issued by EOC. The action purports to be on behalf of a class
consisting of all persons who from January 1, 1984 purchased life
insurance policies sold by Equitable Life and EOC based upon their
allegedly uniform sales presentations and policy illustrations. The
complaint puts in issue various alleged sales practices that
plaintiffs assert, among other things, misrepresented the stated
number of years that the annual premium would need to be paid.
Plaintiffs seek damages in an unspecified amount, imposition of a
constructive trust, and seek to enjoin Equitable Life and EOC from
engaging in the challenged sales practices. Equitable Life and EOC
intend to defend vigorously and believe that they have meritorious
defenses which, if successful, would dispose of the action completely.
Equitable Life and EOC further do not believe that this case is an
appropriate class action. Although the outcome of any litigation
cannot be predicted with certainty, particularly in the early stages
of an action, Equitable Life's management believes that the ultimate
F-31
<PAGE>
resolution of this litigation should not have a material adverse
effect on the financial position of the Company. Due to the early
stage of such litigation, the Company's management cannot make an
estimate of loss, if any, or predict whether or not such litigation
will have a material adverse effect on the Company's results of
operations in any particular period.
Equitable Casualty Insurance Company ("Casualty"), a captive property
and casualty insurance company organized under the laws of Vermont,
which is an indirect wholly owned subsidiary of Equitable Life, is a
party to an arbitration proceeding that commenced in August 1995 with
the selection of three arbitrators. The arbitration will resolve a
dispute among Casualty, Houston General Insurance Company ("Houston
General"), and GEICO General Insurance Company ("GEICO General")
regarding the interpretation of a reinsurance agreement that was
entered into as part of a 1980 transaction whereby Equitable General
Insurance Company ("Equitable General"), formerly an indirect
subsidiary of Equitable Life and the predecessor of GEICO General,
sold its commercial lines business along with the stock of Houston
General to subsidiaries of Tokio Marine & Fire Insurance Company, Ltd.
("Tokio Marine"). Casualty and GEICO General maintain that, under the
reinsurance agreement, Houston General assumed liability for all
losses insured under commercial lines policies written by Equitable
General and its predecessors in order to effect the transfer of that
business to Tokio Marine's subsidiaries. Houston General contends that
it did not assume reinsurance liability for losses insured under
certain of those commercial lines policies. The arbitration panel
determined to begin hearing evidence in the arbitration in June 1996.
The result of the arbitration is expected to resolve two litigations
that were commenced by Houston General and that have been stayed by
the presiding courts pending the completion of the arbitration (in one
case, Houston General named as a defendant only GEICO General but
Casualty intervened as a defendant with GEICO General, and in the
other case, Houston General named GEICO General and Equitable Life).
The arbitration is expected to be completed during the second half of
1996. While the ultimate outcome of the arbitration cannot be
predicted with certainty, the Company's management believes that the
arbitrators will recognize that Houston General's position is without
merit and contrary to the way in which the reinsurance industry
operates and therefore the ultimate resolution of this matter should
not have a material adverse effect on the Company's financial position
or results of operations.
On July 25, 1995, a Consolidated and Supplemental Class Action
Complaint ("Complaint") was filed against the Alliance North American
Government Income Trust, Inc. (the "Fund"), Alliance and certain other
defendants affiliated with Alliance, including the Holding Company,
alleging violations of Federal securities laws, fraud and breach of
fiduciary duty in connection with the Fund's investments in Mexican
and Argentine securities. A similar complaint was filed on November 7,
1995 and was subsequently consolidated with the Complaint. The
Complaint, which seeks certification of a plaintiff class of persons
who purchased or owned Class A, B or C shares of the Fund from March
27, 1992 through December 23, 1994, seeks an unspecified amount of
damages, costs, attorneys' fees and punitive damages. The principal
allegations of the Complaint are that the Fund purchased debt
securities issued by the Mexican and Argentine governments in amounts
that were not permitted by the Funds' investment objective, and that
there was no shareholder vote to change the investment objective to
permit purchases in such amounts. The Complaint further alleges that
the decline in the value of the Mexican and Argentine securities held
by the Fund caused the Fund's net asset value to decline to the
detriment of the Fund's shareholders. On September 26, 1995, the
defendants jointly filed a motion to dismiss the Complaint which has
not yet been decided by the Court. Alliance believes that the
allegations in the Complaint are without merit and intends to
vigorously defend against these claims. While the ultimate results of
this action cannot be determined, management of Alliance does not
expect that this action will have a material adverse effect on
Alliance's business.
On January 26, 1996, a purported purchaser of certain notes and
warrants to purchase shares of common stock of Rickel Home Centers,
Inc. ("Rickel") filed a class action complaint against Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJSC"), a wholly owned
subsidiary of DLJ, and certain other defendants for unspecified
compensatory and punitive damages in the United States District Court
for the Southern District of New York. The suit was brought on behalf
of the purchasers of 126,457 units consisting of $126,457,000
aggregate principal amount of 13 1/2% senior notes due 2001 and
126,457 warrants to purchase shares of common stock of Rickel (the
"Units") issued by Rickel in October 1994. The complaint alleges
violations of Federal securities laws and common law fraud against
DLJSC, as the underwriter of
F-32
<PAGE>
the Units and as an owner of 7.3% of the common stock of Rickel, Eos
Partners, L.P., and General Electric Capital Corporation, each as
owners of 44.2% of the common stock of Rickel, and members of the
Board of Directors of Rickel, including a DLJSC Managing Director. The
complaint seeks to hold DLJSC liable for alleged misstatements and
omissions contained in the prospectus and registration statement filed
in connection with the offering of the Units, alleging that the
defendants knew of financial losses and a decline in value of Rickel
in the months prior to the offering and did not disclose such
information. The complaint also alleges that Rickel failed to pay its
semi-annual interest payment due on the Units on December 15, 1995 and
that Rickel filed a voluntary petition for reorganization pursuant to
Chapter 11 of the United States Bankruptcy Code on January 10, 1996.
DLJSC intends to defend itself vigorously against all of the
allegations contained in the complaint. Although there can be no
assurance, DLJ does not believe the outcome of this litigation will
have a material adverse effect on its financial condition. Due to the
early stage of this litigation, based on the information currently
available to it, DLJ's management cannot make an estimate of loss or
predict whether or not such litigation will have a material adverse
effect on DLJ's results of operations in any particular period.
On June 12, 1995, a purported purchaser of certain securities issued
by Spectravision, Inc. ("Spectravision") filed a class action
complaint against DLJSC and certain other defendants for unspecified
damages in the U.S. District Court for the Northern District of Texas.
The suit was brought on behalf of the purchasers of $260,795,000 of
securities issued by Spectravision in November 1992, and alleges
violations of the Federal securities laws and the Texas Securities
Act, common law fraud and negligent misrepresentation. The securities
were issued by Spectravision pursuant to a prepackaged bankruptcy
reorganization plan. DLJSC served as financial advisor to
Spectravision in its reorganization and as Dealer Manager for
Spectravision's 1992 issuance of the securities. DLJSC is also being
sued as a seller of certain notes of Spectravision acquired and resold
by DLJSC. The complaint seeks to hold DLJSC liable for various alleged
misstatements and omissions contained in prospectuses and other
materials issued between July 1992 and June 1994. DLJSC intends to
defend itself vigorously against all of the allegations contained in
the complaint. On June 8, 1995, Spectravision filed a Chapter 11
petition in the United States Bankruptcy Court for the District of
Delaware. On January 5, 1996, the district court in the litigation
involving DLJSC ordered a partial stay of discovery until
Spectravision has emerged from bankruptcy or six months from the date
of the stipulated stay (whichever comes first). Accordingly, discovery
of DLJSC has not yet occurred. Although there can be no assurance, DLJ
does not believe that the ultimate outcome of this litigation will
have a material adverse effect on its financial condition. Due to the
early stage of such litigation, based upon information currently
available to it, DLJ's management cannot make an estimate of loss or
predict whether or not such litigation will have a material adverse
effect on DLJ's results of operations in any particular period.
Plaintiff's counsel in the class action against DLJSC described above
has also filed another securities class action based on similar
factual allegations. Such suit names as defendants Spectravision and
its directors, and was brought on behalf of a class of purchasers of
$209.0 million of stock and $77.0 million of notes issued by
Spectravision in October 1993. DLJSC served as the managing
underwriter for both of these issuances. DLJSC has not been named as a
defendant in this suit, although it has been reported to DLJSC that
plaintiff's counsel is contemplating seeking to amend the complaint to
add DLJSC as a defendant in that action.
In October 1995, DLJSC was named as a defendant in a purported class
action filed in a Texas State Court on behalf of the holders of $550.0
million principal amount of subordinated redeemable discount
debentures of National Gypsum Corporation ("NGC") canceled in
connection with a Chapter 11 plan of reorganization for NGC
consummated in July 1993. The named plaintiff in the State Court
action also filed an adversary proceeding in the Bankruptcy Court for
the Northern District of Texas seeking a declaratory judgment that the
confirmed NGC plan of reorganization does not bar the class action
claims. Subsequent to the consummation of NGC's plan of
reorganization, NGC's shares traded for values substantially in excess
of, and in 1995 NGC was acquired for a value substantially in excess
of, the values upon which NGC's plan of reorganization was based. The
two actions arise out of DLJSC's activities as financial advisor to
NGC in the course of NGC's Chapter 11 reorganization proceedings. The
class action complaint alleges that the plan of reorganization
submitted by NGC was based upon projections by NGC and DLJSC which
intentionally understated forecasts, and provided misleading and
incorrect information in order to hide NGC's true value and that
defendants breached their fiduciary duties by, among other things,
providing false, misleading or incomplete information to deliberately
understate the value of NGC. The class action complaint seeks
compensatory and punitive damages purportedly sustained by the class.
The Texas State
F-33
<PAGE>
Court action has subsequently been removed to the Bankruptcy Court,
which removal is being opposed by the plaintiff. DLJSC intends to
defend itself vigorously against all of the allegations contained in
the complaint. Although there can be no assurance, DLJ does not
believe that the ultimate outcome of this litigation will have a
material adverse effect on its financial condition. Due to the early
stage of such litigation, based upon the information currently
available to it, DLJ's management cannot make an estimate of loss or
predict whether or not such litigation will have a material adverse
effect on DLJ's results of operations in any particular period.
In November and December 1995, DLJSC, along with various other
parties, was named as a defendant in a number of purported class
actions filed in the U.S. District Court for the Eastern District of
Louisiana. The complaints allege violations of the Federal securities
laws arising out of a public offering in 1994 of $435.0 million of
first mortgage notes of Harrah's Jazz Company and Harrah's Jazz
Finance Corp. The complaints seek to hold DLJSC liable for various
alleged misstatements and omissions contained in the prospectus dated
November 9, 1994. DLJSC intends to defend itself vigorously against
all of the allegations contained in the complaints. Although there can
be no assurance, DLJ does not believe that the ultimate outcome of
this litigation will have a material adverse effect on its financial
condition. Due to the early stage of this litigation, based upon the
information currently available to it, DLJ's management cannot make an
estimate of loss or predict whether or not such litigation will have a
material adverse effect on DLJ's results of operations in any
particular period.
In addition to the matters described above, Equitable Life and its
subsidiaries and DLJ and its subsidiaries are involved in various
legal actions and proceedings in connection with their businesses.
Some of the actions and proceedings have been brought on behalf of
various alleged classes of claimants and certain of these claimants
seek damages of unspecified amounts. While the ultimate outcome of
such matters cannot be predicted with certainty, in the opinion of
management no such matter is likely to have a material adverse effect
on the Company's consolidated financial position or results of
operations.
15) LEASES
The Company has entered into operating leases for office space and
certain other assets, principally data processing equipment and office
furniture and equipment. Future minimum payments under noncancelable
leases for 1996 and the succeeding four years are $114.8 million,
$101.8 million, $90.0 million, $73.6 million, $57.7 million and $487.0
million thereafter. Minimum future sublease rental income on these
noncancelable leases for 1996 and the succeeding four years are $11.0
million, $8.7 million, $6.9 million, $4.6 million, $2.9 million and
$1.1 million thereafter.
At December 31, 1995, the minimum future rental income on
noncancelable operating leases for wholly owned investments in real
estate for 1996 and the succeeding four years are $292.9 million,
$271.2 million, $248.1 million, $226.4 million, $195.5 million and
$1,018.8 million thereafter.
F-34
<PAGE>
16) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Compensation costs................................. $ 595.9 $ 690.0 $ 1,452.3
Commissions........................................ 314.3 313.0 551.1
Short-term debt interest expense................... 11.4 19.0 317.1
Long-term debt interest expense.................... 108.1 98.3 86.0
Amortization of policy acquisition costs........... 320.4 318.1 275.9
Capitalization of policy acquisition costs......... (391.0) (410.9) (397.8)
Rent expense, net of sub-lease income.............. 124.8 128.9 159.5
Other.............................................. 772.6 786.7 1,140.1
----------------- ---------------- -----------------
Total.............................................. $ 1,856.5 $ 1,943.1 $ 3,584.2
================= ================ =================
</TABLE>
During the years ended December 31, 1995, 1994 and 1993, the Company
restructured certain operations in connection with cost reduction
programs and recorded pre-tax provisions of $32.0 million, $20.4
million and $96.4 million, respectively. The amounts paid during 1995,
associated with the 1995 and 1994 cost reduction programs, totaled
$24.0 million. At December 31, 1995, the liabilities associated with
the 1995 and 1994 cost reduction programs amounted to $37.8 million.
The 1995 cost reduction program included relocation expenses,
including the accelerated amortization of building improvements
associated with the relocation of the home office. The 1994 cost
reduction program included costs associated with the termination of
operating leases and employee severance benefits in connection with
the consolidation of 16 insurance agencies. The 1993 cost reduction
program primarily reflected severance benefits of terminated employees
in connection with the combination of a wholly owned subsidiary of the
Company with Alliance.
17) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as dividends
to the Holding Company. Under the New York Insurance Law, the New York
Superintendent has broad discretion to determine whether the financia1
condition of a stock life insurance company would support the payment
of dividends to its shareholders. For the years ended December 31,
1995, 1994 and 1993, statutory (loss) earnings totaled $(352.4)
million, $67.5 million and $324.0 million, respectively. No amounts
are expected to be available for dividends from Equitable Life to the
Holding Company in 1996.
At December 31, 1995, the Insurance Group, in accordance with various
government and state regulations, had $18.9 million of securities
deposited with such government or state agencies.
F-35
<PAGE>
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 the Company's
statutory change in surplus and capital stock and statutory surplus
and capital stock determined in accordance with accounting practices
prescribed by the New York Insurance Department with net earnings and
equity on a GAAP basis.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Net change in statutory surplus and capital stock.. $ 78.1 $ 292.4 $ 190.8
Change in asset valuation reserves................. 365.7 (285.2) 639.1
----------------- ---------------- -----------------
Net change in statutory surplus, capital stock
and asset valuation reserves..................... 443.8 7.2 829.9
Adjustments:
Future policy benefits and policyholders'
account balances............................... (67.9) (11.0) (171.0)
Deferred policy acquisition costs................ 70.6 92.8 121.8
Deferred Federal income taxes.................... (150.0) (59.7) (57.5)
Valuation of investments......................... 189.1 45.2 202.3
Valuation of investment subsidiary............... (188.6) 396.6 (464.9)
Limited risk reinsurance......................... 416.9 74.9 85.2
Issuance of surplus notes........................ (538.9) - -
Sale of subsidiary and joint venture............. - - (366.5)
Contribution from the Holding Company............ - (300.0) -
Postretirement benefits.......................... (26.7) 17.1 23.8
Other, net....................................... 115.1 (44.0) 60.3
GAAP adjustments of Closed Block................. (3.1) 4.5 (16.0)
GAAP adjustments of discontinued GIC
Segment........................................ 37.3 42.8 (35.0)
----------------- ---------------- -----------------
Net Earnings....................................... $ 297.6 $ 266.4 $ 212.4
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Statutory surplus and capital stock................ $ 2,202.9 $ 2,124.8 $ 1,832.4
Asset valuation reserves........................... 1,345.9 980.2 1,265.4
----------------- ---------------- -----------------
Statutory surplus, capital stock and asset
valuation reserves............................... 3,548.8 3,105.0 3,097.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (1,017.4) (949.5) (938.5)
Deferred policy acquisition costs................ 3,083.3 3,221.1 2,858.8
Deferred Federal income taxes.................... (450.8) (26.8) (137.8)
Valuation of investments......................... 417.7 (794.1) (29.8)
Valuation of investment subsidiary............... (665.1) (476.5) (873.1)
Limited risk reinsurance......................... (429.0) (845.9) (920.8)
Issuance of surplus notes........................ (538.9) - -
Postretirement benefits.......................... (343.3) (316.6) (333.7)
Other, net....................................... 4.4 (79.2) (81.9)
GAAP adjustments of Closed Block................. 575.7 578.8 574.2
GAAP adjustments of discontinued GIC
Segment........................................ (184.6) (221.9) (264.6)
----------------- ---------------- -----------------
Total Shareholder's Equity......................... $ 4,000.8 $ 3,194.4 $ 2,950.6
================= ================ =================
</TABLE>
F-36
<PAGE>
18) BUSINESS SEGMENT INFORMATION
The Company has three major business segments: Individual Insurance
and Annuities; Investment Services and Group Pension.
Consolidation/elimination principally includes debt not specific to
any business segment. Attributed Insurance Capital represents net
assets and related revenues and earnings of the Insurance Group not
assigned to the insurance segments. Interest expense related to debt
not specific to any business segment is presented within Corporate
interest expense. Information for all periods is presented on a
comparable basis.
The Individual Insurance and Annuities segment offers a variety of
traditional, variable and interest-sensitive life insurance products,
disability income, annuity products and mutual fund and other
investment products to individuals and small groups. This segment
includes Separate Accounts for certain individual insurance and
annuity products.
The Investment Services segment provides investment fund management,
primarily to institutional clients. This segment includes Separate
Accounts which provide various investment options for group clients
through pooled or single group accounts.
Intersegment investment advisory and other fees of approximately
$124.1 million, $135.3 million and $128.6 million for 1995, 1994 and
1993, respectively, are included in total revenues of the Investment
Services segment. These fees, excluding amounts related to the
discontinued GIC Segment of $14.7 million, $27.4 million and $17.0
million for 1995, 1994 and 1993, respectively, are eliminated in
consolidation.
The Group Pension segment administers traditional participating group
annuity contracts with conversion features, generally for corporate
qualified pension plans, and association plans which provide full
service retirement programs for individuals affiliated with
professional and trade associations.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Individual insurance and annuities................. $ 3,254.6 $ 3,110.7 $ 2,981.5
Group pension...................................... 292.0 359.1 426.6
Attributed insurance capital....................... 61.2 79.4 61.6
----------------- ---------------- -----------------
Insurance operations............................. 3,607.8 3,549.2 3,469.7
Investment services................................ 949.1 935.2 2,792.6
Consolidation/elimination.......................... (34.9) (24.7) (40.5)
----------------- ---------------- -----------------
Total.............................................. $ 4,522.0 $ 4,459.7 $ 6,221.8
================= ================ =================
Earnings (loss) before Federal income taxes
and cumulative effect of accounting change
Individual insurance and annuities................. $ 274.4 $ 245.5 $ 76.2
Group pension...................................... (13.3) 15.8 2.0
Attributed insurance capital....................... 18.7 69.8 49.0
----------------- ---------------- -----------------
Insurance operations............................. 279.8 331.1 127.2
Investment services................................ 161.2 177.5 302.1
Consolidation/elimination.......................... (3.1) .3 .5
----------------- ---------------- -----------------
Subtotal..................................... 437.9 508.9 429.8
Corporate interest expense......................... (27.9) (114.2) (126.1)
----------------- ---------------- -----------------
Total.............................................. $ 410.0 $ 394.7 $ 303.7
================= ================ =================
</TABLE>
F-37
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Individual insurance and annuities..................................... $ 50,328.8 $ 44,063.4
Group pension.......................................................... 4,033.3 4,222.8
Attributed insurance capital........................................... 2,391.6 2,609.8
---------------- -----------------
Insurance operations................................................. 56,753.7 50,896.0
Investment services.................................................... 12,842.9 12,127.9
Consolidation/elimination.............................................. (354.4) (1,614.4)
---------------- -----------------
Total.................................................................. $ 69,242.2 $ 61,409.5
================ =================
</TABLE>
19) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for the years ended December 31,
1995, 1994 and 1993, are summarized below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED,
------------------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
----------------- ----------------- ------------------ ------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1995
----
Total Revenues................ $ 1,074.7 $ 1,158.4 $ 1,127.1 $ 1,161.8
================= ================= ================== ==================
Net Earnings.................. $ 59.0 $ 94.3 $ 91.2 $ 53.1
================= ================= ================== ==================
1994
----
Total Revenues................ $ 1,107.4 $ 1,075.0 $ 1,153.8 $ 1,123.5
================= ================= ================== ==================
Earnings before Cumulative
Effect of Accounting
Change...................... $ 64.0 $ 68.4 $ 89.1 $ 72.0
================= ================= ================== ==================
Net Earnings.................. $ 36.9 $ 68.4 $ 89.1 $ 72.0
================= ================= ================== ==================
1993
----
Total Revenues................ $ 1,502.2 $ 1,539.7 $ 1,679.4 $ 1,500.5
================= ================= ================== ==================
Net Earnings.................. $ 32.3 $ 47.1 $ 68.8 $ 64.2
================= ================= ================== ==================
</TABLE>
20) INVESTMENT IN DLJ
On December 15, 1993, the Company sold a 61% interest in DLJ to the
Holding Company for $800.0 million in cash and securities. The excess
of the proceeds over the book value in DLJ at the date of sale of
$340.2 million has been reflected as a capital contribution. In 1995,
DLJ completed the initial public offering ("IPO") of 10.58 million
shares of its common stock, which included 7.28 million of the Holding
Company's shares in DLJ, priced at $27 per share. Concurrent with the
IPO, the Company contributed equity securities to DLJ having a market
value of $21.2 million. Upon completion of the IPO, the Company's
ownership percentage was reduced to 36.1%. The Company's ownership
interest will be further reduced upon the issuance of common stock
after the vesting of forfeitable restricted stock units acquired by
and/or the exercise of options granted to certain DLJ employees. At
December 31, 1995, DLJ had options
F-38
<PAGE>
outstanding to purchase approximately 9.2 million shares of DLJ common
stock at $27.00 per share. Options are exercisable over a period of up
to ten years. DLJ restricted stock units represents forfeitable rights
to receive approximately 5.2 million shares of DLJ common stock
through February 2000.
The results of operations and cash flows of DLJ through the date of
sale are included in the consolidated statements of earnings and cash
flow for the year ended December 31, 1993. For the period subsequent
to the date of sale, the results of operations of DLJ are accounted
for on the equity basis and are included in commissions, fees and
other income in the consolidated statements of earnings. The Company's
carrying value of DLJ is included in investment in and loans to
affiliates in the consolidated balance sheets.
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 10,911.4 $ 8,970.0
Securities purchased under resale agreements........................... 18,748.2 10,476.4
Broker-dealer related receivables...................................... 13,023.7 11,784.8
Other assets........................................................... 1,893.2 2,030.4
---------------- -----------------
Total Assets........................................................... $ 44,576.5 $ 33,261.6
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 26,744.8 $ 18,356.7
Broker-dealer related payables......................................... 12,915.5 10,618.0
Short-term and long-term debt.......................................... 1,717.5 1,956.5
Other liabilities...................................................... 1,775.0 1,285.1
---------------- -----------------
Total liabilities...................................................... 43,152.8 32,216.3
Cumulative exchangeable preferred stock................................ 225.0 225.0
Total shareholders' equity............................................. 1,198.7 820.3
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 44,576.5 $ 33,261.6
================ =================
DLJ's equity as reported............................................... $ 1,198.7 $ 820.3
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 40.5 50.8
The Holding Company's equity ownership in DLJ.......................... (499.0) (532.1)
Minority interest in DLJ............................................... (324.3) -
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 415.9 $ 339.0
================ =================
</TABLE>
F-39
<PAGE>
Summarized statements of earnings information for DLJ reconciled to
the Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Commission, fees and other income...................................... $ 1,325.9 $ 953.5
Net investment income.................................................. 904.1 791.9
Dealer, trading and investment gains, net.............................. 528.6 263.3
---------------- -----------------
Total Revenues......................................................... 2,758.6 2,008.7
Total expenses including income taxes.................................. 2,579.5 1,885.7
---------------- -----------------
Net earnings........................................................... 179.1 123.0
Dividends on preferred stock........................................... 19.9 20.9
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 159.2 $ 102.1
================ =================
DLJ's earnings applicable to common shares as reported................. $ 159.2 $ 102.1
Amortization of cost in excess of net assets acquired in 1985.......... (3.9) (3.1)
The Holding Company's equity in DLJ's earnings......................... (90.4) (60.9)
Minority interest in DLJ............................................... (6.5) -
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 58.4 $ 38.1
================ =================
</TABLE>
21) RELATED PARTY TRANSACTIONS
On August 31, 1993, the Company sold $661.0 million of primarily
privately placed below investment grade fixed maturities to EQ Asset
Trust 1993, a limited purpose business trust, wholly owned by the
Holding Company. The Company recognized a $4.1 million gain net of
related deferred policy acquisition costs, deferred Federal income tax
and amounts attributable to participating group annuity contracts. In
conjunction with this transaction, the Company received $200.0 million
of Class B Notes issued by EQ Asset Trust 1993. These notes have
interest rates ranging from 6.85% to 9.45%. The Class B Notes are
reflected in investments in and loans to affiliates on the
consolidated balance sheets.
F-40
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Contractowners of Separate Account A
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly,
in all material respects, the financial position of Common Stock Fund,
Intermediate Government Securities Fund, Money Market Fund, Balanced Fund,
Aggressive Stock Fund, Growth Investors Fund, Conservative Investors Fund,
High Yield Fund, Global Fund, Growth & Income Fund, Quality Bond Fund, Equity
Index Fund and International Fund, separate investment funds of The Equitable
Life Assurance Society of the United States ("Equitable Life") Separate
Account A at December 31, 1995, the results of each of their operations and
changes in each of their net assets for the periods indicated in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of Equitable Life's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
shares in The Hudson River Trust at December 31, 1995 with the transfer agent,
provide a reasonable basis for the opinion expressed above. The unit value
information presented in Note 6 for each of the years prior to December 31,
1993 were audited by other independent accountants whose report dated February
10, 1993 expressed an unqualified opinion on the financial statements
containing such information.
PRICE WATERHOUSE LLP
New York, NY
February 7, 1996
FSA-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
INTERMEDIATE
COMMON GOVERNMENT MONEY
STOCK SECURITIES MARKET BALANCED
FUND FUND FUND FUND
---------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust, at value (Note 2):
Cost: $2,730,574,741.......................... $3,178,176,762
22,292,402.......................... $22,705,464
79,144,981.......................... $78,776,275
1,000,920,237.......................... $1,042,706,057
1,907,367,665..........................
275,629,206..........................
66,943,785..........................
32,825,077..........................
292,617,275..........................
63,444,279..........................
16,440,543..........................
84,114,345..........................
14,965,497..........................
Receivable for The Hudson River Trust shares......... -- -- -- 45,138
Due from Equitable Life's General Account (Note 3)... 9,626,077 213,032 1,375,168 47,201
--------------- ----------- ----------- --------------
Total assets................................. 3,187,802,839 22,918,496 80,151,443 1,042,798,396
--------------- ----------- ----------- --------------
LIABILITIES:
Payable for The Hudson River Trust shares............ 9,392,501 212,486 1,370,908 --
Due to Equitable Life's General Account (Note 3)..... -- -- -- --
Net accumulated amount of (i) mortality risk, death benefit, expense and
expense risk charges and (ii) mortality and other gains and losses
retained by Equitable Life (Note 3)................ 424,968 382,215 523,239 684,668
-------------- ----------- ----------- --------------
Total liabilities............................ 9,817,469 594,701 1,894,147 684,668
-------------- ------------ ----------- --------------
NET ASSETS (NOTE 5).................................. $3,177,985,370 $22,323,795 $78,257,296 $1,042,113,728
============== =========== =========== ==============
EQUI-VEST Contracts:
Units Value........................................ $ 162.42 $ 27.22 $ 30.92
============== =========== ==============
Units Outstanding.................................. 16,291,858 1,020,875 30,212,070
============== =========== ==============
Old Contracts:
Units Value........................................ $ 199.66 32.00
============== ===========
Units Outstanding.................................. 387,086 139,918
============== ===========
EQUIPLAN Contracts:
Units Value........................................ $ 216.27 $ 49.69
============== ===========
Units Outstanding.................................. 107,971 49,572
============== ===========
Momentum Contracts:
Units Value........................................ $ 162.42 $ 109.80 $ 27.22 $ 30.92
============== =========== =========== ==============
Units Outstanding.................................. 403,012 7,179 188,358 956,545
============== =========== =========== ==============
Momentum Plus Contracts:
Units Value........................................ $ 132.47 $ 105.94 $ 107.55 $ 108.95
============== =========== =========== ==============
Units Outstanding.................................. 706,304 87,681 299,468 335,596
============== =========== =========== ==============
EQUI-VEST PRP Contracts:
UnitsValue......................................... $ 126.78 $ 109.80 $ 107.04 $ 108.26
============== =========== =========== ==============
Units Outstanding.................................. 1,988,845 89,105 80,905 385,513
============== =========== =========== ==============
</TABLE>
See Notes to Financial Statements.
FSA-2
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH CONSERVATIVE HIGH GROWTH & QUALITY EQUITY
STOCK INVESTORS INVESTORS YIELD GLOBAL INCOME BOND INDEX INTERNATIONAL
FUND FUND FUND FUND FUND FUND FUND FUND FUND
- ---------- ------------ ------------ ------------- ------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$2,098,196,591
$307,104,188
$71,597,071
$33,348,092
$315,707,990
$70,969,558
$17,177,878
$88,408,584
$15,113,555
-- -- -- -- -- -- -- -- 208,092
6,231,567 3,694,931 406,113 314,989 2,151,580 862,816 250,726 1,610,118 --
- -------------- ------------ ----------- ----------- ------------ ----------- ----------- ----------- -----------
2,104,428,158 310,799,119 72,003,184 33,663,081 317,859,570 71,832,374 17,428,604 90,018,702 15,321,647
- -------------- ------------ ----------- ----------- ------------ ----------- ----------- ----------- -----------
6,155,114 3,694,935 406,116 314,990 2,151,576 862,800 250,727 1,610,128 --
-- -- -- -- -- -- -- -- 208,095
863,687 782,992 570,857 296,772 700,508 549,295 132,004 306,464 12,455
- -------------- ------------ ----------- ----------- ------------ ----------- ----------- ----------- -----------
7,018,801 4,477,927 976,973 611,762 2,852,084 1,412,095 382,731 1,916,592 220,550
- -------------- ------------ ----------- ----------- ------------ ----------- ----------- ----------- -----------
$2,097,409,357 $306,321,192 $71,026,211 $33,051,319 $315,007,486 $70,420,279 $17,045,873 $88,102,110 $15,101,097
============== ============ =========== =========== ============ =========== =========== =========== ===========
$ 68.73
==============
25,820,941
==============
$ 68.73 $ 120.08 $ 112.97 $ 113.44 $ 122.06 $ 121.02 $ 108.38 $ 135.94 $ 104.15
============== ============ =========== ============ =========== =========== =========== ============ ===========
969,400 57,291 10,581 7,224 62,309 16,744 4,134 12,423 480
============== ============ =========== =========== =========== =========== =========== ============ ===========
$ 130.50 $ 121.49 $ 110.81 $ 121.10 $ 124.30 $ 121.25 $ 114.38 $ 135.92 $ 104.15
============== ============ =========== =========== =========== =========== =========== ============ ===========
717,955 374,652 128,580 70,070 390,608 67,353 17,168 44,121 3,456
============== ============ =========== =========== =========== =========== =========== ============ ===========
$ 123.95 $ 120.08 $ 112.97 $ 113.44 $ 122.06 $ 121.02 $ 108.38 $ 135.94 $ 104.15
============== ============ =========== =========== =========== =========== =========== ============ ===========
1,309,946 2,112,814 491,320 209,146 2,120,553 497,651 135,029 591,520 140,674
============== ============ =========== =========== =========== =========== =========== ============ ===========
</TABLE>
FSA-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------------------
INTERMEDIATE
COMMON GOVERNMENT MONEY
STOCK SECURITIES MARKET BALANCED
FUND FUND FUND FUND
------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust................. $ 38,701,881 $1,062,712 $3,760,240 $ 32,315,135
------------ ---------- ---------- ------------
Expenses (Note 3):
Mortality risk, death benefit, expense and
expense risk charges.................................. 33,227,785 210,894 924,254 12,186,303
Financial accounting charges............................ 5,642,309 -- 72,631 2,179,967
------------ ---------- ---------- ------------
Total expenses........................................ 38,870,094 210,894 996,885 14,366,270
Less: Reduction for expense limitation.................. 2,950,317 8,379 59,226 1,211,018
------------ ---------- ---------- ------------
Net expenses.......................................... 35,919,777 202,515 937,659 13,155,252
------------ ---------- ---------- ------------
NET INCOME (LOSS)......................................... 2,782,104 860,197 2,822,581 19,159,883
------------ ---------- ---------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions............ 30,693,506 (262,021) 111,769 7,912,630
Realized gain distribution from The Hudson River Trust.. 176,306,227 -- -- 28,456,582
------------ ---------- ---------- ------------
Net realized gain (loss).............................. 206,999,733 (262,021) 111,769 36,369,212
Change in unrealized appreciation / depreciation
of investments........................................ 498,084,127 1,263,426 244,984 107,611,597
------------ ---------- ---------- ------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS.......................................... 705,083,860 1,001,405 356,753 143,980,809
------------ ---------- ---------- ------------
NET INCREASE IN NET ASSETS FROM OPERATIONS
(NOTE 2)................................................ $707,865,964 $1,861,602 $3,179,334 $163,140,692
============ ========== ========== ============
<FN>
- ----------
Commencement of Operations
</FN>
</TABLE>
See Notes to Financial Statements.
FSA-4
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 1,
1995* TO
DECEMBER 31,
YEAR ENDED DECEMBER 31, 1995 1995
- ------------------------------------------------------------------------------------------------------------ ---------------
AGGRESSIVE GROWTH CONSERVATIVE HIGH GROWTH & QUALITY EQUITY
STOCK INVESTORS INVESTORS YIELD GLOBAL INCOME BOND INDEX INTERNATIONAL
FUND FUND FUND FUND FUND FUND FUND FUND FUND
- ------------ ------------- ----------- ----------- ------------ ------------ ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 4,874,525 $ 7,361,114 $3,056,206 $2,579,699 $ 4,379,867 $1,382,201 $ 716,416 $ 820,315 $176,168
- ------------ ----------- ---------- ---------- ----------- ---------- ---------- ---------- --------
19,240,040 2,730,233 729,377 300,991 3,209,543 591,270 143,778 459,747 26,741
3,695,650 -- -- -- -- -- -- -- --
- ------------ ----------- ---------- ---------- ----------- ---------- ---------- ---------- --------
22,935,690 2,730,233 729,377 300,991 3,209,543 591,270 143,778 459,747 26,741
984,306 -- -- -- -- -- -- -- --
- ------------ ----------- ---------- ---------- ----------- ---------- ---------- ---------- --------
21,951,384 2,730,233 729,377 300,991 3,209,543 591,270 143,778 459,747 26,741
- ------------ ----------- ---------- ---------- ----------- ---------- ---------- ---------- --------
(17,076,859) 4,630,881 2,326,829 2,278,708 1,170,324 790,931 572,638 360,568 149,427
- ------------ ----------- ---------- ---------- ----------- ---------- ---------- ---------- --------
41,110,828 142,448 (38,006) (142,069) 1,612,501 135,257 (14,461) 3,548,584 21,647
233,380,462 4,048,003 440,266 -- 8,661,740 -- -- 650,158 63,342
- ------------ ----------- ---------- ---------- ----------- ---------- ---------- ---------- --------
274,491,290 4,190,451 402,260 (142,069) 10,274,241 135,257 (14,461) 4,198,742 84,989
201,133,502 35,365,665 6,622,303 1,530,565 29,094,331 7,973,647 952,860 4,368,831 148,058
- ------------ ----------- ---------- ---------- ----------- ---------- ---------- ---------- --------
475,624,792 39,556,116 7,024,563 1,388,496 39,368,572 8,108,904 938,399 8,567,573 233,047
- ------------ ----------- ---------- ---------- ----------- ---------- ---------- ---------- --------
$458,547,933 $44,186,997 $9,351,392 $3,667,204 $40,538,896 $8,899,835 $1,511,037 $8,928,141 $382,474
============ =========== ========== ========== =========== ========== ========== ========== ========
</TABLE>
FSA-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE
GOVERNMENT SECURITIES
COMMON STOCK FUND FUND
----------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------------------------
1995 1994 1995 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net income (loss).................................... $ 2,782,104 $ 3,678,514 $ 860,197 $ 614,654
Realized gain (loss) on investments.................. 206,999,733 128,544,779 (262,021) (176,964)
Change in unrealized appreciation / depreciation
of investments..................................... 498,084,127 (209,040,398) 1,263,426 (776,770)
-------------- -------------- ----------- -----------
Net increase (decrease) in net assets from operations 707,865,964 (76,817,105) 1,861,602 (339,080)
-------------- -------------- ----------- -----------
FROM CONTRACT OWNER TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions........................................ 323,872,865 330,675,155 7,369,681 5,109,894
Transfers from other Funds and
Guaranteed Interest Account........................ 563,350,890 522,732,281 6,382,251 7,212,276
-------------- -------------- ----------- -----------
Total............................................ 887,223,755 853,407,436 13,751,932 12,322,170
-------------- -------------- ----------- -----------
Payments, Transfers and Charges:
Annuity payments, withdrawals and
death benefits..................................... 159,386,173 104,381,857 1,010,469 1,493,169
Transfers to other Funds and
Guaranteed Interest Account........................ 467,919,413 367,123,429 3,875,451 1,630,955
Withdrawal and administrative charges................ 4,834,457 3,774,939 13,622 4,440
-------------- -------------- ----------- -----------
Total............................................ 632,140,043 475,280,225 4,899,542 3,128,564
-------------- -------------- ----------- -----------
Net increase (decrease) in net assets from
Contract Owner transactions........................ 255,083,712 378,127,211 8,852,390 9,193,606
-------------- -------------- ----------- -----------
Net (increase) decrease in accumulated amount
retained by Equitable Life in Separate Account A
(Note 3)........................................... (202,590) 787,237 (29,532) 2,789
-------------- -------------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS...................... 962,747,086 302,097,343 10,684,460 8,857,315
NET ASSETS--BEGINNING OF PERIOD........................ 2,215,238,284 1,913,140,941 11,639,335 2,782,020
-------------- -------------- ----------- -----------
NET ASSETS--END OF PERIOD (NOTE 1)..................... $3,177,985,370 $2,215,238,284 $22,323,795 $11,639,335
============== ============== =========== ===========
</TABLE>
See Notes to Financial Statements.
FSA-6
<PAGE>
<TABLE>
<CAPTION>
GROWTH
INVESTORS
MONEY MARKET FUND BALANCED FUND AGGRESSIVE STOCK FUND FUND
- ------------------------------ ------------------------------ -------------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
- ------------------------------ ------------------------------ -------------------------------- ----------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------- --------------- -------------- --------------- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,822,581 $ 1,714,266 $ 19,159,883 $ 15,921,598 $ (17,076,859) $ (14,797,576) $ 4,630,881 $ 1,645,820
111,769 (120,977) 36,369,212 1,905,805 274,491,290 15,356,337 4,190,451 (124,742)
244,984 (207,660) 107,611,597 (108,178,870) 201,133,502 (55,814,543) 35,365,665 (3,833,947)
- ------------ ------------ -------------- ------------ -------------- -------------- ------------ ------------
3,179,334 1,385,629 163,140,692 (90,351,467) 458,547,933 (55,255,782) 44,186,997 (2,312,869)
- ------------ ------------ -------------- ------------ -------------- -------------- ------------ ------------
96,460,995 130,877,596 100,845,169 155,491,871 255,277,523 263,528,472 88,478,478 84,714,487
11,693,688 7,538,773 72,926,145 121,755,406 937,308,527 778,065,845 96,710,983 44,017,404
- ------------ ------------ -------------- ------------ -------------- -------------- ------------ ------------
108,154,683 138,416,369 173,771,314 277,247,277 1,192,586,050 1,041,594,317 185,189,461 128,731,891
- ------------ ------------ -------------- ------------ -------------- -------------- ------------ ------------
9,756,910 7,109,016 70,581,767 53,580,642 101,140,511 67,484,290 8,656,331 2,106,986
112,024,444 83,270,336 140,405,721 125,123,498 890,032,461 686,083,129 31,783,310 7,685,641
141,480 159,791 2,326,794 2,093,655 4,012,965 3,084,680 329,796 40,176
- ------------ ------------ -------------- ------------ -------------- -------------- ------------ ------------
121,922,834 90,539,143 213,314,282 180,797,795 995,185,937 756,652,099 40,769,437 9,832,803
- ------------ ------------ -------------- ------------ -------------- -------------- ------------ ------------
(13,768,151) 47,877,226 (39,542,968) 96,449,482 197,400,113 284,942,218 144,420,024 118,899,088
- ------------ ------------ -------------- ------------ -------------- -------------- ------------ -------------
(60,821) (18,576) (639,644) 112,409 (703,992) (150,482) (69,190) (105,609)
- ------------ ------------ -------------- ------------ -------------- -------------- ------------ ------------
(10,649,638) 49,244,279 122,958,080 6,210,424 655,244,054 229,535,954 188,537,831 116,480,610
88,906,934 39,662,655 919,155,648 912,945,224 1,442,165,303 1,212,629,349 117,783,361 1,302,751
- ------------ ------------ -------------- ------------ -------------- -------------- ------------ ------------
$ 78,257,296 $ 88,906,934 $1,042,113,728 $919,155,648 $2,097,409,357 $1,442,165,303 $306,321,192 $117,783,361
============ ============ ============== ============ ============== ============== ============ ============
</TABLE>
FSA-7
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
<TABLE>
<CAPTION>
CONSERVATIVE
INVESTORS HIGH YIELD GLOBAL
FUND FUND FUND
------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
----------- ------------- ----------- ------------ -------------- -----------
1995 1994 1995 1994 1995 1994
---------- ------------- ----------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net income (loss) ...................... $ 2,326,829 $ 1,190,864 $ 2,278,708 $ 715,639 $ 1,170,324 $ 360,446
Realized gain (loss) on investments .... 402,260 (127,857) (142,069) (17,855) 10,274,241 3,321,287
Change in unrealized appreciation /
depreciation of investments ......... 6,622,303 (1,918,004) 1,530,565 (1,004,798) 29,094,331 (5,946,084)
----------- ----------- ----------- ----------- ------------ ------------
Net increase (decrease) in net assets
from operations ...................... 9,351,392 (854,997) 3,667,204 (307,014) 40,538,896 (2,264,351)
----------- ----------- ----------- ----------- ------------ ------------
FROM CONTRACT OWNER TRANSACTIONS
(NOTE 4):
Contributions and Transfers:
Contributions ........................ 17,614,456 35,648,124 10,927,641 10,298,407 81,368,082 88,843,233
Transfers from other Funds and
Guaranteed Interest Account ........ 12,235,331 10,060,907 10,118,081 4,822,949 137,660,677 106,878,648
----------- ----------- ----------- ----------- ------------ ------------
Total .............................. 29,849,787 45,709,031 21,045,722 15,121,356 219,028,759 195,721,881
----------- ----------- ----------- ----------- ------------ ------------
Payments, Transfers and Charges:
Annuity payments, withdrawals and
death benefits ........................ 2,534,266 1,237,649 1,942,685 250,952 11,743,890 2,236,973
Transfers to other Funds and
Guaranteed Interest Account .......... 5,239,849 4,836,017 3,213,615 1,175,948 93,494,152 30,832,215
Withdrawal and administrative charges .. 74,396 16,644 28,309 3,143 394,438 37,634
----------- ----------- ----------- ----------- ------------ ------------
Total .............................. 7,848,511 6,090,310 5,184,609 1,430,043 105,632,480 33,106,822
----------- ----------- ----------- ----------- ------------ ------------
Net increase in net assets from Contract
Owner transactions ................... 22,001,276 39,618,721 15,861,113 13,691,313 113,396,279 162,615,059
----------- ----------- ----------- ----------- ------------ ------------
Net (increase) decrease in accumulated
amount retained by Equitable Life in
Separate Account A (Note 3) ........ (75,714) (47,431) (11,837) (9,034) (136,682) 37,687
----------- ----------- ----------- ----------- ------------ -----------
INCREASE IN NET ASSETS ................... 31,276,954 38,716,293 19,516,480 13,375,265 153,798,493 160,388,395
NET ASSETS BEGINNING OF PERIOD .......... 39,749,257 1,032,964 13,534,839 159,574 161,208,993 820,598
----------- ----------- ----------- ----------- ------------ ------------
NET ASSETS END OF YEAR (NOTE 2) ......... $71,026,211 $39,749,257 $33,051,319 $13,534,839 $315,007,486 $161,208,993
=========== =========== =========== =========== ============ ============
<FN>
- ----------
*Commencement of operations.
</FN>
</TABLE>
See Notes to Financial Statements.
FSA-8
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME QUALITY BOND EQUITY INDEX INTERNATIONAL
FUND FUND FUND FUND
- -------------------------------- --------------------------------- ---------------------------- ----------------
JANUARY 3, JANUARY 3, JANUARY 3, SEPTEMBER 1,
YEAR ENDED 1994* TO YEAR ENDED 1994* TO YEAR ENDED 1994* TO 1995* TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
- ------------ ------------- ------------ -------------- ------------- ------------ ----------------
1995 1994 1995 1994 1995 1994 1995
- ------------ ------------- ------------ -------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
$ 790,931 $ 171,084 $ 572,638 $ 162,195 $ 360,568 $ 29,737 $ 149,427
135,257 (20,837) (14,461) (39,448) 4,198,742 27,166 84,989
7,973,647 (448,368) 952,860 (215,525) 4,368,831 (74,592) 148,058
- ----------- ----------- ----------- ---------- ----------- ---------- -----------
8,899,835 (298,121) 1,511,037 (92,778) 8,928,141 (17,689) 382,474
- ----------- ----------- ----------- ---------- ----------- ---------- -----------
22,698,765 14,505,511 5,630,019 4,156,517 28,329,533 2,277,779 2,925,742
28,860,658 10,945,268 7,603,814 2,032,907 153,170,493 6,726,113 17,699,810
- ----------- ----------- ----------- ---------- ----------- ---------- -----------
51,559,423 25,450,779 13,233,833 6,189,424 181,500,026 9,003,892 20,625,552
- ----------- ----------- ----------- ---------- ----------- ---------- -----------
1,952,266 216,363 705,351 58,955 1,077,397 25,120 41,651
10,151,108 2,775,715 2,324,024 693,842 106,387,645 3,864,503 5,873,268
60,042 6,365 8,789 479 23,173 575 907
- ----------- ----------- ----------- ---------- ----------- ---------- -----------
12,163,416 2,998,443 3,038,164 753,276 107,488,215 3,890,198 5,915,826
- ----------- ----------- ----------- ---------- ----------- ---------- -----------
39,396,007 22,452,336 10,195,669 5,436,148 74,011,811 5,113,694 14,709,726
- ----------- ----------- ----------- ---------- ----------- ---------- -----------
(20,535) (9,243) (325) (3,878) 59,424 6,729 8,897
- ----------- ----------- ----------- ---------- ----------- ---------- -----------
48,275,307 22,144,972 11,706,381 5,339,492 82,999,376 5,102,734 15,101,097
22,144,972 -- 5,339,492 -- 5,102,734 -- --
- ----------- ----------- ----------- ---------- ----------- ---------- -----------
$70,420,279 $22,144,972 $17,045,873 $5,339,492 $88,102,110 $5,102,734 $15,101,097
=========== =========== =========== ========== =========== ========== ===========
</TABLE>
FSA-9
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. General
Separate Account A (the Account) of The Equitable Life Assurance Society
of the United States (Equitable Life) is used to fund benefits under
certain individual tax-favored variable annuity contracts (Old Contracts),
individual non-qualified variable annuity contracts (EQUIPLAN Contracts),
tax-favored and non-qualified certificates issued under group deferred
variable annuity contracts and certain related individual contracts
(EQUI-VEST Contracts), group deferred variable annuity contracts used to
fund tax-qualified defined contribution plans (Momentum Contracts) and
group variable annuity contracts used as a funding vehicle for employers
who sponsor qualified defined contribution plans (Momentum Plus) and group
deferred variable annuity contracts used as individual retirement
annuities (including those established from qualified plan distributions)
or for after-tax contributions to a non-qualified annuity (EQUI-VEST
Personal Retirement Programs). All of these contracts and certificates are
collectively referred to as the Contracts.
The net assets of the Account are not chargeable with liabilities arising
out of any other business Equitable Life may conduct. The excess of assets
over reserves and other contract liabilities, if any, in the Account may
be transferred to Equitable Life's General Account.
Separate Account A is organized as a unit investment trust, a type of
investment company, and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940. The Account consists
of thirteen investment funds (Funds): Common Stock, Intermediate
Government Securities, Money Market, Balanced, Aggressive Stock, Growth
Investors, Conservative Investors, High Yield, Global, Growth & Income,
Quality Bond, Equity Index and International Fund. The assets in each Fund
are invested in shares of a corresponding portfolio (Portfolio) of a
mutual fund, The Hudson River Trust (Trust). The Trust is an open-end,
diversified, management investment company that invests the assets of
separate accounts of insurance companies. Each Portfolio has separate
investment objectives.
2. Significant Accounting Policies
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Share Valuation--Investment in shares of the Trust are valued at the net
asset value per share of the respective Portfolio.
Share Transactions--Share transactions are recorded on the trade date at
the net asset value per share of the underlying Portfolios. Realized gains
and losses on investments include gains and losses on redemptions of the
Trust's shares (determined on the identified cost basis) and capital gain
distributions from the Trust. Dividends and realized gain distributions
from The Hudson River Trust are recorded on ex-date.
Federal Income Taxes--No Federal income tax based on net income or
realized and unrealized capital gains is currently applicable to Contracts
participating in the Account by reason of applicable provisions of the
Internal Revenue Code and no Federal income tax payable by Equitable Life
is expected to affect the accumulation unit values of Contracts
participating in the Account. Accordingly, no provision for income taxes
is required.
FSA-10
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
3. Asset Charges
Charges are made directly against the assets of the Account and are
reflected daily in the computation of the accumulation unit values of the
Contracts. The table below shows the currently effective annual rates of
charges:
<TABLE>
<CAPTION>
EQUI-VEST
EQUI-VEST/MOMENTUM MOMENTUM PLUS OLD EQUIPLAN PRP
CONTRACTS CONTRACTS CONTRACTS CONTRACTS CONTRACTS
--------------------------------- --------------- ------------- ----------------- -------------
Common Stock and
Intermediate
Common Stock, Money All Common Stock and Government
Market and Balanced Other Money Market Securities
Funds Funds All Funds Funds Funds All Funds
------------------- ---------- ----------- ---------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Death Benefits........ 0.05 of 1% 0.05 of 1% -- 0.05 of 1% 0.05 of 1% --
Mortality Risks....... 0.30 of 1% 0.30 of 1% 0.50 of 1% 0.45 of 1% 0.45 of 1% 0.60 of 1%
Expenses.............. 0.60 of 1% 0.60 of 1% 0.25 of 1% 0.16 of 1% 0.16 of 1% 0.24/0.25 of 1%
Expense Risks......... 0.30 of 1% 0.15 of 1% 0.60 of 1% 0.08 of 1% 0.08 of 1% 0.50 of 1%
Financial Accounting.. 0.24 of 1% 0.24 of 1% -- -- -- --
</TABLE>
During 1995, Equitable Life charged EQUI-VEST PRP Contracts 0.24 of 1%
against the assets of the Intermediate Government Securities, Growth
Investors, Conservative Investors, High Yield, Global, Growth & Income,
Quality Bond, Equity Index and International Funds for expenses. This
voluntary expense limitation (discounted from 0.25 of 1% to 0.24 of 1%)
may be discontinued by Equitable Life at its discretion.
The above charges may be retained in the Account by Equitable Life and, to
the extent retained, participate in the net investment results of the
Trust ratably with assets attributable to the Contracts.
Since the Trust shares are valued at their net asset value, investment
advisory fees and direct operating expenses of the Trust are, in effect,
passed on to the Account and are reflected in the computation of the
accumulation unit values of the Contracts.
Under the terms of the Contracts, the aggregate of these asset charges and
the charges of the Trust for advisory fees and for direct operating
expenses may not exceed a total effective annual rate of 1.75% for
EQUI-VEST and Momentum Contracts for the Money Market, Balanced, Common
Stock and Aggressive Stock Funds and 1% for the Old Contracts and EQUIPLAN
Contracts.
Under the Contracts, the total charges may be reallocated among the
various expense categories. Equitable Life, however, intends to limit any
possible reallocation to include only the expense risks, mortality risks
and death benefit charges.
4. Contributions, Payments, Transfers and Charges
Contributions represent participant contributions under EQUI-VEST,
Momentum, Momentum Plus and EQUI-VEST PRP Contracts (except amounts
allocated to the Guaranteed Interest Account, which are reflected in the
General Account) and participant contributions under other Contracts
reduced by applicable deductions, charges and state premium taxes.
Contributions also include amounts applied to purchase variable annuities.
Transfers are amounts that participants have directed to be moved among
the Funds, including permitted transfers to and from the Guaranteed
Interest Account, which is part of Equitable Life's General Account.
Variable annuity payments and death benefits are payments to participants
and beneficiaries made under the terms of the Contracts. Withdrawals are
amounts that participants have requested to be withdrawn and paid to them
or applied to purchase annuities. Withdrawal charges, if applicable, are
the deferred contingent withdrawal charges that apply to certain
withdrawals under EQUI-VEST, Momentum, Momentum Plus and EQUI-VEST PRP
Contracts. Administrative charges, if applicable, are deducted annually
under EQUI-VEST, EQUIPLAN and Old Contracts and quarterly under Momentum,
Momentum Plus and EQUI-VEST PRP Contracts.
FSA-11
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
Accumulation units are purchased when amounts (except variable annuity
purchase amounts) are allocated to the Account and are redeemed when
payments, transfers or charges (except variable annuity payments) are made
or deducted from the Account.
Accumulation units issued and redeemed during the periods indicated were:
<TABLE>
<CAPTION>
Year Ended
December 31,
----------------------------------------
1995 1994
-------------- -------------
<S> <C> <C>
COMMON STOCK FUND
- -----------------
Issued -- EQUI-VEST Contracts........................................ 4,339,470 5,361,543
Momentum Contracts......................................... 208,765 192,156
Momentum Plus Contracts.................................... 470,567 358,043
Old Contracts.............................................. 837 2,804
EQUIPLAN Contracts......................................... 268 300
EQUI-VEST PRP Contracts.................................... 1,432,603 1,024,286
Redeemed -- EQUI-VEST Contracts........................................ 3,797,103 3,529,063
Momentum Contracts......................................... 75,510 42,853
Momentum Plus Contracts.................................... 94,575 39,733
Old Contracts.............................................. 51,405 32,387
EQUIPLAN Contracts......................................... 11,184 5,676
EQUI-VEST PRP Contracts.................................... 391,658 76,386
INTERMEDIATE GOVERNMENT SECURITIES FUND
- ---------------------------------------
Issued -- Momentum Contracts......................................... 7,133 644
Momentum Plus Contracts.................................... 34,658 82,876
EQUIPLAN Contracts......................................... 68 93
EQUI-VEST PRP Contracts.................................... 90,918 42,557
Redeemed -- Momentum Contracts......................................... 598 --
Momentum Plus Contracts.................................... 11,347 19,508
EQUIPLAN Contracts......................................... 4,000 4,562
EQUI-VEST PRP Contracts.................................... 33,589 10,781
MONEY MARKET FUND
- -----------------
Issued -- EQUI-VEST Contracts........................................ 366,971 314,962
Momentum Contracts......................................... 447,257 182,577
Momentum Plus Contracts.................................... 676,808 1,102,121
Old Contracts.............................................. 2,235 7,743
EQUI-VEST PRP Contracts.................................... 144,021 128,664
Redeemed -- EQUI-VEST Contracts........................................ 345,636 380,840
Momentum Contracts......................................... 374,993 122,214
Momentum Plus Contracts.................................... 851,769 689,692
Old Contracts.............................................. 9,440 28,522
EQUI-VEST PRP Contracts.................................... 125,670 66,109
</TABLE>
FSA-12
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Year Ended
December 31,
-----------------------------------------
1995 1994
-------------- ---------------
<S> <C> <C>
BALANCED FUND
- -------------
Issued -- EQUI-VEST Contracts........................................ 4,387,731 7,746,224
Momentum Contracts......................................... 395,854 559,478
Momentum Plus Contracts.................................... 204,147 208,551
EQUI-VEST PRP Contracts.................................... 183,034 322,182
Redeemed -- EQUI-VEST Contracts........................................ 6,839,622 6,341,428
Momentum Contracts......................................... 215,312 131,610
Momentum Plus Contracts.................................... 56,192 30,349
EQUI-VEST PRP Contracts.................................... 86,454 33,249
AGGRESSIVE STOCK FUND
- ---------------------
Issued -- EQUI-VEST Contracts........................................ 15,601,564 17,411,319
Momentum Contracts......................................... 583,570 458,121
Momentum Plus Contracts.................................... 465,017 373,205
EQUI-VEST PRP Contracts.................................... 1,591,822 763,109
Redeemed -- EQUI-VEST Contracts........................................ 14,567,533 14,120,182
Momentum Contracts......................................... 234,646 95,930
Momentum Plus Contracts.................................... 97,553 34,958
EQUI-VEST PRP Contracts.................................... 945,741 99,244
GROWTH INVESTORS FUND
- ---------------------
Issued -- Momentum Contracts......................................... 50,523 10,517
Momentum Plus Contracts.................................... 243,492 204,431
EQUI-VEST PRP Contracts.................................... 1,401,142 1,093,456
Redeemed -- Momentum Contracts......................................... 3,545 204
Momentum Plus Contracts.................................... 56,483 29,562
EQUI-VEST PRP Contracts.................................... 311,129 70,655
CONSERVATIVE INVESTORS FUND
- ---------------------------
Issued -- Momentum Contracts......................................... 8,347 2,696
Momentum Plus Contracts.................................... 54,650 104,525
EQUI-VEST PRP Contracts.................................... 223,974 366,054
Redeemed -- Momentum Contracts......................................... 450 12
Momentum Plus Contracts.................................... 18,295 22,776
EQUI-VEST PRP Contracts.................................... 57,483 41,224
HIGH YIELD FUND
- ---------------
Issued -- Momentum Contracts......................................... 6,324 1,446
Momentum Plus Contracts.................................... 44,314 41,025
EQUI-VEST PRP Contracts.................................... 145,638 109,000
Redeemed -- Momentum Contracts......................................... 395 151
Momentum Plus Contracts.................................... 12,085 4,679
EQUI-VEST PRP Contracts.................................... 35,957 9,535
</TABLE>
FSA-13
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Year Ended
December 31,
-------------------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
GLOBAL FUND
- -----------------
Issued -- Momentum Contracts......................................... 53,496 16,301
Momentum Plus Contracts.................................... 251,525 242,014
EQUI-VEST PRP Contracts.................................... 1,670,603 1,589,784
Redeemed -- Momentum Contracts......................................... 7,044 444
Momentum Plus Contracts.................................... 84,289 26,677
EQUI-VEST PRP Contracts.................................... 854,945 284,890
GROWTH & INCOME FUND
- --------------------
Issued -- Momentum Contracts......................................... 14,155 4,182
Momentum Plus Contracts.................................... 66,279 9,654
EQUI-VEST PRP Contracts.................................... 387,123 240,113
Redeemed -- Momentum Contracts......................................... 1,570 22
Momentum Plus Contracts.................................... 8,379 201
EQUI-VEST PRP Contracts.................................... 99,840 29,745
QUALITY BOND FUND
- -----------------
Issued -- Momentum Contracts......................................... 3,450 1,207
Momentum Plus Contracts.................................... 16,825 2,915
EQUI-VEST PRP Contracts.................................... 108,824 60,527
Redeemed -- Momentum Contracts......................................... 523 --
Momentum Plus Contracts.................................... 2,479 93
EQUI-VEST PRP Contracts.................................... 26,494 7,829
EQUITY INDEX FUND
- -----------------
Issued -- Momentum Contracts......................................... 13,555 664
Momentum Plus Contracts.................................... 46,112 3,032
EQUI-VEST PRP Contracts.................................... 1,413,313 85,072
Redeemed -- Momentum Contracts......................................... 1,679 117
Momentum Plus Contracts.................................... 5,016 7
EQUI-VEST PRP Contracts.................................... 868,769 38,096
INTERNATIONAL FUND
- ------------------
Issued -- Momentum Contracts......................................... 480 --
Momentum Plus Contracts.................................... 3,464 --
EQUI-VEST PRP Contracts.................................... 198,903 --
Redeemed -- Momentum Contracts......................................... 0 --
Momentum Plus Contracts.................................... 8 --
EQUI-VEST PRP Contracts.................................... 58,228 --
</TABLE>
FSA-14
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
5. Net Assets
Net assets consist of: (i) net assets attributable to Contracts in the
accumulation period, which are represented by Contract accumulation units
outstanding and associated accumulation unit values and (ii) actuarial
reserves and other liabilities attributable to Contracts in the payout
period which are not represented by accumulation units or unit values.
Listed below are components of net assets.
<TABLE>
<CAPTION>
INTERMEDIATE
COMMON GOVERNMENT MONEY AGGRESSIVE GROWTH
STOCK SECURITIES MARKET BALANCED STOCK INVESTORS
FUND FUND FUND FUND FUND FUND
-------------- ------------ ------------ -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net assets attributable
to EQUI-VEST
Contracts in
accumulation period...... $2,646,072,171 $ -- $27,784,711 $ 934,237,949 $1,774,667,393 $ --
Net assets attributable
to Momentum
Contracts in
accumulation period...... 65,455,997 788,207 5,126,458 29,578,934 66,626,661 6,879,601
Net assets attributable
to Momentum Plus
Contracts in
accumulation period...... 93,562,302 9,288,912 32,208,088 36,561,596 93,695,206 45,515,989
Net assets attributable
to Old Contracts in
accumulation period...... 77,284,324 -- 4,478,039 -- -- --
Net assets attributable
to EQUIPLAN
Contracts in
accumulation period...... 23,350,893 2,463,414 -- -- -- --
Net assets attributable
to EQUI-VEST PRP
Contracts in
accumulation period...... 252,150,274 9,783,262 8,660,000 41,735,249 162,372,587 253,709,591
------------- ----------- ----------- -------------- -------------- ------------
Actuarial reserves and
other contract
liabilities
attributable to
Contracts in payout...... 20,109,409 -- -- -- 47,510 216,011
-------------- ----------- ----------- -------------- -------------- ------------
$3,177,985,370 $22,323,795 $78,257,296 $1,042,113,728 $2,097,409,357 $306,321,192
============== =========== =========== ============== ============== ============
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVE HIGH GROWTH & QUALITY EQUITY
INVESTORS YIELD GLOBAL INCOME BOND INDEX INTERNATIONAL
FUND FUND FUND FUND FUND FUND FUND
------------ ------------- ------------- ------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets attributable
to Momentum
Contracts in
accumulation period..... $ 1,195,370 $ 819,489 $ 7,605,705 $ 2,026,401 $ 448,047 $ 1,688,718 $ 50,032
Net assets attributable
to Momentum Plus
Contracts in
accumulation period..... 14,247,486 8,485,834 48,550,927 8,166,372 1,963,593 5,996,639 359,926
Net assets attributable
to EQUI-VEST PRP
Contracts in
accumulation period..... 55,505,387 23,726,544 258,843,710 60,227,506 14,634,233 80,409,441 14,651,853
----------- ----------- ------------ ----------- ----------- ----------- -----------
Actuarial reserves and
other contract
liabilities
attributable to
Contracts in payout..... 77,968 19,452 7,144 -- -- 7,312 39,286
----------- ----------- ------------ ----------- ----------- ----------- -----------
$71,026,211 $33,051,319 $315,007,486 $70,420,279 $17,045,873 $88,102,110 $15,101,097
=========== =========== ============ =========== =========== =========== ===========
</TABLE>
FSA-15
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
6. Accumulation Unit Values
Shown below is accumulation unit value information for a unit outstanding
throughout the periods shown.
<TABLE>
<CAPTION>
COMMON STOCK FUND--OLD CONTRACTS
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------- ------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $151.67 $155.96 $125.72 $122.56 $ 89.56 $97.97 $78.37 $63.99 $59.83 $51.41
======= ======= ======= ======= ======= ====== ====== ====== ====== ======
Unit value, end of period....... $199.66 $151.67 $155.96 $125.72 $122.56 $89.56 $97.97 $78.37 $63.99 $59.83
======= ======= ======= ======= ======= ====== ====== ====== ====== ======
Number of units outstanding,
end of period (000's)........... 387 438 467 525 598 694 780 895 1,079 1,282
======= ======= ======= ======= ======= ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK FUND--EQUI-VEST/MOMENTUM** CONTRACTS
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $124.32 $128.81 $104.63 $102.76 $ 75.67 $83.40 $67.22 $55.30 $52.10 $45.11
======= ======= ======= ======= ======= ====== ====== ====== ====== ======
Unit value, end of period....... $162.42 $124.32 $128.81 $104.63 $102.76 $75.67 $83.40 $67.22 $55.30 $52.10
======= ======= ======= ======= ======= ====== ====== ====== ====== ======
Number of EQUI-VEST
units outstanding, end of
period (000's)............... 16,292 15,749 13,917 11,841 10,292 9,670 8,645 7,252 7,349 6,059
======= ======= ======= ======= ======= ====== ====== ====== ====== ======
Number of Momentum units
outstanding, end of
period (000's)............... 403 270 120
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK FUND--EQUIPLAN CONTRACTS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------- ------- ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $164.29 $168.93 $136.10 $132.67 $ 96.95 $106.05 $ 84.83 $69.26 $65.62 $54.35
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
Unit value, end of period....... $216.27 $164.29 $168.93 $136.10 $132.67 $ 96.95 $106.05 $84.83 $69.26 $65.62
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
Number of units outstanding,
end of period (000's)........... 108 119 124 135 144 157 177 196 235 270
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 9, 1993*
1995 1994 TO DECEMBER 31, 1993
------------ ------------ --------------------
<S> <C> <C> <C>
Unit value, beginning of period.................................. $101.38 $105.01 $100.00
======= ======= =======
Unit value, end of period........................................ $132.47 $101.38 $105.01
======= ======= =======
Number of units outstanding, end of period (000's)............... 706 330 12
======= ======= =======
</TABLE>
FSA-16
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 13, JANUARY 3, 1994*
1995 TO DECEMBER 31, 1994
------------ --------------------
<S> <C> <C>
Unit value, beginning of period....................................... $ 97.03 $100.00
======= =======
Unit value, end of period............................................. $126.78 $ 97.03
======= =======
Number of units outstanding, end of period (000's).................... 1,989 948
======= =======
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT SECURITIES FUND--EQUIPLAN CONTRACTS
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $44.04 $46.25 $42.04 $40.00 $35.17 $33.12 $28.89 $27.31 $26.81 $22.45
====== ======= ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $49.69 $44.04 $46.25 $42.04 $40.00 $35.17 $33.12 $28.89 $27.31 $26.81
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of units outstanding,
end of period (000's)......... 50 54 58 66 74 82 91 98 120 113
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT SECURITIES FUND--MOMENTUM CONTRACTS
YEAR ENDED
DECEMBER 13, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
------------ --------------------
<S> <C> <C>
$ 98.19 $100.00
Unit value, beginning of period....................................... ======= =======
Unit value, end of period............................................. $109.80 $ 98.19
======= =======
7 1
Number of units outstanding, end of period (000's).................... ======= =======
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT SECURITIES FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 9, 1993*
1995 1994 TO DECEMBER 31, 1993
------------ ------------ --------------------
<S> <C> <C> <C>
Unit value, beginning of period................................. $ 94.76 $100.44 $100.00
======= ======= =======
Unit value, end of period....................................... $105.94 $ 94.76 $100.44
======= ======= =======
Number of units outstanding, end of period (000's).............. 88 64 1
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT SECURITIES FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 13, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
------------ --------------------
<S> <C> <C>
Unit value, beginning of period................................. $ 98.19 $100.00
======= =======
Unit value, end of period....................................... $109.80 $ 98.19
======= =======
Number of units outstanding, end of period (000's).............. 89 32
======= =======
</TABLE>
FSA-17
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
MONEY MARKET FUND--OLD CONTRACTS
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $30.44 $29.43 $28.75 $27.92 $26.47 $24.59 $22.66 $21.23 $20.01 $18.87
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $32.00 $30.44 $29.43 $28.75 $27.92 $26.47 $24.59 $22.66 $21.23 $20.01
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of units outstanding,
end of period (000's)......... 140 147 168 204 246 289 310 339 419 432
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET FUND--EQUI-VEST / MOMENTUM** CONTRACTS
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $26.08 $25.41 $25.01 $24.48 $23.38 $21.89 $20.32 $19.18 $18.22 $17.31
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $27.22 $26.08 $25.41 $25.01 $24.48 $23.38 $21.89 $20.32 $19.18 $18.22
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of EQUI-VEST
units outstanding, end of
period (000's)................ 1,021 1,000 1,065 1,201 1,325 1,307 1,045 656 581 609
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of Momentum units
outstanding, end of
period (000's)................ 188 116 56
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 9, 1993*
1995 1994 TO DECEMBER 31, 1993
------------ ------------ --------------------
<S> <C> <C> <C>
Unit value, beginning of period..................................... $103.10 $100.47 $100.00
======= ======= =======
Unit value, end of period........................................... $107.55 $103.10 $100.47
======= ======= =======
Number of units outstanding, end of period (000's).................. 299 474 62
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 31, JANUARY 3, 1994*
1995 TO DECEMBER 31, 1994
------------ --------------------
<S> <C> <C>
Unit value, beginning of period........................................... $102.61 $100.00
======= =======
Unit value, end of period................................................. $107.04 $102.61
======= =======
Number of units outstanding, end of period (000's)........................ 81 63
======= =======
</TABLE>
FSA-18
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
BALANCED FUND--EQUI-VEST / MOMENTUM** CONTRACTS
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $26.18 $28.85 $26.04 $27.17 $19.40 $19.69 $15.80 $13.95 $14.69 $13.14
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $30.92 $26.18 $28.85 $26.04 $27.17 $19.40 $19.69 $15.80 $13.95 $14.69
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of EQUI-VEST
units outstanding, end of
period (000's)................ 30,212 32,664 31,259 25,975 21,100 19,423 16,810 15,335 17,370 11,988
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of Momentum units
outstanding, end of
period (000's)................ 957 776 348
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
BALANCED FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 9, 1993*
1995 1994 TO DECEMBER 31, 1993
-------------- -------------- --------------------
<S> <C> <C> <C>
Unit value, beginning of period..................................... $ 92.22 $101.63 $100.00
======= ======= =======
Unit value, end of period........................................... $108.95 $ 92.22 $101.63
======= ======= =======
Number of units outstanding, end of period (000's).................. 336 188 9
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
BALANCED FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 31, JANUARY 3, 1994*
1995 TO DECEMBER 31, 1994
------------- --------------------
<S> <C> <C>
Unit value, beginning of period..................................... $ 91.64 $100.00
======= =======
Unit value, end of period........................................... $108.26 $ 91.64
======= =======
Number of units outstanding, end of period (000's).................. 386 289
======= =======
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE STOCK FUND--EQUI-VEST / MOMENTUM** CONTRACTS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $52.88 $55.68 $48.30 $50.51 $27.36 $25.86 $18.09 $18.15 $18.33 $15.03
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $68.73 $52.88 $55.68 $48.30 $50.51 $27.36 $25.86 $18.09 $18.15 $18.33
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of EQUI-VEST
units outstanding, end of
period (000's)................ 25,821 24,787 21,496 17,986 12,962 9,545 8,134 8,972 10,180 6,666
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of Momentum units
outstanding, end of
period (000's)................ 969 620 258
====== ====== ======
</TABLE>
FSA-19
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
AGGRESSIVE STOCK FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 9, 1993*
1995 1994 TO DECEMBER 31, 1993
------------ ------------ --------------------
<S> <C> <C> <C>
Unit value, beginning of period.............................. $100.49 $105.90 $100.00
======= ======= =======
Unit value, end of period.................................... $130.50 $100.49 $105.90
======= ======= =======
Number of units outstanding, end of period (000's)........... 718 350 12
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE STOCK FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 31, JANUARY 3, 1994*
1995 TO DECEMBER 31, 1994
------------ --------------------
<S> <C> <C>
Unit value, beginning of period........................................... $ 95.45 $100.00
======= =======
Unit value, end of period................................................. $123.95 $ 95.45
======= =======
Number of units outstanding, end of period (000's)........................ 1,310 664
======= =======
</TABLE>
<TABLE>
<CAPTION>
GROWTH INVESTORS FUND--MOMENTUM CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
------------ --------------------
<S> <C> <C>
Unit value, beginning of period........................................... $ 96.31 $100.00
======= =======
Unit value, end of period................................................. $120.08 $ 96.31
======= =======
Number of units outstanding, end of period (000's)........................ 57 10
======= =======
</TABLE>
<TABLE>
<CAPTION>
GROWTH INVESTORS FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 9, 1993*
1995 1994 TO DECEMBER 31, 1993
------------ ------------ --------------------
<S> <C> <C> <C>
Unit value, beginning of period.............................. $ 97.45 $101.99 $100.00
======= ======= =======
Unit value, end of period.................................... $121.49 $ 97.45 $101.99
======= ======= =======
Number of units outstanding, end of period (000's)........... 375 188 13
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
GROWTH INVESTORS FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 31, JANUARY 3, 1994*
1995 TO DECEMBER 31, 1994
------------ --------------------
<S> <C> <C>
Unit value, beginning of period........................................... $ 96.31 $100.00
======= =======
Unit value, end of period................................................. $120.08 $ 96.31
======= =======
Number of units outstanding, end of period (000's)........................ 2,113 1,023
======= =======
</TABLE>
FSA-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
CONSERVATIVE INVESTORS FUND--MOMENTUM CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
------------ --------------------
<S> <C> <C>
Unit value, beginning of period............................................... $ 95.10 $100.00
======= =======
Unit value, end of period..................................................... $112.97 $ 95.10
======= =======
Number of units outstanding, end of period (000's)............................ 11 3
======= =======
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVE INVESTORS FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 9, 1993*
1995 1994 TO DECEMBER 31, 1993
------------ ------------ --------------------
<S> <C> <C> <C>
Unit value, beginning of period.................................. $ 93.29 $98.60 $100.00
======= ====== =======
Unit value, end of period........................................ $110.81 $93.29 $ 98.60
======= ====== =======
Number of units outstanding, end of period (000's)............... 129 92 10
======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVE INVESTORS FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
-------------------- -------------------------
<S> <C> <C>
Unit value, beginning of period.................................. $ 95.10 $100.00
======= =======
Unit value, end of period........................................ $112.97 $ 95.10
======= =======
Number of units outstanding, end of period (000's)............... 491 325
======= =======
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD FUND--MOMENTUM CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
---------------- -------------------------
<S> <C> <C>
Unit value, beginning of period.................................. $ 95.88 $100.00
======= =======
Unit value, end of period........................................ $113.44 $ 95.88
======= =======
Number of units outstanding, end of period (000's)............... 7 1
======= =======
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 9, 1993*
1995 1994 TO DECEMBER 31, 1993
-------------------- --------------- ----------------------
<S> <C> <C> <C>
Unit value, beginning of period.................................. $102.37 $106.74 $100.00
======= ======= =======
Unit value, end of period........................................ $121.10 $102.37 $106.74
======= ======= =======
Number of units outstanding, end of period (000's)............... 70 38 1
======= ======= =======
</TABLE>
FSA-21
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
HIGH YIELD FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 31, JANUARY 3, 1994*
1995 TO DECEMBER 31, 1994
------------- --------------------
<S> <C> <C>
Unit value, beginning of period...................................... $ 95.88 $100.00
======= =======
Unit value, end of period............................................ $113.44 $ 95.88
======= =======
Number of units outstanding, end of period (000's)................... 209 99
======= =======
</TABLE>
<TABLE>
<CAPTION>
GLOBAL FUND--MOMENTUM CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
-------------- --------------------
<S> <C> <C>
Unit value, beginning of period...................................... $104.12 $100.00
======= =======
Unit value, end of period............................................ $122.06 $104.12
======= =======
Number of units outstanding, end of period (000's)................... 62 16
======= =======
</TABLE>
<TABLE>
<CAPTION>
GLOBAL FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 9, 1993*
1995 1994 TO DECEMBER 31, 1993
-------------- -------------- --------------------
<S> <C> <C> <C>
Unit value, beginning of period..................................... $106.04 $102.14 $100.00
======= ======= =======
Unit value, end of period........................................... $124.30 $106.04 $102.14
======= ======= =======
Number of units outstanding, end of period (000's).................. 391 223 8
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
GLOBAL FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 31, JANUARY 3, 1994*
1995 TO DECEMBER 31, 1994
---------------- --------------------
<S> <C> <C>
Unit value, beginning of period..................................... $104.12 $100.00
======= =======
Unit value, end of period........................................... $122.06 $104.12
======= =======
Number of units outstanding, end of period (000's).................. 2,121 1,305
======= =======
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND--MOMENTUM CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
-------------- ---------------------
<S> <C> <C>
Unit value, beginning of period...................................... $ 98.86 $100.00
======= =======
Unit value, end of period............................................ $121.02 $ 98.86
======= =======
Number of units outstanding, end of period (000's)................... 17 4
======= =======
</TABLE>
FSA-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
GROWTH & INCOME FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
---------------- ---------------------
<S> <C> <C>
Unit value, beginning of period...................................... $ 99.06 $100.00
======= =======
Unit value, end of period............................................ $121.25 $ 99.06
======= =======
Number of units outstanding, end of period (000's)................... 67 9
======= =======
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 31, JANUARY 3, 1994*
1995 TO DECEMBER 31, 1994
--------------- -----------------------
<S> <C> <C>
Unit value, beginning of period...................................... $ 98.86 $100.00
======= =======
Unit value, end of period............................................ $121.02 $ 98.86
======= =======
Number of units outstanding, end of period (000's)................... 498 210
======= =======
</TABLE>
<TABLE>
<CAPTION>
QUALITY BOND FUND--MOMENTUM CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
------------------ -----------------------
<S> <C> <C>
Unit value, beginning of period...................................... $ 93.87 $100.00
======= =======
Unit value, end of period............................................ $108.38 $ 93.87
======= =======
Number of units outstanding, end of period (000's)................... 4 1
======= =======
</TABLE>
<TABLE>
<CAPTION>
QUALITY BOND FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
------------------ ----------------------
<S> <C> <C>
Unit value, beginning of period...................................... $ 99.07 $100.00
======= =======
Unit value, end of period............................................ $114.38 $ 99.07
======= =======
Number of units outstanding, end of period (000's)................... 17 3
======= =======
</TABLE>
<TABLE>
<CAPTION>
QUALITY BOND FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 31, JANUARY 3, 1994*
1995 TO DECEMBER 31, 1994
----------------- ----------------------
<S> <C> <C>
Unit value, beginning of period...................................... $ 93.87 $100.00
======= =======
Unit value, end of period............................................ $108.38 $ 93.87
======= =======
Number of units outstanding, end of period (000's)................... 135 53
======= =======
</TABLE>
FSA-23
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
EQUITY INDEX FUND--MOMENTUM CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
--------------- ------------------------
<S> <C> <C>
Unit value, beginning of period....................................... $100.95 $100.00
======= =======
Unit value, end of period............................................. $135.94 $100.95
======= =======
Number of units outstanding, end of period (000's).................... 12 1
======= =======
</TABLE>
<TABLE>
<CAPTION>
EQUITY INDEX FUND--MOMENTUM PLUS CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
------------------ ------------------------
<S> <C> <C>
Unit value, beginning of period....................................... $100.94 $100.00
======= =======
Unit value, end of period............................................. $135.92 $100.94
======= =======
Number of units outstanding, end of period (000's).................... 44 3
======= =======
</TABLE>
<TABLE>
<CAPTION>
EQUITY INDEX FUND--EQUI-VEST PRP CONTRACTS
YEAR ENDED
DECEMBER 31, JUNE 1, 1994*
1995 TO DECEMBER 31, 1994
------------------ ------------------------
<S> <C> <C>
Unit value, beginning of period....................................... $100.95 $100.00
======= =======
Unit value, end of period............................................. $135.94 $100.95
======= =======
Number of units outstanding, end of period (000's).................... 592 47
======= =======
</TABLE>
FSA-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
INTERNATIONAL FUND--MOMENTUM CONTRACTS
SEPTEMBER 1, 1994* TO
DECEMBER 31, 1995
---------------------
<S> <C>
Unit value, beginning of period......................................................................... $ 0.00
=======
Unit value, end of period............................................................................... $104.15
=======
Number of units outstanding, end of period (000's)...................................................... 0
=======
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL FUND--MOMENTUM PLUS CONTRACTS
SEPTEMBER 1, 1994* TO
DECEMBER 31, 1995
---------------------
<S> <C>
Unit value, beginning of period......................................................................... $ 0.00
=======
Unit value, end of period............................................................................... $104.15
=======
Number of units outstanding, end of period (000's)...................................................... 3
=======
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL FUND--EQUI-VEST PRP CONTRACTS
SEPTEMBER 1, 1994* TO
DECEMBER 31, 1995
---------------------
<S> <C>
Unit value, beginning of period......................................................................... $ 0.00
=======
Unit value, end of period............................................................................... $104.15
=======
Number of units outstanding, end of period (000's)...................................................... 141
=======
<FN>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
</FN>
</TABLE>
FSA-25
<PAGE>
NOTE
The supplement dated May 1, 1996 to the EQUI-VEST prospectus dated May 1,
1995 contained in this Post-Effective Amendment No. 58 and Amendment No. 54
(together, the "Amendment") to Form N-4 Registration Statement Nos. 2-30070
and 811-1705 ("Registration Statement") under the Securities Act of 1933 and
Investment Company Act of 1940, respectively, is being filed by The Equitable
Life Assurance Society of the United States ("Equitable Life") for the
purpose of updating the financial information and other disclosures contained
in Equitable Life's EQUI-VEST prospectus dated May 1, 1995. The aforesaid
supplement will be used for continuing contributions under Equitable Life's
EQUI-VEST annuity contracts outstanding as of April 30, 1996. For purposes of
such continuing contributions, the Amendment shall not otherwise be deemed to
amend, delete or supersede the EQUI-VEST prospectus dated May 1, 1995,
previously filed as part of the Registration Statement. Participants under
the EQUI-VEST contracts outstanding on April 30, 1996 who request a statement
of additional information will be provided with an EQUI-VEST statement of
additional information dated May 1, 1996, as contained in the Registration
Statement.
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SUPPLEMENT DATED MAY 1, 1996
TO
EQUI-VEST(REGISTERED TRADEMARK) PROSPECTUS
DATED MAY 1, 1995
This Supplement modifies certain information in the prospectus dated May 1,
1995 for EQUI-VEST, group and individual deferred variable annuity contracts
offered by Equitable Life. This Supplement is designed for Contract Owners
and Certificate Owners under EQUI-VEST contracts issued prior to May 1, 1996.
Capitalized terms in this Supplement have the same meanings as in the
EQUI-VEST prospectus. If you have misplaced your prospectus, you may obtain
an additional copy, free of charge by writing to us at P.O. Box 2996, New
York, NY 10116-2996, or by calling us toll-free at 1-800-628-6673.
As of May 1, 1996, for new contract offerings, the EQUI-VEST prospectus has
been combined with the prospectus for MOMENTUM, an Equitable Life deferred
variable group annuity program which is available only to certain categories
of trusteed employer-sponsored defined contribution plans. The combination of
these two prospectuses into one does not in itself change the terms or
conditions for either program.
EQUI-VEST contracts are not insured by the FDIC or any other agency. They are
not deposits or other obligations of any bank and are not bank guaranteed.
They are subject to investment risks and possible loss of principal invested.
Modifications and updates this Supplement makes to the May 1, 1995 EQUI-VEST
prospectus are described below (page references are to the May 1, 1995
prospectus):
On page 2, the paragraphs under the captions are replaced by the following:
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. Equitable Life's Annual
Report on Form 10-K for the year ended December 31, 1995 is incorporated
herein by reference.
All documents or reports filed by Equitable Life pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE ACT)
after the date hereof and prior to the termination of the offering of the
securities offered hereby shall be deemed to be incorporated by reference in
this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this prospectus.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits not specifically incorporated by reference
into the text of such documents). Requests for such documents should be
delivered to The Equitable Life Assurance Society of the United States, 787
Seventh Avenue, New York, New York 10019. Attention: Corporate Secretary
(telephone: (212) 554-1234).
EQUITABLE LIFE. The information about Equitable Life on page 7 is updated as
follows: Equitable Life is a wholly-owned subsidiary of The Equitable
Companies Incorporated (the Holding Company). The largest stockholder of the
Holding Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding
shares of common stock of the Holding Company, plus convertible preferred
stock. AXA, a French company, is the holding company for an international
group of insurance and related financial services companies. Equitable Life,
the Holding Company and their subsidiaries managed approximately $195.3
billion in assets as of December 31, 1995.
INVESTMENT OPTIONS. Under Investment Options in Part 1: "Summary," at page 8,
we have added the following information: If an Employer's plan is intended to
comply with the requirements of ERISA section 404(c), the Employer or the
Plan Trustee is responsible for making sure that the Investment Options
chosen for the plan constitute a broad range of investment choices as
required by the Department of Labor under the ERISA section 404(c)
regulation.
THE TRUST'S INVESTMENT ADVISER. The information about Alliance Capital
Management L.P. (Alliance), the Trust's investment adviser on page 20, is
updated as follows: As of December 31, 1995, Alliance was managing
approximately $146.5 billion in assets. Alliance employs 162 investment
professionals, including 81 research analysts. Portfolio managers have
average investment experience of more than 16 years.
1
<PAGE>
EQUI-VEST Prospectus Supplement, continued
THE GUARANTEED INTEREST ACCOUNT. On page 30, the following replaces the third
paragraph of Part 4: The Guaranteed Interest Account: Interest is credited to
the Account every day. There are three levels of interest rates
simultaneously in effect in the Guaranteed Interest Account: the minimum
interest rate guaranteed over the life of the contract, the yearly guaranteed
interest rate for the calendar year, and the current interest rate. Your
money in the Guaranteed Interest Account will be credited with the highest
applicable rate of the three. Current interest rates are declared
periodically by Equitable Life, at its discretion, according to procedures
that Equitable Life reserves the right to change. All interest rates are
effective annual rates, but before deduction of applicable administrative or
contingent withdrawal charges.
The minimum interest rate for money invested in the Guaranteed Interest
Account for all EQUI-VEST contracts is 4% for 1997. The minimum rate for 1996
continues at 4%.
WHERE TO REACH US. On or about July 1, 1996, Equitable Life intends to
relocate its Individual Annuity Center from New York City to 200 Plaza Drive,
2nd Floor, Secaucus, NJ 07094. This address should be used for all written
requests and communications EXCEPT contributions and loan payments.
(Contributions and loan payments should continue to go to the addresses
specified in the prospectus.)
2
<PAGE>
EQUI-VEST Prospectus Supplement, continued
FEE TABLES AND EXAMPLES.
On pages 13 through 18, the fee tables and examples are updated as follows:
TABLE 1: EQUI-VEST SERIES 100
<TABLE>
<CAPTION>
Description of Expenses
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
SALES LOAD ON PURCHASES ................... NONE
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) .. 6%
MAXIMUM ANNUAL ADMINISTRATIVE CHARGE (2) .. $30
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY GROWTH & EQUITY
MARKET SECURITIES BOND HIGH YIELD INCOME INDEX
---------- -------------- --------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND TRUST ANNUAL
EXPENSE (3) 1.75% N/A N/A N/A N/A N/A
Separate Account Annual Expenses (4)
Mortality and Expense Risk Fees .65% .50% .50% .50% .50% .50%
Other Expenses .84% .84% .84% .84% .84% .84%
---------- -------------- --------- ------------ ---------- --------
Total Separate Account Annual
Expenses 1.49%(3) 1.34% 1.34% 1.34% 1.34% 1.34%
Trust Annual Expenses (4)
Investment Advisory Fees 0.40% 0.50% 0.55% 0.55% 0.55% 0.35%
Other Expenses 0.04% 0.07% 0.04% 0.05% 0.05% 0.13%
---------- -------------- --------- ------------ ---------- --------
Total Trust Annual Expenses (5) 0.44%(3) 0.57% 0.59% 0.60% 0.60% 0.48%
</TABLE>
<TABLE>
<CAPTION>
COMMON AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
---------- -------- --------------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND
TRUST ANNUAL EXPENSE (3) 1.75% N/A N/A 1.75% N/A 1.75% N/A
Separate Account Annual Expenses
(4)
Mortality and Expense Risk Fees .65% .50% .50% .50% .50% .65% .50%
Other Expenses .84% .84% .84% .84% .84% .84% .84%
---------- -------- --------------- ------------ -------------- ---------- -----------
Total Separate Account Annual
Expenses 1.49%(3) 1.34% 1.34% 1.34%(3) 1.34% 1.49%(3) 1.34%
Trust Annual Expenses (4)
Investment Advisory Fees 0.35% 0.53% 0.90% 0.46% 0.55% 0.37% 0.52%
Other Expenses 0.03% 0.08% 0.13% 0.03% 0.04% 0.03% 0.04%
---------- -------- --------------- ------------ -------------- ---------- -----------
Total Trust Annual Expenses (5) 0.38%(3) 0.61% 1.03% 0.49%(3) 0.59% 0.40%(3) 0.56%
</TABLE>
3
<PAGE>
EQUI-VEST Prospectus Supplement, continued
TABLE 2: EQUI-VEST SERIES 200
<TABLE>
<CAPTION>
Description of Expenses
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
SALES LOAD ON PURCHASES ................... NONE
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) .. 6%
MAXIMUM ANNUAL ADMINISTRATIVE CHARGE (2) .. $30
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY GROWTH & EQUITY
MARKET SECURITIES BOND HIGH YIELD INCOME INDEX
---------- -------------- --------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND TRUST ANNUAL
EXPENSE (3) 1.75% N/A N/A N/A N/A N/A
Separate Account Annual Expenses (4)
Mortality and Expense Risk Fees 1.15% 1.09% 1.09% 1.09% 1.09% 1.09%
Other Expenses .25% .25% .25% .25% .25% .25%
---------- -------------- --------- ------------ ---------- --------
Total Separate Account Annual
Expenses 1.40%(3) 1.34% 1.34% 1.34% 1.34% 1.34%
Trust Annual Expenses (4)
Investment Advisory Fees 0.40% 0.50% 0.55% 0.55% 0.55% 0.35%
Other Expenses 0.04% 0.07% 0.04% 0.05% 0.05% 0.13%
---------- -------------- --------- ------------ ---------- --------
Total Trust Annual Expenses (5) 0.44%(3) 0.57% 0.59% 0.60% 0.60% 0.48%
</TABLE>
<TABLE>
<CAPTION>
COMMON AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
---------- -------- --------------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND
TRUST ANNUAL EXPENSE (3) 1.75% N/A N/A 1.75% N/A 1.75% N/A
Separate Account Annual Expenses
(4)
Mortality and Expense Risk Fees 1.15% 1.09% 1.09% 1.09% 1.09% 1.15% 1.09%
Other Expenses .25% .25% .25% .25% .25% .25% .25%
---------- -------- --------------- ------------ -------------- ---------- -----------
Total Separate Account Annual
Expenses 1.40%(3) 1.34% 1.34% 1.34%(3) 1.34% 1.40%(3) 1.34%
Trust Annual Expenses (4)
Investment Advisory Fees 0.35% 0.53% 0.90% 0.46% 0.55% 0.37% 0.52%
Other Expenses 0.03% 0.08% 0.13% 0.03% 0.04% 0.03% 0.04%
---------- -------- --------------- ------------ -------------- ---------- -----------
Total Trust Annual Expenses (5) 0.38%(3) 0.61% 1.03% 0.49%(3) 0.59% 0.40%(3) 0.56%
</TABLE>
- ------------
Notes:
(1) The contingent withdrawal charge is a percentage of specified
contributions or amounts withdrawn, depending on the Contract.
Important exceptions and limitations eliminate or reduce the contingent
withdrawal charge. See "Contingent Withdrawal Charge" in Part 7.
(2) Many Contracts are exempt from this charge. The Annual Administrative
Charge is the lesser of $30 or 2% of the Annuity Account Value. See
"Annual Administrative Charge" in Part 7.
(3) The amounts shown in the Table under "Separate Account Annual Expenses"
and "Hudson River Trust Annual Expenses," when added together, are not
permitted to exceed a total annual rate of 1.75% of the value of the
assets held in the Money Market, Common Stock, Aggressive Stock and
Balanced Funds. For Series 100 Contracts, without this expense
limitation, total Separate Account Annual Expenses plus Trust Annual
Expenses for 1995 would have been 1.93%, 1.87%, 1.83%, and 1.89% for
the Money Market, Common Stock, Aggressive Stock and Balanced Funds,
respectively. For Series 200 Contracts, without this expense limitation,
total Separate Account Annual Expenses plus Trust Annual Expenses for
1995 would have been 1.84%, 1.78%, 1.83%, and 1.80% for the Money Market,
Common Stock, Aggressive Stock and Balanced Funds, respectively. For
Series 100 Contracts, Separate Account Annual Expenses are guaranteed not
to exceed a total annual rate of 1.49% for the Money Market, Balanced and
Common Stock Funds and an annual rate of 1.34% for all other Investment
Funds. See "Limitation on Charges" in Part 7.
(4) Separate Account and Trust expenses are shown as a percentage of each
Investment Fund's or Portfolio's average value. "Mortality and Expense
Risk Fees" includes death benefit charges. "Other Expenses" under
"Separate Account Annual Expenses" includes financial accounting
expenses. See "Limitation on Charges," "Charges to Investment Funds"
and "Trust Charges to Portfolios" in Part 7.
(5) Expenses shown for all Portfolios are for the fiscal year ended
December 31, 1995. The amount shown for the International Portfolio,
which was established on April 3, 1995 is annualized. The investment
advisory fee for each Portfolio may vary from year to year depending
upon the average daily net assets of the respective Portfolio of the
Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. The Trust expenses are shown as a
percentage of each Portfolio's average value. See "Trust Charges to
Portfolios" in Part 7.
4
<PAGE>
EQUI-VEST Prospectus Supplement, continued
EXAMPLES: EQUI-VEST SERIES 100 AND 200
For each type of Series 100 and 200 Contract, the examples which follow
show the expenses that a hypothetical Contract Owner would pay in the
surrender and non-surrender situations noted below, assuming a single
contribution of $1,000 on the Contract Date invested in one of the
Investment Funds listed and a 5% annual return on assets and no waiver of
the contingent withdrawal charge.(1) For purposes of these examples, the
annual administrative charge is computed by reference to the actual
aggregate annual administrative charges as a percentage of the total assets
held under all EQUI-VEST Contracts.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future
investment performance.
IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSE
WOULD BE:
FOR IRA (INCLUDING CERTAIN QP IRA(2)), SEP, EDC AND PARTICIPANT-OWNED HR-10
CONTRACTS:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Money Market $81.26 $125.75 $166.03 $259.78
Intermediate Government Securities 82.84 130.51 174.07 276.62
Quality Bond 83.04 131.11 175.07 278.70
High Yield 83.13 131.41 175.57 279.74
Growth & Income 83.13 131.41 175.57 279.74
Equity Index 81.95 127.84 169.55 267.18
Common Stock 81.26 125.75 166.03 259.78
Global 83.23 131.70 176.07 280.78
International 87.37 144.12 196.86 323.52
Aggressive Stock 81.26 125.75 166.03 259.78
Asset Allocation Series:
Conservative Investors 83.04 131.11 175.07 278.70
Balanced 81.26 125.75 166.03 259.78
Growth Investors 82.74 130.22 173.57 275.57
FOR TSA AND QP IRA CONTRACTS:(3)
1 Year 3 Years 5 Years 10 Years
-------- --------- --------- ----------
Money Market $75.08 $119.19 $166.03 $259.78
Intermediate Government Securities 76.67 123.98 174.07 276.62
Quality Bond 76.86 124.58 175.07 278.70
High Yield 76.96 124.88 175.57 279.74
Growth & Income 76.96 124.88 175.57 279.74
Equity Index 75.77 121.29 169.55 267.18
Common Stock 75.08 119.19 166.03 259.78
Global 77.06 125.18 176.07 280.78
International 81.23 137.67 196.86 323.52
Aggressive Stock 75.08 119.19 166.03 259.78
Asset Allocation Series:
Conservative Investors 76.86 124.58 175.07 278.70
Balanced 75.08 119.19 166.03 259.78
Growth Investors 76.57 123.68 173.57 275.57
FOR TRUSTEED AND NQ CONTRACTS:
1 Year 3 Years 5 Years 10 Years
-------- --------- --------- ----------
Money Market $75.08 $119.19 $163.26 $223.29
Intermediate Government
Securities 76.67 123.98 171.80 240.72
Quality Bond 76.86 124.58 172.87 242.88
High Yield 76.96 124.88 173.40 243.95
Growth & Income 76.96 124.88 173.40 243.95
Equity Index 75.77 121.29 167.00 230.95
Common Stock 75.08 119.19 163.26 223.29
Global 77.06 125.18 173.93 245.03
International 81.23 137.67 196.04 289.27
Aggressive Stock 75.08 119.19 163.26 223.29
Asset Allocation Series:
Conservative Investors 76.86 124.58 172.87 242.88
Balanced 75.08 119.19 163.26 223.29
Growth Investors 76.57 123.68 171.27 239.64
</TABLE>
5
<PAGE>
EQUI-VEST Prospectus Supplement, continued
IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE
EXPENSE WOULD BE:
FOR ALL SERIES 100 AND 200 CONTRACTS:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Money Market $19.43 $60.08 $103.26 $223.29
Intermediate Government
Securities 21.10 65.16 111.80 240.72
Quality Bond 21.31 65.80 112.87 242.88
High Yield 21.42 66.11 113.40 243.95
Growth & Income 21.42 66.11 113.40 243.95
Equity Index 20.16 62.31 107.00 230.95
Common Stock 19.43 60.08 103.26 223.29
Global 21.52 66.43 113.93 245.03
International 25.93 79.68 136.04 289.27
Aggressive Stock 19.43 60.08 103.26 223.29
Asset Allocation Series:
Conservative Investors 21.31 65.80 112.87 242.88
Balanced 19.43 60.08 103.26 223.29
Growth Investors 21.00 64.84 111.27 239.64
</TABLE>
- ------------
(1) The amount accumulated could not be paid in the form of an annuity at
the end of any of the periods shown in the examples. If the amount
applied to purchase an annuity is less than $2,000, or the initial
annuity payment is less than $20 we may pay the amount to the payee in
a single sum instead of as payments under an annuity form. See
"Distribution Options" in Part 6. In some cases, charges for state
premium or other taxes will be deducted from the amount applied, if
applicable.
(2) These expenses also apply to a Series 100 or 200 QP IRA purchased in a
state where group Contracts are issued.
(3) These expenses apply only to a Series 100 or 200 QP IRA purchased in a
state where individual Contracts are issued.
6
<PAGE>
EQUI-VEST Prospectus Supplement, continued
TABLE 3: EQUI-VEST SERIES 300 AND 400
<TABLE>
<CAPTION>
<S> <C>
Description of Expenses
- --------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
SALES LOAD ON PURCHASE ............................................ NONE
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) .......................... 6%
MAXIMUM/CURRENT ANNUAL ADMINISTRATIVE CHARGE (2) .................. $65/30
MAXIMUM/CURRENT THIRD PARTY TRANSFER OR EXCHANGE FEE (3) .......... $65/25 PER OCCURRENCE
Separate Account Annual Expenses
Mortality and Expense Risk Fees (including Death Benefit Charges) . 1.10%
Other Expenses (4) ................................................ .25%
-------------------------
Total Separate Account Annual Expenses (5) ....................... 1.35%
=========================
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY
MARKET SECURITIES BOND YIELD INCOME INDEX
-------- -------------- --------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
TRUST ANNUAL EXPENSES:
Investment Advisory Fees 0.40% 0.50% 0.55% 0.55% 0.55% 0.35%
Other Expenses 0.04% 0.07% 0.04% 0.05% 0.05% 0.13%
-------- -------------- --------- ------- ---------- --------
Total Trust Annual Expenses
(6) 0.44% 0.57% 0.59% 0.60% 0.60% 0.48%
</TABLE>
<TABLE>
<CAPTION>
COMMON AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
-------- -------- --------------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
TRUST ANNUAL EXPENSES:
Investment Advisory
Fees 0.35% 0.53% 0.90% 0.46% 0.55% 0.37% 0.52%
Other Expenses 0.03% 0.08% 0.13% 0.03% 0.04% 0.03% 0.04%
-------- -------- --------------- ------------ -------------- ---------- -----------
Total Trust Annual
Expenses (6) 0.38% 0.61% 1.03% 0.49% 0.59% 0.40% 0.56%
</TABLE>
- ------------
Notes:
(1) The contingent withdrawal charge is a percentage of specified
contributions. See "Contingent Withdrawal Charge" in Part 7. Important
exceptions and limitations eliminate or reduce the contingent
withdrawal charge.
(2) The Annual Administrative Charge is the lesser of $30 or 2% of the
Annuity Account Value (adjusted to include any withdrawals made during
that year) during the first two Contract Years; and $30 for each
Contract Year thereafter. See "Annual Administrative Charge" in Part 7.
We reserve the right to increase this fee in the future if our
administrative costs increase, but such fee may not exceed an annual
maximum of $65, subject to applicable law.
(3) There is a Third Party Transfer or Exchange Fee of $25 per occurrence.
We reserve the right to increase this fee in the future, but such fee
may not exceed a maximum of $65 per occurrence, subject to applicable
law.
(4) For a limited period of time, we will charge .24% against the assets of
the Intermediate Government Securities, Quality Bond, High Yield,
Growth & Income, Equity Index, Global, International, Conservative
Investors and Growth Investors Funds for expenses.
(5) The amounts shown in the Table under "Separate Account Annual Expenses"
are not permitted to exceed a total annual rate of 1.35% of the value
of the assets held in the Investment Funds. Separate Account expenses
are shown as a percentage of each Investment Fund's average value. See
"Limitation on Charges" in Part 7.
(6) Expenses shown for all Portfolios are for the fiscal year ended
December 31, 1995. The amount shown for the International Portfolio,
which was established on April 3, 1995, is annualized. The investment
advisory fee for each Portfolio may vary from year to year depending
upon the average daily net assets of the respective Portfolio of the
Trust. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other
direct operating expenses will also fluctuate from year to year
depending on actual expenses. The Trust expenses are shown as a
percentage of each Portfolio's average value. See "Trust Charges to
Portfolios" in Part 7.
7
<PAGE>
EQUI-VEST Prospectus Supplement, continued
EXAMPLES: EQUI-VEST SERIES 300 AND 400
For each type of Series 300 and 400 Contract, the examples which follow
show the expenses that a hypothetical Contract Owner would pay in the
surrender and non-surrender situations noted below, assuming a single
contribution of $1,000 on the Contract Date invested in one of the
Investment Funds listed, a 5% annual return on assets and no waiver of the
contingent withdrawal charge.(1) For purposes of these examples the annual
administrative charge is computed by reference to the actual aggregate
annual administrative charges as a percentage of the total assets held
under all EQUI-VEST Contracts.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future
investment performance.
IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSE
WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Money Market $75.47 $120.39 $165.40 $227.68
Intermediate Government
Securities 76.67 123.98 171.80 240.72
Quality Bond 76.86 124.58 172.87 242.88
High Yield 76.96 124.88 173.40 243.95
Growth & Income 76.96 124.88 173.40 243.95
Equity Index 75.77 121.29 167.00 230.95
Common Stock 74.88 118.59 162.18 221.10
Global 77.06 125.18 173.93 245.03
International 81.23 137.67 196.04 289.27
Aggressive Stock 75.97 121.88 168.07 233.13
Asset Allocation Series:
Conservative Investors 76.86 124.58 172.87 242.88
Balanced 75.08 119.19 163.26 223.29
Growth Investors 76.57 123.68 171.27 239.64
</TABLE>
IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE
EXPENSE WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Money Market $19.85 $61.35 $105.40 $227.68
Intermediate Government
Securities 21.10 65.16 111.80 240.72
Quality Bond 21.31 65.80 112.87 242.88
High Yield 21.42 66.11 113.40 243.95
Growth & Income 21.42 66.11 113.40 243.95
Equity Index 20.16 62.31 107.00 230.95
Common Stock 19.22 59.44 102.18 221.10
Global 21.52 66.43 113.93 245.03
International 25.93 79.68 136.04 289.27
Aggressive Stock 20.37 62.94 108.07 233.13
Asset Allocation Series:
Conservative Investors 21.31 65.80 112.87 242.88
Balanced 19.43 60.08 103.26 223.29
Growth Investors 21.00 64.84 111.27 239.64
</TABLE>
- ------------
(1) The amount accumulated could not be paid in the form of an annuity at
the end of any of the periods shown in the examples. If the amount
applied to purchase an annuity is less than $2,000, or the initial
annuity payment is less than $20, we may pay the amount to the payee in
a single sum instead of as payments under an annuity form. See
"Distribution Options" in Part 6. In some cases, charges for state
premium or other taxes will be deducted from the amount applied, if
applicable.
8
<PAGE>
EQUI-VEST Prospectus Supplement, continued
INVESTMENT PERFORMANCE. In Part 3: "Investment Performance," the benchmark
for the Aggressive Stock Fund on page 25 has been changed as follows:
AGGRESSIVE STOCK: May 1, 1984; 50% Russell 2000 Small Stock Index and 50% S&P
Mid-Cap Index (50% Russell 2000/50% S&P MidCap).
Also, the tables on pages 26 and 27 are replaced by the following:
EQUI-VEST ANNUALIZED RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
-------- --------- ---------
<S> <C> <C> <C>
MONEY MARKET 4.32% 2.83% 3.08%
Lipper Money Market 4.35 2.88 3.10
3-Month T-Bill 5.74 4.34 4.47
INTERMEDIATE GOVERNMENT
SECURITIES 11.81 4.79 --
Lipper U.S. Government 15.47 6.27 --
Lehman Intermediate Government 14.41 6.74 --
QUALITY BOND 15.46 -- --
Lipper Corporate Bond A-Rated 18.15 -- --
Lehman Aggregate 18.47 -- --
HIGH YIELD 18.32 11.30 13.40
Lipper High Yield 17.36 9.80 15.79
Master High Yield 19.91 11.57 17.17
GROWTH & INCOME 22.42 -- --
Lipper Growth & Income 31.18 -- --
75% S&P 500/25% Value Line Conv. 34.93 -- --
EQUITY INDEX 34.66 -- --
Lipper S&P 500 Index Funds 35.31 -- --
S&P 500 37.54 -- --
COMMON STOCK 30.64 15.79 16.51
Lipper Growth 31.08 12.09 15.53
S&P 500 37.54 15.30 16.57
GLOBAL 17.23 16.63 14.93
Lipper Global 13.87 13.45 9.10
MSCI World 20.72 15.83 11.74
INTERNATIONAL* -- -- --
Lipper International -- -- --
MSCI EAFE -- -- --
AGGRESSIVE STOCK 29.87 12.38 20.14
Lipper Small Company Growth 28.19 15.26 25.72
50% Russell 2000/50% S&P MidCap 29.69 13.67 20.16
The Asset Allocation Series:
CONSERVATIVE INVESTORS 18.79 7.09 8.67
Lipper Income 21.25 9.65 11.99
70% Lehman Treas./30% S&P 500 24.11 10.41 11.73
BALANCED 18.13 5.90 9.77
Lipper Flexible Portfolio 21.58 9.32 11.43
50% S&P 500/50% Lehman Corp. 28.39 12.01 13.39
GROWTH INVESTORS 24.68 10.65 15.55
Lipper Flexible Portfolio 21.58 9.32 11.43
30% Lehman Corp./70% S&P 500 32.05 13.35 14.70
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SINCE INCEPTION
10 YEARS 20 YEARS INCEPTION DATE
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
MONEY MARKET 4.63% -- 5.64% 5/11/82
Lipper Money Market 4.71 -- 5.91
3-Month T-Bill 5.77 -- 6.68
INTERMEDIATE GOVERNMENT
SECURITIES -- -- 6.19 4/1/91
Lipper U.S. Government -- -- 7.87
Lehman Intermediate Government -- -- 8.17
QUALITY BOND -- -- 3.14 10/1/93
Lipper Corporate Bond A-Rated -- -- 4.58
Lehman Aggregate -- -- 6.46
HIGH YIELD -- -- 8.72 1/2/87
Lipper High Yield -- -- 8.87
Master High Yield -- -- 11.28
GROWTH & INCOME -- -- 8.20 10/1/93
Lipper Growth & Income -- -- 12.76
75% S&P 500/25% Value Line Conv. -- -- 15.45
EQUITY INDEX -- -- 17.58 3/1/94
Lipper S&P 500 Index Funds -- -- 17.62
S&P 500 -- -- 19.89
COMMON STOCK 13.67 13.73% 10.65 8/1/68
Lipper Growth 12.05 12.79 N/A
S&P 500 14.87 14.59 11.18
GLOBAL -- -- 9.87 8/27/87
Lipper Global -- -- 2.52
MSCI World -- -- 6.75
INTERNATIONAL* -- -- 9.60* 4/3/95
Lipper International -- -- 12.21*
MSCI EAFE -- -- 9.17*
AGGRESSIVE STOCK 16.32 -- 17.85 5/1/84
Lipper Small Company Growth 16.42 -- 18.71
50% Russell 2000/50% S&P MidCap 13.66 -- N/A
The Asset Allocation Series:
CONSERVATIVE INVESTORS -- -- 8.18 10/2/89
Lipper Income -- -- 9.79
70% Lehman Treas./30% S&P 500 -- -- 10.55
BALANCED 8.93 -- 10.16 5/1/84
Lipper Flexible Portfolio 10.13 -- 11.57
50% S&P 500/50% Lehman Corp. 12.53 -- 13.94
GROWTH INVESTORS -- -- 14.51 10/2/89
Lipper Flexible Portfolio -- -- 9.44
30% Lehman Corp./70% S&P 500 -- -- 11.97
</TABLE>
- ------------
* Unannualized.
9
<PAGE>
EQUI-VEST Prospectus Supplement, continued
EQUI-VEST CUMULATIVE RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1995:
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION DATE
-------- --------- --------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET 4.32% 8.74% 16.40% 57.24% -- 111.32% 5/11/82
Lipper Money Market 4.35 8.87 16.48 58.55 -- 119.52
3-Month T-Bill 5.74 13.58 24.45 75.23 -- 141.98
INTERMEDIATE GOVERNMENT
SECURITIES 11.81 15.08 -- -- -- 32.99 4/1/91
Lipper U.S. Government 15.47 20.05 -- -- -- 43.43
Lehman Intermediate Government 14.41 21.60 -- -- -- 45.17
QUALITY BOND 15.46 -- -- -- -- 7.20 10/1/93
Lipper Corporate Bond A-Rated 18.15 -- -- -- -- 10.67
Lehman Aggregate 18.47 -- -- -- -- 15.09
HIGH YIELD 18.32 37.86 87.54 -- -- 112.16 1/2/87
Lipper High Yield 17.36 32.45 108.96 -- -- 117.28
Master High Yield 19.91 38.89 120.85 -- -- 161.50
GROWTH & INCOME 22.42 -- -- -- -- 19.38 10/1/93
Lipper Growth & Income 31.18 -- -- -- -- 31.42
75% S&P 500/25% Value Line Conv. 34.93 -- -- -- -- 38.14
EQUITY INDEX 34.66 -- -- -- -- 34.60 3/1/94
Lipper S&P 500 Index Funds 35.31 -- -- -- -- 34.65
S&P 500 37.54 -- -- -- -- 39.30
COMMON STOCK 30.64 55.23 114.65 260.01 1,210.04% 1,504.82 8/1/68
Lipper Growth 31.08 41.29 107.30 215.49 1,036.49 N/A
S&P 500 37.54 53.30 115.25 300.11 1,425.04 1,728.76
GLOBAL 17.23 58.64 100.53 -- -- 119.39 8/27/87
Lipper Global 13.87 46.36 55.44 -- -- 23.09
MSCI World 20.72 55.39 74.20 -- -- 72.38
INTERNATIONAL* -- -- -- -- -- 9.60* 4/3/95
Lipper International -- -- -- -- -- 12.21*
MSCI EAFE -- -- -- -- -- 9.17*
AGGRESSIVE STOCK 29.87 41.93 150.26 353.28 -- 579.47 5/1/84
Lipper Small Company Growth 28.19 55.24 268.67 357.25 -- 588.33
50% Russell 2000/50% S&P MidCap 29.69 46.89 150.49 259.88 -- 465.90
The Asset Allocation Series:
CONSERVATIVE INVESTORS 18.79 22.82 51.55 -- -- 63.44 10/2/89
Lipper Income 21.25 31.95 76.42 -- -- 79.42
70% Lehman Treas./30% S&P 500 24.11 34.58 74.09 -- -- 87.24
BALANCED 18.13 18.76 59.39 135.32 -- 209.23 5/1/84
Lipper Flexible Portfolio 21.58 30.92 72.73 163.91 -- 248.20
50% S&P 500/50% Lehman Corp. 28.39 40.53 87.43 225.59 -- 359.14
GROWTH INVESTORS 24.68 35.48 106.02 -- -- 133.02 10/2/89
Lipper Flexible Portfolio 21.58 30.92 72.73 -- -- 76.92
30% Lehman Corp./70% S&P 500 32.05 45.64 98.56 -- -- 102.72
</TABLE>
YEAR-BY-YEAR RATES OF RETURN
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY
MARKET SECURITIES BOND YIELD INCOME INDEX
-------- -------------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
1986 5.17% --% --% --% --% --%
1987 5.23 -- -- 3.27* -- --
1988 5.94 -- -- 8.25 -- --
1989 7.72 -- -- 3.71 -- --
1990 6.82 -- -- (2.43) -- --
1991 4.69 10.94* -- 22.78 -- --
1992 2.16 4.17 -- 10.80 -- --
1993 1.58 9.09 (0.84)* 21.48 (0.59)* --
1994 2.62 (5.65) (6.37) (4.09) (1.90) (0.04)*
1995 4.32 11.81 15.46 18.32 22.42 34.66
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
COMMON INTER- AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL NATIONAL STOCK INVESTORS BALANCED INVESTORS
-------- ---------- ---------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1986 15.43% --% --% 21.75% --% 11.70% --%
1987 6.08 (13.67)* -- (1.13) -- (5.05) --
1988 21.55 9.38 -- (0.39) -- 13.27 --
1989 24.07 25.02 -- 42.87 2.75* 24.60 3.65*
1990 (9.27) (7.33) -- 5.73 4.97 (1.46) 9.12
1991 35.81 28.79 -- 84.57 18.23 40.02 46.90
1992 1.82 (1.86) -- (4.47) 4.36 (4.15) 3.52
1993 23.11 30.34 -- 15.17 9.27 10.80 13.71
1994 (3.48) 3.82 -- (5.11) (5.38) (9.27) (4.44)
1995 30.64 17.23 9.60* 29.87 18.79 18.13 24.68
</TABLE>
- ------------
* Unannualized
10
<PAGE>
EQUI-VEST Prospectus Supplement, continued
STANDARDIZED COMPUTATION OF PERFORMANCE FOR EQUI-VEST
The discussion and tables under these captions on page 28 are replaced by the
following:
The performance data in the following tables, which are prepared in a manner
prescribed by the SEC for use when we advertise the performance of the
Separate Account, illustrate the average annual total return of the
Investment Funds over the periods shown assuming a single initial
contribution of $1,000 and termination of the Contract at the end of each
period under circumstances in which the contingent withdrawal charge applies.
The values shown are also net of all other charges and expenses assessed
against the Investment Funds. An Investment Fund's average annual total
return is the annual rate of growth of the Investment Fund that would be
necessary to achieve the ending value of a contribution kept in the
Investment Fund for the period specified.
Since charges under the Contracts may vary, we have assumed, for each charge,
the highest that might apply. Each calculation further assumes that the
$1,000 contribution was allocated to only one Investment Fund, no transfers
or additional contributions were made, no loans, and no amounts were
allocated to any other Investment Fund under the Contract.
In order to calculate the standardized performance information, we divide the
termination value (defined below) of a Contract which is terminated on
December 31, 1995 by the $1,000 investment made at the beginning of each
period illustrated. The result of that calculation is the total growth rate
for the period. Then we annualize that growth rate to obtain the average
annual percentage increase (decrease) during the period shown. When we
"annualize," we assume that a single rate of return applied each year during
the period will produce the ending value, taking into account the effect of
compounding. "Termination value" means the Annuity Account Value less the
contingent withdrawal charge, the annual administrative charge and all other
charges and expenses which are applied against an Investment Fund. See "Part
7: Deductions and Charges."
TABLE 1: GROWTH OF $1,000 FOR CONTRACTS TERMINATED ON DECEMBER 31, 1995
<TABLE>
<CAPTION> LENGTH OF INVESTMENT PERIOD
----------------------------------------------------------------------
INVESTMENT FUND ONE YEAR THREE YEARS FIVE YEARS TEN YEARS SINCE INCEPTION*
- ---------------------------------- ---------- ------------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C>
Money Market $ 967.14 $ 959.58 $ 969.16 $1,238.28 --
Intermediate Government Securities 1,036.61 1,017.18 -- -- $1,129.47
Quality Bond 1,070.42 -- -- -- 966.87
High Yield 1,096.88 1,227.61 1,622.29 -- 1,717.29
Growth & Income 1,134.90 -- -- -- 1,079.01
Equity Index 1,248.40 -- -- -- 1,227.00
Common Stock 1,211.15 1,382.15 1,874.49 2,984.60 --
Global 1,086.81 1,413.78 1,744.84 -- 1,801.98
International -- -- -- -- 1,021.40
Aggressive Stock 1,204.92 1,266.93 2,242.97 3,878.98 --
Asset Allocation Series:
Conservative Investors 1,101.32 1,089.58 1,296.10 -- 1,376.50
Balanced 1,095.13 1,050.79 1,362.92 1,906.80 --
Growth Investors 1,155.92 1,206.38 1,796.08 -- 2,005.22
</TABLE>
TABLE 2: AVERAGE ANNUAL TOTAL RETURN UNDER CONTRACTS TERMINATED ON DECEMBER
31, 1995
<TABLE>
<CAPTION> LENGTH OF INVESTMENT PERIOD
----------------------------------------------------------------------
INVESTMENT FUND ONE YEAR THREE YEARS FIVE YEARS TEN YEARS SINCE INCEPTION*
- ---------------------------------- ---------- ------------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C>
Money Market (3.29)% (1.37)% (0.62)% 2.16% --
Intermediate Government Securities 3.66 0.57 -- -- 2.60%
Quality Bond 7.04 -- -- -- (1.49)
High Yield 9.69 7.07 10.16 -- 6.20
Growth & Income 13.49 -- -- -- 3.44
Equity Index 24.84 -- -- -- 11.80
Common Stock 21.11 11.39 13.39 11.55 --
Global 8.68 12.23 11.78 -- 7.31
International -- -- -- 2.14
Aggressive Stock 20.49 8.21 17.53 14.52 --
Asset Allocation Series:
Conservative Investors 10.13 2.90 5.32 -- 5.25
Balanced 9.51 1.67 6.39 6.67 --
Growth Investors 15.59 6.45 12.43 -- 11.79
</TABLE>
* Inception dates are as follows: Money Market (May 11, 1982);
Intermediate Government Securities (April 1, 1991); Quality Bond (October 1,
1993); High Yield (January 2, 1987); Growth & Income (October 1, 1993);
Equity Index (March 1, 1994); Common Stock (August 1, 1968); Global (August
27, 1987); International (April 3, 1995); Aggressive Stock (May 1, 1984);
Conservative Investors (October 2, 1989); Balanced (May 1, 1984) and Growth
Investors (October 2, 1989). The "Since Inception" number for the
International Fund is unannualized.
11
<PAGE>
EQUI-VEST Prospectus Supplement, continued
AUTOMATIC TRANSFER OPTIONS (INVESTMENT SIMPLIFIER). On page 37, under the
Interest Sweep Option, the amount of interest transferred each month will
equal the amount of interest that has been credited to amounts you have in
the Guaranteed Interest Account from the last Business Day of the prior month
to the last Business Day of the current month.
All other terms and conditions of the Interest Sweep Option remain in effect.
LOANS (FOR TSA AND CORPORATE TRUSTEED ONLY). On page 38, the Loans section is
replaced by the following:
Unless restricted by the employer's plan, loans are permitted against the
Annuity Account Value of certain TSA and Corporate Trusteed Contracts. Loans
under a Corporate Trusteed Contract, however, may not be available in all
states. Loans under TSA and Corporate Trusteed Contracts are restricted by
the rules of the Code. In addition, ERISA rules may apply to loans under
Corporate Trusteed Contracts and, when offered in the future, loans under
individual TSA contracts where the TSA plan is subject to Title I of ERISA.
Loans are not available under University TSA Contracts and under any TSA when
the Required Minimum Distributions Option has been elected. Also, loans are
currently not available under individual TSA Contracts where the TSA plan is
subject to Title I of ERISA; however, we expect to offer these loans
beginning on or after July 1, 1996 (approximately) in states where approved.
The EQUI-VEST program permits only one loan at any one time. Before a loan
can be made under either a Corporate Trusteed or TSA Contract, a properly
completed loan agreement and application must be signed. Participants should
read the terms and conditions contained in these documents carefully and
consult with a tax advisor before taking out a loan. A loan application form
can be obtained from your Equitable Life Agent, by writing to our Processing
Office or by calling our toll-free number. In the case of Corporate Trusteed
and certain TSA Contracts, the written consent of the Participant's spouse
will be required before a loan can be made. More details of the loan
provisions are stated in the Contract and on the loan agreement and
application form.
A loan will not be treated as a taxable distribution when made to the extent
that it conforms to Code limits. If the loan fails to qualify under Code
limits, or if interest and principal is not repaid when due, or in some
instances if service with the employer terminates, the amount borrowed and
not yet repaid may be treated as a taxable distribution.
The amount and terms of loans under TSA and Corporate Trusteed Contracts are
discussed in Part 2, "Loan Provisions," in the SAI. The tax consequences of
failure to repay a loan are substantial and are discussed in Part 9 "Tax
Aspects of the Contracts" and in Part 2 of the SAI.
AUTOMATIC WITHDRAWAL. On page 42, the payment option we offer called
Automatic Withdrawal has been renamed "Required Minimum Distributions
Option." The Required Minimum Distributions Options is a payment option which
provides for the minimum distributions required by Federal tax law for those
with certain types of EQUI-VEST Contracts (IRAs, qualified plans, EDCs, SEPs,
and TSAs) who are age 70 1/2 or older. The option operates the same way as
described in the prospectus under "Automatic Withdrawal."
With respect to pre-1987 TSA account balances being exempt from minimum
distribution rules, all post-1986 salary reduction contributions and all
amounts earned since the beginning of 1987 on both exempt and non-exempt TSA
balances are subject to minimum distribution requirements.
QUALIFIED PLANS DESIGNED TO COMPLY WITH SECTION 404(C) OF ERISA. On page 43,
the following is added to this section:
Section 404(c) plans must provide, among other things, that a broad range of
investment choices are available to plan participants and beneficiaries and
must provide such plan participants and beneficiaries with enough information
to make informed investment decisions. Compliance with the Section 404(c)
regulation is completely voluntary by the plan sponsor, and the plan sponsor
may choose not to comply with Section 404(c).
The EQUI-VEST Trusteed, HR-10 Annuitant-Owned and TSA programs provide the
broad range of investment choices and information needed in order to meet the
requirements of the Section 404(c) regulation. If the plan is intended to be
a Section 404(c) plan, it is, however, the plan sponsor's responsibility to
see that the requirements of the DOL regulation are met. Equitable Life and
its Agents shall not be responsible if a plan fails to meet the requirements
of Section 404(c).
12
<PAGE>
EQUI-VEST Prospectus Supplement, continued
DIRECT TSA TO TSA TRANSFERS. Under Part 6: "Provisions of the Contracts," we
have added the following sentence at page 34, under "Special Limits":
Currently we do not accept contributions via direct TSA to TSA transfers
under Rev. Rul. 90-24 where any such funds were invested in a custodial
account under Code Section 403(b)(7) and are still subject to its
restrictions.
VARIABLE INCOME ANNUITY. The variable annuity option discussed on page 41
under "Distribution Options--Income Annuity Distribution Options" in Part 6
"Provisions of the Contracts" of the prospectus has been broadened to allow
funding of variable payments through your choice of the 13 Investment Funds
of the Hudson River Trust through the purchase of annuity units. Previously,
only the Common Stock Fund was available for variable payment funding.
DISTRIBUTION. Equico Securities Inc., the principal underwriter of the Trust
under a Distribution & Servicing Agreement, will change its name to EQ
Financial Consultants Inc. on or about May 1, 1996. For 1995, Equico was paid
a fee of $325,380 for its services under the Distribution and Servicing
Agreement. See "Distribution of These and Other Contracts" at page 44.
FREE WITHDRAWAL AMOUNT (FREE CORRIDOR). The free corridor amount is available
immediately under the TSA Contracts. See "Contingent Withdrawal Charge" on
page 49.
LOANS FOR ERISA TSA CONTRACTS. Beginning on or about July 1, 1996, loans will
be permitted, in those states where approved, under TSA contracts which are
subject to the Employee Retirement Income Security Act of 1974 (ERISA). As
with loans on non-ERISA TSA contracts, only one outstanding loan will be
permitted at any time. There is a minimum loan amount of $1,000 and a maximum
loan amount which varies depending on the participant's Annuity Account Value
but may never exceed $50,000. For more complete details and rules on Loans
see "Loans" in Part 6 "Provisions of the Contracts" of the prospectus and
"Part 2: Loan Provisions" in the Statement of Additional Information.
In addition, under ERISA TSA contracts, we will determine the loan interest
rate, unless the TSA's plan administrator chooses to do so. If we set the
rate, it will be established at the initiation of the loan and will be equal
to the Prime Rate (the base rate on corporate loans posted by at least 75% of
the nation's 30 largest banks) as published in the Wall Street Journal on the
first Monday of the last month of the calendar quarter prior to the effective
date of the loan, plus one percentage point (1.00%).
EXCEPTIONS TO THE CONTINGENT WITHDRAWAL CHARGE. For IRA, QP IRA, SEP and NQ
Contracts (Series 300 and 400 only), the "Exceptions to the Contingent
Withdrawal Charge" section under "Contingent Withdrawal Charges" in Part 7:
"Deductions and Charges" is replaced with the following:
A contingent withdrawal charge will not apply upon any of the events listed
below.
o the Annuitant dies and a death benefit is payable to the beneficiary, or
o we receive a properly completed election form providing for the Annuity
Account Value to be used to buy a life contingent annuity.
A contingent withdrawal charge will not apply in the following events.
However, we reserve the right to impose a contingent withdrawal charge, in
accordance with your Contract and applicable state law, for pre-existing
conditions or conditions which began within 12 months of your Contract Date
for these events:
o the Annuitant has qualified to receive Social Security disability
benefits as certified by the Social Security Administration, or
o we receive proof satisfactory to us that the Annuitant's life expectancy
is six months or less (such proof must include, but is not limited to,
certification by a licensed physician), or
o the Annuitant has been confined to a nursing home for more than a 90 day
period (or such other period, if required in your state) as verified by
a licensed physician. A nursing home for this purpose means one which is
(a) approved by Medicare as a provider of skilled nursing care service,
or (b) licensed as a skilled nursing home by the state or territory in
which it is located (it must be within the United States, Puerto Rico,
U.S. Virgin Islands, or Guam) and meets all of the following:
- -- its main function is to provide skilled, intermediate, or custodial
nursing care;
- -- it provides continuous room and board to three or more persons;
13
<PAGE>
EQUI-VEST Prospectus Supplement, continued
- -- it is supervised by a registered nurse or licensed practical nurse;
- -- it keeps daily medical records of each patient;
- -- it controls and records all medications dispensed; and
- -- its primary service is other than to provide housing for residents.
Additionally, a withdrawal charge will not apply to an IRA, QP IRA, or SEP
Contract upon the following events:
o the Annuitant has completed at least six Contract Years and has attained
age 59 1/2 or
o a request is made for a refund of a contribution in excess of amounts
allowed to be contributed under the Code within one month of the date on
which the contribution is made.
New York Contracts--Fixed Maturity Account
For Contracts issued in New York, the contingent withdrawal charge applicable
to contributions to the Fixed Maturity Account (including amounts transferred
to that Account from the other Investment Options) and which are withdrawn
from the Fixed Maturity Account, will never exceed 6%; however, the
contingent withdrawal charge could be lower.
For the Fixed Maturity Account, the contingent withdrawal charge will be the
greater of that determined by applying the New York Declining Scale
("Declining Scale") and the New York Alternative Scale ("Alternative Scale"),
not to exceed 6%. As to the withdrawal of amounts that have been transferred
within the Fixed Maturity Account from one Maturity Period to another, the
Alternative Scale is applied if it produces a higher charge than the
Declining Scale.
<TABLE>
<CAPTION>
DECLINING SCALE ALTERNATIVE SCALE
- ------------------------- -------------------------
<S> <C> <C> <C>
Year of Investment in Year of Transfer within
Fixed Maturity Account* Fixed Maturity Account*
Within Year 1 6% Within Year 1 5%
2 6% 2 4%
3 5% 3 3%
4 4% 4 2%
5 3% 5 1%
6 2% After Year 5 0%
After Year 6 0%
Not to exceed 1% times
the number of years
remaining in Maturity
Period, rounded to the
higher number of years.
In other words, if 4.3
years remain, it would be
a 5% charge.
- ----------------- ------ -------------------------
</TABLE>
* Measured from the Contract Anniversary Date prior to the date of the
contribution or transfer.
For example, compare the withdrawal charge that would be applicable to a
withdrawal from a Series 400 Contract that has an Annuity Account Value of
$10,000--$8,000 from contributions made three years ago and $2,000 from
positive investment performance.
o For any contributions withdrawn in the first six years after they are
made, the normal Series 400 withdrawal charge would be $480 (6% of
$8,000). However, if the contributions were made to the Fixed Maturity
Account, the withdrawal charge would be lower. According to the New York
Declining Scale described above, in the third year, the withdrawal
charge would be limited to 5% of the $8,000, or $400.
o Now assume that, although the contributions had been made to the Fixed
Maturity Account three years ago, they were transferred to a new
Maturity Period within the Fixed Maturity Account in the third year, and
further assume that there is exactly one year remaining in the Maturity
Period to which the amounts were transferred. Because there was a
transfer within the Fixed Maturity Account, the New York Alternative
Scale may now apply. Based on this Scale, a contribution that was so
transferred will be subject to 5% withdrawal charge, if withdrawn in the
year of the transfer, such charge not to exceed 1% for each year
remaining in the Maturity Period. Since, in this example, the time
remaining is exactly one year, the Alternative Scale would limit the
withdrawal charge to 1%. However, New York regulations allow that the
greater of the Declining Scale or the Alternative Scale is used.
Therefore, the withdrawal charge would be 5%, or $400, based on the
Declining Scale.
14
<PAGE>
EQUI-VEST Prospectus Supplement, continued
o In no event would the contingent withdrawal charge exceed that otherwise
applicable under the Contract; application of the New York Scale can
only result in a lower charge. Thus, if a contribution had been in the
Contract for more than six years and was thus exempt from a withdrawal
charge, no such charge would be applicable.
o For withdrawals from an Investment Option other than the Fixed Maturity
Account, the amount available for withdrawal without a contingent
withdrawal charge is reduced by the amount of contributions in the Fixed
Maturity Account to which no withdrawal charge applies.
o As of any date on which 50% or more of your Annuity Account Value is
held in the Fixed Maturity Account, the Free Corridor Amount is zero.
o If you have not made a prior election for the reinvestment of your
Maturity Amount when it reaches the Expiration Date, such Amount will be
reinvested in whichever Fixed Maturity Period then offered has the
nearest Expiration Date; if no Fixed Maturity Periods are being offered,
it will be reinvested in the Money Market Fund.
The potential for the contingent withdrawal charge applicable to withdrawals
from the Fixed Maturity Account to be lower than the otherwise applicable
charge and the potential for the Free Corridor Amount to also be lower than
that which would otherwise apply should be considered in making allocations
to, or transfers to or from, the Fixed Maturity Account.
TAX-QUALIFIED RETIREMENT PLANS (QUALIFIED PLANS). The 1996 annual dollar
limit for salary reduction contributions into qualified plans, or "elective
deferrals" is $9,500 (up from $9,240 in 1995). See the second paragraph under
the above caption at page 54.
TAX-SHELTERED ANNUITY (TSA) ARRANGEMENTS. As of 1996, contributions under a
TSA salary reduction agreement cannot exceed $9,500 per year. See the first
paragraph under the above captions at page 55.
DISTRIBUTIONS FROM QUALIFIED PLANS AND TSAS. The following TAX-RELATED LOAN
INFORMATION has been added to the general tax information beginning on page
55:
Loans may be made from a qualified plan or TSA plan, which permits them,
without being treated as a distribution. However, if the amount of the loan
exceeds permissible limits under the Code when made, the amount of the excess
is treated (solely for tax purposes) as a taxable distribution. Additionally,
if the loan is not repaid at least quarterly amortizing interest and
principal, the amount not repaid when due may be treated as a taxable
distribution. Under Proposed Treasury Regulations which are not yet
effective, the IRS would require the entire unpaid balance of the loan to be
includible in income in the year of the default. See the discussion in Part 6
under "Loans (for TSA and Corporate Trusteed only)," the discussion below and
in Part 4 of the SAI for certain additional Equitable Life, Code and ERISA
rules covering loans from qualified plans or TSAs.
In addition, the following section, called MINIMUM DISTRIBUTIONS AFTER AGE
70 1/2, replaces the "Required Minimum Distributions" section on page 56.
The minimum distribution rules mandate qualified retirement plan participants
and TSA annuitants to start taking annual distributions from their retirement
plans by age 70 1/2. The distribution requirements are designed to use up
the participant's interest in the plan over the individual's life expectancy.
Whether the correct amount has been distributed is calculated on a year by
year basis; there are no provisions to allow amounts taken in excess of the
required amount to be carried over or carried back and credited to other
years.
Generally, an individual must take the first required minimum distribution
with respect to the calendar year in which the individual turns age 70 1/2 .
The individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2, or to delay taking it
until the three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date,"
which is the April 1st of the calendar year following the calendar year in
which the individual turns age 70 1/2.) If the individual chooses to delay
taking the first annual minimum distribution, then the individual will have
to take two minimum distributions in that year--the delayed one for the first
year and the one actually for that year. Once minimum distributions begin,
they must be made at some time every year.
Some individuals may be entitled to delay commencement of required minimum
distributions for all or part of their account balance until after age 70 1/2.
Consult your tax adviser to determine whether you may qualify for this
exception.
15
<PAGE>
EQUI-VEST Prospectus Supplement, continued
There are two general ways to take minimum distributions--"account based" or
"annuity based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
You should discuss with your tax adviser which minimum distribution options
are best for your own personal situation. Individuals who are participants in
more than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Generally, the minimum distribution must be calculated annually for, and
taken from, each tax qualified retirement plan and TSA. Distributions in
excess of the amount required in any year from a qualifed plan, for example,
will not satisfy the required amount for a TSA the individual also
participates in. In Notice 88-38, the IRS indicated that an individual
maintaining more than one Code Section 403(b) arrangement may choose to take
the annual required minimum distribution for all TSAs from any one or more
TSAs the individual maintains, as long as the required distribution is
calculated separately for each TSA and all the minimum distribution amounts
are added together.
An account based minimum distribution method may be a lump sum payment, or a
periodic withdrawal made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. In the alternative, an individual could meet
the minimum distribution requirements by applying the Retirement Account
Value or Annuity Account Value to an annuity over the individual's life or
the joint lives of the individual and a designated beneficiary, or over a
period certain not extending beyond applicable life expectancies.
If an individual dies before the Required Beginning Date or before
distributions in the form of an annuity begin, distributions of the entire
interest under the contract must be completed within five years after death,
unless payments to a designated beneficiary begin within one year of the
Annuitant's death and are made over the beneficiary's life or over a period
certain which does not extend beyond the Beneficiary's life expectancy. If
the surviving spouse is the designated beneficiary, the spouse may delay the
commencement of such payments up until the individual would have attained age
70 1/2. In the alternative, such spouse can roll over the death benefit to
an IRA. See "Tax-Free Rollover" above. If an individual dies after the
Required Beginning Date or after distributions in the form of an annuity have
begun, payments after death must continue to be made at least as rapidly as
the payments made before the death of the Annuitant. Distributions received
by a beneficiary are generally given the same tax treatment the Annuitant
would have received if distribution had been made to the Annuitant.
TAX-QUALIFIED INDIVIDUAL RETIREMENT ANNUITIES (IRAS). The first three
paragraphs of the CONTRIBUTIONS TO IRAS section on page 57 have been revised
and are replaced as follows:
Contributions to IRAs
Individuals may make three different types of contributions to purchase an
IRA, or as later additions to an existing IRA: "regular" contributions out of
earnings, tax-free "rollover" contributions from tax-qualified plans, or
direct custodian-to-custodian transfers from other individual retirement
arrangements ("direct transfers"). See "Contributions Under the Contracts" in
Part 6. The immediately following discussion relates to "regular" IRA
contributions. Transfer and rollover contributions are discussed below under
"Tax Free Transfers and Rollovers."
Generally, $2,000 is the maximum amount of deductible and nondeductible
contributions which may be made to all IRAs by an individual in any taxable
year. The above limits may be less where the individual's earnings are below
$2,000. This limit does not apply to rollover or direct transfer
contributions into an IRA.
If the individual's spouse does not work or elects to be treated as having no
compensation, the individual and the individual's spouse may contribute up to
$2,250 to individual retirement arrangements (but no more than $2,000 to any
one individual retirement arrangement). The non-working spouse owns his or
her individual retirement arrangements, even if the working spouse makes
contributions to purchase the spousal individual retirement arrangements. The
amount of IRA contribution for a tax year that an individual can deduct
depends on whether the individual (or the individual's spouse, if a joint
return is filed) is covered by an employer-sponsored tax-favored retirement
plan (including a qualified plan, TSA or SEP, but not an EDC plan). If
neither the individual nor the individual's spouse is covered during any part
of the taxable year by an IRA plan, then regardless of adjusted gross income
(AGI), each working spouse may make a deductible contribution to an IRA for
each tax year (MAXIMUM PERMISSIBLE DOLLAR DEDUCTION) up to the lesser of
$2,000 or 100% of compensation.
16
<PAGE>
EQUI-VEST Prospectus Supplement, continued
In addition, the EXCESS CONTRIBUTIONS section on page 60 is also replaced as
follows:
Excess contributions to an IRA are subject to a 6% excise tax for the year in
which made and for each year thereafter until withdrawn. In the case of
"regular" IRA contributions any contribution in excess of the lesser of
$2,000 or 100% of compensation or earned income is an "excess contribution,"
(without regard to the deductibility or nondeductibility of IRA contributions
under this limit). Also, any "regular" contributions made after you reach age
70 1/2 are excess contributions. In the case of rollover IRA contributions,
excess contributions are amounts which are not eligible to be rolled over
(for example, after-tax contributions to a qualified plan or minimum
distributions required to be made after age 70 1/2). An excess contribution
(rollover or "regular") which is withdrawn, however, before the time for
filing the individual's federal income tax return for the tax year (including
extensions) is not includable in income and is not subject to the 10% penalty
tax on early distributions (discussed below under "Penalty Tax on Early
Distributions"), provided any earnings attributable to the excess
contribution are also withdrawn and no tax deduction is taken for the excess
contribution. The withdrawn earnings on the excess contribution, however,
would be includable in the individual's gross income for the tax year in
which the excess contribution from which they arose was made and would be
subject to the 10% penalty tax. If excess contributions are not withdrawn
before the time for filing the individual's federal income tax return for the
tax year (including extensions), the "regular" contributions may still be
withdrawn after that time if the IRA contribution for the tax year did not
exceed $2,250 and no tax deduction was taken for the excess contribution; in
that event, the excess contribution would not be includable in gross income
and would not be subject to the 10% penalty tax. Lastly, excess "regular"
contributions may also be reduced by underutilizing the allowable
contribution limits for a later year.
In addition, the TAX-FREE TRANSFERS AND ROLLOVERS section beginning on page
60 is replaced as follows:
Rollover contributions may be made to an IRA from these sources: (i)
qualified plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii)
other individual retirement arrangements.
The rollover amount must be transferred to the Contract either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within
60 days of the date the proceeds from another individual retirement
arrangement or an eligible rollover distribution from a qualified plan or TSA
were received. Generally the taxable portion of any distribution from a
qualified plan or TSA is an eligible rollover distribution and may be rolled
over tax-free to an IRA unless the distribution is (i) a required minimum
distribution under Section 401(a)(9) of the Code; or (ii) one of a series of
substantially equal periodic payments made (not less frequently than
annually) (a) for the life (or life expectancy) of the plan participant or
the joint lives (or joint life expectancies) of the plan participant and his
or her designated beneficiary, or (b) for a specified period of ten years or
more. See "Federal and State Income Tax Withholding--Mandatory Withholding
from Qualified Plans and TSAs," below.
Under some circumstances, amounts from a Contract may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" IRA treatment, the
source of funds used to establish the IRA must be a rollover contribution
from the qualified plan and the entire amount received from the IRA
(including any earnings on the rollover contribution) must be rolled over
into another qualified plan within 60 days of the date received. Similar
rules apply in the case of a TSA. If you make a contribution to an IRA which
is from an eligible rollover distribution and you commingle such contribution
with other contributions, you may not be able to roll over these eligible
rollover distribution contributions and earnings to another qualified plan
(or TSA, as the case may be) at a future date, unless the Code permits.
We offer a separate IRA contract subject to separate charges, designed to
serve as a "Conduit" IRA for this purpose (QP IRA Contract). Therefore
amounts in a QP IRA contract which are not commingled with "regular" IRA
Contributions or nonqualified plan funds (or TSA funds, as the case may be)
may be eligible to be rolled over into another qualified plan (or TSA, as the
case may be) which accepts such contributions.
Under the conditions and limitations of the Code, an individual may elect for
each IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers
and can be made more frequently than once a year.
17
<PAGE>
EQUI-VEST Prospectus Supplement, continued
The same tax-free treatment applies to amounts withdrawn from the Contract
and rolled over into other individual retirement arrangements unless the
distribution was received under an inherited IRA.
Tax-free rollovers are also available to the surviving spouse beneficiary, of
a deceased individual, or a spousal alternate payee of a qualified domestic
relations order applicable to a qualified plan or TSA. In some cases, IRAs
can be transferred on a tax-free basis between spouses or former spouses
incidental to a judicial decree of divorce or separation.
Under DISTRIBUTIONS FROM IRA CONTRACTS on page 61, the following sentence
defining "distributions" is added to the first paragraph: "Distributions
include withdrawals from your Contract, surrender of your Contract and
annuity payments from your Contract, as well as any death benefit paid from
your Contract."
A new tax-related IRA section has been added above "Prohibited Transactions"
at page 62 called MINIMUM DISTRIBUTIONS AFTER AGE 70 1/2:
The minimum distribution rules discussed above under "Qualified Plans and
TSAs--Minimum Distributions After Age 70 1/2" also generally apply to IRAs.
Individuals who are Participants in more than one individual retirement
arrangement or other tax favored retirement plan may be able to choose
different distribution options for each arrangement. Your minimum
distribution for any taxable year is calculated by adding together the
separate minimum distribution amounts from each of your individual retirement
arrangements. The IRS, however, does not require that you take out the
minimum distribution from each individual retirement arrangement that you
maintain. As long as the total amount distributed annually for all IRAs
satisfies your overall minimum distribution requirement for IRAs, you may
choose to take your annual required distribution for IRAs from any one or
more individual retirement arrangements that you maintain.
This special rule applies only to IRAs and TSAs and does not apply to
qualified plans. A distribution from a TSA will not satisfy a distribution
requirement for IRAs.
If the individual dies after distribution in the form of an annuity has
begun, or after the Required Beginning Date, payment of the remaining
interest must be made at least as rapidly as under the method used prior to
the individual's death. The IRS has indicated that an exception to this rule
may apply if the beneficiary of the IRA is the surviving spouse. In some
circumstances, the surviving spouse may elect to "make the IRA his or her
own" and halt distributions until he or she reaches age 70 1/2. If an
individual dies before the Required Beginning Date and before distributions
in the form of an annuity begin, distributions of the individual's entire
interest under the Contract must be completed within five years after death,
unless payments to a designated beneficiary begin within one year of the
individual's death and are made over the beneficiary's life or over a period
certain which does not extend beyond the beneficiary's life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay
the commencement of such payments up until the individual would have attained
age 70 1/2. In the alternative, a surviving spouse may elect to roll over
the inherited IRA into the surviving spouse's own IRA. Under Series 300 and
400 Contracts, if you elect to have your spouse be the sole primary
beneficiary and to be the Successor Annuitant and Contract Owner, then your
surviving spouse automatically becomes both the successor Contract Owner and
Annuitant, and no death benefit is payable until the surviving spouse's
death.
If there is an insufficient distribution in any year, a 50% tax may be
imposed on the amount by which the minimum required to be distributed exceeds
the amount actually distributed. The penalty tax may be waived by the
Secretary of the Treasury in certain limited circumstances. Failure to have
distributions made as the Code and Treasury regulations require may result in
disqualification of your IRA. See "Tax Penalty for Insufficient
Distributions" below.
FEDERAL AND STATE INCOME TAX WITHHOLDING. Under the ELECTIVE WITHHOLDING
section on page 65, the third paragraph which discusses federal withholding
requirements and the annual payment limit for an exemption from withholding
is replaced with the following paragraph: "Periodic payments are generally
subject to wage-bracket type withholding (as if such payments were wages by
an employer to an employee) unless the recipient elects no withholding. If a
recipient does not elect out of withholding or does not specify the number of
withholding exemptions, withholding will generally be made as if the
recipient is married and claiming three withholding exemptions. There is an
annual threshold of taxable income from periodic payments which is exempt
from withholding based on this assumption. For 1996 a recipient of periodic
payments (e.g., monthly or annual payments which are not eligible rollover
distributions) which total less than $14,075 taxable amount will generally be
exempt from Federal income tax withholding, unless the recipient specifies a
different choice of withholding exemption."
18
<PAGE>
EQUI-VEST Prospectus Supplement, continued
GENERATION SKIPPING TAX/OTHER WITHHOLDING. The section entitled "Generation
Skipping Tax" on page 66 is replaced by a new section called "Other
Withholding." The new "Other Withholding" section is as follows: "In certain
cases Equitable may be required to withhold, or temporarily hold back, an
amount of death benefit due to potential application of state inheritance or
estate tax rules or federal "generation skipping tax," which is a form of
estate tax. The potential application of these rules varies depending on the
amount of the death benefit, the relationship of the beneficiaries to the
deceased, and the residence of the parties. You should consult with your tax
or legal adviser concerning potential application of these rules to your own
personal situation."
CERTAIN RULES APPLICABLE TO PLAN LOANS. This new section has been added to
Part 9: "Tax Aspects of the Contracts":
Qualified plans and TSA loans are subject to Code limits and may also be
subject to the limits of the applicable plan. Code requirements apply even if
the plan is not subject to ERISA. For example loans offered by certain
qualified plans and TSAs are subject to the following conditions:
o The amount of a loan to a participant, when aggregated with all other
loans to the participant from all qualified plans of the employer,
cannot exceed the greater of $10,000 or 50% of the participant's
non-forefeitable accrued benefits, and cannot exceed $50,000 in any
event. This $50,000 limit is reduced by the excess (if any) of the
highest outstanding loan balance over the previous twelve months over
the outstanding balance of plan loans on the date the loan was made.
o In general, the term of the loan cannot exceed five years unless the
loan is used to acquire the participant's primary residence. EQUI-VEST
Contracts have a term limit of 10 years for loans used to acquire the
participant's primary residence.
o All principal and interest must be amortized in substantially level
payments being made at least quarterly.
o If the loan does not qualify under the conditions above, the participant
fails to repay the interest or principal when due, or in some instances,
if the participant separates from service or the plan is terminated, the
amount borrowed or not repaid may be treated as a distribution. The
participant may be required to include as ordinary income the unpaid
amount due and a 10% penalty tax on early distributions may apply. The
plan should report the amount of the unpaid loan balance to the IRS as a
distribution.
o Many plans provide that the participant's spouse must consent in writing
to the loan.
<PAGE>
In addition, certain loan rules apply only to loans under ERISA plans:
o For contracts which are subject to ERISA, the trustee or sponsoring
employer is responsible for insuring that any loan meets applicable
Department of Labor (DOL) requirements. It is the responsibility of the
plan administrator, the trustee of the qualified plan and/or the
employer, and not Equitable Life, to properly administer any loan made
to plan participants. With respect to specific loans made by the plan to
a plan participant, the plan administrator determines the interest rate
(such determination can be assumed by permitting the loan to be made at
the rate set by Equitable Life), the maximum term and all other terms
and conditions of the loan.
o With respect to specific loans made by the plan to a plan participant,
the plan administrator determines the interest rate, the maximum term
and all other terms and conditions of the loan.
o Only 50% of the participant's vested account balance may serve as
security for a loan. To the extent that a participant borrows an amount
which should be secured by more than 50% of the participant's vested
account balance, it is the responsibility of the trustee or plan
administrator to obtain the additional security.
o Each new or renewed loan must bear a reasonable rate of interest
commensurate with the interest rates charged by persons in the business
of lending money for loans that would be made under similar
circumstances.
o Loans must be available to all plan Participants, former Participants
who still have account balances under the plan, beneficiaries (after the
death of a Participant) and alternate payees on a reasonably equivalent
basis.
19
<PAGE>
EQUI-VEST Prospectus Supplement, continued
FINANCIAL STATEMENTS.
Part 10: Independent Accountants is updated as follows:
The consolidated financial statements of Equitable Life for the years ended
December 31, 1995, 1994 and 1993 included in Equitable Life's Annual Report
on Form 10-K for the year ended December 31, 1995, incorporated by reference
in the prospectus, have been audited by Price Waterhouse LLP, independent
accountants, whose report thereon is incorporated herein by reference. Such
consolidated financial statements have been incorporated herein by reference
in reliance upon the report of Price Waterhouse LLP given upon their
authority as experts in accounting and auditing.
STATEMENT OF ADDITIONAL INFORMATION. The statement of additional information
(SAI), dated May 1, 1996, which is part of the registration statement for the
Separate Account, is available free of charge upon request by writing to the
Processing Office or calling 1-800-628-6673, our toll-free number. The SAI
has been incorporated by reference into this Supplement. The Table of
Contents for the SAI appears below.
- -----------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Part 1: Additional Information about the MOMENTUM Program Page 3
Part 2: How We Deduct the MOMENTUM Quarterly Administrative
Charge Page 3
Part 3: Description of Contribution Sources for the MOMENTUM
Program Page 4
Part 4: Additional Loan Provisions Page 4
Part 5: Tax Rules: Special Aspects Page 7
Part 6: Required Minimum Distributions Option/Automatic Minimum
Withdrawal Option Page 9
Part 7: Accumulation Unit Values Page 10
Part 8: Calculation of Annuity Payments Page 10
Part 9: The Reorganization Page 12
Part 10: Money Market Fund Yield Information Page 12
Part 11: Other Yield Information Page 13
Part 12: Distribution Page 13
Part 13: Key Factors in Retirement Planning Page 13
Part 14: Long Term Market Trends Page 18
Part 15: Custodian and Independent Accountants Page 20
Part 16: Financial Statements Page 20
</TABLE>
HOW TO OBTAIN THE EQUI-VEST STATEMENT OF ADDITIONAL INFORMATION
Send this request form to:
FOR EQUI-VEST
Individual Annuity Center
The Equitable
P.O. Box 2996
New York, NY 10116-2996
Please send me a Statement of Additional Information dated May 1, 1996
- -----------------------------------------------------------------------------
Name
- -----------------------------------------------------------------------------
Address
- -----------------------------------------------------------------------------
City State Zip
20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SUPPLEMENT DATED MAY 1, 1996
TO
EQUI-VEST(REGISTERED TRADEMARK) AND MOMENTUM Prospectus
Dated May 1, 1996
This supplement modifies certain information in the prospectus dated May 1,
1996 (the "Prospectus") for EQUI-VEST and MOMENTUM, group and individual
deferred variable annuity contracts offered by Equitable Life. Equitable Life
will offer its EQUI-VEST Series 200 TSA contracts modified with Rider
95MDHOSP (the "Modified TSA Contract") only to employees (age 75 and below)
of hospitals and non-profit healthcare organizations doing business in
Maryland. This Supplement describes the material differences between the
Modified TSA Contract and the EQUI-VEST Series 200 TSA contract described in
the Prospectus. Capitalized terms in this Supplement have the same meaning as
in the Prospectus.
Material differences between the Modified TSA Contract and the TSA provisions
described in the EQUI-VEST Prospectus include the following:
o CONTINGENT WITHDRAWAL CHARGE. The Contingent Withdrawal Charge schedule
for the Modified TSA Contract is as follows:
<TABLE>
<CAPTION>
CONTINGENT WITHDRAWAL CHARGES
- ------------------------------
CONTRACT YEAR(S) CHARGE
- ------------------ ----------
<S> <C>
1 6%
2 5
3 4
4 3
5 2
6+ 0
</TABLE>
This table replaces the EQUI-VEST Series 200 Contingent Withdrawal
Charge table "Deductions and Charges" in Part 8 of the Prospectus."
o No contingent withdrawal charge will apply to funds transferred on or
after January 18, 1996 into the Modified TSA Contract from another tax
sheltered annuity contract qualified under Section 403(b) of the Code and
issued by an insurance company other than Equitable Life.
o LOANS. Loans will be available under the Modified TSA Contract when the
TSA plan is subject to the Employee Retirement Income Security Act of 1974
(ERISA). Only one outstanding loan will be permitted at any time. There is a
minimum loan amount of $1,000 and a maximum loan amount which varies
depending on the participant's Annuity Account Value but may never exceed
$50,000. For more complete details and rules on Loans see "Loans" in Part 6
of the Prospectus, "Certain Rules Applicable to Plan Loans" in Part 10 and
"Part 4: Additional Loan Provisions" in the Statement of Additional
Information.
o In addition, under the Modified TSA Contract we will determine the loan
interest rate, unless the TSA's plan administrator chooses to do so. If we
set the rate, it will be equal to the Prime Rate (the base rate on corporate
loans posted by at least 75% of the nation's 30 largest banks) as published
in the Wall Street Journal on the first Monday of the last month of the
calendar quarter prior to the effective date of the loan, plus one percentage
point (1.00%).
o EXCEPTIONS TO THE CONTINGENT WITHDRAWAL CHARGE. For the modified TSA
Contract, the "How the Contingent Withdrawal Charge is Applied for Series 100
and 200 IRA, SEP, TSA, EDC and Annuitant-Owned HR-10 Contracts" Section in
"Part 8: Deductions and Charges" has been revised as follows:
No charge will be applied to any amount withdrawn from the TSA Contract if:
- -- the Annuitant has separated from service, or
- -- the Annuitant makes a withdrawal that qualifies as a hardship withdrawal
under the Plan and the Code, or
- -- the Annuitant makes a withdrawal at any time if they qualify to receive
Social Security disability benefits as certified by the Social Security
Administration or any successor agency.
o ANNUAL ADMINISTRATIVE CHARGE. No annual administrative charge will be
charged to participants in the Modified TSA Contract.
FOR USE ONLY IN THE STATE OF MARYLAND
888-1103
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SUPPLEMENT DATED MAY 1, 1996
TO
EQUI-VEST(REGISTERED TRADEMARK) AND MOMENTUM Prospectus
Dated May 1, 1996
This Supplement modifies certain information in the prospectus dated May
1, 1996 for EQUI-VEST and MOMENTUM, group and individual deferred variable
annuity contracts offered by Equitable Life. Capitalized terms in this
Supplement have the same meanings as in the prospectus.
In addition to other options described in "Distribution Options" under
Part 6 of the prospectus, the following distribution options may be available
to participants in certain public employee deferred compensation plans in the
State of Iowa. If such plans permit the use of such options, your Employer
may select one of the following options upon receipt of your irrevocable
election to receive payments in such form:
1. MINIMUM DISTRIBUTION OPTION
Beginning in the year that you are required to begin minimum distribution
payments under the Code and applicable treasury regulations and each year
thereafter, we will make annual payments to you subject to the rules of the
Code and to our administrative rules then in effect. The amount of each
payment will be calculated as described in this item 1.
Each year, we will calculate an annual amount equal to the minimum
distribution required under Section 401(a)(9) of the Code and applicable
Treasury regulations. The minimum distribution for each such year will be
determined by dividing (a) your Annuity Account Value as of December 31 of
the previous year, by (b) a life expectancy factor described below.
As you may elect under the terms of your Employer's plan, the life
expectancy factor is either a single life expectancy factor (based on your
life expectancy) or a joint life expectancy factor (based on the joint lives
of you and your spouse). Either such factor will be determined based on
tables contained in Section 401(a)(9) of the Code or applicable Treasury
regulations.
If the joint life expectancy factor is elected, your designated
beneficiary for minimum distribution purposes must be your spouse, unless the
naming of a non-spouse beneficiary is permitted pursuant to our rules in
effect at the time a beneficiary is named (such naming is not permitted at
this date).
Life expectancy factors will be recalculated each year, unless (a) you
elect not to recalculate or (b) the beneficiary is not your spouse. If life
expectancy is not recalculated, then each life expectancy factor is based on
the calculation for the calendar year in which you (and the beneficiary, if
joint life expectancy applies) begin receiving minimum distributions reduced
by one for each subsequent calendar year.
The election of the life expectancy factor to be used and whether
recalculation is to apply will be irrevocable.
The calculation procedure may be changed as necessary in our sole
discretion to comply with the minimum distribution rules under Section
401(a)(9) of the Code and applicable Treasury regulations.
2. COMBINATION OF SYSTEMATIC WITHDRAWAL AND MINIMUM DISTRIBUTION
OPTION
Beginning on the date of the first payment of your plan benefits, if we
are directed by your Employer under the terms of the Employer's plan, we will
make systematic withdrawal payments to you as follows at the frequency you
have elected (annually, quarterly or monthly), subject to our administrative
rules then in effect. The systematic withdrawal option described in
"Distribution Options" under Part 6 of the prospectus will be in combination
with the Minimum Distribution Option as described below.
Prior to the year that minimum distributions are required to start, we
will pay the amount of each systematic withdrawal payment of the type you
have selected. Based on your elections regarding your
<PAGE>
beneficiary and recalculations of life expectancy as described in item 1.
above, we will calculate annually the required imputed minimum distribution
amount and determine whether an additional payment to you is required. The
calculation of such imputed minimum distribution amount will be made on a
basis consistent with the required minimum distribution rules described in
item 1. above, using the tables contained in Section 401(a)(9) of the Code
and applicable Treasury regulations. Beginning with the year that minimum
distributions are required to start, we will calculate annually the required
minimum distribution and determine whether an additional payment to you is
required. If required, an imputed minimum distribution payment or a required
minimum distribution payment, as applicable, will be made in addition to the
systematic withdrawal payments.
If at any time after you have made the irrevocable election under your
Employer's plan as described above, the Internal Revenue Service disallows
the basis for calculating the payments as described in this item 2, we will
have the right, in our sole discretion, to change the basis for calculating
the payments as we deem necessary in order to meet the requirements of the
Code and applicable Treasury regulations.
FOR USE ONLY WITH PEDC CONTRACTS
IN THE STATE OF IOWA
