File Nos. 33-79170
811-8524
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 5 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 6 [X]
(Check appropriate box or boxes.)
EQUITABLE LIFE INSURANCE COMPANY OF IOWA SEPARATE ACCOUNT A
___________________________________________________________
(Exact Name of Registrant)
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
________________________________________
(Name of Depositor)
604 Locust Street, Des Moines, Iowa 50309
____________________________________________________ __________
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (800) 344-6860
NAME AND ADDRESS OF AGENT FOR SERVICE
John A. Merriman, Secretary & General Counsel
Equitable Life Insurance Company of Iowa
604 Locust Street
Des Moines, Iowa 50309
(515) 245-6911
COPIES TO:
Judith A. Hasenauer and G. Thomas Sullivan
Blazzard, Grodd & Hasenauer, P.C. Nyemaster, Goode,
P.O. Box 5108 McLaughlin, Voigts,
Westport, CT 06881 West, Hansell & O'Brien
(203) 226-7866 699 Walnut Street
Des Moines, Iowa 50309
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on February 3, 1997 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following:
___ This Post-Effective Amendment designates a new effective date for
a previously filed Post-Effective Amendment.
Registrant has declared that it has registered an indefinite number or
amount of securities in accordance with Rule 24f-2 under the Investment
Company Act of 1940. Registrant filed its Rule 24f-2 Notice for the fiscal
year ended December 31, 1995 on or about February 27, 1996.
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
- -------- -------------------
PART A
<S> <C> <C>
Item 1. Cover Page................................. Cover Page
Item 2. Definitions................................ Definitions
Item 3. Synopsis................................... Highlights
Item 4. Condensed Financial Information............ Not Applicable
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies......... The Company; The
Separate Account;
Equi-Select Series
Trust; Travelers
Series Fund Inc.;
Smith Barney Series
Fund; Warburg Pincus
Trust; The GCG Trust;
Smith Barney Concert
Series Inc.
Item 6. Deductions and Expenses.................... Charges and
Deductions
Item 7. General Description of Variable
Annuity Contracts.......................... The Contracts
Item 8. Annuity Period............................. Annuity Provisions
Item 9. Death Benefit.............................. The Contracts;
Annuity
Provisions
Item 10. Purchases and Contract Value............... Purchase Payments
and Contract Value
Item 11. Redemptions................................ Withdrawals
Item 12. Taxes...................................... Tax Status
Item 13. Legal Proceedings.......................... Legal Proceedings
Item 14. Table of Contents of the Statement
of Additional Information.................. Table of Contents
of the Statement
of Additional
Information
</TABLE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET (CONT'D)
(required by Rule 495)
Item No. Location
- -------- --------------------
PART B
<S> <C> <C>
Item 15. Cover Page................................. Cover Page
Item 16. Table of Contents.......................... Table of Contents
Item 17. General Information and History............ The Company
Item 18. Services................................... Not Applicable
Item 19. Purchase of Securities Being Offered....... Not Applicable
Item 20. Underwriters............................... Distributor
Item 21. Calculation of Performance Data............ Performance
Information
Item 22. Annuity Payments........................... Annuity Provisions
Item 23. Financial Statements....................... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item so numbered in Part C to this Registration Statement.
EXPLANATORY NOTE
==============================================================================
This Registration Statement contains two Prospectuses for the Contract. The
distribution system for each version of the Prospectus is different. These
Prospectuses will be filed with the Commission pursuant to Rule 497.
The Registrant undertakes to update this Explanatory Note each time a
Post-Effective Amendment is filed. The following Prospectuses were most
recently filed pursuant to Rule 497 regarding this Registration Statement:
1. On April 12, 1996, a Prospectus was filed pursuant to Rule 497
which contained the ten Portfolios of Equi-Select Series Trust and the
International Equity Portfolio of the Warburg Pincus Trust.
2. On April 11, 1996, a Prospectus was filed pursuant to Rule 497
which contained the Research, OTC and Total Return Portfolios of Equi-
Select Series Trust, the four Portfolios of Travelers Series Fund
Inc. and the Appreciation Portfolio of the Smith Barney Series Fund.
==============================================================================
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
Home Office: Administered at: Mailing Address:
604 Locust Street Customer Service Center P.O. Box 9271
Des Moines, Iowa 50309 Wilmington, DE 19801 Des Moines, Iowa 50306-9271
(800) 344-6864
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE AND
FIXED ANNUITY CONTRACTS
ISSUED BY
EQUITABLE LIFE INSURANCE COMPANY OF IOWA SEPARATE ACCOUNT A
AND
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
The Individual Flexible Purchase Payment Deferred Variable and Fixed Annuity
Contracts (the "Contracts") described in this Prospectus provide for
accumulation of Contract Values on a fixed and variable basis and payment of
monthly annuity payments on a fixed basis. The Contracts are designed for use
by individuals in retirement plans on a Qualified or Non-Qualified basis. (See
"Definitions" on Page __.)
At the Owner's direction, Purchase Payments for the Contracts will be
allocated to a segregated investment account of Equitable Life Insurance
Company of Iowa (the "Company") which account has been designated Equitable
Life Insurance Company of Iowa Separate Account A (the "Separate Account") or
to the Company's Fixed Account. Under certain circumstances, however, Purchase
Payments may initially be allocated to the Money Market Subaccount of the
Separate Account. (See "Highlights" on Page __.) The Separate Account invests
in shares of Equi-Select Series Trust (see "Equi-Select Series Trust" on Page
__), Warburg Pincus Trust (see "Warburg Pincus Trust" on Page __) and The GCG
Trust (see "The GCG Trust" on Page __). The Separate Account may invest in
other Investment Options. Equi-Select Series Trust is a series fund with nine
Portfolios currently available: Advantage Portfolio, International Fixed
Income Portfolio, Money Market Portfolio, Mortgage-Backed Securities
Portfolio, OTC Portfolio, Research Portfolio, Total Return Portfolio, Growth &
Income Portfolio and Value + Growth Portfolio. Warburg Pincus Trust is a
series fund with four portfolios, one of which is currently available in
connection with the Contracts: International Equity Portfolio. The GCG Trust
is a series fund with sixteen operational series, three of which are currently
available in connection with the Contracts: Fully Managed Series, Rising
Dividends Series and Small Cap Series.
Shares of certain Portfolios of the Investment Options may not be available
for sale in all states. The Prospectuses of the Investment Options may contain
Portfolios not currently available in connection with the Contracts.
This Prospectus concisely sets forth the information a prospective investor
should know before investing. Additional information about the Contracts is
contained in the Statement of Additional Information which is available at no
charge. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
The Table of Contents of the Statement of Additional Information can be found
on Page __ of this Prospectus. For the Statement of Additional Information,
call (800) 344-6864 or write to the Company at the address listed above.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENT IN THE CONTRACTS IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF THE
OWNER'S INVESTMENT TO FLUCTUATE, AND WHEN THE CONTRACTS ARE SURRENDERED THE
VALUE MAY BE HIGHER OR LOWER THAN THE PURCHASE PAYMENTS.
INQUIRIES:
Any inquiries can be made by telephone or in writing to Equitable Life
Insurance Company of Iowa at (800) 344-6864 or P.O. Box 9271, Des Moines, Iowa
50306-9271.
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.
This Prospectus and the Statement of Additional Information are dated February
3, 1997.
This Prospectus should be kept for future reference.
TABLE OF CONTENTS
PAGE
DEFINITIONS
HIGHLIGHTS
FEE TABLE
CONDENSED FINANCIAL INFORMATION
THE COMPANY
THE SEPARATE ACCOUNT
INVESTMENT OPTIONS
Equi-Select Series Trust
Warburg Pincus Trust
The GCG Trust
Voting Rights
Substitution of Securities
CHARGES AND DEDUCTIONS
Deduction for Withdrawal Charge (Sales Load)
Reduction or Elimination of the Withdrawal Charge
Deduction for Mortality and Expense Risk Charge
Deduction for Administrative Charge
Deduction for Annual Contract Maintenance Charge
Deduction for Premium Taxes
Deduction for Income Taxes
Deduction for Expenses of the Investment Options
Deduction for Transfer Fee
THE CONTRACTS
Ownership
Annuitant
Assignment
Beneficiary
PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments
Allocation of Purchase Payments
Dollar Cost Averaging
Automatic Portfolio Rebalancing
Contract Value
Accumulation Unit
TRANSFERS
WITHDRAWALS
Automatic Withdrawals
Texas Optional Retirement Program
Suspension of Payments or Transfers
CONTRACT PROCEEDS
Maturity Proceeds
Death Proceeds
Death of the Annuitant
Death of Owner
Fixed Payment Plans
Plan A. Interest
Plan B. Fixed Period
Plan C. Life Income
DISTRIBUTOR
ADMINISTRATION
PERFORMANCE INFORMATION
Money Market Portfolio
Other Portfolios
TAX STATUS
General
Diversification
Multiple Contracts
Contracts Owned by Other than Natural Persons
Tax Treatment of Assignments
Income Tax Withholding
Tax Treatment of Withdrawals -- Non-Qualified Contracts
Qualified Plans
Tax Treatment of Withdrawals -- Qualified Contracts
Tax-Sheltered Annuities -- Withdrawal Limitations
FINANCIAL STATEMENTS
LEGAL PROCEEDINGS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
DEFINITIONS
ACCUMULATION PERIOD -- The period during which Purchase Payments may be made
prior to the Maturity Date.
ACCUMULATION UNIT -- A unit of measure used to calculate the Contract Value in
a Subaccount of the Separate Account prior to the Maturity Date.
AGE -- The Annuitant's age on his or her last birthday.
ANNUITANT -- The natural person on whose life Annuity Payments are based.
ANNUITY PAYMENTS -- The series of payments after the Maturity Date under the
Payment Plan selected.
BENEFICIARY -- The person the Owner has chosen to receive the Proceeds on the
Annuitant's death as shown on the Company's records. There may be different
classes of Beneficiaries, such as primary and contingent. These classes set
the order of payment. There may be more than one Beneficiary in a class.
COMPANY -- Equitable Life Insurance Company of Iowa.
CONTRACT ANNIVERSARY -- An anniversary of the Issue Date of the Contract.
CONTRACT YEAR -- One year from the Issue Date and from each Contract
Anniversary.
FIXED ACCOUNT -- The Company's general investment account which contains all
the assets of the Company with the exception of the Separate Account and other
segregated asset accounts.
INVESTMENT OPTION -- An investment entity the Company may make available from
time to time.
ISSUE DATE/DATE OF ISSUE -- The effective date of the Contract.
MATURITY DATE -- The date on which Annuity Payments begin.
NON-QUALIFIED CONTRACTS -- Contracts issued under non-qualified plans which
do not receive favorable tax treatment under Sections 401, 403(b), 408 or 457
of the Internal Revenue Code of 1986, as amended (the "Code").
OWNER -- The person(s) who owns the Contract. The Owner may be someone other
than the Annuitant. There may be Joint Owners.
PORTFOLIO -- A segment of an Investment Option which constitutes a separate
and distinct class of shares, which may also be referred to as a Series.
PROCEEDS -- Proceeds are the amounts payable under the Contract.
PURCHASE PAYMENT -- An amount paid to the Company to provide benefits under
the Contract. A Purchase Payment does not include transfers between the
Separate Account and the Fixed Account or among Subaccounts.
PURCHASE PAYMENT ANNIVERSARY -- The anniversary of a Purchase Payment.
QUALIFIED CONTRACTS -- Contracts issued under qualified plans which receive
favorable tax treatment under Sections 401, 403(b), 408 or 457 of the Code.
SEPARATE ACCOUNT -- A separate investment account of the Company designated as
Equitable Life Insurance Company of Iowa Separate Account A, into which
Purchase Payments or Contract Values may be allocated.
SUBACCOUNT -- A segment of the Separate Account representing an investment in
an Investment Option.
VALUATION DATE -- The Separate Account will be valued each day that the New
York Stock Exchange and the Company's Customer Service Center both are open
for business.
VALUATION PERIOD -- The period beginning at the close of business of the New
York Stock Exchange on each Valuation Date and ending at the close of business
for the next succeeding Valuation Date.
HIGHLIGHTS
At the Owner's direction, Purchase Payments for the Contracts will be
allocated to a segregated investment account of Equitable Life Insurance
Company of Iowa (the "Company") which account has been designated Equitable
Life Insurance Company of Iowa Separate Account A (the "Separate Account") or
to the Company's Fixed Account. Under certain circumstances, however, Purchase
Payments may initially be allocated to the Money Market Subaccount of the
Separate Account (see below). The Separate Account invests in shares of
Equi-Select Series Trust (see "Equi-Select Series Trust" on Page __), Warburg
Pincus Trust (see "Warburg Pincus Trust" on Page __) and The GCG Trust (see
"The GCG Trust" on Page __). The Separate Account may invest in other
Investment Options. Owners bear the investment risk for all amounts allocated
to the Separate Account.
Within twenty (20) days of the date of receipt of the Contract by the Owner
(or within ten (10) days of the date of receipt with respect to the
circumstances described in (a) and (b) below or in states where required or,
within thirty (30) days in the case of a Contract issued in the state of
California to an individual who is sixty (60) years of age or older), it may
be returned by delivering or mailing it to the Company at its Customer Service
Center. When the Contract is received at the Customer Service Center, the
Company will refund the Contract Value computed at the end of the Valuation
Period during which the Contract is received by the Company except in the
following circumstances: (a) where the Contract is purchased pursuant to an
Individual Retirement Annuity; (b) in those states which require the Company
to refund Purchase Payments, less withdrawals; or (c) in the case of Contracts
(including Contracts purchased pursuant to an Individual Retirement Annuity)
which are deemed by certain states to be replacing an existing annuity or
insurance contract and which require the Company to refund Purchase Payments,
less withdrawals. With respect to the circumstances described in (a), (b) and
(c) above, the Company will refund the greater of Purchase Payments, less any
withdrawals, or the Contract Value, and will allocate initial purchase
payments to the Money Market Subaccount until the expiration of fifteen days
from the Issue Date (or twenty-five days in the case of Contracts described
under (c) above). Upon the expiration of the fifteen day period (or
twenty-five day period with respect to Contracts described under (c)), the
Subaccount value of the Money Market Subaccount will be allocated to the
Separate Account or Fixed Account in accordance with the election made by the
Owner in the Application. In Pennsylvania, when the Contract is purchased
pursuant to an Individual Retirement Annuity and is not deemed to be replacing
an existing annuity or insurance contract, the Owner may return the Contract
within twenty (20) days of receipt. Further, in Pennsylvania when the Contract
is received at the Customer Service Center during the first seven days, the
Company will refund the greater of Purchase Payments, less withdrawals or the
Contract Value, thereafter (days 8-20), the Company will refund the Contract
Value computed at the end of the Valuation Period during which the Contract is
received by the Company. In Oregon, when the Contract is purchased pursuant to
an Individual Retirement Annuity, the Owner may return the Contract within
twenty (20) days of receipt. Further, when the Contract is received at the
Customer Service Center during the first ten days, the Company will refund the
greater of the initial Purchase Payment, less any withdrawals or the Contract
Value as of the date of cancellation. Thereafter (days 11-20), the Company
will refund the Contract Value as of the date of cancellation. The initial
Purchase Payment will be allocated to the Money Market Sub-Account as
described above.
A Withdrawal Charge (sales load) may be deducted in the event of a withdrawal
of all or a portion of the Contract Value. The Withdrawal Charge percentages
are based upon the number of Purchase Payment Anniversaries that Purchase
Payments have remained in the Contract before being withdrawn:
TABLE OF WITHDRAWAL CHARGES
<TABLE>
<CAPTION>
<S> <C>
Purchase Payment Anniversary Withdrawal Charge
- ---------------------------- ------------------------------------
1 8% of the Purchase Payment withdrawn
2 7% of the Purchase Payment withdrawn
3 6% of the Purchase Payment withdrawn
4 5% of the Purchase Payment withdrawn
5 4% of the Purchase Payment withdrawn
6 3% of the Purchase Payment withdrawn
7 2% of the Purchase Payment withdrawn
8 1% of the Purchase Payment withdrawn
9 and after 0% of the Purchase Payment withdrawn
</TABLE>
At any time, the Owner may make a withdrawal, without the imposition of a
Withdrawal Charge, of an amount equal to the sum of: 1) earnings (Contract
Value less unliquidated Purchase Payments not withdrawn); 2) Purchase Payments
in the Contract for more than eight years and 3) an amount which is equal to
10% of the Purchase Payments in the Contract for less than eight years, fixed
at the time of the first withdrawal in the Contract Year, plus 10% of the
Purchase Payments made after the first withdrawal in the Contract Year but
before the next Contract Anniversary, less any withdrawals in the same
Contract Year of Purchase Payments less than eight years old.
There is a Mortality and Expense Risk Charge which is equal, on an annual
basis, to 1.25% of the average daily net asset value of the Separate Account.
This Charge compensates the Company for assuming the mortality and expense
risks under the Contracts. (See "Charges and Deductions -- Deduction for
Mortality and Expense Risk Charge" on Page __.)
There is an Administrative Charge which is equal, on an annual basis, to .15%
of the average daily net asset value of the Separate Account. This Charge
compensates the Company for costs associated with the administration of the
Contracts and the Separate Account. (See "Charges and Deductions -- Deduction
for Administrative Charge" on Page __.)
There is an Annual Contract Maintenance Charge of $30 each Contract Year prior
to the Maturity Date. (See "Charges and Deductions -- Deduction for Annual
Contract Maintenance Charge" on Page __.)
Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the Contract Values. Premium taxes generally range
from 0% to 4%. (See "Charges and Deductions -- Deduction for Premium Taxes" on
Page __.)
Under certain circumstances, a Transfer Fee may be assessed when an Owner
transfers Contract Values from one Subaccount to another Subaccount or to or
from the Fixed Account. (See "Charges and Deductions -- Deduction for Transfer
Fee" on Page __.)
There is a ten percent (10%) federal income tax penalty applied to the income
portion of any distribution from Non-Qualified Contracts. However, the penalty
is not imposed on amounts received: (a) after the taxpayer reaches age 59 1/2;
(b) after the death of the Owner; (c) if the taxpayer is totally disabled (for
this purpose disability is as defined in Section 72(m)(7) of the Code); (d) in
a series of substantially equal periodic payments made not less frequently
than annually for the life (or life expectancy) of the taxpayer and his or her
Beneficiary; (e) under an immediate annuity; or (f) which are allocable to
purchase payments made prior to August 14, 1982. The Contract provides that
upon the death of the Annuitant prior to the Maturity Date, the Death Proceeds
will be paid to the named Beneficiary. Such payments made upon the death of
the Annuitant who is not the Owner of the Contract do not qualify for the
death of Owner exception described above, and will be subject to the ten
percent (10%) distribution penalty unless the Beneficiary is 59 1/2 or one of
the other exceptions to the penalty applies. For federal income tax purposes,
withdrawals are deemed to be on a last-in, first-out basis. Separate tax
withdrawal penalties and restrictions apply to Qualified Contracts. (See "Tax
Status -- Tax Treatment of Withdrawals -- Qualified Contracts" on Page __.)
For a further discussion of the taxation of the Contracts, see "Tax Status" on
Page __.
Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (as defined in Section 403(b)(11) of the Code) are limited
to circumstances only when the Owner attains age 59 1/2, separates from
service, dies, becomes disabled (within the meaning of Section 72(m)(7) of the
Code) or in the case of hardship. Withdrawals for hardship are restricted to
the portion of the Owner's Contract Value which represents contributions made
by the Owner and does not include any investment results. The limitations on
withdrawals became effective on January 1, 1989, and apply only to: (1) salary
reduction contributions made after December 31, 1988; (2) income attributable
to such contributions; and (3) income attributable to amounts held as of
December 31, 1988. The limitations on withdrawals do not affect rollovers or
transfers between certain Qualified Plans. Tax penalties may also apply. (See
"Tax Status -- Tax Treatment of Withdrawals -- Qualified Contracts" on Page
__.) Owners should consult their own tax counsel or other tax adviser
regarding any distributions. (See "Tax Status -- Tax Sheltered Annuities --
Withdrawal Limitations" on Page __.)
See "Tax Status -- Diversification" on Page __ for a discussion of owner
control of the underlying investments in a variable annuity contract.
Because of certain exemptive and exclusionary provisions, interests in the
Fixed Account are not registered under the Securities Act of 1933 and the
Fixed Account is not registered as an investment company under the Investment
Company Act of 1940, as amended. Accordingly, neither the Fixed Account nor
any interests therein are subject to the provisions of these Acts and the
Company has been advised that the staff of the Securities and Exchange
Commission has not reviewed the disclosures in the Prospectus relating to the
Fixed Account. Disclosures regarding the Fixed Account may, however, be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA SEPARATE ACCOUNT A
FEE TABLE
OWNER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Withdrawal Charge (see Note 2 below)
(as a percentage of Purchase Payments withdrawn)
Purchase Payment Anniversary Charge
- ------------------------------------------------ ------------------------------------------
1 8%
2 7%
3 6%
4 5%
5 4%
6 3%
7 2%
8 1%
9+ 0%
Transfer Fee (See Note 3 below) No charge for first 12 transfers in a
Contract Year; thereafter the fee is the
lesser of 2% of the Contract Value
transferred or an amount not greater
than $25.
Annual Contract Maintenance Charge $30 per Contract per year
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charge 1.25%
Administrative Charge .15%
------
Total Separate Account Annual Expenses 1.40%
</TABLE>
EQUI-SELECT SERIES TRUST'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Other
Expenses**
(after
Management expense Total Annual
Fees* reimbursement) Expenses
--------- -------------- ------------
Advantage Portfolio .50% .30% .80 %
International Fixed Income Portfolio .85% .75% 1.60 %
Money Market Portfolio .375% .30% .675%
Mortgage-Backed Securities Portfolio .75% .50% 1.25 %
OTC Portfolio .80% .40% 1.20 %
Research Portfolio .80% .40% 1.20 %
Total Return Portfolio .80% .40% 1.20 %
Growth & Income Portfolio .95% .40% 1.35 %
Value + Growth Portfolio .95% .40% 1.35 %
<FN>
______________
* PRIOR TO OCTOBER 6, 1995, EQUITABLE INVESTMENT SERVICES, INC. ("EISI"),
THE TRUST'S INVESTMENT ADVISER, WAIVED ITS MANAGEMENT FEES FOR EACH OF THE
PORTFOLIOS EXCEPT THE GROWTH & INCOME PORTFOLIO AND THE VALUE + GROWTH
PORTFOLIO WHICH COMMENCED INVESTMENT OPERATIONS ON APRIL 1, 1996.
** BEGINNING OCTOBER 6, 1995, EISI HAS UNDERTAKEN TO REIMBURSE EACH
PORTFOLIO FOR ALL OPERATING EXPENSES, EXCLUDING MANAGEMENT FEES, THAT EXCEED
.30% OF THE AVERAGE DAILY NET ASSETS OF THE ADVANTAGE AND MONEY MARKET
PORTFOLIOS, .50% OF THE AVERAGE DAILY NET ASSETS OF THE MORTGAGE-BACKED
SECURITIES PORTFOLIO AND .75% OF THE AVERAGE DAILY NET ASSETS OF THE
INTERNATIONAL FIXED INCOME PORTFOLIO. BEGINNING FEBRUARY 3, 1997, EISI HAS
UNDERTAKEN TO REIMBURSE THE OTC, TOTAL RETURN, RESEARCH, GROWTH & INCOME AND
VALUE + GROWTH PORTFOLIOS FOR ALL OPERATING EXPENSES, EXCLUDING MANAGEMENT FEES,
THAT EXCEED .40% OF THE AVERAGE DAILY NET ASSETS OF SUCH PORTFOLIOS. FROM
OCTOBER 6, 1995 TO FEBRUARY 3, 1997, EISI REIMBURSED THE OTC, TOTAL RETURN,
RESEARCH, GROWTH & INCOME AND VALUE + GROWTH PORTFOLIOS FOR ALL OPERATING
EXPENSES, EXCLUDING MANAGEMENT FEES, THAT EXCEEDED .75% OF THE AVERAGE DAILY NET
ASSETS OF SUCH PORTFOLIOS. THIS VOLUNTARY EXPENSE REIMBURSEMENT CAN BE
TERMINATED AT ANY TIME.
</TABLE>
WARBURG PINCUS TRUST'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Other
Expenses
(after Total
Management expense Operating
Fees reimbursement) Expenses
--------- -------------- ----------
International Equity Portfolio* .27% 1.17% 1.44 %
<FN>
________________________
* WARBURG, PINCUS COUNSELLORS, INC., THE TRUST'S INVESTMENT ADVISER,
WAIVED PART OF ITS MANAGEMENT FEE AND REIMBURSED CERTAIN EXPENSES FOR THE
FISCAL PERIOD ENDED DECEMBER 31, 1995 FOR THE INTERNATIONAL EQUITY PORTFOLIO.
WITHOUT SUCH WAIVER AND REIMBURSEMENT, MANAGEMENT FEES WOULD HAVE EQUALED
1.00%, OTHER EXPENSES WOULD HAVE EQUALED 1.21% AND TOTAL PORTFOLIO EXPENSES
WOULD HAVE EQUALED 2.21%. WARBURG, PINCUS COUNSELLORS, INC. HAD UNDERTAKEN TO
REDUCE OR OTHERWISE LIMIT TOTAL PORTFOLIO OPERATING EXPENSES THROUGH DECEMBER
31, 1995. THERE IS NO ASSURANCE THAT THESE UNDERTAKINGS WILL CONTINUE.
</TABLE>
THE GCG TRUST'S ANNUAL EXPENSES
(as a percentage of average combined net assets of a group of Series)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Fees* Other Expenses** Total Annual Expenses
----------------- ----------------- ----------------------
Fully Managed Series 1.00% 0.01% 1.01%
Rising Dividends Series 1.00% 0.01% 1.01%
Small Cap Series 1.00% 0.01% 1.01%
<FN>
*Fees decline as combined assets increase (see The GCG Trust prospectus).
**Other expenses generally consist of independent trustees' fees and expenses.
</TABLE>
EXAMPLES
An Owner would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets:
(a) if the Contract is fully surrendered at the end of each time period
or if Payment Plan A - Option 2 is elected;
(b) if the Contract is not surrendered;
<TABLE>
<CAPTION>
TIME PERIODS
<S> <C> <C> <C> <C>
SUBACCOUNTS INVESTING IN: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------ --------- ------------ ---------- ----------
EQUI-SELECT SERIES TRUST
Advantage Portfolio a) $103.39 a) $125.98 a) $159.12 a) $263.02
b) $23.39 b) $71.99 b) $123.12 b) $263.02
International Fixed Income Portfolio a) $111.38 a) $149.87 a) $198.75 a) $341.02
b) $31.38 b) $95.87 b) $162.75 b) $341.02
Money Market Portfolio a) $102.13 a) $122.20 a) $152.77 a) $250.22
b) $22.13 b) $68.20 b) $116.77 b) $250.22
Mortgage-Backed Securities Portfolio a) $107.89 a) $139.49 a) $181.61 a) $307.73
b) $27.89 b) $85.49 b) $145.61 b) $307.73
OTC Portfolio a) $107.39 a) $138.00 a) $179.14 a) $302.87
b) $27.39 b) $84.00 b) $143.14 b) $302.87
Research Portfolio a) $107.39 a) $138.00 a) $179.14 a) $302.87
b) $27.39 b) $84.00 b) $143.14 b) $302.87
Total Return Portfolio a) $107.39 a) $138.00 a) $179.14 a) $302.87
b) $27.39 b) $84.00 b) $143.14 b) $302.87
Growth & Income Portfolio a) $108.89 a) $142.47 a) $186.54 a) $317.37
b) $28.89 b) $88.47 b) $150.54 b) $317.37
Value + Growth Portfolio a) $108.89 a) $142.47 a) $186.54 a) $317.37
b) $28.89 b) $88.47 b) $150.54 b) $317.37
WARBURG PINCUS TRUST
International Equity Portfolio a) $109.79 a) $145.14 a) $190.95 a) $325.96
b) $29.79 b) $91.14 b) $154.95 b) $325.96
THE GCG TRUST
Fully Managed Series a) $105.49 a) $132.31
b) $25.49 b) $78.31
Rising Dividends Series a) $105.49 a) $132.31
b) $25.49 b) $78.31
Small Cap Series a) $105.49 a) $132.31
b) $25.49 b) $78.31
</TABLE>
NOTES TO FEE TABLE AND EXAMPLES
1. The purpose of the Fee Table is to assist the Owner in understanding
the various costs and expenses that an Owner will incur directly or
indirectly. For additional information, see "Charges and Deductions" in this
Prospectus and the Prospectuses for Equi-Select Series Trust, Warburg Pincus
Trust and The GCG Trust.
2. At any time, the Owner may make a withdrawal, without the imposition
of a Withdrawal Charge, of an amount equal to the sum: 1) earnings (Contract
Value less unliquidated Purchase Payments not withdrawn); 2) Purchase Payments
in the Contract for more than eight years; and 3) an amount which is equal to
10% of the Purchase Payments in the Contract for less than eight years, fixed
at the time of the first withdrawal in the Contract Year, plus 10% of the
Purchase Payment made after the first withdrawal in the Contract Year but
before the next Contract Anniversary, less any withdrawals in the same
Contract Year of Purchase Payments less than eight years old.
3. If the Owner is participating in the Automatic Portfolio Rebalancing
program or Dollar Cost Averaging program providing for the automatic transfer
of funds from a Subaccount or the Fixed Account to any other Subaccount, such
transfers are currently not taken into account in determining the number of
transfers for the year or in determining any Transfer Fee. (See "Charges and
Deductions -- Deduction for Transfer Fee" on Page __, "Purchase Payments and
Contract Value -- Dollar Cost Averaging" on Page __ and "Purchase Payments and
Contract Value -- Automatic Portfolio Rebalancing" on Page __.)
4. Premium taxes are not reflected. Premium taxes may apply. (See
"Charges and Deductions -- Deduction for Premium Taxes" on Page __.)
5. The Examples assume an estimated $27,700 Contract Value so that the
Annual Contract Maintenance Charge per $1,000 of net asset value in the
Separate Account is $1.08. Such charge would be higher for smaller Contract
Values and lower for higher Contract Values.
6. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
CONDENSED FINANCIAL INFORMATION
The financial statements of Equitable Life Insurance Company of Iowa and
Equitable Life Insurance Company of Iowa Separate Account A may be found in
the Statement of Additional Information.
The table below gives per unit information about the financial history of
the Advantage, International Fixed Income, Money Market, Mortgage-Backed
Securities, OTC, Research and Total Return Subaccounts invested in Equi-Select
Series Trust from commencement of operations (October 7, 1994) to September
30, 1996. The table below gives per unit information about the financial
history of the Growth & Income and Value + Growth Subaccounts invested in
Equi-Select Series Trust from commencement of operations (April 1, 1996) to
September 30, 1996. The table below also gives per unit information about the
financial history of the International Equity Subaccount invested in Warburg
Pincus Trust from commencement of operations (April 1, 1996) to September 30,
1996. This information should be read in conjunction with the financial
statements and related notes of the Separate Account included in the Statement
of Additional Information.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIOD FROM
COMMENCEMENT
PERIOD ENDED YEAR ENDED OF OPERATIONS TO
SEPTEMBER 30, 1996 DECEMBER 31, 1995 December 31, 1994
------------------- ------------------ -----------------
ADVANTAGE SUBACCOUNT
Unit value at beginning of period $ 10.86 $ 10.08 $ 10.00
Unit value at end of period $ 11.23 $ 10.86 $ 10.08
No. of units outstanding at end of period 1,036,930 344,775 45,516
INTERNATIONAL FIXED INCOME SUBACCOUNT
Unit value at beginning of period $ 11.55 $ 10.06 $ 10.00
Unit value at end of period $ 11.67 $ 11.55 $ 10.06
No. of units outstanding at end of period 590,459 311,689 5 ,098
MONEY MARKET SUBACCOUNT
Unit value at beginning of period $ 10.45 $ 10.07 $ 10.00
Unit value at end of period $ 10.71 $ 10.45 $ 10.07
No. of units outstanding at end of period 1,643,207 548,767 34,322
MORTGAGE-BACKED SECURITIES SUBACCOUNT
Unit value at beginning of period $ 11.42 $ 9.99 $ 10.00
Unit value at end of period $ 11.39 $ 11.42 $ 9.99
No. of units outstanding at end of period 805,409 380,031 2,886
OTC SUBACCOUNT
Unit value at beginning of period $ 13.21 $ 10.35 $ 10.00
Unit value at end of period $ 15.61 $ 13.21 $ 10.35
No. of units outstanding at end of period 1,994,122 759,597 63,781
RESEARCH SUBACCOUNT
Unit value at beginning of period $ 13.10 $ 9.72 $ 10.00
Unit value at end of period $ 15.20 $ 13.10 $ 9.72
No. of units outstanding at end of period 3,562,977 1,255,752 69,177
TOTAL RETURN SUBACCOUNT
Unit value at beginning of period $ 12.05 $ 9.81 $ 10.00
Unit value at end of period $ 12.80 $ 12.05 $ 9.81
No. of units outstanding at end of period 3,387,074 1,312,565 33,106
GROWTH & INCOME SUBACCOUNT
Unit value at beginning of period $ 10.00
Unit value at end of period $ 11.66
No. of units outstanding at end of period 1,335,656
VALUE + GROWTH SUBACCOUNT
Unit value at beginning of period $ 10.00
Unit value at end of period $ 10.80
No. of units outstanding at end of period 791,732
INTERNATIONAL EQUITY SUBACCOUNT
Unit value at beginning of period $ 10.00
Unit value at end of period $ 10.04
No. of units outstanding at end of period 583,902
</TABLE>
The Subaccounts investing in The GCG Trust are new in 1997.
THE COMPANY
Equitable Life Insurance Company of Iowa (the "Company") was founded in Iowa
in 1867 and is the oldest life insurance company west of the Mississippi. The
Company is currently licensed to do business in the District of Columbia and
all states except New Hampshire and New York. The Company is a wholly-owned
subsidiary of Equitable of Iowa Companies ("Equitable of Iowa"), an Iowa
corporation.
THE SEPARATE ACCOUNT
The Board of Directors of the Company adopted a resolution to establish a
segregated asset account pursuant to Iowa insurance law on January 24, 1994.
This segregated asset account has been designated Equitable Life Insurance
Company of Iowa Separate Account A (the "Separate Account"). The Company has
caused the Separate Account to be registered with the Securities and Exchange
Commission as a unit investment trust pursuant to the provisions of the
Investment Company Act of 1940.
The assets of the Separate Account are the property of the Company. However,
the assets of the Separate Account equal to the reserves and other contract
liabilities with respect to the Separate Account, are not chargeable with
liabilities arising out of any other business the Company may conduct. Income,
gains and losses, whether or not realized, are, in accordance with the
Contracts, credited to or charged against the Separate Account without regard
to other income, gains or losses of the Company. The Company's obligations
arising under the Contracts are general obligations.
The Separate Account meets the definition of a "separate account" under
federal securities laws.
The Separate Account is divided into Subaccounts, with the assets of each
Subaccount invested in one Portfolio of Equi-Select Series Trust, Warburg
Pincus Trust or The GCG Trust. The Separate Account may invest in other
Investment Options. There is no assurance that the investment objectives of
any of the Portfolios will be met.
Owners bear the complete investment risk for Purchase Payments allocated to a
Subaccount. Contract Values will fluctuate in accordance with the investment
performance of the Subaccounts to which Purchase Payments are allocated, and
in accordance with the imposition of the fees and charges assessed under the
Contracts.
INVESTMENT OPTIONS
EQUI-SELECT SERIES TRUST
Equi-Select Series Trust ("Trust") has been established to act as one of the
funding vehicles for the Contracts offered. The Trust is an open-end
management investment company. The Trust is managed by Equitable Investment
Services, Inc. ("EISI") which is a wholly-owned subsidiary of Equitable of
Iowa. EISI has retained Sub-Advisers for certain Portfolios to make investment
decisions and place orders. The Sub-Advisers for the Portfolios are: Credit
Suisse Investment Management Limited with respect to the International Fixed
Income Portfolio; Massachusetts Financial Services Company with respect to the
OTC, Research and Total Return Portfolios and Robertson, Stephens & Company
Investment Management, L.P. with respect to the Growth & Income and Value +
Growth Portfolios. See "Management of the Trust" in the Trust Prospectus,
which accompanies this Prospectus, for additional information concerning EISI
and the Sub-Advisers, including a description of advisory and sub-advisory
fees.
The Trust is intended to meet differing investment objectives with its
currently available separate Portfolios.
The investment objectives of the Portfolios are as follows:
ADVANTAGE PORTFOLIO. The Advantage Portfolio seeks current income with a
very low degree of share-price fluctuation. The Portfolio invests primarily in
ultra short-term investment grade debt obligations. The Portfolio is designed
for investors who seek higher yields than money market funds generally offer
and who are willing to accept some modest principal fluctuation in order to
achieve that objective. Because its share price will vary, the Portfolio is
not an appropriate investment for those whose primary objective is absolute
principal stability. The Portfolio's investments include a combination of
high-quality money market instruments, as well as securities with longer
maturities and securities of lower quality. Under normal market conditions, it
is anticipated that the Portfolio will maintain an average effective maturity
of one year or less.
INTERNATIONAL FIXED INCOME PORTFOLIO. The International Fixed Income
Portfolio seeks to provide high total return. The Portfolio will seek to
achieve its objective by investing in both domestic and foreign debt
securities and related foreign currency transactions. The total return will be
sought through a combination of current income, capital gains and gains in
currency positions. Under normal market conditions, the Portfolio will invest
primarily in: (i) obligations issued or guaranteed by foreign national
governments, their agencies, instrumentalities, or political subdivisions;
(ii) U.S. government securities; and (iii) debt securities issued or
guaranteed by supranational organizations, considered to be government
securities. Under normal conditions, the Portfolio's Sub-Adviser expects that
the Portfolio generally will be invested in at least six different countries,
including the U.S., although the Portfolio may at times invest all of its
assets in a single country. The Portfolio may invest a significant portion of
its assets in foreign securities. Investing in foreign securities generally
involves risks not ordinarily associated with investing in securities of
domestic issuers. Purchasers are cautioned to read the "Appendix -- Foreign
Investments" in the Trust Prospectus for a discussion of the risks involved in
foreign investing.
MONEY MARKET PORTFOLIO. The Money Market Portfolio seeks to obtain
maximum current income, consistent with the preservation of capital and the
maintenance of liquidity. The Portfolio will seek to achieve this objective by
investing exclusively in certain U.S. dollar-denominated money market
instruments having remaining maturities of 397 days or less. An investment in
the Money Market Portfolio is neither insured nor guaranteed by the U.S.
Government.
MORTGAGE-BACKED SECURITIES PORTFOLIO. The Mortgage-Backed Securities
Portfolio seeks to obtain a high current return, consistent with safety of
principal, primarily through investments in mortgage-backed securities.
Mortgage-backed securities represent interests in, or are secured by and
payable from, pools of mortgage loans, including collateralized mortgage
obligations.
OTC PORTFOLIO. The primary investment objective of the OTC Portfolio is
to seek to obtain long-term growth of capital. The Portfolio seeks to achieve
its objective by investing at least 65% of its total assets, under normal
circumstances, in securities principally traded on the over-the-counter (OTC)
securities market.
RESEARCH PORTFOLIO. The Research Portfolio seeks to provide long-term
growth of capital and future income by investing a substantial portion of its
assets in the common stocks or securities convertible into common stocks of
companies believed to possess better than average prospects for long-term
growth. A smaller proportion of the assets may be invested in bonds,
short-term obligations, preferred stocks or common stocks whose principal
characteristic is income production rather than growth. The portfolio
securities of the Research Portfolio are selected by the investment research
analysts in the Equity Research Group of the Sub-Adviser. The Portfolio's
assets are allocated to industry groups (e.g. within the health care sector,
the managed care, drug and medical supply industries). The allocation by
sector and industry is determined by the analysts acting together as a group.
TOTAL RETURN PORTFOLIO. The Total Return Portfolio primarily seeks to
obtain above-average income (compared to a portfolio entirely invested in
equity securities) consistent with the prudent employment of capital. While
current income is the primary objective, the Portfolio believes that there
should also be a reasonable opportunity for growth of capital and income,
since many securities offering a better than average yield may also possess
growth potential. Generally, at least 40% of the Portfolio's assets are
invested in equity securities.
GROWTH & INCOME PORTFOLIO. The Growth & Income Portfolio seeks long-term
total return. The Portfolio will pursue this objective primarily by investing
in equity and debt securities, focusing on small- and mid-cap companies that
offer the potential for capital appreciation, current income or both. The
Portfolio will normally invest the majority of its assets in common and
preferred stocks, convertible securities, bonds and notes.
VALUE + GROWTH PORTFOLIO. The Value + Growth Portfolio seeks capital
appreciation. The Portfolio invests primarily in mid-cap growth companies with
favorable relationships between price/earnings ratios and growth rates, in
sectors offering the potential for above-average returns. Mid-cap companies
are companies with market capitalizations ranging from $750 million to
approximately $2 billion, although the Portfolio's investments may include
securities of larger or smaller companies.
WARBURG PINCUS TRUST
Warburg Pincus Trust is an open-end management investment company. Warburg,
Pincus Counsellors, Inc. ("Warburg") is the investment adviser to each of the
Trust's four Portfolios, one of which -- the International Equity Portfolio --
is being offered herein. Warburg is a wholly-owned subsidiary of Warburg,
Pincus Counsellors G.P., a New York general partnership, which itself is
controlled by Warburg, Pincus & Co. ("WP & Co."), also a New York general
partnership. Lionel I. Pincus, the managing partner of WP & Co., may be deemed
a controlling person of both WP & Co. and Warburg.
The investment objective of the International Equity Portfolio is as follows:
INTERNATIONAL EQUITY PORTFOLIO. The investment objective of the
International Equity Portfolio is to seek long-term capital appreciation by
investing primarily in a broadly diversified portfolio of equity securities of
companies, wherever organized, that in the judgment of Warburg have their
principal business activities and interests outside the United States. The
Portfolio will ordinarily invest substantially all of its assets -- but no
less than 65% of its total assets -- in common stocks, warrants and securities
convertible into or exchangeable for common stocks. Generally the Portfolio
will hold no less than 65% of its total assets in at least three countries
other than the United States.
THE GCG TRUST
The GCG Trust ("GCG") is an open-end management investment company, more
commonly referred to as a mutual fund. Directed Services, Inc. ("Manager")
serves as the manager to GCG. The Manager is an indirect wholly-owned
subsidiary of Equitable of Iowa and an affiliate of the Company. GCG and the
Manager have retained Portfolio Managers for each of the Series of GCG. The
Portfolio Manager to the Fully Managed Series is T. Rowe Price; the Portfolio
Manager to the Rising Dividends Series is Kayne, Anderson Investment
Management, L.P.; and the Portfolio Manager to the Small Cap Series is Fred
Alger Management, Inc.
The investment objectives of the available Series are as follows:
FULLY MANAGED SERIES. The Fully Managed Series seeks, over the long
term, a high total investment return, consistent with the preservation of
capital and prudent investment risk. The Series seeks to achieve this
objective by investing primarily in common stocks. The Series may also invest
in fixed income securities and money market instruments to preserve its
principal value during uncertain or declining market conditions.
RISING DIVIDENDS SERIES. The Rising Dividends Series seeks capital
appreciation. The Series seeks to achieve this objective by investing in
equity securities of high quality companies that meet the following four
criteria: consistent dividend increases; substantial dividend increases;
reinvested profits; and an under-leveraged balance sheet.
SMALL CAP SERIES. The Small Cap Series seeks to achieve long-term
capital appreciation by investing in equity securities of companies that, at
the time of purchase, have total market capitalization within the range of
companies included in the Russell 2000 Growth Index. Many of the securities
in which the Series invests may be those of new companies in a developmental
stage or more seasoned companies believed by the Portfolio Manager to be
entering a new stage of growth.
While a brief summary of the investment objectives of the Portfolios of
Equi-Select Series Trust and Warburg Pincus Trust and the Series of The GCG
Trust are set forth above, more comprehensive information, including a
discussion of potential risks, is found in the current Prospectuses for each
of the Investment Options, which are included with this Prospectus.
Additional Prospectuses and the Statements of Additional Information can be
obtained by calling the Customer Service Center or writing the Company's Home
Office. Purchasers should read the Prospectuses for the Investment Options
carefully before investing.
VOTING RIGHTS
In accordance with its view of present applicable law, the Company will vote
the shares of the Investment Options held in the Separate Account at special
meetings of the shareholders in accordance with instructions received from
persons having the voting interest in the Separate Account. The Company will
vote shares for which it has not received instructions, as well as shares
attributable to it, in the same proportion as it votes shares for which it has
received instructions. The Investment Options do not hold regular meetings of
shareholders.
The number of shares which a person has a right to vote will be determined as
of a date to be chosen by the Company prior to a shareholder meeting of an
Investment Option. Voting instructions will be solicited by written
communication prior to the meeting.
SUBSTITUTION OF SECURITIES
If the shares of the Investment Options (or any Portfolio within an Investment
Option or any other Investment Option), are no longer available for investment
by the Separate Account or, if in the judgment of the Company, further
investment in the shares should become inappropriate in view of the purpose of
the Contracts, the Company may substitute shares of another Investment Option
(or Portfolio) for shares already purchased or to be purchased in the future
by Purchase Payments under the Contracts. No substitution of securities may
take place without prior approval of the Securities and Exchange Commission
and under the requirements it may impose.
Shares of the Investment Options are issued and redeemed in connection with
investments in and payments under certain variable annuity contracts and (with
respect to certain of the Investment Options) variable life insurance policies
of various life insurance companies which may or may not be affiliated. In
addition, Warburg Pincus Trust and GCG offer their shares to tax-qualified
pension and retirement plans ("Qualified Plans"). The Investment Options do
not foresee any disadvantage to Owners arising out of the fact that the
Investment Options offer their shares for products offered by life insurance
companies which are not affiliated (or with respect to Warburg Pincus Trust
and GCG, that they offer their shares to Qualified Plans). Nevertheless, the
Boards of Trustees of the Investment Options intend to monitor events in order
to identify any material irreconcilable conflicts which may possibly arise and
to determine what action, if any, should be taken in response thereto. If such
a conflict were to occur, one or more insurance company separate accounts (or
Qualified Plans) might withdraw its investments in an Investment Option. An
irreconcilable conflict might result in the withdrawal of a substantial amount
of a Portfolio's assets which could adversely affect such Portfolio's net
asset value per share.
CHARGES AND DEDUCTIONS
Various charges and deductions are made from the Contract Value and the
Separate Account. These charges and deductions are:
DEDUCTION FOR WITHDRAWAL CHARGE (SALES LOAD)
If all or a portion of the Contract Value (see "Withdrawals" on Page __) is
withdrawn, a Withdrawal Charge (sales load) will be calculated at the time of
each withdrawal and will be deducted from the Contract Value. This Charge
reimburses the Company for expenses incurred in connection with the promotion,
sale and distribution of the Contracts. The Withdrawal Charge percentages are
based upon the number of Purchase Payment Anniversaries that Purchase Payments
have remained in the Contract before being withdrawn as shown in the Table of
Withdrawal Charges below:
TABLE OF WITHDRAWAL CHARGES
<TABLE>
<CAPTION>
<S> <C>
Purchase Payment Anniversary Withdrawal Charge
- ---------------------------- ------------------------------------
1 8% of the Purchase Payment withdrawn
2 7% of the Purchase Payment withdrawn
3 6% of the Purchase Payment withdrawn
4 5% of the Purchase Payment withdrawn
5 4% of the Purchase Payment withdrawn
6 3% of the Purchase Payment withdrawn
7 2% of the Purchase Payment withdrawn
8 1% of the Purchase Payment withdrawn
9 and after 0% of the Purchase Payment withdrawn
</TABLE>
At any time, the Owner may make a withdrawal, without the imposition of a
Withdrawal Charge, of an amount equal to the sum of: 1) earnings (Contract
Value less unliquidated Purchase Payments not withdrawn); 2) Purchase Payments
in the Contract for more than eight years; and 3) an amount which is equal to
10% of the Purchase Payments in the Contract for less than eight years, fixed
at the time of the first withdrawal in the Contract Year, plus 10% of the
Purchase Payments made after the first withdrawal in the Contract Year but
before the next Contract Anniversary, less any withdrawals in the same
Contract Year of Purchase Payments less than eight years old. See
"Withdrawals" for a discussion of how Contract Value is deemed withdrawn for
purposes of the Withdrawal Charge.
Commissions will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions, up to an amount currently equal to
7.75% of Purchase Payments, for promotional or distribution expenses
associated with the marketing of the Contracts. The Company may, by agreement
with the broker-dealer, pay commissions as a combination of a certain
percentage amount at the time of sale and a trail commission (which when
combined could exceed 7.75% of Purchase Payments). In addition, under certain
circumstances, the Company may pay certain sellers production bonuses which
will take into account, among other things, the total Purchase Payments which
have been made under Contracts associated with the broker-dealer. Additional
payments or allowances may be made for other services not directly related to
the sale of the Contracts. To the extent that the Withdrawal Charge is
insufficient to cover the actual costs of distribution, the Company may use
any of its corporate assets, including potential profit which may arise from
the Mortality and Expense Risk Charge (see below), to provide for any
difference.
No Withdrawal Charge is deducted if Plan A -- Option 1; Plan B or Plan C is
elected. (See "Contract Proceeds -- Fixed Payment Plans" on Page __.)
In addition, in certain states, an endorsement to the Contract is issued which
permits the Owner to make a total or partial withdrawal without the imposition
of a Withdrawal Charge if the Annuitant is hospitalized and/or confined to an
eligible nursing home for 30 consecutive days.
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
The amount of the Withdrawal Charge on the Contracts may be reduced or
eliminated when sales of the Contracts are made to individuals or to a group
of individuals in a manner that results in savings of sales expenses. The
entitlement to reduction of the Withdrawal Charge will be determined by the
Company after examination of all the relevant factors such as:
1. The size and type of group to which sales are to be made will be
considered. Generally, the sales expenses for a larger group are less than for
a smaller group because of the ability to implement large numbers of Contracts
with fewer sales contacts.
2. The total amount of Purchase Payments to be received will be
considered. Per Contract sales expenses are likely to be less on larger
Purchase Payments than on smaller ones.
3. Any prior or existing relationship with the Company will be
considered. Per Contract sales expenses are likely to be less when there is a
prior existing relationship because of the likelihood of implementing the
Contract with fewer sales contacts.
4. There may be other circumstances, of which the Company is not
presently aware, which could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction or elimination of the Withdrawal Charge.
The Company and its affiliates may offer an exchange program ("Exchange
Program") to their fixed annuity contract owners whereby a contract owner can
exchange his or her fixed annuity contract for a Contract offered by this
Prospectus. Pursuant to the Exchange Program, the Withdrawal Charge may be
reduced or eliminated so that a contract owner would not incur any additional
or higher Withdrawal Charge as a result of the exchange.
The Withdrawal Charge may be eliminated when the Contracts are issued to an
officer, director or employee of the Company or any of its affiliates. In no
event will reductions or elimination of the Withdrawal Charge be permitted
where reductions or elimination will be unfairly discriminatory to any person.
DEDUCTION FOR MORTALITY AND EXPENSE RISK CHARGE
The Company deducts on each Valuation Date a Mortality and Expense Risk Charge
which is equal, on an annual basis, to 1.25% (consisting of approximately .90%
for mortality risks and approximately .35% for expense risks) of the average
daily net asset value of the Separate Account. The mortality risks assumed by
the Company arise from its contractual obligation to make annuity payments
after the Annuity Date for the life of the Annuitant and to waive the
Withdrawal Charge in the event of the death of the Annuitant. Also, there is a
mortality risk borne by the Company with respect to the guaranteed death
benefit (see "Contract Proceeds -- Death Proceeds" on Page __). The expense
risk assumed by the Company is that all actual expenses involved in
administering the Contracts, including Contract maintenance costs,
administrative costs, mailing costs, data processing costs, legal fees,
accounting fees, filing fees and the costs of other services may exceed the
amount recovered from the Annual Contract Maintenance Charge and the
Administrative Charge.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by the Company. Conversely, if the amount
deducted proves more than sufficient, the excess will be a profit to the
Company. The Company expects a profit from this charge.
The Mortality and Expense Risk Charge is guaranteed by the Company and cannot
be increased.
DEDUCTION FOR ADMINISTRATIVE CHARGE
The Company deducts on each Valuation Date an Administrative Charge which is
equal, on an annual basis, to .15% of the average daily net asset value of the
Separate Account. This charge, together with the Annual Contract Maintenance
Charge (see below), is to reimburse the Company for the expenses it incurs in
the establishment and maintenance of the Contracts and the Separate Account.
These expenses include but are not limited to: preparation of the Contracts,
confirmations, annual reports and statements, maintenance of Owner records,
maintenance of Separate Account records, administrative personnel costs,
mailing costs, data processing costs, legal fees, accounting fees, filing
fees, the costs of other services necessary for Owner servicing and all
accounting, valuation, regulatory and reporting requirements. Since this
charge is an asset-based charge, the amount of the charge attributable to a
particular Contract may have no relationship to the administrative costs
actually incurred by that Contract. The Company does not intend to profit from
this charge. This charge will be reduced to the extent that the amount of this
charge is in excess of that necessary to reimburse the Company for its
administrative expenses. Should this charge prove to be insufficient, the
Company will not increase this charge and will incur the loss.
DEDUCTION FOR ANNUAL CONTRACT MAINTENANCE CHARGE
The Company deducts an Annual Contract Maintenance Charge of $30 from the
Contract Value on each Contract Anniversary prior to the Maturity Date. This
charge is to reimburse the Company for its administrative expenses (see
above). This charge is deducted by subtracting values from the Fixed Account
and/or cancelling Accumulation Units from each applicable Subaccount in the
ratio that the value of each account bears to the total Contract Value. If a
total withdrawal is made on other than a Contract Anniversary, the Annual
Contract Maintenance Charge will be deducted at the time of withdrawal. If the
Maturity Date is not a Contract Anniversary, the Annual Contract Maintenance
Charge will be deducted from the Maturity Proceeds. The Company has set this
charge at a level so that, when considered in conjunction with the
Administrative Charge (see above), it will not make a profit from the charges
assessed for administration.
DEDUCTION FOR PREMIUM TAXES
The Contract provides that any premium or other taxes paid to any government
entity relating to the Contract will be deducted from the Purchase Payment or
Contract Value when incurred. Some states assess premium taxes at the time
Purchase Payments are made; others assess premium taxes at the time Annuity
Payments begin. Premium taxes generally range from 0% to 4%. The Contract also
provides that the Company may, at its sole discretion, pay taxes when due and
deduct that amount from the Contract Value at a later date. Payment at an
earlier date does not waive any right the Company may have to deduct amounts
at a later date. The Company currently intends to advance any premium taxes
due at the time Purchase Payments are made and then deduct such premium taxes
from an Owner's Contract Value at the time Annuity Payments begin or upon
withdrawal if the Company is unable to obtain a refund. The Company will, in
its sole discretion, determine when taxes have resulted from:
(1) the investment experience of the Separate Account;
(2) receipt by the Company of the Purchase Payments; or
(3) commencement of Annuity Payments.
DEDUCTION FOR INCOME TAXES
While the Company is not currently maintaining a provision for federal income
taxes with respect to the Separate Account, the Company has reserved the right
to establish a provision for income taxes if it determines, in its sole
discretion, that it will incur a tax as a result of the operation of the
Separate Account. The Company will deduct for any income taxes incurred by it
as a result of the operation of the Separate Account whether or not there was
a provision for taxes and whether or not it was sufficient. The Company will
deduct any withholding taxes required by applicable law.
DEDUCTION FOR EXPENSES OF THE INVESTMENT OPTIONS
There are other deductions from and expenses paid out of the assets of the
Investment Options, including amounts paid for other expenses and amounts paid
to the investment advisers as Management Fees, which are described in the
accompanying Prospectuses for the Investment Options.
DEDUCTION FOR TRANSFER FEE
Prior to the Maturity Date, the Owner may transfer all or part of the Owner's
interest in a Subaccount or the Fixed Account (subject to Fixed Account
provisions) without the imposition of any fee or charge if there have been no
more than 12 transfers made in the Contract Year. If more than 12 transfers
have been made in the Contract Year, the Company will deduct a Transfer Fee
which is equal to the lesser of 2% of the Contract Value transferred or an
amount not greater than $25. (The current amount is $25.) Currently, all
transfers made on any one day are considered a single transfer. If the Owner
is participating in the Automatic Portfolio Rebalancing program or the Dollar
Cost Averaging program providing for the automatic transfer of funds from a
Subaccount or the Fixed Account to any other Subaccount(s), such transfers
currently are not counted toward the number of transfers for the year and are
not taken into account in determining any Transfer Fee. However, the Company
reserves the right to treat multiple transfers in a single day, Automatic
Portfolio Rebalancing transfers and Dollar Cost Averaging transfers as
standard transfers when determining annual transfers and imposing the Transfer
Fee. (See "Purchase Payments and Contract Value -- Dollar Cost Averaging" on
Page __ and "Purchase Payments and Contract Value -- Automatic Portfolio
Rebalancing" on Page __.)
THE CONTRACTS
OWNERSHIP
The Owner exercises all the rights under the Contract. The maximum issue Age
is 85 years old for Owners and Annuitants (in Florida, 75 years old for
Annuitants). The Owner may name a new Owner. Any change in Ownership must be
sent to the Company's Customer Service Center on a form acceptable to the
Company. The change will go into effect when it is signed, subject to any
payments or actions taken by the Company before it records it. The Company is
not responsible for any tax consequences occurring as a result of ownership
changes.
ANNUITANT
The Annuitant is the natural person on whose life Annuity Payments are based.
The Annuitant is irrevocably named at the time the Contract is issued.
ASSIGNMENT
During the Annuitant's life, the Owner can assign some or all of the Owner's
rights under the Contract to someone else.
A signed copy of the assignment must be sent to the Company on a form
acceptable to the Company. An assignment of the Contract is not binding on the
Company until the assignment, or a copy, is recorded at the Customer Service
Center, subject to any payments or actions taken by the Company before the
recording. The Company is not responsible for the validity or effect of any
assignment, including any tax consequences.
The consent of any Irrevocable Beneficiaries is required before assignment of
Proceeds can happen.
If the Contract is issued pursuant to a retirement plan which receives
favorable tax treatment under the provisions of Sections 401, 403(b), 408 or
457 of the Code, it may not be assigned, pledged or otherwise transferred
except as may be allowed under applicable law.
BENEFICIARY
The Owner can name any Beneficiary to be an Irrevocable Beneficiary. The
interest of an Irrevocable Beneficiary cannot be changed without his or her
consent. Otherwise, the Owner can change Beneficiaries as explained below.
Unless the Owner states otherwise, all rights of a Beneficiary, including an
Irrevocable Beneficiary, will end if he or she dies before the Annuitant. If
any Beneficiary dies before the Annuitant, that Beneficiary's interest will
pass to any other Beneficiaries according to their respective interests. If
all Beneficiaries die before the Annuitant, upon the Annuitant's death the
Company will pay the Death Proceeds to the Owner, if living, otherwise to the
Owner's estate or legal successors.
The Owner can change the Beneficiary at any time during the Annuitant's life.
To do so, the Owner must send a written request to the Company's Customer
Service Center. The request must be on a form acceptable to the Company. The
change will go into effect when signed, subject to any payments or actions
taken by the Company before it records the change.
A change cancels all prior Beneficiary designations; except, however, a change
will not cancel any Irrevocable Beneficiary without his or her consent. The
interest of the Beneficiary will be subject to:
(1) any assignment of the Contract, accepted and recorded by the Company
prior to the Annuitant's death; and
(2) any Payment Plan in effect on the date of the Annuitant's death.
Death Proceeds will be paid as though the Beneficiary died before the
Annuitant if:
(1) the Beneficiary dies at the same time as the Annuitant; or
(2) the Beneficiary dies within 24 hours of the Annuitant's death.
PURCHASE PAYMENTS AND CONTRACT VALUE
PURCHASE PAYMENTS
The initial Purchase Payment is due on the Issue Date. There is no Contract
until the initial Purchase Payment is paid. If any check presented as payment
of any part of the initial Purchase Payment for a Contract is not honored, the
Contract is void.
The minimum Purchase Payment for Non-Qualified Contracts is an aggregate of
$5,000 the first year and the minimum subsequent Purchase Payment is $100.
Under certain circumstances the Company may waive and/or modify the minimum
subsequent Purchase Payment requirement for Non-Qualified Contracts in the
case of large groups who submit Purchase Payments through Company approved
billing procedures. For Qualified Contracts, the minimum Purchase Payment is
$100 per month if payroll deduction is used; otherwise it is an aggregate of
$2,000 per year. Prior Company approval must be obtained for subsequent
Purchase Payments in excess of $500,000 or for total Purchase Payments in
excess of $1 million. The Company reserves the right to accept or decline any
Application or Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS
The initial Purchase Payment is allocated to the Fixed Account or the
Subaccount(s) of the Separate Account as elected by the Owner. Unless
otherwise changed by the Owner, subsequent Purchase Payments are allocated in
the same manner as the initial Purchase Payment. (In Oregon, Washington and
New Jersey, after the second Contract Year, subsequent Purchase Payments may
not be allocated to the Fixed Account.)
Under certain circumstances, Purchase Payments, which have been designated by
prospective purchasers to be allocated to the Fixed Account or Subaccounts
other than the Money Market Subaccount, may initially be allocated to the
Money Market Subaccount during the free look period. (See "Highlights" on Page
__.) For each Subaccount, Purchase Payments are converted into Accumulation
Units. The number of Accumulation Units credited to the Contract is determined
by dividing the Purchase Payment allocated to the Subaccount by the value of
the Accumulation Unit for the Subaccount. Purchase Payments allocated to the
Fixed Account are credited in dollars.
If the Application for a Contract is in good order, the Company will apply the
Purchase Payment to the Separate Account and credit the Contract with
Accumulation Units and/or to the Fixed Account and credit the Contract with
dollars within two business days of receipt. If the Application for a Contract
is not in good order, the Company will attempt to get it in good order or the
Company will return the Application and the Purchase Payment within five (5)
business days. The Company will not retain a Purchase Payment for more than
five (5) business days while processing an incomplete Application unless it
has been so authorized by the purchaser.
DOLLAR COST AVERAGING
Dollar Cost Averaging is a program which, if elected, permits an Owner to
systematically transfer each month amounts from any one Subaccount or the
Fixed Account (subject to Fixed Account provisions) to any Subaccount(s). By
allocating amounts on a regularly scheduled basis as opposed to allocating the
total amount at one particular time, an Owner may be less susceptible to the
impact of market fluctuations. The minimum amount which may be transferred is
$100. The minimum duration of participation in any Dollar Cost Averaging
program is currently five (5) months. An Owner must have a minimum of the
amount required in the Subaccount or the Fixed Account to complete the Owner's
designated program, in order to participate in the Dollar Cost Averaging
program.
All Dollar Cost Averaging transfers will be made on the 15th of each month or
another monthly date mutually agreed upon (or the next Valuation Date if the
15th of the month is not a Valuation Date). If the Owner is participating in
the Dollar Cost Averaging program, such transfers currently are not taken into
account in determining any Transfer Fee. The Company reserves the right to
treat Dollar Cost Averaging transfers as standard transfers when determining
the number of transfers in a year and imposing any applicable Transfer Fees.
An Owner participating in the Dollar Cost Averaging program may not make
automatic withdrawals of his or her Contract Value or participate in the
Automatic Portfolio Rebalancing program. (See "Withdrawals -- Automatic
Withdrawals" on Page __ and "Purchase Payments and Contract Value -- Automatic
Portfolio Rebalancing" below.)
AUTOMATIC PORTFOLIO REBALANCING
Owners may participate in the Automatic Portfolio Rebalancing program pursuant
to which Owners authorize the Company to automatically transfer all or a
portion of their Contract Value on a periodic basis to maintain a particular
percentage allocation among the Portfolios, as selected by the Owner. The
Contract Value allocated to each Portfolio will increase or decrease at
different rates depending on the investment experience of the Portfolio and
Automatic Portfolio Rebalancing automatically reallocates the Contract Value
in the Portfolios to the allocation chosen by the Owner. The allocations must
be in full percentage points.
An Owner may select that rebalancing occur on a quarterly, semiannual or
annual basis and currently all Portfolios are available investment options
under Automatic Portfolio Rebalancing. The Fixed Account is excluded from
rebalancing. Currently, the Company offers Automatic Portfolio Rebalancing to
Owners with a Contract Value of greater than $25,000, but reserves the right
to offer the program on Contracts with a lesser amount. The Company reserves
the right to modify, suspend or terminate this service at any time.
All Automatic Portfolio Rebalancing transfers will be made on the 15th of the
month that rebalancing is requested or another monthly date mutually agreed
upon (or the next Valuation Date, if the 15th of the month is not a Valuation
Date). If the Owner is participating in the Automatic Portfolio Rebalancing
program, such transfers currently are not taken into account in determining
any Transfer Fee. The Company reserves the right to treat Automatic Portfolio
Rebalancing transfers as standard transfers when determining the number of
transfers in a year and imposing any applicable Transfer Fees. An Owner
participating in the Automatic Portfolio Rebalancing program may not make
automatic withdrawals of his or her Contract Value or participate in the
Dollar Cost Averaging program. (See "Purchase Payments and Contract Value --
Dollar Cost Averaging" above and "Withdrawals -- Automatic Withdrawals" on
Page __.)
CONTRACT VALUE
The Contract Value, at any time, is the sum of:
(1) the Fixed Account Value; and
(2) the Separate Account Value.
The Separate Account value on any Valuation Date means the sum of the Owner's
interests in the Subaccounts of the Separate Account. The value of the Owner's
interest in a Subaccount is determined by multiplying the number of
Accumulation Units attributable to that Subaccount by the Accumulation Unit
value for the Subaccount. Any withdrawals or transfers will result in the
cancellation of Accumulation Units in a Subaccount. The Separate Account
values will vary with the performance of the Subaccounts of the Separate
Account, any Purchase Payments paid, partial withdrawals and charges assessed.
ACCUMULATION UNIT
A Purchase Payment when allocated to the Separate Account is converted into
Accumulation Units for the selected Subaccount. The number of Accumulation
Units in a Subaccount credited to the Contract is determined by dividing the
Purchase Payment allocated to that Subaccount by the Accumulation Unit value
for that Subaccount as of the Valuation Period during which the Purchase
Payment is allocated to the Subaccount. The Accumulation Unit value for each
Subaccount was arbitrarily set initially at $10. Subsequent Accumulation Unit
values are determined by subtracting (2) from (1) and dividing the result by
(3) where:
(1) is the net result of:
(a) the assets of the Subaccount attributable to Accumulation Units;
plus or minus
(b) the cumulative charge or credit for taxes reserved, which
resulted from the operation or maintenance of the Subaccount.
(2) is the cumulative unpaid charge for the Mortality and Expense Risk
Charge and for the Administrative Charge; and
(3) is the number of Accumulation Units outstanding at the end of the
Valuation Period.
The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.
TRANSFERS
Prior to the Maturity Date, the Owner may transfer all or part of the Owner's
interest in a Subaccount or the Fixed Account without the imposition of any
fee or charge if there have been no more than 12 transfers for the Contract
Year. All transfers are subject to the following:
(1) if more than 12 free transfers have been made in any Contract Year,
the Company will deduct a Transfer Fee for each subsequent transfer. (The
Transfer Fee is the lesser of 2% of the Contract Value transferred or $25.)
The Transfer Fee will be deducted from the amount which is transferred.
Transfers from a Dollar Cost Averaging program or Automatic Portfolio
Rebalancing program are currently not counted toward the number of annual
transfers and are not taken into account in determining any applicable
Transfer Fees. Currently, all transfers in a single day are treated as a
single transfer. The Company reserves the right to treat Dollar Cost Averaging
transfers, Automatic Portfolio Rebalancing transfers and multiple transfers in
a single day as standard transfers in determining the number of annual
transfers and the imposition of any applicable Transfer Fees.
(2) the minimum amount which can be transferred is $100 or the Owner's
entire interest in the Subaccount or the Fixed Account, if less. The minimum
amount which must remain in a Subaccount or Fixed Account after a transfer is
$100 or the Subaccount or Fixed Account must be liquidated.
(3) for any Contract Year, transfers of Purchase Payments and any
attributable earnings from the Fixed Account to a Subaccount are limited to
ten percent (10%) of the Purchase Payment and ten percent (10%) of its
attributable earnings. If a Purchase Payment was received at least eight (8)
years prior to the request for transfer, all of the Purchase Payment and the
earnings attributable to it may be transferred to a Subaccount. (In New
Jersey, no amounts may be transferred to the Fixed Account after the second
Contract Year.)
(4) any transfer direction must clearly specify:
(a) the amount which is to be transferred; and
(b) the Fixed Account or Subaccounts which are to be affected.
(5) transfers will be made as of the Valuation Period next following the
Valuation Period during which a written request for a transfer is
received by the Company.
(6) the Company reserves the right, at any time, and without prior
notice to any party, to terminate, suspend, or modify the transfer privilege
described above, subject to applicable state law and regulation.
An Owner may elect to make transfers by telephone. To elect this option the
Owner must do so in writing to the Company. If there are Joint Owners, unless
the Company is informed to the contrary, instructions will be accepted from
either one of the Joint Owners. The Company will use reasonable procedures to
confirm that instructions communicated by telephone are genuine. If it does
not, the Company may be liable for any losses due to unauthorized or
fraudulent instructions. The Company may tape record all telephone
instructions.
WITHDRAWALS
Prior to the Maturity Date, the Owner may, upon written request received by
the Company, make a total or partial withdrawal of the Contract Withdrawal
Value. (For Contracts issued in Idaho, no partial withdrawal may be made for
30 days after the Issue Date.) The Contract terminates if a total withdrawal
is made. The Contract Withdrawal Value is:
(1) the Contract Value for the Valuation Period next following the
Valuation Period during which a written request for a withdrawal is received
by the Company; less
(2) any applicable taxes not previously deducted; less
(3) the Withdrawal Charge, if any (see "Charges and Deductions --
Deduction for Withdrawal Charge (Sales Load)" on Page 12); less
(4) the Annual Contract Maintenance Charge, if any.
A withdrawal will result in the cancellation of Accumulation Units for each
applicable Subaccount of the Separate Account or a reduction in the Fixed
Account Value. Unless otherwise instructed, a partial withdrawal will be
applied pro rata among each Subaccount and the Fixed Account based on the
ratio of the value of each Subaccount or Fixed Account to the Contract Value.
The Company will pay the amount of any withdrawal from the Subaccounts within
seven (7) calendar days of receipt of a request, unless the "Suspension of
Payments or Transfers" provision is in effect (see "Suspension of Payments or
Transfers" below).
For purposes of determining any applicable Withdrawal Charges or any other
charges under the Contract, Contract Value is removed in the following order:
1) earnings (Contract Value less Purchase Payments not withdrawn); 2) Purchase
Payments in the Contract for more than eight years (these Purchase Payments
are liquidated on a first in, first out basis); 3) additional free amount
(which is equal to 10% of the Purchase Payments in the Contract for less than
eight years, fixed at the time of the first withdrawal in the Contract Year,
plus 10% of the Purchase Payments made after the first withdrawal in the
Contract Year but before the next Contract Anniversary, less any withdrawals
in the same Contract Year of Purchase Payments less than eight years old); and
4) Purchase Payments in the Contract for less than eight years (these Purchase
Payments are removed on a first in, first out basis).
Each partial withdrawal must be for an amount which is not less than $100 or
the Owner's entire interest in the Subaccount or the Fixed Account, if less.
The minimum Contract Value which must remain in a Subaccount or the Fixed
Account after a partial withdrawal is $100.
Certain tax withdrawal penalties and restrictions may apply to withdrawals
from the Contracts. (See "Tax Status" on Page __.) For Contracts purchased in
connection with 403(b) plans, the Code limits the withdrawal of amounts
attributable to contributions made pursuant to a salary reduction agreement
(as defined in Section 403(b)(11) of the Code) to circumstances only when the
Owner: (1) attains age 59 1/2; (2) separates from service; (3) dies; (4)
becomes disabled (within the meaning of Section 72(m)(7) of the Code); or (5)
in the case of hardship.
However, withdrawals for hardship are restricted to the portion of the Owner's
Contract Value which represents contributions made by the Owner and does not
include any investment results. The limitations on withdrawals became
effective on January 1, 1989 and apply only to salary reduction contributions
made after December 31, 1988, to income attributable to such contributions and
to income attributable to amounts held as of December 31, 1988. The
limitations on withdrawals do not affect rollovers or transfers between
certain Qualified Plans. Owners should consult their own tax counsel or other
tax adviser regarding any distributions.
AUTOMATIC WITHDRAWALS
Subject to any conditions and fees the Company may impose, an Owner may elect
to withdraw a designated amount in equal periodic installments ("automatic
withdrawals"). The Company reserves the right to charge a fee for automatic
withdrawals. Currently, however, there are no charges for automatic
withdrawals.
Automatic withdrawals are made on the 15th of each month, or any other monthly
date mutually agreed upon (or the next following Valuation Date if the monthly
date is not a Valuation Date). Certain withdrawal penalties may apply to
withdrawals from the Contracts (see "Tax Status -- Tax Treatment of
Withdrawals -- Qualified Contracts" on Page __ and "Tax Treatment of
Withdrawals -- Non-Qualified Contracts" on Page __). Automatic withdrawals are
taken pro rata from Contract Value. Automatic withdrawals are not allowed
simultaneously with the Dollar Cost Averaging program or Automatic Portfolio
Rebalancing program. (See "Purchase Payments and Contract Value -- Dollar Cost
Averaging" on Page __ and "Purchase Payments and Contract Value -- Automatic
Portfolio Rebalancing" on Page __.)
TEXAS OPTIONAL RETIREMENT PROGRAM
A Contract issued to a participant in the Texas Optional Retirement Program
("ORP") will contain an ORP endorsement that will amend the Contract as
follows: A) If for any reason a second year of ORP participation is not begun,
the total amount of the State of Texas' first-year contribution will be
returned to the appropriate institute of higher education upon its request. B)
No benefits will be payable, through surrender of the Contract or otherwise,
until the participant dies, accepts retirement, terminates employment in all
Texas institutions of higher education or attains the age of 70 1/2. The value
of the Contract may, however, be transferred to other contracts or carriers
during the period of ORP participation. A participant in the ORP is required
to obtain a certificate of termination from the participant's employer before
the value of a Contract can be withdrawn.
SUSPENSION OF PAYMENTS OR TRANSFERS
The Company reserves the right to suspend or postpone payments (in Illinois,
for a period not exceeding six months) for withdrawals or transfers for any
period when:
(1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
(2) trading on the New York Stock Exchange is restricted;
(3) an emergency exists as a result of which disposal of securities held
in the Separate Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Separate Account's net assets;
(4) when the Company's Customer Service Center is closed; or
(5) during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners; provided that applicable
rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions described in (2) and (3) exist.
The Company reserves the right to defer payment for a withdrawal or
transfer from the Fixed Account for the period permitted by law but not for
more than six months after written election is received by the Company.
CONTRACT PROCEEDS
MATURITY PROCEEDS
The Owner selects a Maturity Date at the Issue Date and may elect a new
Maturity Date at any time by making a written request to the Company at its
Customer Service Center at least seven days prior to the Maturity Date.
On the Maturity Date, the Company will pay the Maturity Proceeds of the
Contract to the Annuitant, if living, subject to the terms of the Contract. If
Payment Plan A, Option 1; Plan B; or Plan C are elected, the Maturity Proceeds
will be the Contract Value less any applicable taxes not previously deducted.
(See "Fixed Payment Plans" below.) If the Maturity Proceeds are paid in cash
or by any other method not listed above, the Maturity Proceeds equal the
Contract Value less:
(1) any applicable taxes not previously deducted; less
(2) the Withdrawal Charge, if any; less
(3) the Annual Contract Maintenance Charge, if any.
The election of a Payment Plan must be made in writing at least seven (7) days
prior to the Maturity Date. If no election is made, an automatic option of
monthly income for a minimum of 120 months and as long thereafter as the
Annuitant lives will be applied.
DEATH PROCEEDS
For issue ages less than 67, the death proceeds will be the greater of:
(1) Purchase Payments (less any withdrawals and taxes);
(2) Contract Value on the date of settlement (less taxes); or
(3) The highest Contract Value (adjusted for subsequent premium
withdrawals and taxes) on any Contract Anniversary beginning with the 8th
Contract Anniversary and continuing through to the last anniversary prior to
attained age 76.
For issue ages 67 through 75, the death proceeds will be the greater of:
(1) Purchase Payments (less withdrawals and taxes);
(2) Contract Value on the date of settlement (less taxes); or
(3) The Contract Value (less subsequent withdrawals and taxes) on the 8th
Contract Anniversary.
For issue ages 76 and above, the death proceeds will be the Contract Value on
the date of settlement, less any applicable taxes not previously deducted.
The Death Proceeds will be determined and paid as of the Valuation Period next
following the Valuation Period during which both due proof of death
satisfactory to the Company and an election for the payment method from all
Beneficiaries are received at the Company.
The Beneficiary can elect to have a single lump sum payment or choose one of
the Payment Plans. If a single sum payment is requested, the amount will be
paid within seven (7) days, unless the Suspension of Payments or Transfers
provision is in effect.
Payment to the Beneficiary, other than in a single sum, may only be elected
during the 60-day period beginning with the date of receipt of due proof of
death on a form acceptable to the Company.
The entire Death Proceeds must be paid within five (5) years of the date of
death unless:
(1) the Beneficiary elects to have the Death Proceeds:
(a) payable under a Payment Plan over the life of the Beneficiary or
over a period not extending beyond the life expectancy of the
Beneficiary; and
(b) payable beginning within one year of the date of death; or
(2) if the Beneficiary is the Owner's Spouse, the Beneficiary may elect
to become the Owner of the Contract and the Contract will continue in effect.
DEATH OF THE ANNUITANT
(1) If the Annuitant dies prior to the Maturity Date, the Company will
pay the Death Proceeds as provided above.
(2) If the Annuitant dies after the Maturity Date but before all of the
Proceeds payable under the Contract have been distributed, the Company will
pay the remaining Proceeds to the Beneficiary(ies) according to the terms of
the supplementary contract.
DEATH OF OWNER
(1) If the Owner dies before the Maturity Date, ownership of the
Contract will be transferred as follows:
(a) if the Owner is also the Annuitant, the Death of the Annuitant
provision described above applies; or
(b) if the Owner is not also the Annuitant and if the new Owner is
the spouse of the Owner, the Contract may be continued; or
(c) if the Owner is not also the Annuitant and if the new Owner is
someone other than the spouse of the Owner, the Contract Withdrawal Value must
be distributed pursuant to the Death Proceeds provision above.
(2) If the Owner dies on or after the Maturity Date, but before all
Proceeds payable under the Contract have been distributed, the Company will
continue payments according to the terms of the supplementary contract.
The Owner's spouse is the Owner's surviving spouse at the time of the Owner's
death. If the Owner is not a natural person, the death of the Annuitant will
be treated as the death of the Owner. If there are Joint Owners, any
references to the death of the Owner shall mean the first death of an Owner.
FIXED PAYMENT PLANS
After the first Contract Year, the Proceeds may be applied under one or more
of the Payment Plans described below. Payment Plans not specified in the
Contract are available only if they are approved both by the Company and the
Owner. The Owner chooses a Payment Plan during the Annuitant's lifetime. This
choice can be changed during the life of the Annuitant prior to the Maturity
Date. If the Owner has not chosen a plan prior to the Annuitant's death, the
automatic option of monthly income for a minimum of 120 months and as long
thereafter as the Payee lives will be applied.
The Owner chooses a plan by sending a written request to the Customer Service
Center. The Company will send the Owner the proper forms to complete. The
request, when recorded at the Company's Customer Service Center, will be in
effect from the date it was signed, subject to any payments or actions taken
by the Company before the recording. Any change must be requested at least
seven (7) days prior to the Maturity Date. If, for any reason, the person
named to receive payments (the Payee) is changed, the change will go into
effect when the request is recorded at the Company's Customer Service Center,
subject to any payments or actions taken by the Company before the recording.
No Withdrawal Charge is deducted if Plan A-Option 1; Plan B or Plan C is
elected.
A plan is available only if the periodic payment is $100 or more. If the Pay
is other than a natural person (such as a corporation), a plan will be
available only with the Company's consent.
A supplementary contract will be issued in exchange for the Contract when
payment is made under a Payment Plan. The effective date of a Payment Plan
shall be a date upon which the Company and the Owner mutually agree.
The minimum interest rate for plans A and B is 3.0% a year, compounded yearly.
The minimum rates for Plan C were based on the 1983a Annuity Table at 3.0%
interest, compounded yearly. The Company may pay a higher rate at its
discretion.
PLAN A. INTEREST
OPTION 1 -- The Contract Value less any applicable taxes not previously
deducted may be left on deposit with the Company for five (5) years. Fixed
payments will be made monthly, quarterly, semi-annually, or annually. The
Company does not allow a monthly payment if the Contract Value applied under
this option is less than $100,000. The Proceeds may not be withdrawn until the
end of the five (5) year period.
OPTION 2 -- The Contract Withdrawal Value may be left on deposit with the
Company for a specified period. Interest will be paid annually. All or part of
the Proceeds may be withdrawn at any time.
PLAN B. FIXED PERIOD
The Contract Value less any applicable taxes not previously deducted will
be paid until the Proceeds, plus interest, are paid in full. Payments may be
paid annually or monthly. The payment period cannot be more than thirty (30)
years nor less than five (5) years. The Contract provides for a table of
minimum annual payments. They are based on the Age of the Annuitant or the
Beneficiary.
PLAN C. LIFE INCOME
The Contract Value less any applicable taxes not previously deducted will
be paid in monthly or annual payments for as long as the Annuitant or
Beneficiary, whichever is appropriate, lives. The Company has the right to
require proof satisfactory to it of the Age and sex of such person and proof
of continuing survival of such person. A minimum number of payments may be
guaranteed, if desired. The Contract provides for a table of minimum annual
payments. They are based on the Age of the Annuitant or the Beneficiary.
DISTRIBUTOR
Equitable of Iowa Securities Network, Inc. ("Securities Network"), 604 Locust
Street, Des Moines, Iowa 50309, acts as the distributor of the Contracts.
Securities Network is also a wholly-owned subsidiary of Equitable of Iowa. The
Contracts are offered on a continuous basis.
ADMINISTRATION
While the Company has primary responsibility for all administration of the
Contracts, it has retained Golden American Life Insurance Company, P.O. Box
8794, Wilmington, Delaware to perform certain administrative services. Such
administrative services include issuance of the Contracts and maintenance of
Owners' records.
PERFORMANCE INFORMATION
MONEY MARKET PORTFOLIO
From time to time, the Company may advertise the "yield" and "effective yield"
of the Money Market Subaccount of the Separate Account. Both yield figures are
based on historical earnings and are not intended to indicate future
performance. The "yield" of the Money Market Subaccount refers to the income
generated by Contract Values in the Money Market Subaccount over a seven-day
period (which period will be stated in the advertisement). This income is
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the Contract Values in the Money Market Subaccount.
The "effective yield" is calculated similarly. However, when annualized, the
income earned by Contract Values is assumed to be reinvested. This results in
the "effective yield" being slightly higher than the "yield" because of the
compounding effect of the assumed reinvestment. The yield figure will reflect
the deduction of any asset-based charges and any applicable Annual Contract
Maintenance Charge, but will not reflect the deduction of any Withdrawal
Charge. The deduction of any Withdrawal Charge would reduce any percentage
increase or make greater any percentage decrease.
OTHER PORTFOLIOS
From time to time, the Company may advertise performance data for the various
other Portfolios under the Contract. Such data will show the percentage change
in the value of an Accumulation Unit based on the performance of an investment
medium over a period of time, usually a calendar year, determined by dividing
the increase (decrease) in value for that Unit by the Accumulation Unit value
at the beginning of the period. This percentage figure will reflect the
deduction of any asset-based charges and any applicable Annual Contract
Maintenance Charges under the Contracts, but will not reflect the deduction of
any Withdrawal Charge. The deduction of any Withdrawal Charge would reduce any
percentage increase or make greater any percentage decrease.
Any advertisement will also include total return figures calculated as
described in the Statement of Additional Information. The total return figures
reflect the deduction of the asset-based charges, any applicable Annual
Contract Maintenance Charge and Withdrawal Charges, as well as the fees and
expenses of the Portfolio being advertised.
The Company may make available yield information with respect to some of the
Portfolios. Such yield information will be calculated as described in the
Statement of Additional Information. The yield information will reflect the
deduction of any applicable Annual Contract Maintenance Charge as well as any
asset-based charges.
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the Portfolios
against established market indices such as the Standard & Poor's 500 Composite
Stock Price Index, the Dow Jones Industrial Average or other management
investment companies which have investment objectives similar to the Portfolio
being compared. The Standard & Poor's 500 Composite Stock Price Index is an
unmanaged, unweighted average of 500 stocks, the majority of which are listed
on the New York Stock Exchange. The Dow Jones Industrial Average is an
unmanaged, weighted average of thirty blue chip industrial corporations listed
on the New York Stock Exchange. Both the Standard & Poor's 500 Composite Stock
Price Index and the Dow Jones Industrial Average assume quarterly reinvestment
of dividends.
In addition, the Company may, as appropriate, compare each Subaccount's
performance to that of other types of investments such as certificates of
deposit, savings accounts and U.S. Treasuries, or to certain interest rate and
inflation indices, such as the Consumer Price Index, which is published by the
U.S. Department of Labor and measures the average change in prices over time
of a fixed "market basket" of certain specified goods and services. Similar
comparisons of Subaccount performance may also be made with appropriate
indices measuring the performance of a defined group of securities widely
recognized by investors as representing a particular segment of the securities
markets. For example, Subaccount performance may be compared with Donoghue
Money Market Institutional Averages (money market rates), Lehman Brothers
Corporate Bond Index (corporate bond interest rates) or Lehman Brothers
Government Bond Index (long-term U.S. Government obligation interest rates).
The Company may also distribute sales literature which compares the
performance of the Accumulation Unit values of the Contracts issued through
the Separate Account with the unit values of variable annuities issued through
the separate accounts of other insurance companies. Such information will be
derived from the Lipper Variable Insurance Products Performance Analysis
Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is
published by Lipper Analytical Services, Inc., a publisher of statistical data
which currently tracks the performance of almost 4,000 investment companies.
The rankings compiled by Lipper may or may not reflect the deduction of
asset-based insurance charges. The Company's sales literature utilizing these
rankings will indicate whether or not such charges have been deducted. Where
the charges have not been deducted, the sales literature will indicate that if
the charges had been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect
the deduction of asset-based insurance charges. The Company's sales literature
utilizing these rankings will indicate whether or not such charges have been
deducted. Where the charges have not been deducted, the sales literature will
indicate that if the charges had been deducted, the ranking might have been
lower.
Morningstar rates a variable annuity subaccount against its peers with similar
investment objectives. Morningstar does not rate any subaccount that has less
than three years of performance data. The Company's sales literature utilizing
these rankings will indicate whether charges have been deducted. Where the
charges have not been deducted, the sales literature will indicate that if the
charges had been deducted, the ranking might have been lower.
TAX STATUS
GENERAL
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING INVESTMENT IN
THE CONTRACTS. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED IN THIS PROSPECTUS MAY BE APPLICABLE IN CERTAIN
SITUATIONS. MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE
STATE OR OTHER TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An Owner is
not taxed on increases in the value of a Contract until distribution occurs,
either in the form of a lump sum payment or as annuity payments under the
Annuity Option selected. For a lump sum payment received as a total withdrawal
(total surrender), the recipient is taxed on the portion of the payment that
exceeds the cost basis of the Contract. For Non-Qualified Contracts, this cost
basis is generally the purchase payments, while for Qualified Contracts there
may be no cost basis. The taxable portion of the lump sum payment is taxed at
ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments
based on a fixed annuity option is determined by multiplying the payment by
the ratio that the cost basis of the Contract (adjusted for any period certain
or refund feature) bears to the expected return under the Contract. Payments
received after the investment in the Contract has been recovered (i.e. when
the total of the excludible amounts equals the investment in the Contract) are
fully taxable. The taxable portion is taxed at ordinary income tax rates. For
certain types of Qualified Plans there may be no cost basis in the Contract
within the meaning of Section 72 of the Code. Owners, Annuitants and
Beneficiaries under the Contracts should seek competent financial advice about
the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury
Department ("Treasury Department"), adequately diversified. Disqualification
of the Contract as an annuity contract would result in imposition of federal
income tax to the Owner with respect to earnings allocable to the Contract
prior to the receipt of payments under the Contract. The Code contains a safe
harbor provision which provides that annuity contracts such as the Contracts
meet the diversification requirements if, as of the end of each quarter, the
underlying assets meet the diversification standards for a regulated
investment company and no more than fifty-five percent (55%) of the total
assets consist of cash, cash items, U.S. Government securities and securities
of other regulated investment companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg.
1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The
Regulations amplify the diversification requirements for variable contracts
set forth in the Code and provide an alternative to the safe harbor provision
described above. Under the Regulations, an investment portfolio will be deemed
adequately diversified if: (1) no more than 55% of the value of the total
assets of the portfolio is represented by any one investment; (2) no more than
70% of the value of the total assets of the portfolio is represented by any
two investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer".
The Company intends that all Portfolios of the Investment Options underlying
the Contracts will be managed by the investment advisers for the Investment
Options in such a manner as to comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be
contained in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available,
would cause the Owner to be considered as the owner of the assets of the
Separate Account resulting in the imposition of federal income tax to the
Owner with respect to earnings allocable to the Contract prior to receipt of
payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the Owner
being retroactively determined to be the owner of the assets of the Separate
Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from
such combination of contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation, or certain other entities. Such Contracts
generally will not be treated as annuities for federal income tax purposes.
However, this treatment is not applied to Contracts held by a trust or other
entity as an agent for a natural person nor Contracts held by Qualified Plans.
Purchasers should consult their own tax counsel or other tax adviser before
purchasing a Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the Owner are subject to Federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at
the rate of 10% from non-periodic payments. However, the Owner, in most cases,
may elect not to have taxes withheld or to have withholding done at a
different rate.
Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a
mandatory 20% withholding for Federal income tax. The 20% withholding
requirement generally does not apply to: a) a series of substantially equal
payments made at least annually for the life or life expectancy of the
participant or joint and last survivor expectancy of the participant and a
designated beneficiary, or for a specified period of 10 years or more; or b)
distributions which are required minimum distributions; (c) the portion of the
distributions not includible in gross income (i.e. returns of after-tax
contributions). Participants should consult their own tax counsel or other tax
advisor regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS -- NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate
purchase payments made, any amount withdrawn will be treated as coming first
from the earnings and then, only after the income portion is exhausted, as
coming from the principal. Withdrawn earnings are includible in gross income.
It further provides that a ten percent (10%) penalty will apply to the income
portion of any distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of
the Owner; (c) if the taxpayer is totally disabled (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (d) in a series of
substantially equal periodic payments made not less frequently than annually
for the life (or life expectancy) of the taxpayer or for the joint lives (or
joint life expectancies) of the taxpayer and his or her Beneficiary; (e) under
an immediate annuity; or (f) which are allocable to purchase payments made
prior to August 14, 1982.
The Contract provides that upon the death of the Annuitant prior to the
Maturity Date, the Death Proceeds will be paid to the named Beneficiary. Such
payments made upon the death of the Annuitant who is not the Owner of the
Contract do not qualify for the death of Owner exception described above, and
will be subject to the ten (10%) percent distribution penalty unless the
Beneficiary is 59 1/2 years old or one of the other exceptions to the penalty
applies.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals -- Qualified Contracts", below.)
QUALIFIED PLANS
The Contracts offered by this Prospectus are designed to be suitable for use
under various types of qualified plans. Generally, participants in a qualified
plan are not taxed on increases to the value of the contributions to the plan
until distribution occurs, regardless of whether the plan assets are held
under an annuity contract. Taxation of participants in each qualified plan
varies with the type of plan and terms and conditions of each specific plan.
Owners, Annuitants and Beneficiaries are cautioned that benefits under a
qualified plan may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts issued pursuant to the
plan. Some retirement plans are subject to distribution and other requirements
that are not incorporated into the Company's administrative procedures.
Owners, participants and Beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are general descriptions of
the types of qualified plans with which the Contracts may be used. Such
descriptions are not exhaustive and are for general informational purposes
only. The tax rules regarding qualified plans are very complex and will have
differing applications depending on individual facts and circumstances. Each
purchaser should obtain competent tax advice prior to purchasing a Contract
issued under a qualified plan.
Contracts issued pursuant to qualified plans include special provisions
restricting Contract provisions that may otherwise be available as described
in this Prospectus. Generally, Contracts issued pursuant to qualified plans
are not transferable except upon surrender or annuitization. Various penalty
and excise taxes may apply to contributions or distributions made in violation
of applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals -- Qualified Contracts", below.)
On July 6, 1983, the U.S. Supreme Court decided in ARIZONA GOVERNING COMMITTEE
v. NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection
with certain qualified plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the benefit
of their employees. Such contributions are not includible in the gross income
of the employees until the employees receive distributions from the Contracts.
The amount of contributions to the tax-sheltered annuity is limited to certain
maximums imposed by the Code. Furthermore, the Code sets forth additional
restrictions governing such items as transferability, distributions,
nondiscrimination and withdrawals. (See "Tax Treatment of Withdrawals --
Qualified Contracts" and "Tax-Sheltered Annuities -- Withdrawal Limitations"
below.) Any employee should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
b. Individual Retirement Annuities
(1) Regular Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement
Annuity" ("IRA"). Under applicable limitations, certain amounts may be
contributed to an IRA which will be deductible from the individual's gross
income. These IRAs are subject to limitations on eligibility, contributions,
transferability and distributions. (See "Tax Treatment of Withdrawals --
Qualified Contracts" below.) Under certain conditions, distributions from
other IRAs and other Qualified Plans may be rolled over or transferred on a
tax-deferred basis into an IRA. Sales of Contracts for use with IRAs are
subject to special requirements imposed by the Code, including the requirement
that certain informational disclosure be given to persons desiring to
establish an IRA. Purchasers of Contracts to be qualified as IRAs should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
(2) SIMPLE IRAs
Section 408(p) of the Code permits certain employers (generally those
with less than 100 employees) to establish a retirement program for employees
by using Savings Incentive Match Plan Individual Retirement Annuities ("SIMPLE
IRA"). SIMPLE IRA programs can only be established with the approval of and
adoption by the employer of the Owner of the SIMPLE IRA. Contributions to
SIMPLE IRAs will be made pursuant to a salary reduction agreement in which an
Owner would authorize his/her employer to deduct a certain amount from his/her
pay and contribute it directly to the SIMPLE IRA. The Owner's employer will
also make contributions to the SIMPLE IRA in amounts based upon certain
elections of the employer. The only contributions that can be made to a SIMPLE
IRA are salary reduction contributions and employer contributions as described
above, and rollover contributions from other SIMPLE IRAs. Purchasers of
Contracts to be qualified as SIMPLE IRAs should obtain competent tax advice as
to the tax treatment and suitability of such an investment.
c. Corporate and Self-Employed ("H.R. 10" and "Keogh")
Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These sections of
the Code also permit self-employed individuals to establish such retirement
plans for themselves and their employees (sometimes referred to as "Keogh" or
"H.R. 10" Plans). These retirement plans may permit the purchase of the
Contracts to provide benefits under the Plan. Contributions to the Plan for
the benefit of employees will not be includible in the gross income of the
employees until distributed from the Plan. The tax consequences to
participants may vary depending upon the particular plan design. However, the
Code places limitations and restrictions on all plans including on such items
as: amount of allowable contributions; form, manner and timing of
distributions; transferability of benefits; vesting and nonforfeitability of
interests; nondiscrimination in eligibility and participation; and the tax
treatment of distributions, withdrawals and surrenders. (See "Tax Treatment of
Withdrawals -- Qualified Contracts" below.) Purchasers of Contracts for use
with pension or profit-sharing plans should obtain competent tax advice as to
the tax treatment and suitability of such an investment.
d. Section 457 Plans of State and Local Governments and
Tax-Exempt Entities
Section 457 of the Code permits employees of state and local governments
and tax-exempt entities to defer a portion of their compensation without
paying current federal income tax if the employer establishes an "eligible
deferred compensation plan" as defined in Section 457 of the Code. For plans
established by tax-exempt entities, the employer is the Owner of the Contract
and has the sole right to the proceeds of the Contract, until paid or made
available to the participant, subject to the claims of the general creditors
of the employer. For plans established by state and local governments after
August 20, 1996, the assets of the 457 plan must be held in trust for the
benefit of plan participants and Contracts issued to these plans will be held
in the name of such trust, or in the name of the plan, for the benefit of plan
participants, and are not subject to the general creditors of the employer.
Purchasers of Contracts with respect to 457 plans should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS -- QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of
the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a Qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax
on the taxable portion of any distribution from qualified retirement plans,
including Contracts issued and qualified under Code Sections 401 (H.R. 10 and
Corporate Pension and Profit-Sharing Plans), 403(b) (Tax-Sheltered Annuities)
and 408(b) (Individual Retirement Annuities). The penalty is increased to 25%
instead of 10% for SIMPLE IRAs if distribution occurs within the first two
years after the Owner first participated in the SIMPLE IRA. To the extent
amounts are not includible in gross income because they have been rolled over
to an IRA or to another eligible qualified plan, no tax penalty will be
imposed. The tax penalty will not apply to the following distributions: (a) if
distribution is made on or after the date on which the Owner or Annuitant (as
applicable) reaches age 59 1/2; (b) distributions following the death or
disability of the Owner or Annuitant (as applicable) (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the Owner or Annuitant (as applicable) or the joint lives (or
joint life expectancies) of such Owner or Annuitant (as applicable) and his or
her designated Beneficiary; (d) distributions to an Owner or Annuitant (as
applicable) who has separated from service after he has attained age 55; (e)
distributions made to the Owner or Annuitant (as applicable) to the extent
such distributions do not exceed the amount allowable as a deduction under
Code Section 213 to the Owner or Annuitant (as applicable) for amounts paid
during the taxable year for medical care; (f) distributions made to an
alternate payee pursuant to a qualified domestic relations order; (g)
distributions from an Individual Retirement Annuity for the purchase of
medical insurance (as described in Section 213(d)(1)(D) of the Code) for the
Owner and his or her spouse and dependents if the Owner has received
unemployment ccompensation for at least 12 weeks. This exception will no
longer apply after the Owner has been re-employed for at least 60 days. The
exceptions stated in (d) and (f) above do not apply in the case of an
Individual Retirement Annuity. The exception stated in (c) above applies to an
Individual Retirement Annuity without the requirement that there be a
separation from service.
Generally, distributions from a qualified plan (other than IRAs) must commence
no later than April 1 of the calendar year following the year in which the
employee attains age 70 1/2 or retires, whichever is later. For IRAs,
distributions must commence no later than April 1 of the calendar year
following the year in which the Owner attains age 70 1/2. Required
distributions must be over a period not exceeding the life expectancy of the
individual or the joint lives or life expectancies of the individual and his
or her designated beneficiary. If the required minimum distributions are not
made, a 50% penalty tax is imposed as to the amount not distributed.
TAX-SHELTERED ANNUITIES -- WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value which represents contributions made by the Owner and does not include
any investment results. The limitations on withdrawals became effective on
January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, to income attributable to such contributions and to income
attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers or transfers between certain Qualified
Plans. Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
FINANCIAL STATEMENTS
Financial statements of the Company and the Separate Account have been
included in the Statement of Additional Information.
LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Separate Account, the
Distributor or the Company is a party which are likely to have a material
adverse effect on the Separate Account or upon the ability of the Company to
meet its obligations under the Contracts. In the ordinary course of business,
the Company and its subsidiaries are also engaged in certain other litigation
none of which management believes is material.
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
ITEM PAGE
Company
Experts
Legal Opinions
Distribut or Yield Calculation for Money Market
Subaccount
Performance Information
Annuity Provisions
Financial Statements
<TABLE>
<CAPTION>
<S> <C>
________________________________________________________________________
__________________
__________________
__________________
FRONT
- -----
Equitable Life Insurance Company of Iowa
Attention: Variable Products
P.O. Box 9271
Des Moines, Iowa 50306-9271
________________________________________________________________________
________________________________________________________________________
Please send me, at no charge, the Statement of Additional Information
dated February 3, 1997, for the Individual Flexible Purchase Payment
Deferred Variable and Fixed Annuity Contracts issued by Equitable Life
Insurance Company of Iowa Separate Account A and Equitable Life
Insurance Company of Iowa.
(Please print or type and fill in all information)
BACK ________________________________________________________________________
- -----
Name
________________________________________________________________________
Address
________________________________________________________________________
City State Zip Code
________________________________________________________________________
</TABLE>
5344-A 1/97
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
Home Office: Administered at: Mailing Address:
604 Locust Street Customer Service Center P.O. Box 9271
Des Moines, Iowa 50309 Wilmington, DE 19801 Des Moines, Iowa 50306-9271
(800) 648-6810
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE AND
FIXED ANNUITY CONTRACTS
ISSUED BY
EQUITABLE LIFE INSURANCE COMPANY OF IOWA SEPARATE ACCOUNT A
AND
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
The Individual Flexible Purchase Payment Deferred Variable and Fixed Annuity
Contracts (the "Contracts") described in this Prospectus provide for
accumulation of Contract Values on a fixed and variable basis and payment of
monthly annuity payments on a fixed basis. The Contracts are designed for use
by individuals in retirement plans on a Qualified or Non-Qualified basis. (See
"Definitions" on Page __.)
At the Owner's direction, Purchase Payments for the Contracts will be
allocated to a segregated investment account of Equitable Life Insurance
Company of Iowa (the "Company") which account has been designated Equitable
Life Insurance Company of Iowa Separate Account A (the "Separate Account") or
to the Company's Fixed Account. Under certain circumstances, however, Purchase
Payments may initially be allocated to the Smith Barney Money Market
Subaccount of the Separate Account. (See "Highlights" on Page __.) The
Separate Account invests in shares of the following Investment Options:
Equi-Select Series Trust (see "Equi-Select Series Trust" on Page __),
Travelers Series Fund Inc. (see "Travelers Series Fund Inc." on Page __),
Smith Barney Series Fund (see "Smith Barney Series Fund" on Page __), and
Smith Barney Concert Series Inc. (see "Smith Barney Concert Series Inc." on
Page __). Equi-Select Series Trust is a series fund with nine Portfolios,
three of which are currently available in connection with the Contracts
offered herein -- the OTC Portfolio, the Research Portfolio and the Total
Return Portfolio. Travelers Series Fund Inc. is a series fund with twelve
Portfolios, four of which are currently available in connection with the
Contracts: Smith Barney Income and Growth Portfolio, Smith Barney
International Equity Portfolio, Smith Barney High Income Portfolio and Smith
Barney Money Market Portfolio. Smith Barney Series Fund is a series fund with
ten Portfolios, one of which is currently available in connection with the
Contracts -- the Appreciation Portfolio. Smith Barney Concert Series Inc. is a
series fund with ten Portfolios, five of which are currently available in
connection with the Contracts: Select High Growth Portfolio, Select Growth
Portfolio, Select Balanced Portfolio, Select Conservative Portfolio and Select
Income Portfolio.
Shares of certain Portfolios of the Investment Options may not be available in
all states. The Prospectuses of the Investment Options may contain Portfolios
not currently available in connection with the Contracts.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENT IN THE CONTRACTS IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF THE
OWNER'S INVESTMENT TO FLUCTUATE, AND WHEN THE CONTRACTS ARE SURRENDERED, THE
VALUE MAY BE HIGHER OR LOWER THAN THE PURCHASE PAYMENTS.
This Prospectus concisely sets forth the information a prospective investor
should know before investing. Additional information about the Contracts is
contained in the Statement of Additional Information which is available at no
charge. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
The Table of Contents of the Statement of Additional Information can be found
on Page __ of this Prospectus. For the Statement of Additional Information,
call (800) 648-6810 or write to the Company at the address listed above.
INQUIRIES:
Any inquiries can be made by telephone or in writing to Equitable Life
Insurance Company of Iowa at (800) 648-6810 or P.O. Box 9271, Des Moines, Iowa
50306-9271.
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.
This Prospectus and the Statement of Additional Information are dated February
3, 1997.
This Prospectus should be kept for future reference.
TABLE OF CONTENTS
PAGE
DEFINITIONS
HIGHLIGHTS
FEE TABLE
CONDENSED FINANCIAL INFORMATION
THE COMPANY
THE SEPARATE ACCOUNT
INVESTMENT OPTIONS
Equi-Select Series Trust
Travelers Series Fund Inc.
Smith Barney Series Fund
Smith Barney Concert Series Inc.
Voting Rights
Substitution of Securities
CHARGES AND DEDUCTIONS
Deduction for Withdrawal Charge (Sales Load)
Reduction or Elimination of the Withdrawal Charge
Deduction for Mortality and Expense Risk Charge
Deduction for Administrative Charge
Deduction for Annual Contract Maintenance Charge
Deduction for Premium Taxes
Deduction for Income Taxes
Deduction for Expenses of the Investment Options
Deduction for Transfer Fee
THE CONTRACTS
Ownership
Annuitant
Assignment
Beneficiary
PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments
Allocation of Purchase Payments
Dollar Cost Averaging
Automatic Portfolio Rebalancing
Contract Value
Accumulation Unit
TRANSFERS
WITHDRAWALS
Automatic Withdrawals
Texas Optional Retirement Program
Suspension of Payments or Transfers
CONTRACT PROCEEDS
Maturity Proceeds
Death Proceeds
Death of the Annuitant
Death of Owner
Fixed Payment Plans
Plan A. Interest
Plan B. Fixed Period
Plan C. Life Income
DISTRIBUTOR
ADMINISTRATION
PERFORMANCE INFORMATION
Money Market Portfolio
Other Portfolios
TAX STATUS
General
Diversification
Owner Control
Multiple Contracts
Contracts Owned by Other than Natural Persons
Tax Treatment of Assignments
Income Tax Withholding
Tax Treatment of Withdrawals - Non-Qualified Contracts
Qualified Plans
Tax Treatment of Withdrawals -- Qualified Contracts
Tax-Sheltered Annuities -- Withdrawal Limitations
FINANCIAL STATEMENTS
LEGAL PROCEEDINGS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
DEFINITIONS
ACCUMULATION PERIOD -- The period during which Purchase Payments may be made
prior to the Maturity Date.
ACCUMULATION UNIT -- A unit of measure used to calculate the Contract Value in
a Subaccount of the Separate Account prior to the Maturity Date.
AGE -- The Annuitant's age on his or her last birthday.
ANNUITANT -- The natural person on whose life Annuity Payments are based.
ANNUITY PAYMENTS -- The series of payments after the Maturity Date under the
Payment Plan selected.
BENEFICIARY -- The person the Owner has chosen to receive the Proceeds on the
Annuitant's death as shown on the Company's records. There may be different
classes of Beneficiaries, such as primary and contingent. These classes set
the order of payment. There may be more than one Beneficiary in a class.
COMPANY -- Equitable Life Insurance Company of Iowa.
CONTRACT ANNIVERSARY -- An anniversary of the Issue Date of the Contract.
CONTRACT YEAR -- One year from the Issue Date and from each Contract
Anniversary.
FIXED ACCOUNT -- The Company's general investment account which contains all
the assets of the Company with the exception of the Separate Account and other
segregated asset accounts.
INVESTMENT OPTION -- An investment entity the Company may make available from
time to time.
ISSUE DATE/DATE OF ISSUE -- The effective date of the Contract.
MATURITY DATE -- The date on which Annuity Payments begin.
NON-QUALIFIED CONTRACTS -- Contracts issued under non-qualified plans which do
not receive favorable tax treatment under Sections 401, 403(b), 408 or 457 of
the Internal Revenue Code of 1986, as amended (the "Code").
OWNER -- The person(s) who owns the Contract. The Owner may be someone other
than the Annuitant. There may be Joint Owners.
PORTFOLIO -- A segment of an Investment Option which constitutes a separate
and distinct class of shares, which may also be referred to as a Select
Portfolio or a Series.
PROCEEDS -- Proceeds are the amounts payable under the Contract.
PURCHASE PAYMENT -- An amount paid to the Company to provide benefits under
the Contract. A Purchase Payment does not include transfers between the
Separate Account and the Fixed Account or among Subaccounts.
PURCHASE PAYMENT ANNIVERSARY -- The anniversary of a Purchase Payment.
QUALIFIED CONTRACTS -- Contracts issued under qualified plans which receive
favorable tax treatment under Sections 401, 403(b), 408 or 457 of the Code.
SEPARATE ACCOUNT -- A separate investment account of the Company designated as
Equitable Life Insurance Company of Iowa Separate Account A, into which
Purchase Payments or Contract Values may be allocated.
SUBACCOUNT -- A segment of the Separate Account representing an investment in
an Investment Option.
VALUATION DATE -- The Separate Account will be valued each day that the New
York Stock Exchange and the Company's Customer Service Center both are open
for business.
VALUATION PERIOD -- The period beginning at the close of business of the New
York Stock Exchange on each Valuation Date and ending at the close of business
for the next succeeding Valuation Date.
HIGHLIGHTS
At the Owner's direction, Purchase Payments for the Contracts will be
allocated to a segregated investment account of Equitable Life Insurance
Company of Iowa (the "Company") which account has been designated Equitable
Life Insurance Company of Iowa Separate Account A (the "Separate Account") or
to the Company's Fixed Account. Under certain circumstances, however, Purchase
Payments may initially be allocated to the Smith Barney Money Market
Subaccount of the Separate Account (see below). The Separate Account invests
in shares of Equi-Select Series Trust (see "Equi-Select Series Trust" on Page
__), Travelers Series Fund Inc. (see "Travelers Series Fund Inc." on Page __),
Smith Barney Series Fund (see "Smith Barney Series Fund" on Page __), and
Smith Barney Concert Series Inc. (see "Smith Barney Concert Series Inc." on
Page __). The Separate Account may invest in other Investment Options. Owners
bear the investment risk for all amounts allocated to the Separate Account.
Within twenty (20) days of the date of receipt of the Contract by the Owner
(or within ten (10) days of the date of receipt with respect to the
circumstances described in (a) below or in states where required or, within
thirty (30) days in the case of a Contract issued in the state of California
to an individual who is sixty (60) years of age or older), it may be returned
by delivering or mailing it to the Company at its Customer Service Center.
When the Contract is received at the Customer Service Center, the Company will
refund the Contract Value computed at the end of the Valuation Period during
which the Contract is received by the Company except in the following
circumstances: (a) in those states which require the Company to refund
Purchase Payments, less withdrawals; or (b) in the case of Contracts which are
deemed by certain states to be replacing an existing annuity or insurance
contract and which require the Company to refund Purchase Payments, less
withdrawals. With respect to the circumstances described in (a) and (b) above,
the Company will refund the greater of Purchase Payments, less any
withdrawals, or the Contract Value, and will allocate initial purchase
payments to the Money Market Subaccount until the expiration of fifteen days
from the Issue Date (or twenty-five days in the case of Contracts described
under (b) above). Upon the expiration of the fifteen day period (or
twenty-five day period with respect to Contracts described under (b)), the
Subaccount value of the Money Market Subaccount will be allocated to the
Separate Account or Fixed Account in accordance with the election made by the
Owner in the Application.
A Withdrawal Charge (sales load) may be deducted in the event of a withdrawal
of all or a portion of the Contract Value. The Withdrawal Charge percentages
are based upon the number of Purchase Payment Anniversaries that Purchase
Payments have remained in the Contract before being withdrawn:
TABLE OF WITHDRAWAL CHARGES
<TABLE>
<CAPTION>
<S> <C>
Purchase Payment Anniversary Withdrawal Charge
- ---------------------------- ------------------------------------
1 8% of the Purchase Payment withdrawn
2 7% of the Purchase Payment withdrawn
3 6% of the Purchase Payment withdrawn
4 5% of the Purchase Payment withdrawn
5 4% of the Purchase Payment withdrawn
6 3% of the Purchase Payment withdrawn
7 2% of the Purchase Payment withdrawn
8 1% of the Purchase Payment withdrawn
9 and after 0% of the Purchase Payment withdrawn
</TABLE>
At any time, the Owner may make a withdrawal, without the imposition of a
Withdrawal Charge, of an amount equal to the sum of: 1) earnings (Contract
Value less unliquidated Purchase Payments not withdrawn); 2) Purchase Payments
in the Contract for more than eight years; and 3) an amount which is equal to
10% of the Purchase Payments in the Contract for less than eight years, fixed
at the time of the first withdrawal in the Contract Year, plus 10% of the
Purchase Payment made after the first withdrawal in the Contract Year but
before the next Contract Anniversary, less any withdrawals in the same
Contract Year of Purchase Payments less than eight years old.
There is a Mortality and Expense Risk Charge which is equal, on an annual
basis, to 1.25% of the average daily net asset value of the Separate Account.
This Charge compensates the Company for assuming the mortality and expense
risks under the Contracts. (See "Charges and Deductions -- Deduction for
Mortality and Expense Risk Charge" on Page __.)
There is an Administrative Charge which is equal, on an annual basis, to .15%
of the average daily net asset value of the Separate Account. This Charge
compensates the Company for costs associated with the administration of the
Contracts and the Separate Account. (See "Charges and Deductions -- Deduction
for Administrative Charge" on Page __.)
There is an Annual Contract Maintenance Charge of $30 each Contract Year prior
to the Maturity Date. (See "Charges and Deductions -- Deduction for Annual
Contract Maintenance Charge" on Page __.)
Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the Contract Values. Premium taxes generally range
from 0% to 4%. (See "Charges and Deductions -- Deduction for Premium Taxes" on
Page __.)
Under certain circumstances, a Transfer Fee may be assessed when an Owner
transfers Contract Values from one Subaccount to another Subaccount or to or
from the Fixed Account. (See "Charges and Deductions -- Deduction for Transfer
Fee" on Page __.)
There is a ten percent (10%) federal income tax penalty applied to the income
portion of any distribution from Non-Qualified Contracts. However, the penalty
is not imposed on amounts received: (a) after the taxpayer reaches age 59 1/2;
(b) after the death of the Owner; (c) if the taxpayer is totally disabled (for
this purpose disability is as defined in Section 72(m)(7) of the Code); (d) in
a series of substantially equal periodic payments made not less frequently
than annually for the life (or life expectancy) of the taxpayer and his or her
Beneficiary; (e) under an immediate annuity; or (f) which are allocable to
purchase payments made prior to August 14, 1982. The Contract provides that
upon the death of the Annuitant prior to the Maturity Date, the Death Proceeds
will be paid to the named Beneficiary. Such payments made upon the death of
the Annuitant who is not the Owner of the Contract do not qualify for the
death of Owner exception described above, and will be subject to the ten
percent (10%) distribution penalty unless the Beneficiary is 59 1/2 or one of
the other exceptions to the penalty applies. For federal income tax purposes,
withdrawals are deemed to be on a last-in, first-out basis. Separate tax
withdrawal penalties and restrictions apply to Qualified Contracts (see "Tax
Status - Tax Treatment of Withdrawals - Qualified Contracts" on Page __). For
a further discussion of the taxation of the Contracts, see "Tax Status" on
Page __.
Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (as defined in Section 403(b)(11) of the Code) are limited
to circumstances only when the Owner attains age 59 1/2, separates from
service, dies, becomes disabled (within the meaning of Section 72(m)(7) of the
Code) or in the case of hardship. Withdrawals for hardship are restricted to
the portion of the Owner's Contract Value which represents contributions made
by the Owner and does not include any investment results. The limitations on
withdrawals became effective on January 1, 1989, and apply only to: (1) salary
reduction contributions made after December 31, 1988; (2) income attributable
to such contributions; and (3) income attributable to amounts held as of
December 31, 1988. The limitations on withdrawals do not affect rollovers or
transfers between certain Qualified Plans. Tax penalties may also apply. (See
"Tax Status -- Tax Treatment of Withdrawals -- Qualified Contracts" on Page
__.) Owners should consult their own tax counsel or other tax adviser
regarding any distributions. (See "Tax Status -- Tax Sheltered Annuities --
Withdrawal Limitations" on Page __.)
See "Tax Status -- Owner Control" for a discussion of owner control of the
underlying investments in a variable annuity contract and the tax
considerations related thereto.
Because of certain exemptive and exclusionary provisions, interests in the
Fixed Account are not registered under the Securities Act of 1933 and the
Fixed Account is not registered as an investment company under the Investment
Company Act of 1940, as amended. Accordingly, neither the Fixed Account nor
any interests therein are subject to the provisions of these Acts and the
Company has been advised that the staff of the Securities and Exchange
Commission has not reviewed the disclosures in the Prospectus relating to the
Fixed Account. Disclosures regarding the Fixed Account may, however, be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA SEPARATE ACCOUNT A
FEE TABLE
OWNER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Withdrawal Charge (see Note 2 below)
(as a percentage of Purchase Payments withdrawn)
Purchase Payment Anniversary Charge
- --------------------------------- ------------------------------------------
1 8%
2 7%
3 6%
4 5%
5 4%
6 3%
7 2%
8 1%
9+ 0%
Transfer Fee (see Note 3 below) No charge for first 12 transfers in a
Contract Year; thereafter the fee is the
lesser of 2% of the Contract Value
transferred or an amount not greater
than $25.
Annual Contract Maintenance Charge $30 per Contract per year
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charge 1.25%
Administrative Charge .15%
-----
Total Separate Account Annual Expenses 1.40%
</TABLE>
EQUI-SELECT SERIES TRUST'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of the Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Other Total Annual
Fees* Expenses Expenses
(after expense
reimbursement)**
---------- ----------------- ------------
OTC Portfolio .80% .40% 1.20 %
Research Portfolio .80% .40% 1.20 %
Total Return Portfolio .80% .40% 1.20 %
<FN>
___________________
* PRIOR TO OCTOBER 6, 1995, EQUITABLE INVESTMENT SERVICES, INC.
("EISI"), THE TRUST'S INVESTMENT ADVISER, WAIVED ITS MANAGEMENT FEES FOR EACH
OF THE PORTFOLIOS.
** BEGINNING FEBRUARY 3, 1997, EISI HAS UNDERTAKEN TO REIMBURSE EACH
PORTFOLIO FOR ALL OPERATING EXPENSES, EXCLUDING MANAGEMENT FEES, THAT EXCEED
.40% OF THE AVERAGE DAILY NET ASSETS OF THE OTC, TOTAL RETURN AND RESEARCH
PORTFOLIOS. THIS VOLUNTARY EXPENSE REIMBURSEMENT CAN BE TERMINATED AT ANY
TIME. FROM OCTOBER 6, 1995 TO FEBRUARY 3, 1997, EISI REIMBURSED EACH PORTFOLIO
FOR ALL OPERATING EXPENSES, EXCLUDING MANAGEMENT FEES, THAT EXCEEDED .75% OF
THE AVERAGE DAILY NET ASSETS OF EACH PORTFOLIO.
</TABLE>
TRAVELERS SERIES FUND INC.'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Other Total Annual
Fees Expenses Expenses
----------- --------- -------------
Smith Barney Income and Growth Portfolio 0.65% 0.08% 0.73%
Smith Barney International Equity Portfolio 0.90 0.20 1.10
Smith Barney High Income Portfolio 0.60 0.24 0.84
Smith Barney Money Market Portfolio* 0.60 0.14 0.74
<FN>
_____________________
* SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC., THE FUND'S INVESTMENT MANAGER,
WAIVED PART OF ITS MANAGEMENT FEES FOR THE YEAR ENDED OCTOBER 31, 1996 FOR THE
SMITH BARNEY MONEY MARKET PORTFOLIO SUCH THAT THE ACTUAL TOTAL ANNUAL EXPENSES
CHARGED IN 1996 WAS 0.65%. THIS VOLUNTARY FEE WAIVER CAN BE TERMINATED AT ANY
TIME.
</TABLE>
SMITH BARNEY SERIES FUND'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of the Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Other Total Operating
Fees Expenses Expenses
----------- --------- ----------------
Appreciation Portfolio 0.75% 0.22% 0.97%
</TABLE>
SMITH BARNEY CONCERT SERIES INC.'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Select Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Fees* Other Expenses Total Annual
(after expense Expenses**
reimbursements)**
---------------- ------------------ ------------
Select High Growth Portfolio .35% 0% .35%
Select Growth Portfolio .35% 0% .35%
Select Balanced Portfolio .35% 0% .35%
Select Conservative Portfolio .35% 0% .35%
Select Income Portfolio .35% 0% .35%
<FN>
* Each Select Portfolio of Smith Barney Concert Series Inc., as a shareholder of
the Underlying Smith Barney Funds (see "Smith Barney Concert Series" on Page __),
also will indirectly bear its proportionate share of any investment management fees
and other expenses paid by the Underlying Smith Barney Funds.
** Travelers Investment Adviser, Inc., the manager of each Select Portfolio, has
agreed to bear all expenses of these Select Portfolios of Smith Barney Concert
Series Inc. other than the management fee and extraordinary expenses.
</TABLE>
EXAMPLES
An Owner would pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets:
(a) if the Contract is fully surrendered at the end of each time period
or if Payment Plan A - Option 2 is elected;
(b) if the Contract is not surrendered;
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Subaccounts investing in:
TIME PERIODS
EQUI-SELECT SERIES TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------- ---------- ------------ ---------- ----------
OTC Portfolio a) $107.39 a) $138.00 a) $179.14 a) $302.87
b) $27.39 b) $84.00 b) $143.14 b) $302.87
Research Portfolio a) $107.39 a) $138.00 a) $179.14 a) $302.87
b) $27.39 b) $84.00 b) $143.14 b) $302.87
Total Return Portfolio a) $107.39 a) $138.00 a) $179.14 a) $302.87
b) $27.39 b) $84.00 b) $143.14 b) $302.87
TRAVELERS SERIES FUND INC.
- ----------------------------------------
Smith Barney Income and Growth Portfolio a) $102.69 a) $123.86 a) $155.57 a) $255.87
b) $22.69 b) $69.86 b) $119.57 b) $255.87
Smith Barney International Equity
Portfolio a) $106.39 a) $135.01 a) $174.17 a) $293.07
b) $26.39 b) $81.01 b) $138.17 b) $293.07
Smith Barney High Income Portfolio a) $103.79 a) $127.19 a) $161.14 a) $267.09
b) $23.79 b) $73.19 b) $125.14 b) $267.09
Smith Barney Money Market Portfolio a) $102.79 a) $124.17 a) $156.08 a) $256.90
b) $22.79 b) $70.17 b) $120.08 b) $256.90
SMITH BARNEY SERIES FUND
- ----------------------------------------
Appreciation Portfolio a) $105.09 a) $131.11 a) $167.68 a) $280.17
b) $25.09 b) $77.11 b) $131.68 b) $280.17
SMITH BARNEY CONCERT SERIES INC.
- ----------------------------------------
Select High Growth Portfolio a) $98.86 a) $112.29
b) $18.86 b) $58.29
Select Growth Portfolio a) $98.86 a) $112.29
b) $18.86 b) $58.29
Select Balanced Portfolio a) $98.86 a) $112.29
b) $18.86 b) $58.29
Select Conservative Portfolio a) $98.86 a) $112.29
b) $18.86 b) $58.29
Select Income Portfolio a) $98.86 a) $112.29
b) $18.86 b) $58.29
</TABLE>
NOTES TO FEE TABLE AND EXAMPLES
1. The purpose of the Fee Table is to assist the Owner in understanding
the various costs and expenses that an Owner will incur directly or
indirectly. For additional information, see "Charges and Deductions" in this
Prospectus and the Prospectuses for Equi-Select Series Trust, Travelers Series
Fund Inc., Smith Barney Series Fund and Smith Barney Concert Series Inc.
2. At any time, the Owner may make a withdrawal without the imposition of
a Withdrawal Charge, of an amount equal to the sum of: 1)earnings (Contract
Value less unliquidated Purchase Payments not withdrawn) ; 2) Purchase
Payments in the Contract for more than eight years; and 3) an amount which is
equal to 10% of the Purchase Payments in the Contract for less than eight
years, fixed at the time of the first withdrawal in the Contract Year, plus
10% of the Purchase Payment made after the first withdrawal in the Contract
Year but before the next Contract Anniversary, less any withdrawals in the
same Contract Year of Purchase Payments less than eight years old.
3. If the Owner is participating in the Automatic Portfolio Rebalancing
program or the Dollar Cost Averaging program providing for the automatic
transfer of funds from a Subaccount or the Fixed Account to any other
Subaccount, such transfers are currently not taken into account in determining
the number of transfers for the year or in determining any Transfer Fee. (See
"Charges and Deductions -- Deduction for Transfer Fee" on Page __, "Purchase
Payments and Contract Value -- Dollar Cost Averaging" on Page __ and "Purchase
Payments and Contract Value -- Automatic Portfolio Rebalancing" on Page __.)
4. Premium taxes are not reflected. Premium taxes may apply. (See
"Charges and Deductions -- Deduction for Premium Taxes" on Page __.)
5. The Examples assume an estimated $27,700 Contract Value so that the
Annual Contract Maintenance Charge per $1,000 of net asset value in the
Separate Account is $1.08. Such charge would be higher for smaller Contract
Values and lower for higher Contract Values.
6. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
CONDENSED FINANCIAL INFORMATION
The financial statements of Equitable Life Insurance Company of Iowa and
Equitable Life Insurance Company of Iowa Separate Account A may be found in
the Statement of Additional Information.
The table below gives per unit information about the financial history of the
OTC Subaccount, Research Subaccount and Total Return Subaccount of Equi-Select
Series Trust from commencement of operations (October 7, 1994) to September
30, 1996 and of the available Subaccounts invested in Travelers Series Fund
Inc. from commencement of operations of the Subaccounts (April 5, 1995 for the
Smith Barney Income and Growth Subaccount; March 27, 1995 for the Smith Barney
International Equity Subaccount; April 28, 1995 for the Smith Barney High
Income Subaccount; and May 24, 1995 for the Smith Barney Money Market
Subaccount) to September 30, 1996 and of the Appreciation Subaccount invested
in Smith Barney Series Fund from commencement of operations (March 25, 1996)
to September 30, 1996. This information should be read in conjunction with the
financial statements and related notes of the Separate Account included in the
Statement of Additional Information.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIOD PERIOD FROM
ENDED YEAR ENDED COMMENCEMENT OF
SEPTEMBER 30, DECEMBER 31, OPERATIONS TO
1996 1995 DECEMBER 31,
1994
EQUI-SELECT SERIES TRUST
- -------------------------------------------
OTC SUBACCOUNT
Unit value at beginning of period $ 13.21 $ 10.35 $ 10.00
Unit value at end of period $ 15.61 $ 13.21 $ 10.35
No. of units outstanding at end of period 1,994,122 759,597 63,781
RESEARCH SUBACCOUNT
Unit value at beginning of period $ 13.10 $ 9.72 $ 10.00
Unit value at end of period $ 15.20 $ 13.10 $ 9.72
No. of units outstanding at end of period 3,562,977 1,255,752 69,177
TOTAL RETURN SUBACCOUNT
Unit value at beginning of period $ 12.05 $ 9.81 $ 10.00
Unit value at end of period $ 12.80 $ 12.05 $ 9.81
No. of units outstanding at end of period 3,387,074 1,312,565 33,106
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
PERIOD FROM
COMMENCEMENT OF
PERIOD ENDED OPERATIONS TO
SEPTEMBER 30, 1996 DECEMBER 31, 1995
TRAVELERS SERIES FUND INC.
- -------------------------------------------- ------------------ -----------------
SMITH BARNEY INCOME AND GROWTH SUBACCOUNT
Unit value at beginning of period $ 12.05 $ 10.00
Unit value at end of period $ 13.41 $ 12.05
No. of units outstanding at end of period 1,184,697 295,134
SMITH BARNEY INTERNATIONAL EQUITY SUBACCOUNT
Unit value at beginning of period $ 11.56 $ 10.00
Unit value at end of period $ 13.14 $ 11.56
No. of units outstanding at end of period 609,873 154,388
SMITH BARNEY HIGH INCOME SUBACCOUNT
Unit value at beginning of period $ 10.94 $ 10.00
Unit value at end of period $ 11.76 $ 10.94
No. of units outstanding at end of period 482,626 72,283
SMITH BARNEY MONEY MARKET SUBACCOUNT
Unit value at beginning of period $ 10.23 $ 10.00
Unit value at end of period $ 10.50 $ 10.23
No. of units outstanding at end of period 301,532 125,048
SMITH BARNEY SERIES FUND
- --------------------------------------------
Smith Barney Appreciation Subaccount
Unit value at beginning of period $ 10.00
Unit value at end of period $ 10.57
No. of Units outstanding at end of period 296,349
</TABLE>
The Subaccounts investing in Smith Barney Concert Series Inc. are new in 1997.
THE COMPANY
Equitable Life Insurance Company of Iowa (the "Company") was founded in Iowa
in 1867 and is the oldest life insurance company west of the Mississippi. The
Company is currently licensed to do business in the District of Columbia and
all states except New Hampshire and New York. The Company is a wholly-owned
subsidiary of Equitable of Iowa Companies ("Equitable of Iowa"), an Iowa
corporation.
THE SEPARATE ACCOUNT
The Board of Directors of the Company adopted a resolution to establish a
segregated asset account pursuant to Iowa insurance law on January 24, 1994.
This segregated asset account has been designated Equitable Life Insurance
Company of Iowa Separate Account A (the "Separate Account"). The Company has
caused the Separate Account to be registered with the Securities and Exchange
Commission as a unit investment trust pursuant to the provisions of the
Investment Company Act of 1940.
The assets of the Separate Account are the property of the Company. However,
the assets of the Separate Account equal to the reserves and other contract
liabilities with respect to the Separate Account, are not chargeable with
liabilities arising out of any other business the Company may conduct. Income,
gains and losses, whether or not realized, are, in accordance with the
Contracts, credited to or charged against the Separate Account without regard
to other income, gains or losses of the Company. The Company's obligations
arising under the Contracts are general obligations.
The Separate Account meets the definition of a "separate account" under
federal securities laws.
The Separate Account is divided into Subaccounts, with the assets of each
Subaccount invested in one Portfolio of Equi-Select Series Trust, Travelers
Series Fund Inc., Smith Barney Series Fund or Smith Barney Concert Series Inc.
The Separate Account may invest in other Investment Options. There is no
assurance that the investment objectives of any of the Portfolios will be met.
Owners bear the complete investment risk for Purchase Payments allocated to a
Subaccount. Contract Values will fluctuate in accordance with the investment
performance of the Subaccounts to which Purchase Payments are allocated, and
in accordance with the imposition of the fees and charges assessed under the
Contracts.
INVESTMENT OPTIONS
EQUI-SELECT SERIES TRUST
Equi-Select Series Trust ("Trust") has been established to act as one of the
funding vehicles for the Contracts offered. The Trust is an open-end
management investment company. The Trust is managed by Equitable Investment
Services, Inc. ("EISI") which is a wholly-owned subsidiary of Equitable of
Iowa. EISI has retained a Sub-Adviser for the OTC, Research and Total Return
Portfolios to make investment decisions and place orders. The Sub-Adviser for
the Portfolios is Massachusetts Financial Services Company. See "Management of
the Trust" in the Trust Prospectus, which accompanies this Prospectus, for
additional information concerning EISI and the Sub-Adviser, including a
description of advisory and sub-advisory fees.
The investment objectives of the Portfolios are as follows:
OTC PORTFOLIO. The investment objective of the OTC Portfolio is to seek
to obtain long-term growth of capital. The Portfolio seeks to achieve its
objective by investing at least 65% of its total assets, under normal
circumstances, in securities principally traded on the over-the-counter (OTC)
securities market.
RESEARCH PORTFOLIO. The Research Portfolio seeks to provide long-term
growth of capital and future income by investing a substantial portion of its
assets in the common stocks or securities convertible into common stocks of
companies believed to possess better than average prospects for long-term
growth. A smaller proportion of the assets may be invested in bonds,
short-term obligations, preferred stocks or common stocks whose principal
characteristic is income production rather than growth. The portfolio
securities of the Research Portfolio are selected by the investment research
analysts in the Equity Research Group of the Sub-Adviser. The Portfolio's
assets are allocated to industry groups (e.g. within the health care sector,
the managed care, drug and medical supply industries). The allocation by
sector and industry is determined by the analysts acting together as a group.
TOTAL RETURN PORTFOLIO. The Total Return Portfolio primarily seeks to
obtain above-average income (compared to a portfolio entirely invested in
equity securities) consistent with the prudent employment of capital. While
current income is the primary objective, the Portfolio believes that there
should also be a reasonable opportunity for growth of capital and income since
many securities offering a better than average yield may also possess growth
potential. Generally, at least 40% of the Portfolio's assets will be invested
in equity securities.
TRAVELERS SERIES FUND INC.
Travelers Series Fund Inc. ("Fund") is an investment company underlying
certain variable annuity and variable life insurance contracts. Prior to
September 3, 1996, the Fund was known as Smith Barney/Travelers Series Fund
Inc. The Fund is an open-end management investment company. The Fund is
managed by Smith Barney Mutual Funds Management Inc. ("SBMFM" or "Manager").
SBMFM is a wholly-owned subsidiary of Smith Barney Holdings Inc. ("SBH"). SBH
is a wholly-owned subsidiary of Travelers Group Inc. which is a financial
services holding company engaged, through its subsidiaries, principally in
four business segments: investment services, consumer finance services, life
insurance services and property & casualty insurance services.
The Fund is intended to meet differing investment objectives with its
currently available separate Portfolios.
The investment objectives of the Portfolios are as follows:
SMITH BARNEY INCOME AND GROWTH PORTFOLIO. The Smith Barney Income and
Growth Portfolio seeks current income and long-term growth of income and
capital by investing primarily, but not exclusively, in common stocks. The
Portfolio invests primarily in common stocks offering a current return from
dividends and in interest-paying debt obligations (such as U.S. Government
Securities, investment grade bonds and debentures) and high quality short-term
debt obligations (such as commercial paper and repurchase agreements
collateralized by U.S. Government Securities with broker/dealers or other
financial institutions.)
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO. The Smith Barney
International Equity Portfolio seeks total return on its assets from growth of
capital and income. The Portfolio seeks to achieve its objective by investing
at least 65% of its assets in a diversified portfolio of equity securities of
established non-U.S. issuers. Investing in foreign securities generally
involves risks not ordinarily associated with investing in securities of
domestic issuers. Purchasers are cautioned to read "Special Investment
Techniques and Risk Considerations -- Foreign Securities" in the Fund
Prospectus.
SMITH BARNEY HIGH INCOME PORTFOLIO. The Smith Barney High Income
Portfolio seeks high current income. Capital appreciation is a secondary
objective. The Portfolio seeks to achieve its investment objectives by
investing, under normal circumstances, at least 65% of its assets in
high-yielding corporate debt obligations and preferred stock. The Portfolio
invests significantly in lower rated and unrated corporate debt securities,
which are commonly known as "junk bonds" and involve a significant degree of
risk. (See "The Fund's Investment Program -- Smith Barney High Income
Portfolio" in the Fund Prospectus.) Prior to investing in this Portfolio,
purchasers are cautioned to read the section entitled "Special Investment
Techniques and Risk Considerations -- Lower-Quality and Non-Rated Securities"
in the Fund Prospectus. The Portfolio may invest up to 20% of its assets in
the securities of foreign issuers that are denominated in currencies other
than the U.S. dollar and may invest without limitation in securities of
foreign issuers that are denominated in U.S. dollars. Investing in foreign
securities generally involves risks not ordinarily associated with investing
in securities of domestic issuers. Purchasers are cautioned to read "Special
Investment Techniques and Risk Considerations -- Foreign Securities" in the
Fund Prospectus.
SMITH BARNEY MONEY MARKET PORTFOLIO. The Smith Barney Money Market
Portfolio seeks maximum current income and preservation of capital. The
Portfolio seeks to achieve its objectives by investing in bank obligations and
high quality commercial paper, corporate obligations and municipal
obligations, in addition to U.S. Government Securities and related repurchase
agreements. An investment in this Portfolio is neither insured nor guaranteed
by the U.S. Government. In addition, there is no assurance that the Portfolio
will be able to maintain a stable net asset value of $1.00 per share.
SMITH BARNEY SERIES FUND
Smith Barney Series Fund is a diversified, open-end management investment
company. Smith Barney Mutual Funds Management Inc. ("SBMFM") is the investment
adviser to the Appreciation Portfolio (see "Travelers Series Fund Inc." above
for information pertaining to SBMFM).
Smith Barney Series Fund has ten Portfolios, one of which is currently
available in connection with the Contracts. While a brief summary of the
investment objective is set forth below, more comprehensive information,
including a discussion of potential risks, is found in the current Prospectus
for Smith Barney Series Fund, which is included with this Prospectus.
Additional Prospectuses and the Statement of Additional Information can be
obtained by calling or writing the Company's Home Office.
The investment objective of the Portfolio is as follows:
APPRECIATION PORTFOLIO. The Appreciation Portfolio's goal is long-term
appreciation of capital. The Portfolio will attempt to achieve its goal by
investing primarily in equity and equity-related securities that are believed
to afford attractive opportunities for appreciation. Under normal market
conditions, substantially all -- but not less than 65% -- of the Portfolio's
assets will consist of common stocks, but the Portfolio also may hold
securities convertible into common stocks and warrants.
SMITH BARNEY CONCERT SERIES INC.
Smith Barney Concert Series Inc. ("Concert Series") is an open-end,
non-diversified management investment company. Travelers Investment Adviser,
Inc. ("TIA") serves as each Select Portfolio's investment manager. TIA is an
indirect wholly-owned subsidiary of Travelers Group Inc. Each Select
Portfolio of Concert Series seeks to achieve its investment objective by
investing in a diverse mix of "Underlying Smith Barney Funds" ("fund of funds"
structure), which consist of open-end management investment companies or
series thereof for which Smith Barney Inc. ("Smith Barney") now or in the
future acts as principal underwriter or for which Smith Barney, SBMFM or Smith
Barney Strategy Advisers Inc. now or in the future acts as investment adviser.
See the Prospectus for the Select Portfolios of Concert Series for more
information concerning the fund of funds structure. The fund of funds
structure is different from the investment structure of most investment
options available for a variable annuity contract. Such a structure involves
additional income tax risks (see "Tax Status - Owner Control" on Page __).
The investment objectives of the Select Portfolios are as follows:
SELECT HIGH GROWTH PORTFOLIO. The Select High Growth Portfolio's
investment objective is to seek capital appreciation.
SELECT GROWTH PORTFOLIO. The Select Growth Portfolio's investment
objective is to seek long-term growth of capital.
SELECT BALANCED PORTFOLIO. The Select Balanced Portfolio's investment
objective is to seek a balance of growth of capital and income.
SELECT CONSERVATIVE PORTFOLIO. The Select Conservative Portfolio's
investment objective is to seek income and, secondarily, long-term growth of
capital.
SELECT INCOME PORTFOLIO. The Select Income Portfolio's investment
objective is to seek high current income.
While a brief summary of the investment objectives of the Portfolios of
Equi-Select Series Trust, Travelers Series Fund Inc., Smith Barney Series Fund
and Smith Barney Concert Series Inc. are set forth above, more comprehensive
information, including a discussion of potential risks, is found in the
current Prospectuses for each of the Investment Options, which are included
with the Prospectus. Additional prospectuses and the Statements of Additional
Information can be obtained by calling the Company's Customer Service Center
or writing the Company's Home Office. Purchasers should read the Prospectuses
for the Investment Options carefully before investing.
VOTING RIGHTS
In accordance with its view of present applicable law, the Company will vote
the shares of the Investment Options held in the Separate Account at special
meetings of the shareholders in accordance with instructions received from
persons having the voting interest in the Separate Account. The Company will
vote shares for which it has not received instructions, as well as shares
attributable to it, in the same proportion as it votes shares for which it has
received instructions. The Investment Options do not hold regular meetings of
shareholders.
The number of shares which a person has a right to vote will be determined as
of a date to be chosen by the Company prior to a shareholder meeting of an
Investment Option. Voting instructions will be solicited by written
communication prior to the meeting.
SUBSTITUTION OF SECURITIES
If the shares of the Investment Options (or any Portfolio within an Investment
Option or any other Investment Option), are no longer available for investment
by the Separate Account or, if in the judgment of the Company, further
investment in the shares should become inappropriate in view of the purpose of
the Contracts, the Company may substitute shares of another Investment Option
(or Portfolio) for shares already purchased or to be purchased in the future
by Purchase Payments under the Contracts. No substitution of securities may
take place without prior approval of the Securities and Exchange Commission
and under the requirements it may impose.
Shares of the Investment Options are issued and redeemed in connection with
investments in and payments under certain variable annuity contracts and (with
respect to certain of the Investment Options) variable life insurance policies
of various life insurance companies which may or may not be affiliated. In
addition, the Concert Series offers its shares to tax-qualified pension and
retirement plans ("Qualified Plans"). The Investment Options do not foresee
any disadvantage to Owners arising out of the fact that the Investment Options
offer their shares for products offered by life insurance companies which are
not affiliated (or with respect to the Concert Series, that it offers its
shares to Qualified Plans). Nevertheless, the Boards of Trustees of the
Investment Options intend to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to determine what
action, if any, should be taken in response thereto. If such a conflict were
to occur, one or more insurance company separate accounts (or Qualified Plans)
might withdraw its investments in an Investment Option. An irreconcilable
conflict might result in the withdrawal of a substantial amount of a
Portfolio's assets which could adversely affect such Portfolio's net asset
value per share.
CHARGES AND DEDUCTIONS
Various charges and deductions are made from the Contract Value and the
Separate Account. These charges and deductions are:
DEDUCTION FOR WITHDRAWAL CHARGE (SALES LOAD)
If all or a portion of the Contract Value (see "Withdrawals" on Page __) is
withdrawn, a Withdrawal Charge (sales load) will be calculated at the time of
each withdrawal and will be deducted from the Contract Value. This Charge
reimburses the Company for expenses incurred in connection with the promotion,
sale and distribution of the Contracts. The Withdrawal Charge percentages are
based upon the number of Purchase Payment Anniversaries that Purchase Payments
have remained in the Contract before being withdrawn as shown in the Table of
Withdrawal Charges below:
TABLE OF WITHDRAWAL CHARGES
<TABLE>
<CAPTION>
<S> <C>
Purchase Payment Anniversary Withdrawal Charge
- ---------------------------- ------------------------------------
1 8% of the Purchase Payment withdrawn
2 7% of the Purchase Payment withdrawn
3 6% of the Purchase Payment withdrawn
4 5% of the Purchase Payment withdrawn
5 4% of the Purchase Payment withdrawn
6 3% of the Purchase Payment withdrawn
7 2% of the Purchase Payment withdrawn
8 1% of the Purchase Payment withdrawn
9 and after 0% of the Purchase Payment withdrawn
</TABLE>
At any time the Owner may make a withdrawal, without the imposition of a
Withdrawal Charge, of an amount equal to the sum of: 1) earnings (Contract
Value less unliquidated Purchase Payments not withdrawn); 2) Purchase Payments
in the Contract for more than eight years; and 3) an amount which is equal to
10% of the Purchase Payments in the Contract for less than eight years, fixed
at the time of the first withdrawal in the Contract Year, plus 10% of the
Purchase Payments made after the first withdrawal in the Contract Year but
before the next Contract Anniversary, less any withdrawals in the same
Contract Year of Purchase Payments less than eight years old. See
"Withdrawals" for a discussion of how Contract Value is deemed withdrawn for
purposes of the Withdrawal Charge.
Commissions will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions, up to an amount currently equal to
7.75% of Purchase Payments, for promotional or distribution expenses
associated with the marketing of the Contracts. The Company may, by agreement
with the broker-dealer, pay commissions as a combination of a certain
percentage amount at the time of sale and a trail commission (which when
combined could exceed 7.75% of Purchase Payments). In addition, under certain
circumstances, the Company may pay certain sellers production bonuses which
will take into account, among other things, the total Purchase Payments which
have been made under Contracts associated with the broker-dealer. Additional
payments or allowances may be made for other services not directly related to
the sale of the Contracts. To the extent that the Withdrawal Charge is
insufficient to cover the actual costs of distribution, the Company may use
any of its corporate assets, including potential profit which may arise from
the Mortality and Expense Risk Charge (see below), to provide for any
difference.
No Withdrawal Charge is deducted if Plan A -- Option 1; Plan B or Plan C is
elected. (See "Contract Proceeds -- Fixed Payment Plans" on Page __.)
In addition, in certain states, an endorsement to the Contract is issued which
permits the Owner to make a total or partial withdrawal without the imposition
of a Withdrawal Charge if the Annuitant is hospitalized and/or confined to an
eligible nursing home for 30 consecutive days.
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
The amount of the Withdrawal Charge on the Contracts may be reduced or
eliminated when sales of the Contracts are made to individuals or to a group
of individuals in a manner that results in savings of sales expenses. The
entitlement to reduction of the Withdrawal Charge will be determined by the
Company after examination of all the relevant factors such as:
1. The size and type of group to which sales are to be made will be
considered. Generally, the sales expenses for a larger group are less than for
a smaller group because of the ability to implement large numbers of Contracts
with fewer sales contacts.
2. The total amount of Purchase Payments to be received will be
considered. Per Contract sales expenses are likely to be less on larger
Purchase Payments than on smaller ones.
3. Any prior or existing relationship with the Company will be
considered. Per Contract sales expenses are likely to be less when there is a
prior existing relationship because of the likelihood of implementing the
Contract with fewer sales contacts.
4. There may be other circumstances, of which the Company is not
presently aware, which could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction or elimination of the Withdrawal Charge.
The Company and its affiliates may offer an exchange program ("Exchange
Program") to their fixed annuity contract owners whereby a contract owner can
exchange his or her fixed annuity contract for a Contract offered by this
Prospectus. Pursuant to the Exchange Program, the Withdrawal Charge may be
reduced or eliminated so that a contract owner would not incur any additional
or higher Withdrawal Charge as a result of the exchange.
The Withdrawal Charge may be eliminated when the Contracts are issued to an
officer, director or employee of the Company or any of its affiliates. In no
event will reductions or elimination of the Withdrawal Charge be permitted
where reductions or elimination will be unfairly discriminatory to any person.
DEDUCTION FOR MORTALITY AND EXPENSE RISK CHARGE
The Company deducts on each Valuation Date a Mortality and Expense Risk Charge
which is equal, on an annual basis, to 1.25% (consisting of approximately
.90% for mortality risks and approximately .35% for expense risks) of the
average daily net asset value of the Separate Account. The mortality risks
assumed by the Company arise from its contractual obligation to make annuity
payments after the Annuity Date for the life of the Annuitant and to waive the
Withdrawal Charge in the event of the death of the Annuitant. Also, there is a
mortality risk borne by the Company with respect to the guaranteed death
benefit (see "Contract Proceeds -- Death Proceeds" on Page __). The expense
risk assumed by the Company is that all actual expenses involved in
administering the Contracts, including Contract maintenance costs,
administrative costs, mailing costs, data processing costs, legal fees,
accounting fees, filing fees and the costs of other services may exceed the
amount recovered from the Annual Contract Maintenance Charge and the
Administrative Charge.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by the Company. Conversely, if the amount
deducted proves more than sufficient, the excess will be a profit to the
Company. The Company expects a profit from this charge.
The Mortality and Expense Risk Charge is guaranteed by the Company and cannot
be increased.
DEDUCTION FOR ADMINISTRATIVE CHARGE
The Company deducts on each Valuation Date an Administrative Charge which is
equal, on an annual basis, to .15% of the average daily net asset value of the
Separate Account. This charge, together with the Annual Contract Maintenance
Charge (see below), is to reimburse the Company for the expenses it incurs in
the establishment and maintenance of the Contracts and the Separate Account.
These expenses include but are not limited to: preparation of the Contracts,
confirmations, annual reports and statements, maintenance of Owner records,
maintenance of Separate Account records, administrative personnel costs,
mailing costs, data processing costs, legal fees, accounting fees, filing
fees, the costs of other services necessary for Owner servicing and all
accounting, valuation, regulatory and reporting requirements. Since this
charge is an asset- based charge, the amount of the charge attributable to a
particular Contract may have no relationship to the administrative costs
actually incurred by that Contract. The Company does not intend to profit from
this charge. This charge will be reduced to the extent that the amount of this
charge is in excess of that necessary to reimburse the Company for its
administrative expenses. Should this charge prove to be insufficient, the
Company will not increase this charge and will incur the loss.
DEDUCTION FOR ANNUAL CONTRACT MAINTENANCE CHARGE
The Company deducts an Annual Contract Maintenance Charge of $30 from the
Contract Value on each Contract Anniversary prior to the Maturity Date. This
charge is to reimburse the Company for its administrative expenses (see
above). This charge is deducted by subtracting values from the Fixed Account
and/or cancelling Accumulation Units from each applicable Subaccount in the
ratio that the value of each account bears to the total Contract Value. If a
total withdrawal is made on other than a Contract Anniversary, the Annual
Contract Maintenance Charge will be deducted at the time of withdrawal. If the
Maturity Date is not a Contract Anniversary, the Annual Contract Maintenance
Charge will be deducted from the Maturity Proceeds. The Company has set this
charge at a level so that, when considered in conjunction with the
Administrative Charge (see above), it will not make a profit from the charges
assessed for administration.
DEDUCTION FOR PREMIUM TAXES
The Contract provides that any premium or other taxes paid to any government
entity relating to the Contract will be deducted from the Purchase Payment or
Contract Value when incurred. Some states assess premium taxes at the time
Purchase Payments are made; others assess premium taxes at the time Annuity
Payments begin. Premium taxes generally range from 0% to 4%. The Contract also
provides that the Company may, at its sole discretion, pay taxes when due and
deduct that amount from the Contract Value at a later date. Payment at an
earlier date does not waive any right the Company may have to deduct amounts
at a later date. The Company currently intends to advance any premium taxes
due at the time Purchase Payments are made and then deduct such premium taxes
from an Owner's Contract Value at the time Annuity Payments begin or upon
withdrawal if the Company is unable to obtain a refund. The Company will, in
its sole discretion, determine when taxes have resulted from:
(1) the investment experience of the Separate Account;
(2) receipt by the Company of the Purchase Payments; or
(3) commencement of Annuity Payments.
DEDUCTION FOR INCOME TAXES
While the Company is not currently maintaining a provision for federal income
taxes with respect to the Separate Account, the Company has reserved the right
to establish a provision for income taxes if it determines, in its sole
discretion, that it will incur a tax as a result of the operation of the
Separate Account. The Company will deduct for any income taxes incurred by it
as a result of the operation of the Separate Account whether or not there was
a provision for taxes and whether or not it was sufficient. The Company will
deduct any withholding taxes required by applicable law.
DEDUCTION FOR EXPENSES OF THE INVESTMENT OPTIONS
There are other deductions from and expenses paid out of the assets of the
Investment Options, including amounts paid for other expenses and amounts paid
to the Investment Advisers as Management Fees, which are described in the
accompanying Prospectuses for the Investment Options.
DEDUCTION FOR TRANSFER FEE
Prior to the Maturity Date, the Owner may transfer all or part of the Owner's
interest in a Subaccount or the Fixed Account (subject to Fixed Account
provisions) without the imposition of any fee or charge if there have been no
more than 12 transfers made in the Contract Year. If more than 12 transfers
have been made in the Contract Year, the Company will deduct a Transfer Fee
which is equal to the lesser of 2% of the Contract Value transferred or an
amount not greater than $25. (The current amount is $25.) Currently, all
transfers made on any one day are considered a single transfer. If the Owner
is participating in the Automatic Portfolio Rebalancing program or Dollar Cost
Averaging program providing for the automatic transfer of funds from a
Subaccount or the Fixed Account to any other Subaccount(s), such transfers
currently are not counted toward the number of transfers for the year and are
not taken into account in determining any Transfer Fee. However, the Company
reserves the right to treat multiple transfers in a single day, Automatic
Portfolio Rebalancing transfers and Dollar Cost Averaging transfers as
standard transfers when determining annual transfers and imposing the Transfer
Fee. (See "Purchase Payments and Contract Value -- Dollar Cost Averaging" on
Page __ and "Purchase Payments and Contract Value -- Automatic Portfolio
Rebalancing" on Page __.)
THE CONTRACTS
OWNERSHIP
The Owner exercises all the rights under the Contract. The maximum issue Age
is 85 years old for Owners and Annuitants (in Florida, 75 years old for
Annuitants). The Owner may name a new Owner. Any change in Ownership must be
sent to the Company's Customer Service Center on a form acceptable to the
Company. The change will go into effect when it is signed, subject to any
payments or actions taken by the Company before it records it. The Company is
not responsible for any tax consequences occurring as a result of ownership
changes.
ANNUITANT
The Annuitant is the natural person on whose life Annuity Payments are based.
The Annuitant is irrevocably named at the time the Contract is issued.
ASSIGNMENT
During the Annuitant's life, the Owner can assign some or all of the Owner's
rights under the Contract to someone else.
A signed copy of the assignment must be sent to the Company on a form
acceptable to the Company. An assignment of the Contract is not binding on the
Company until the assignment, or a copy, is recorded at the Customer Service
Center, subject to any payments or actions taken by the Company before the
recording. The Company is not responsible for the validity or effect of any
assignment, including any tax consequences.
The consent of any Irrevocable Beneficiaries is required before assignment of
Proceeds can happen.
If the Contract is issued pursuant to a retirement plan which receives
favorable tax treatment under the provisions of Sections 401, 403(b), 408 or
457 of the Code, it may not be assigned, pledged or otherwise transferred
except as may be allowed under applicable law.
BENEFICIARY
The Owner can name any Beneficiary to be an Irrevocable Beneficiary. The
interest of an Irrevocable Beneficiary cannot be changed without his or her
consent. Otherwise, the Owner can change Beneficiaries as explained below.
Unless the Owner states otherwise, all rights of a Beneficiary, including an
Irrevocable Beneficiary, will end if he or she dies before the Annuitant. If
any Beneficiary dies before the Annuitant, that Beneficiary's interest will
pass to any other Beneficiaries according to their respective interests. If
all Beneficiaries die before the Annuitant, upon the Annuitant's death the
Company will pay the Death Proceeds to the Owner, if living, otherwise to the
Owner's estate or legal successors.
The Owner can change the Beneficiary at any time during the Annuitant's life.
To do so, the Owner must send a written request to the Company's Customer
Service Center. The request must be on a form acceptable to the Company. The
change will go into effect when signed, subject to any payments or actions
taken by the Company before it records the change.
A change cancels all prior Beneficiary designations; except, however, a change
will not cancel any Irrevocable Beneficiary without his or her consent. The
interest of the Beneficiary will be subject to:
(1) any assignment of the Contract, accepted and recorded by the Company
prior to the Annuitant's death; and
(2) any Payment Plan in effect on the date of the Annuitant's death.
Death Proceeds will be paid as though the Beneficiary died before the
Annuitant if:
(1) the Beneficiary dies at the same time as the Annuitant; or
(2) the Beneficiary dies within 24 hours of the Annuitant's death.
PURCHASE PAYMENTS AND CONTRACT VALUE
PURCHASE PAYMENTS
The initial Purchase Payment is due on the Issue Date. There is no Contract
until the initial Purchase Payment is paid. If any check presented as payment
of any part of the initial Purchase Payment for a Contract is not honored, the
Contract is void.
The minimum Purchase Payment for Non-Qualified Contracts is an aggregate of
$5,000 the first year and the minimum subsequent Purchase Payment is $100.
Under certain circumstances the Company may waive and/or modify the minimum
subsequent Purchase Payment requirement for Non-Qualified Contracts in the
case of large groups who submit Purchase Payments through Company approved
billing procedures. For Qualified Contracts, the minimum Purchase Payment is
$100 per month if payroll deduction is used; otherwise it is an aggregate of
$2,000 per year. Prior Company approval must be obtained for subsequent
Purchase Payments in excess of $500,000 or for total Purchase Payments in
excess of $1 million. The Company reserves the right to accept or decline any
Application or Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS
The initial Purchase Payment is allocated to the Fixed Account or the
Subaccount(s) of the Separate Account as elected by the Owner. Unless
otherwise changed by the Owner, subsequent Purchase Payments are allocated in
the same manner as the initial Purchase Payment. (In Oregon, Washington and
New Jersey, after the second Contract Year, subsequent Purchase Payments may
not be allocated to the Fixed Account.) Under certain circumstances, Purchase
Payments, which have been designated by prospective purchasers to be allocated
to the Fixed Account or Subaccounts other than the Smith Barney Money Market
Subaccount, may initially be allocated to the Smith Barney Money Market
Subaccount during the free look period. (See "Highlights" on Page __.) For
each Subaccount, Purchase Payments are converted into Accumulation Units. The
number of Accumulation Units credited to the Contract is determined by
dividing the Purchase Payment allocated to the Subaccount by the value of the
Accumulation Unit for the Subaccount. Purchase Payments allocated to the Fixed
Account are credited in dollars.
If the Application for a Contract is in good order, the Company will apply the
Purchase Payment to the Separate Account and credit the Contract with
Accumulation Units and/or to the Fixed Account and credit the Contract with
dollars within two business days of receipt. If the Application for a Contract
is not in good order, the Company will attempt to get it in good order or the
Company will return the Application and the Purchase Payment within five (5)
business days. The Company will not retain a Purchase Payment for more than
five (5) business days while processing an incomplete Application unless it
has been so authorized by the purchaser.
DOLLAR COST AVERAGING
Dollar Cost Averaging is a program which, if elected, permits an Owner to
systematically transfer each month amounts from any one Subaccount or the
Fixed Account (subject to Fixed Account provisions) to any Subaccount(s). By
allocating amounts on a regularly scheduled basis as opposed to allocating the
total amount at one particular time, an Owner may be less susceptible to the
impact of market fluctuations. The minimum amount which may be transferred is
$100. The minimum duration of participation in any Dollar Cost Averaging
program is currently five (5) months. An Owner must have a minimum of the
amount required in the Subaccount or the Fixed Account to complete the Owner's
designated program, in order to participate in the Dollar Cost Averaging
program.
All Dollar Cost Averaging transfers will be made on the 15th of each month or
another monthly date mutually agreed upon (or the next Valuation Date if the
15th of the month is not a Valuation Date). If the Owner is participating in
the Dollar Cost Averaging program, such transfers currently are not taken into
account in determining any Transfer Fee. The Company reserves the right to
treat Dollar Cost Averaging transfers as standard transfers when determining
the number of transfers in a year and imposing any applicable Transfer Fees.
An Owner participating in the Dollar Cost Averaging program may not make
automatic withdrawals of his or her Contract Value or participate in the
Automatic Portfolio Rebalancing program. (See "Purchase Payments and Contract
Value -- Automatic Portfolio Rebalancing" below and "Withdrawals -- Automatic
Withdrawals" on Page __.)
AUTOMATIC PORTFOLIO REBALANCING
Owners may participate in the Automatic Portfolio Rebalancing program pursuant
to which Owners authorize the Company to automatically transfer all or a
portion of their Contract Value on a periodic basis to maintain a particular
percentage allocation among the Portfolios, as selected by the Owner. The
Contract Value allocated to each Portfolio will increase or decrease at
different rates depending on the investment experience of the Portfolio and
Automatic Portfolio Rebalancing automatically reallocates the Contract Value
in the Portfolios to the allocation chosen by the Owner. The allocations must
be in full percentage points.
An Owner may select that rebalancing occur on a quarterly, semiannual or
annual basis and currently all Portfolios are available investment options
under Automatic Portfolio Rebalancing. The Fixed Account is excluded from
rebalancing. Currently, the Company offers Automatic Portfolio Rebalancing to
Owners with a Contract Value of greater than $25,000, but reserves the right
to offer the program on Contracts with a lesser amount. The Company reserves
the right to modify, suspend or terminate this service at any time.
All Automatic Portfolio Rebalancing transfers will be made on the 15th of the
month that rebalancing is requested or another monthly date mutually agreed
upon (or the next Valuation Date, if the 15th of the month is not a Valuation
Date). If the Owner is participating in the Automatic Portfolio Rebalancing
program, such transfers currently are not taken into account in determining
any Transfer Fee. The Company reserves the right to treat Automatic Portfolio
Rebalancing transfers as standard transfers when determining the number of
transfers in a year and imposing any applicable Transfer Fees. An Owner
participating in the Automatic Portfolio Rebalancing program may not make
automatic withdrawals of his or her Contract Value or participate in the
Dollar Cost Averaging program. (See "Purchase Payments and Contract Value --
Dollar Cost Averaging" above and "Withdrawals -- Automatic Withdrawals" on
Page __.)
CONTRACT VALUE
The Contract Value, at any time, is the sum of:
(1) the Fixed Account Value; and
(2) the Separate Account Value.
The Separate Account value on any Valuation Date means the sum of the Owner's
interests in the Subaccounts of the Separate Account. The value of the Owner's
interest in a Subaccount is determined by multiplying the number of
Accumulation Units attributable to that Subaccount by the Accumulation Unit
value for the Subaccount. Any withdrawals or transfers will result in the
cancellation of Accumulation Units in a Subaccount. The Separate Account
values will vary with the performance of the Subaccounts of the Separate
Account, any Purchase Payments paid, partial withdrawals and charges assessed.
ACCUMULATION UNIT
A Purchase Payment when allocated to the Separate Account is converted into
Accumulation Units for the selected Subaccount. The number of Accumulation
Units in a Subaccount credited to the Contract is determined by dividing the
Purchase Payment allocated to that Subaccount by the Accumulation Unit value
for that Subaccount as of the Valuation Period during which the Purchase
Payment is allocated to the Subaccount. The Accumulation Unit value for each
Subaccount was arbitrarily set initially at $10. Subsequent Accumulation Unit
values are determined by subtracting (2) from (1) and dividing the result by
(3) where:
(1) is the net result of:
(a) the assets of the Subaccount attributable to Accumulation Units;
plus or minus
(b) the cumulative charge or credit for taxes reserved, which
resulted from the operation or maintenance of the Subaccount.
(2) is the cumulative unpaid charge for the Mortality and Expense Risk
Charge and for the Administrative Charge; and
(3) is the number of Accumulation Units outstanding at the end of the
Valuation Period.
The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.
TRANSFERS
Prior to the Maturity Date, the Owner may transfer all or part of the Owner's
interest in a Subaccount or the Fixed Account without the imposition of any
fee or charge if there have been no more than 12 transfers for the Contract
Year. All transfers are subject to the following:
(1) if more than 12 free transfers have been made in any Contract Year,
the Company will deduct a Transfer Fee for each subsequent transfer. (The
Transfer Fee is the lesser of 2% of Contract Value transferred or $25.) The
Transfer Fee will be deducted from the amount which is transferred. Transfers
from a Dollar Cost Averaging program or Automatic Portfolio Rebalancing
program are currently not counted toward the number of annual transfers and
are not taken into account in determining any applicable Transfer Fees.
Currently, all transfers in a single day are treated as a single transfer. The
Company reserves the right to treat Dollar Cost Averaging transfers, Automatic
Portfolio Rebalancing transfers and multiple transfers in a single day as
standard transfers in determining the number of annual transfers and the
imposition of any applicable Transfer Fees.
(2) the minimum amount which can be transferred is $100 or the Owner's
entire interest in the Subaccount or the Fixed Account, if less. The minimum
amount which must remain in a Subaccount or Fixed Account after a transfer is
$100 or the Subaccount or Fixed Account must be liquidated.
(3) for any Contract Year, transfers of Purchase Payments and any
attributable earnings from the Fixed Account to a Subaccount are limited to
ten percent (10%) of the Purchase Payment and ten percent (10%) of its
attributable earnings. If a Purchase Payment was received at least eight (8)
years prior to the request for transfer, all of the Purchase Payment and the
earnings attributable to it may be transferred to a Subaccount. (In New
Jersey, no amounts may be transferred to the Fixed Account after the second
Contract Year).
(4) any transfer direction must clearly specify:
(a) the amount which is to be transferred; and
(b) the Fixed Account or Subaccounts which are to be affected.
(5) transfers will be made as of the Valuation Period next following the
Valuation Period during which a written request for a transfer is received by
the Company.
(6) the Company reserves the right, at any time, and without prior notice
to any party, to terminate, suspend, or modify the transfer privilege
described above, subject to applicable state law and regulation.
An Owner may elect to make transfers by telephone. To elect this option the
Owner must do so in writing to the Company. If there are Joint Owners, unless
the Company is informed to the contrary, instructions will be accepted from
either one of the Joint Owners. The Company will use reasonable procedures to
confirm that instructions communicated by telephone are genuine. If it does
not, the Company may be liable for any losses due to unauthorized or
fraudulent instructions. The Company may tape record all telephone
instructions.
WITHDRAWALS
Prior to the Maturity Date, the Owner may, upon written request received by
the Company, make a total or partial withdrawal of the Contract Withdrawal
Value. (For Contracts issued in Idaho, no partial withdrawal may be made for
30 days after the Issue Date). The Contract terminates if a total withdrawal
is made. The Contract Withdrawal Value is:
(1) the Contract Value for the Valuation Period next following the
Valuation Period during which a written request for a withdrawal is received
by the Company; less
(2) any applicable taxes not previously deducted; less
(3) the Withdrawal Charge, if any (see "Charges and Deductions --
Deduction for Withdrawal Charge (Sales Load)" on Page __); less
(4) the Annual Contract Maintenance Charge, if any.
A withdrawal will result in the cancellation of Accumulation Units for each
applicable Subaccount of the Separate Account or a reduction in the Fixed
Account Value. Unless otherwise instructed, a partial withdrawal will be
applied pro rata among each Subaccount and the Fixed Account based on the
ratio of the value of each Subaccount or Fixed Account to the Contract Value.
The Company will pay the amount of any withdrawal from the Subaccounts within
seven (7) calendar days of receipt of a request, unless the "Suspension of
Payments or Transfers" provision is in effect (see "Suspension of Payments or
Transfers" on Page __).
For purposes of determining any applicable Withdrawal Charges or any other
charges under the Contract, Contract Value is removed in the following order:
1) earnings (Contract Value less Purchase Payments not withdrawn); 2) Purchase
Payments in the Contract for more than eight years (these Purchase Payments
are liquidated on a first in, first out basis); 3) additional free amount
(which is equal to 10% of the Purchase Payments in the Contract for less than
eight years, fixed at the time of the first withdrawal in the Contract Year,
plus 10% of the Purchase Payments made after the first withdrawal in the
Contract Year but before the next Contract Anniversary, less any withdrawals
in the same Contract Year of Purchase Payments less than eight years old); and
4) Purchase Payments in the Contract for less than eight years (these Purchase
Payments are removed on a first in, first out basis).
Each partial withdrawal must be for an amount which is not less than $100 or
the Owner's entire interest in the Subaccount or the Fixed Account, if less.
The minimum Contract Value which must remain in a Subaccount or the Fixed
Account after a partial withdrawal is $100.
Certain tax withdrawal penalties and restrictions may apply to withdrawals
from the Contracts. (See "Tax Status" on Page __.) For Contracts purchased in
connection with 403(b) plans, the Code limits the withdrawal of amounts
attributable to contributions made pursuant to a salary reduction agreement
(as defined in Section 403(b)(11) of the Code) to circumstances only when the
Owner: (1) attains age 59 1/2; (2) separates from service; (3) dies; (4)
becomes disabled (within the meaning of Section 72(m)(7) of the Code); or (5)
in the case of hardship.
However, withdrawals for hardship are restricted to the portion of the Owner's
Contract Value which represents contributions made by the Owner and does not
include any investment results. The limitations on withdrawals became
effective on January 1, 1989 and apply only to salary reduction contributions
made after December 31, 1988, to income attributable to such contributions and
to income attributable to amounts held as of December 31, 1988. The
limitations on withdrawals do not affect rollovers or transfers between
certain Qualified Plans. Owners should consult their own tax counsel or other
tax adviser regarding any distributions.
AUTOMATIC WITHDRAWALS
Subject to any conditions and fees the Company may impose, an Owner may elect
to withdraw a designated amount in equal periodic installments ("automatic
withdrawals"). The Company reserves the right to charge a fee for automatic
withdrawals. Currently, however, there are no charges for automatic
withdrawals.
Automatic withdrawals are made on the 15th of each month, or any other monthly
date mutually agreed upon (or the next following Valuation Date if the monthly
date is not a Valuation Date). Certain withdrawal penalties may apply to
withdrawals from the Contracts (see "Tax Status -- Tax Treatment of
Withdrawals - Qualified Contracts" on Page __ and "Tax Treatment of
Withdrawals - Non-Qualified Contracts" on Page __). Automatic withdrawals are
taken pro rata from Contract Value. Automatic withdrawals are not allowed
simultaneously with the Dollar Cost Averaging program or Automatic Portfolio
Rebalancing program. (See "Purchase Payments and Contract Value -- Dollar Cost
Averaging" on Page __ and "Purchase Payments and Contract Value -- Automatic
Portfolio Rebalancing" on Page __.)
TEXAS OPTIONAL RETIREMENT PROGRAM
A Contract issued to a participant in the Texas Optional Retirement Program
("ORP") will contain an ORP endorsement that will amend the Contract as
follows: A) If for any reason a second year of ORP participation is not begun,
the total amount of the State of Texas' first-year contribution will be
returned to the appropriate institute of higher education upon its request.
B) No benefits will be payable, through surrender of the Contract or
otherwise, until the participant dies, accepts retirement, terminates
employment in all Texas institutions of higher education or attains the age
of 70 1/2. The value of the Contract may, however, be transferred to other
contracts or carriers during the period of ORP participation. A participant
in the ORP is required to obtain a certificate of termination from the
participant's employer before the value of a Contract can be withdrawn.
SUSPENSION OF PAYMENTS OR TRANSFERS
The Company reserves the right to suspend or postpone payments (in Illinois,
for a period not exceeding six months) for withdrawals or transfers for any
period when:
(1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
(2) trading on the New York Stock Exchange is restricted;
(3) an emergency exists as a result of which disposal of securities held
in the Separate Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Separate Account's net assets;
(4) when the Company's Customer Service Center is closed; or
(5) during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners; provided that applicable
rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions described in (2) and (3) exist.
The Company reserves the right to defer payment for a withdrawal or transfer
from the Fixed Account for the period permitted by law but not for more than
six months after written election is received by the Company.
CONTRACT PROCEEDS
MATURITY PROCEEDS
The Owner selects a Maturity Date at the Issue Date and may elect a new
Maturity Date at any time by making a written request to the Company at its
Customer Service Center at least seven days prior to the Maturity Date.
On the Maturity Date, the Company will pay the Maturity Proceeds of the
Contract to the Annuitant, if living, subject to the terms of the Contract. If
Payment Plan A, Option 1; Plan B; or Plan C are elected, the Maturity Proceeds
will be the Contract Value less any applicable taxes not previously deducted.
(See "Fixed Payment Plans" on Page __.) If the Maturity Proceeds are paid in
cash or by any other method not listed above, the Maturity Proceeds equal the
Contract Value less:
(1) any applicable taxes not previously deducted; less
(2) the Withdrawal Charge, if any; less
(3) the Annual Contract Maintenance Charge, if any.
The election of a Payment Plan must be made in writing at least seven (7) days
prior to the Maturity Date. If no election is made, an automatic option of
monthly income for a minimum of 120 months and as long thereafter as the
Annuitant lives will be applied.
DEATH PROCEEDS
For issue ages less than 67, the death proceeds will be the greater of:
(1) Purchase Payments (less any withdrawals and taxes);
(2) Contract Value on the date of settlement (less taxes); or
(3) The highest Contract Value (adjusted for subsequent premium withdrawals
and taxes) on any Contract Anniversary beginning with the 8th Contract
Anniversary and continuing through to the last anniversary prior to attained
age 76.
For issue ages 67 through 75, the death proceeds will be the greater of:
(1) Purchase Payments (less withdrawals and taxes);
(2) Contract Value on the date of settlement (less taxes); or
(3) The Contract Value (less subsequent withdrawals and taxes) on the 8th
Contract Anniversary.
For issue ages 76 and above, the death proceeds will be the Contract Value on
the date of settlement, less any applicable taxes not previously deducted.
The Death Proceeds will be determined and paid as of the Valuation Period next
following the Valuation Period during which both due proof of death
satisfactory to the Company and an election for the payment method from all
Beneficiaries are received at the Company.
The Beneficiary can elect to have a single lump sum payment or choose one of
the Payment Plans. If a single sum payment is requested, the amount will be
paid within seven (7) days, unless the Suspension of Payments or Transfers
provision is in effect.
Payment to the Beneficiary, other than in a single sum, may only be elected
during the 60-day period beginning with the date of receipt of due proof of
death on a form acceptable to the Company.
The entire Death Proceeds must be paid within five (5) years of the date of
death unless:
(1) the Beneficiary elects to have the Death Proceeds:
(a) payable under a Payment Plan over the life of the Beneficiary or
over a period not extending beyond the life expectancy of the Beneficiary; and
(b) payable beginning within one year of the date of death; or
(2) if the Beneficiary is the Owner's Spouse, the Beneficiary may elect
to become the Owner of the Contract and the Contract will continue in effect.
DEATH OF THE ANNUITANT
(1) If the Annuitant dies prior to the Maturity Date, the Company will
pay the Death Proceeds as provided above.
(2) If the Annuitant dies after the Maturity Date but before all of the
Proceeds payable under the Contract have been distributed, the Company will
pay the remaining Proceeds to the Beneficiary(ies) according to the terms of
the supplementary contract.
DEATH OF OWNER
(1) If the Owner dies before the Maturity Date, ownership of the Contract
will be transferred as follows:
(a) if the Owner is also the Annuitant, the Death of the Annuitant
provision described above applies; or
(b) if the Owner is not also the Annuitant and if the new Owner is
the spouse of the Owner, the Contract may be continued; or
(c) if the Owner is not also the Annuitant and if the new Owner is
someone other than the spouse of the Owner, the Contract Withdrawal Value must
be distributed pursuant to the Death Proceeds provision above.
(2) If the Owner dies on or after the Maturity Date, but before all
Proceeds payable under the Contract have been distributed, the Company will
continue payments according to the terms of the supplementary contract.
The Owner's spouse is the Owner's surviving spouse at the time of the Owner's
death. If the Owner is not a natural person, the death of the Annuitant will
be treated as the death of the Owner. If there are Joint Owners, any
references to the death of the Owner shall mean the first death of an Owner.
FIXED PAYMENT PLANS
After the first Contract Year, the Proceeds may be applied under one or more
of the Payment Plans described below. Payment Plans not specified in the
Contract are available only if they are approved both by the Company and the
Owner. The Owner chooses a Payment Plan during the Annuitant's lifetime. This
choice can be changed during the life of the Annuitant prior to the Maturity
Date. If the Owner has not chosen a plan prior to the Annuitant's death, the
automatic option of monthly income for a minimum of 120 months and as long
thereafter as the Payee lives will be applied.
The Owner chooses a plan by sending a written request to the Customer Service
Center. The Company will send the Owner the proper forms to complete. The
request, when recorded at the Company's Annuity Service Center, will be in
effect from the date it was signed, subject to any payments or actions taken
by the Company before the recording. Any change must be requested at least
seven (7) days prior to the Maturity Date. If, for any reason, the person
named to receive payments (the Payee) is changed, the change will go into
effect when the request is recorded at the Company's Annuity Service Center,
subject to any payments or actions taken by the Company before the recording.
No Withdrawal Charge is deducted if Plan A-Option 1; Plan B or Plan C is
elected.
A plan is available only if the periodic payment is $100 or more. If the Payee
is other than a natural person (such as a corporation), a plan will be
available only with the Company's consent.
A supplementary contract will be issued in exchange for the Contract when
payment is made under a Payment Plan. The effective date of a Payment Plan
shall be a date upon which the Company and the Owner mutually agree.
The minimum interest rate for plans A and B is 3.0% a year, compounded yearly.
The minimum rates for Plan C were based on the 1983a Annuity Table at 3.0%
interest, compounded yearly. The Company may pay a higher rate at its
discretion.
PLAN A. INTEREST
OPTION 1 -- The Contract Value less any applicable taxes not previously
deducted may be left on deposit with the Company for five (5) years. Fixed
payments will be made monthly, quarterly, semi-annually, or annually. The
Company does not allow a monthly payment if the Contract Value applied under
this option is less than $100,000. The Proceeds may not be withdrawn until the
end of the five (5) year period.
OPTION 2 -- The Contract Withdrawal Value may be left on deposit with the
Company for a specified period. Interest will be paid annually. All or part of
the Proceeds may be withdrawn at any time.
PLAN B. FIXED PERIOD
The Contract Value less any applicable taxes not previously deducted will
be paid until the Proceeds, plus interest, are paid in full. Payments may be
paid annually or monthly. The payment period cannot be more than thirty (30)
years nor less than five (5) years. The Contract provides for a table of
minimum annual payments. They are based on the Age of the Annuitant or the
Beneficiary.
PLAN C. LIFE INCOME
The Contract Value less any applicable taxes not previously deducted will
be paid in monthly or annual payments for as long as the Annuitant or
Beneficiary, whichever is appropriate, lives. The Company has the right to
require proof satisfactory to it of the Age and sex of such person and proof
of continuing survival of such person. A minimum number of payments may be
guaranteed, if desired. The Contract provides for a table of minimum annual
payments. They are based on the Age of the Annuitant or the Beneficiary.
DISTRIBUTOR
Equitable of Iowa Securities Network, Inc. ("Securities Network"), 604 Locust
Street, Des Moines, Iowa 50309, acts as the distributor of the Contracts.
Securities Network is also a wholly-owned subsidiary of Equitable of Iowa
Companies. The Contracts are offered on a continuous basis.
ADMINISTRATION
While the Company has primary responsibility for all administration of the
Contracts, it has retained Golden American Life Insurance Company, P.O. Box
8794, Wilmington, Delaware to perform certain administrative services. Such
administrative services include issuance of the Contracts and maintenance of
Owners' records.
PERFORMANCE INFORMATION
MONEY MARKET PORTFOLIO
From time to time, the Company may advertise the "yield" and "effective yield"
of the Smith Barney Money Market Subaccount of the Separate Account. Both
yield figures are based on historical earnings and are not intended to
indicate future performance. The "yield" of the Money Market Subaccount refers
to the income generated by Contract Values in the Money Market Subaccount over
a seven-day period (which period will be stated in the advertisement). This
income is "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the Contract Values in the
Money Market Subaccount. The "effective yield" is calculated similarly.
However, when annualized, the income earned by Contract Values is assumed to
be reinvested. This results in the "effective yield" being slightly higher
than the "yield" because of the compounding effect of the assumed
reinvestment. The yield figure will reflect the deduction of any asset-based
charges and any applicable Annual Contract Maintenance Charge, but will not
reflect the deduction of any Withdrawal Charge. The deduction of any
Withdrawal Charge would reduce any percentage increase or make greater any
percentage decrease.
OTHER PORTFOLIOS
From time to time, the Company may advertise performance data for the various
other Portfolios under the Contract. Such data will show the percentage change
in the value of an Accumulation Unit based on the performance of an investment
medium over a period of time, usually a calendar year, determined by dividing
the increase (decrease) in value for that Unit by the Accumulation Unit value
at the beginning of the period. This percentage figure will reflect the
deduction of any asset-based charges and any applicable Annual Contract
Maintenance Charges under the Contracts, but will not reflect the deduction of
any Withdrawal Charge. The deduction of any Withdrawal Charge would reduce any
percentage increase or make greater any percentage decrease.
Any advertisement will also include total return figures calculated as
described in the Statement of Additional Information. The total return figures
reflect the deduction of the asset-based charges, any applicable Annual
Contract Maintenance Charge and Withdrawal Charges, as well as the fees and
expenses of the Portfolio being advertised.
The Company may make available yield information with respect to some of the
Portfolios. Such yield information will be calculated as described in the
Statement of Additional Information. The yield information will reflect the
deduction of any applicable Annual Contract Maintenance Charge as well as any
asset-based charges.
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the Portfolios
against established market indices such as the Standard & Poor's 500 Composite
Stock Price Index, the Dow Jones Industrial Average or other management
investment companies which have investment objectives similar to the Portfolio
being compared. The Standard & Poor's 500 Composite Stock Price Index is an
unmanaged, unweighted average of 500 stocks, the majority of which are listed
on the New York Stock Exchange. The Dow Jones Industrial Average is an
unmanaged, weighted average of thirty blue chip industrial corporations listed
on the New York Stock Exchange. Both the Standard & Poor's 500 Composite Stock
Price Index and the Dow Jones Industrial Average assume quarterly reinvestment
of dividends.
In addition, the Company may, as appropriate, compare each Subaccount's
performance to that of other types of investments such as certificates of
deposit, savings accounts and U.S. Treasuries, or to certain interest rate and
inflation indices, such as the Consumer Price Index, which is published by the
U.S. Department of Labor and measures the average change in prices over time
of a fixed "market basket" of certain specified goods and services. Similar
comparisons of Subaccount performance may also be made with appropriate
indices measuring the performance of a defined group of securities widely
recognized by investors as representing a particular segment of the securities
markets. For example, Subaccount performance may be compared with Donoghue
Money Market Institutional Averages (money market rates), Lehman Brothers
Corporate Bond Index (corporate bond interest rates) or Lehman Brothers
Government Bond Index (long-term U.S. Government obligation interest rates).
The Company may also distribute sales literature which compares the
performance of the Accumulation Unit values of the Contracts issued through
the Separate Account with the unit values of variable annuities issued through
the separate accounts of other insurance companies. Such information will be
derived from the Lipper Variable Insurance Products Performance Analysis
Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is
published by Lipper Analytical Services, Inc., a publisher of statistical data
which currently tracks the performance of almost 4,000 investment companies.
The rankings compiled by Lipper may or may not reflect the deduction of
asset-based insurance charges. The Company's sales literature utilizing these
rankings will indicate whether or not such charges have been deducted. Where
the charges have not been deducted, the sales literature will indicate that if
the charges had been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect
the deduction of asset-based insurance charges. The Company's sales literature
utilizing these rankings will indicate whether or not such charges have been
deducted. Where the charges have not been deducted, the sales literature will
indicate that if the charges had been deducted, the ranking might have been
lower.
Morningstar rates a variable annuity subaccount against its peers with similar
investment objectives. Morningstar does not rate any subaccount that has less
than three years of performance data. The Company's sales literature utilizing
these rankings will indicate whether charges have been deducted. Where the
charges have not been deducted, the sales literature will indicate that if the
charges had been deducted, the ranking might have been lower.
TAX STATUS
GENERAL
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING INVESTMENT IN
THE CONTRACTS. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED IN THIS PROSPECTUS MAY BE APPLICABLE IN CERTAIN
SITUATIONS. MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE
STATE OR OTHER TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An Owner is
not taxed on increases in the value of a Contract until distribution occurs,
either in the form of a lump sum payment or as annuity payments under the
Annuity Option selected. For a lump sum payment received as a total withdrawal
(total surrender), the recipient is taxed on the portion of the payment that
exceeds the cost basis of the Contract. For Non-Qualified Contracts, this cost
basis is generally the purchase payments, while for Qualified Contracts there
may be no cost basis. The taxable portion of the lump sum payment is taxed at
ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments
based on a fixed annuity option is determined by multiplying the payment by
the ratio that the cost basis of the Contract (adjusted for any period certain
or refund feature) bears to the expected return under the Contract. Payments
received after the investment in the Contract has been recovered (i.e. when
the total of the excludible amounts equals the investment in the Contract) are
fully taxable. The taxable portion is taxed at ordinary income tax rates. For
certain types of Qualified Plans there may be no cost basis in the Contract
within the meaning of Section 72 of the Code. Owners, Annuitants and
Beneficiaries under the Contracts should seek competent financial advice about
the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury
Department ("Treasury Department"), adequately diversified. Disqualification
of the Contract as an annuity contract would result in imposition of federal
income tax to the Owner with respect to earnings allocable to the Contract
prior to the receipt of payments under the Contract. The Code contains a safe
harbor provision which provides that annuity contracts such as the Contracts
meet the diversification requirements if, as of the end of each quarter, the
underlying assets meet the diversification standards for a regulated
investment company and no more than fifty-five percent (55%) of the total
assets consist of cash, cash items, U.S. Government securities and securities
of other regulated investment companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg.
1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The
Regulations amplify the diversification requirements for variable contracts
set forth in the Code and provide an alternative to the safe harbor provision
described above. Under the Regulations, an investment portfolio will be deemed
adequately diversified if: (1) no more than 55% of the value of the total
assets of the portfolio is represented by any one investment; (2) no more than
70% of the value of the total assets of the portfolio is represented by any
two investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer".
The Company intends that all Portfolios of the Investment Options underlying
the Contracts will be managed by the investment advisers for the Investment
Options in such a manner as to comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be
contained in such guidance.
OWNER CONTROL
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available,
would cause the Owner to be considered as the owner of the assets of the
Separate Account resulting in the imposition of federal income tax to the
Owner with respect to earnings allocable to the Contract prior to receipt of
payments under the Contract.
Furthermore, under the Contract, the Owner may choose to invest in the Select
Portfolios of Concert Series, which in turn invest in regulated investment
companies which are available for investment to the general public ("fund of
funds structure"). Section 817 of the Code and the Treasury Regulations
thereunder do not currently address variable contract diversification in the
context of such a fund of funds structure. Furthermore, in consideration of
this structure, it is unknown what level of investment management must be
exercised by the managers of the Portfolios of the Investment Options and what
amount of investment diversification of these portfolios is required in order
to preclude the existence of an unacceptable level of owner control. As
discussed above, if the Owner is deemed to possess too much control over the
assets of the Separate Account, the Contract would not be given tax-deferred
treatment and therefore the earnings allocable to the Contract would be
subject to federal income tax prior to receipt by the Owner.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the Owner
being retroactively determined to be the owner of the assets of the Separate
Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from
such combination of contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation, or certain other entities. Such Contracts
generally will not be treated as annuities for federal income tax purposes.
However, this treatment is not applied to Contracts held by a trust or other
entity as an agent for a natural person nor to Contracts held by Qualified
Plans. Purchasers should consult their own tax counsel or other adviser before
purchasing a Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the Owner are subject to Federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at
the rate of 10% from non-periodic payments. However, the Owner, in most cases,
may elect not to have taxes withheld or to have withholding done at a
different rate.
Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a
mandatory 20% withholding for Federal income tax. The 20% withholding
requirement generally does not apply to: a) a series of substantially equal
payments made at least annually for the life or life expectancy of the
participant or joint and last survivor expectancy of the participant and a
designated beneficiary, or for a specified period of 10 years or more; or b)
distributions which are required minimum distributions; (c) the portion of the
distributions not includible in gross income (i.e. returns of after-tax
contributions). Participants should consult their own tax counsel or other tax
advisor regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate
purchase payments made, any amount withdrawn will be treated as coming first
from the earnings and then, only after the income portion is exhausted, as
coming from the principal. Withdrawn earnings are includible in gross income.
It further provides that a ten percent (10%) penalty will apply to the income
portion of any distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of
the Owner; (c) if the taxpayer is totally disabled (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (d) in a series of
substantially equal periodic payments made not less frequently than annually
for the life (or life expectancy) of the taxpayer or for the joint lives (or
joint life expectancies) of the taxpayer and his or her Beneficiary; (e) under
an immediate annuity; or (f) which are allocable to purchase payments made
prior to August 14, 1982.
The Contract provides that upon the death of the Annuitant prior to the
Maturity Date, the Death Proceeds will be paid to the named Beneficiary. Such
payments made upon the death of the Annuitant who is not the Owner of the
Contract do not qualify for the death of Owner exception described above, and
will be subject to the ten (10%) percent distribution penalty unless the
Beneficiary is 59 1/2 years old or one of the other exceptions to the penalty
applies.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts offered by this Prospectus are designed to be suitable for use
under various types of qualified plans. Generally, participants in a qualified
plan are not taxed on increases to the value of the contributions to the plan
until distribution occurs, regardless of whether the plan assets are held
under an annuity contract. Taxation of participants in each qualified plan
varies with the type of plan and terms and conditions of each specific plan.
Owners, Annuitants and Beneficiaries are cautioned that benefits under a
qualified plan may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts issued pursuant to the
plan. Some retirement plans are subject to distribution and other requirements
that are not incorporated into the Company's administrative procedures.
Owners, participants and Beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are general descriptions of
the types of qualified plans with which the Contracts may be used. Such
descriptions are not exhaustive and are for general informational purposes
only. The tax rules regarding qualified plans are very complex and will have
differing applications depending on individual facts and circumstances. Each
purchaser should obtain competent tax advice prior to purchasing a Contract
issued under a qualified plan.
Contracts issued pursuant to qualified plans include special provisions
restricting Contract provisions that may otherwise be available as described
in this Prospectus. Generally, Contracts issued pursuant to qualified plans
are not transferable except upon surrender or annuitization. Various penalty
and excise taxes may apply to contributions or distributions made in violation
of applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals -- Qualified Contracts", below.)
On July 6, 1983, the U.S. Supreme Court decided in ARIZONA GOVERNING COMMITTEE
v. NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection
with certain qualified plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the benefit
of their employees. Such contributions are not includible in the gross income
of the employees until the employees receive distributions from the Contracts.
The amount of contributions to the tax-sheltered annuity is limited to certain
maximums imposed by the Code. Furthermore, the Code sets forth additional
restrictions governing such items as transferability, distributions,
nondiscrimination and withdrawals. (See "Tax Treatment of Withdrawals --
Qualified Contracts" and "Tax-Sheltered Annuities -- Withdrawal Limitations"
below.) Any employee should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
b. Individual Retirement Annuities
(1) Regular Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement
Annuity" ("IRA"). Under applicable limitations, certain amounts may be
contributed to an IRA which will be deductible from the individual's gross
income. These IRAs are subject to limitations on eligibility, contributions,
transferability and distributions. (See "Tax Treatment of Withdrawals --
Qualified Contracts" below.) Under certain conditions, distributions from
other IRAs and other Qualified Plans may be rolled over or transferred on a
tax-deferred basis into an IRA. Sales of Contracts for use with IRAs are
subject to special requirements imposed by the Code, including the requirement
that certain informational disclosure be given to persons desiring to
establish an IRA. Purchasers of Contracts to be qualified as IRAs should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
(2) SIMPLE IRAs
Section 408(p) of the Code permits certain employers (generally those
with less than 100 employees) to establish a retirement program for employees
by using Savings Incentive Match Plan Individual Retirement Annuities ("SIMPLE
IRA"). SIMPLE IRA programs can only be established with the approval of and
adoption by the employer of the Owner of the SIMPLE IRA. Contributions to
SIMPLE IRAs will be made pursuant to a salary reduction agreement in which an
Owner would authorize his/her employer to deduct a certain amount from his/her
pay and contribute it directly to the SIMPLE IRA. The Owner's employer will
also make contributions to the SIMPLE IRA in amounts based upon certain
elections of the employer. The only contributions that can be made to a SIMPLE
IRA are salary reduction contributions and employer contributions as described
above, and rollover contributions from other SIMPLE IRAs. Purchasers of
Contracts to be qualified as SIMPLE IRAs should obtain competent tax advice as
to the tax treatment and suitability of such an investment.
c. Corporate and Self-Employed ("H.R. 10" and "Keogh")
Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These sections of
the Code also permit self-employed individuals to establish such retirement
plans for themselves and their employees (sometimes referred to as "Keogh" or
"H.R. 10" Plans). These retirement plans may permit the purchase of the
Contracts to provide benefits under the Plan. Contributions to the Plan for
the benefit of employees will not be includible in the gross income of the
employees until distributed from the Plan. The tax consequences to
participants may vary depending upon the particular plan design. However, the
Code places limitations and restrictions on all plans including on such items
as: amount of allowable contributions; form, manner and timing of
distributions; transferability of benefits; vesting and nonforfeitability of
interests; nondiscrimination in eligibility and participation; and the tax
treatment of distributions, withdrawals and surrenders. (See "Tax Treatment of
Withdrawals -- Qualified Contracts" below.) Purchasers of Contracts for use
with pension or profit-sharing plans should obtain competent tax advice as to
the tax treatment and suitability of such an investment.
d. Section 457 Plans of State and Local Governments and
Tax-Exempt Entities
Section 457 of the Code permits employees of state and local governments
and tax-exempt entities to defer a portion of their compensation without
paying current federal income tax if the employer establishes an "eligible
deferred compensation plan" as defined in Section 457 of the Code. For plans
established by tax-exempt entities, the employer is the Owner of the Contract
and has the sole right to the proceeds of the Contract, until paid or made
available to the participant, subject to the claims of the general creditors
of the employer. For plans established by state and local governments after
August 20, 1996, the assets of the 457 plan must be held in trust for the
benefit of plan participants and Contracts issued to these plans will be held
in the name of such trust, or in the name of the plan, for the benefit of plan
participants, and are not subject to the general creditors of the employer.
Purchasers of Contracts with respect to 457 plans should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS -- QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of
the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a Qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax
on the taxable portion of any distribution from qualified retirement plans,
including Contracts issued and qualified under Code Sections 401 (H.R. 10 and
Corporate Pension and Profit-Sharing Plans), 403(b) (Tax-Sheltered Annuities)
and 408(b) (Individual Retirement Annuities). The penalty is increased to 25%
instead of 10% for SIMPLE IRAs if distribution occurs within the first two
years after the Owner first participated in the SIMPLE IRA. To the extent
amounts are not includible in gross income because they have been rolled over
to an IRA or to another eligible qualified plan, no tax penalty will be
imposed. The tax penalty will not apply to the following distributions: (a) if
distribution is made on or after the date on which the Owner or Annuitant (as
applicable) reaches age 59 1/2; (b) distributions following the death or
disability of the Owner or Annuitant (as applicable) (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the Owner or Annuitant (as applicable) or the joint lives (or
joint life expectancies) of such Owner or Annuitant (as applicable) and his or
her designated Beneficiary; (d) distributions to an Owner or Annuitant (as
applicable) who has separated from service after he has attained age 55; (e)
distributions made to the Owner or Annuitant (as applicable) to the extent
such distributions do not exceed the amount allowable as a deduction under
Code Section 213 to the Owner or Annuitant (as applicable) for amounts paid
during the taxable year for medical care; (f) distributions made to an
alternate payee pursuant to a qualified domestic relations order; (g)
distributions from an Individual Retirement Annuity for the purchase of
medical insurance (as described in Section 213(d)(1)(D) of the Code) for the
Owner and his or her spouse and dependents if the Owner has received
unemployment compensation for at least 12 weeks. This exception will no
longer apply after the Owner has been re-employed for at least 60 days. The
exceptions stated in (d) and (f) above do not apply in the case of an
Individual Retirement Annuity. The exception stated in (c) above applies to an
Individual Retirement Annuity without the requirement that there be a
separation from service.
Generally, distributions from a qualified plan (other than IRAs) must commence
no later than April 1 of the calendar year following the year in which the
employee attains age 70 1/2 or retires, whichever is later. For IRAs,
distributions must commence no later than April 1 of the calendar year
following the year in which the Owner attains age 70 1/2. Required
distributions must be over a period not exceeding the life expectancy of the
individual or the joint lives or life expectancies of the individual and his
or her designated beneficiary. If the required minimum distributions are not
made, a 50% penalty tax is imposed as to the amount not distributed.
TAX-SHELTERED ANNUITIES -- WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value which represents contributions made by the Owner and does not include
any investment results. The limitations on withdrawals became effective on
January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, to income attributable to such contributions and to income
attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers or transfers between certain Qualified
Plans. Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
FINANCIAL STATEMENTS
Financial statements of the Company and the Separate Account have been
included in the Statement of Additional Information.
LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Separate Account, the
Distributor or the Company is a party which are likely to have a material
adverse effect on the Separate Account or upon the ability of the Company to
meet its obligations under the Contracts. In the ordinary course of business,
the Company and its subsidiaries are also engaged in certain other litigation
none of which management believes is material.
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
ITEM PAGE
Company
Experts
Legal Opinions
Distributor
Yield Calculation for Money Market Subaccount
Performance Information
Annuity Provisions
Financial Statements
<TABLE>
<CAPTION>
<S> <C>
________________________________________________________________________
__________________
__________________
__________________
FRONT
- -----
Equitable Life Insurance Company of Iowa
Variable Annuity Administration
P.O. Box 9271
Des Moines, Iowa 50306-9271
________________________________________________________________________
________________________________________________________________________
Please send me, at no charge, the Statement of Additional Information
dated February 3, 1997, for the Individual Flexible Purchase Payment
Deferred Variable and Fixed Annuity Contracts issued by Equitable Life
Insurance Company of Iowa Separate Account A and Equitable Life
Insurance Company of Iowa.
(Please print or type and fill in all information)
BACK ________________________________________________________________________
- -----
Name
________________________________________________________________________
Address
________________________________________________________________________
City State Zip Code
________________________________________________________________________
Form #PE-1 1/97
</TABLE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT DEFERRED
VARIABLE AND FIXED ANNUITY CONTRACTS
issued by
EQUITABLE LIFE INSURANCE COMPANY OF IOWA SEPARATE ACCOUNT A
AND
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED FEBRUARY 3, 1997, FOR THE
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE AND FIXED ANNUITY
CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE
THE COMPANY AT: P.O. BOX 8794, WILMINGTON, DELAWARE 19899-8794, (800)
344-6864.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED FEBRUARY 3, 1997.
TABLE OF CONTENTS
PAGE
Company
Experts
Legal Opinions
Distributor
Yield Calculation For Money Market Subaccounts
Performance Information
Annuity Provisions
Financial Statements
COMPANY
Information regarding Equitable Life Insurance Company of Iowa (the "Company")
and its ownership is contained in the Prospectus.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995, and the financial statements of each account
within the Separate Account as of December 31, 1995 for the period from
October 7, 1994 or commencement of operations to December 31, 1995, included
herein have been audited by Ernst & Young LLP, independent auditors, as set
forth in their reports appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
LEGAL OPINIONS
Legal matters in connection with the Contracts described herein are being
passed upon by the law firm of Blazzard, Grodd & Hasenauer, P.C., Westport,
Connecticut.
DISTRIBUTOR
Equitable of Iowa Securities Network, Inc. ("Securities Network") acts as the
distributor. Securities Network is an affiliate of the Company and is
registered as a broker-dealer. The offering is on a continuous basis.
YIELD CALCULATION FOR MONEY MARKET SUBACCOUNTS
The Money Market Subaccounts of the Separate Account will calculate their
current yield based upon the seven days ended on the date of calculation. For
the seven calendar days ended September 30, 1996, the annualized yield and
effective yield for the Money Market Subaccount were 3.31% and 3.37%,
respectively. For the seven calendar days ended September 30, 1996, the
annualized yield and effective yield for the Smith Barney Money Market
Subaccount were 3.35% and 3.41%, respectively.
The current yields of the Money Market Subaccounts are computed by determining
the net change (exclusive of capital changes) in the value of a hypothetical
pre-existing Owner account having a balance of one Accumulation Unit of the
Subaccount at the beginning of the period, subtracting the Mortality and
Expense Risk Charge, the Administrative Charge and the Annual Contract
Maintenance Charge, dividing the difference by the value of the account at the
beginning of the same period to obtain the base period return and multiplying
the result by (365/7).
The Money Market Subaccounts compute their effective compound yield according
to the method prescribed by the Securities and Exchange Commission. The
effective yield reflects the reinvestment of net income earned daily on Money
Market Subaccounts assets.
Net investment income for yield quotation purposes will not include either
realized capital gains and losses or unrealized appreciation and depreciation,
whether reinvested or not.
The yields quoted should not be considered a representation of the yield of
the Money Market Subaccounts in the future since the yield is not fixed.
Actual yields will depend not only on the type, quality and maturities of the
investments held by the Money Market Subaccounts and changes in the interest
rates on such investments, but also on changes in the Money Market
Subaccounts' expenses during the period.
Yield information may be useful in reviewing the performance of the Money
Market Subaccounts and for providing a basis for comparison with other
investment alternatives. However, the Money Market Subaccounts' yield
fluctuates, unlike bank deposits or other investments which typically pay a
fixed yield for a stated period of time. The yield information does not
reflect the deduction of any applicable Withdrawal Charge at the time of the
surrender. (See "Charges and Deductions - Deduction for Withdrawal Charge
(Sales Load)" in the Prospectus.)
PERFORMANCE INFORMATION
From time to time, the Company may advertise performance data as described in
the Prospectus. Any such advertisement will include total return figures for
the time periods indicated in the advertisement. Such total return figures
will reflect the deduction of a 1.25% Mortality and Expense Risk Charge, a
.15% Administrative Charge, the investment advisory fee for the underlying
Portfolio being advertised and any applicable Annual Contract Maintenance
Charge and Withdrawal Charges.
The hypothetical value of a Contract purchased for the time periods described
in the advertisement will be determined by using the actual Accumulation Unit
values for an initial $1,000 purchase payment, and deducting any applicable
Annual Contract Maintenance Charge and any applicable Withdrawal Charge to
arrive at the ending hypothetical value. The average annual total return is
then determined by computing the fixed interest rate that a $1,000 purchase
payment would have to earn annually, compounded annually, to grow to the
hypothetical value at the end of the time periods described. The formula used
in these calculations is
n
P (1 + T ) = ERV
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods used
(or fractional portion thereof) of a hypothetical $1,000
payment made at the beginning of the time periods used.
In addition to total return data, the Company may include yield information in
its advertisements. For each Subaccount (other than the Money Market
Subaccounts) for which the Company will advertise yield, it will show a yield
quotation based on a 30 day (or one month) period ended on the date of the
most recent balance sheet of the Separate Account included in the registration
statement, computed by dividing the net investment income per Accumulation
Unit earned during the period by the maximum offering price per Unit on the
last day of the period, according to the following formula:
Yield = a-b 6
[2(_____ + 1) - 1]
cd
Where:
a = Net investment income earned during the period by the Trust
attributable to shares owned by the Subaccount.
b = Expenses accrued for the period (net of reimbursements).
c = The average daily number of Accumulation Units outstanding
during the period.
d = The maximum offering price per Accumulation Unit on the last
day of the period.
The Company may also advertise performance data which will be calculated in
the same manner as described above but which will not reflect the deduction of
any Withdrawal Charge.
Owners should note that the investment results of each Subaccount will
fluctuate over time, and any presentation of the Subaccount's total return or
yield for any period should not be considered as a representation of what an
investment may earn or whatan Owner's total return or yield may be in any
future period.
ANNUITY PROVISIONS
Currently, the Company makes available payment plans on a fixed basis only.
(See the Prospectus - "Contract Proceeds - Fixed Payment Plans" for a
description of the Payment Plans.)
FINANCIAL STATEMENTS
The consolidated financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts.
Financial Statements
Equitable Life Insurance Company of Iowa
Period January 1, 1996 through
September 30, 1996
(Unaudited)
Equitable Life Insurance Company of Iowa
Financial Statements
Period January 1, 1996 through September 30, 1996
(Unaudited)
Contents
Unaudited Financial Statements
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Equitable Life Insurance Company of Iowa
Consolidated Balance Sheet (Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
September 30
1996
____________
<S> <C>
ASSETS
Investments
Fixed maturities, available for sale, at market
(cost: $7,065,461) $7,111,810
Equity securities of unaffiliated companies, at market
(cost: $51,430) 63,663
Equity security of affiliated company, at market
(cost: $619) 4,648
Mortgage loans on real estate 1,652,580
Real estate, less allowance for depreciation of $4,483 8,929
Policy loans 182,969
Short-term investments 20,292
____________
Total investments 9,044,891
Cash and cash equivalents 18,554
Securities and indebtedness of related parties 13,733
Accrued investment income 126,493
Notes and other receivables 22,487
Deferred policy acquisition costs 742,259
Property and equipment, less allowance for depreciation
of $12,335 9,049
Intangible assets, less accumulated amortization of $614 2,362
Other assets 76,288
Due from affiliates 10,030
Separate account assets 351,032
____________
Total assets $10,417,178
============
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Consolidated Balance Sheet (Unaudited) (continued)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
September 30
1996
____________
<S> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Policy liabilities and accruals:
Future policy benefits:
Annuity and universal life products $8,149,999
Traditional life insurance products 714,311
Unearned revenue reserve 17,806
Other policy claims and benefits 5,871
____________
8,887,987
Other policyholders' funds:
Advance premiums and other deposits 634
Accrued dividends 12,555
____________
13,189
Deferred income taxes 16,883
Due to affiliates 3,360
Other liabilities 201,470
Separate account liabilities 351,032
____________
Total liabilities 9,473,921
Commitments and contingencies
Stockholder's equity:
Common stock, par value $1.00 per share -
authorized 7,500,000 shares, issued and
outstanding 5,000,300 shares 5,000
Additional paid-in capital 274,009
Unrealized appreciation (depreciation) of
fixed maturity securities 18,865
Unrealized appreciation of equity securities 16,262
Retained earnings 629,121
____________
Total stockholder's equity 943,257
____________
Total liabilities and stockholder's equity $10,417,178
============
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Consolidated Statement of Income (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the nine
months ended
September 30
1996
____________
<S> <C>
Revenues:
Annuity and universal life product charges $46,556
Traditional life insurance premiums 29,712
Net investment income 523,671
Realized gains on investments 15,828
Other income 578
____________
616,345
Benefits and expenses:
Annuity and universal life benefits:
Interest credited to account balances 326,756
Benefit claims incurred in excess of account
balances 6,367
Traditional life insurance benefits 34,785
Decrease in future traditional policy benefits (2,275)
Distributions to participating policyholders 18,753
Underwriting, acquisition and insurance expenses:
Commissions 95,638
General expenses 34,680
Insurance taxes 5,951
Policy acquisition costs deferred (115,292)
Amortization of deferred policy acquisition costs 59,309
____________
464,672
Interest expense 1,872
Other expenses 1
____________
466,545
____________
149,800
Income taxes:
Current 49,724
Deferred 2,535
____________
52,259
____________
97,541
Equity loss, net of related income taxes (86)
____________
NET INCOME $97,455
============
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the nine
months ended
September 30
1996
____________
<S> <C>
OPERATING ACTIVITIES
Net income $97,455
Adjustments to reconcile net income to net cash provided by
operations:
Adjustments related to annuity and universal life products:
Interest credited to account balances 324,905
Charges for mortality and administration (47,414)
Change in unearned revenues 799
Decrease in traditional life policy liabilities and accruals (337)
Decrease in other policyholders' funds (217)
Increase in accrued investment income (3,659)
Policy acquisition costs deferred (115,292)
Amortization of deferred policy acquisition costs 59,309
Change in other assets, other liabilities and accrued income
taxes (15,222)
Provision for depreciation and amortization (536)
Provision for deferred income taxes 2,574
Share of losses of related parties 132
Realized gains on investments (15,828)
____________
Net cash provided by operating activities 286,669
INVESTING ACTIVITIES
Sale, maturity or repayment of investments:
Fixed maturities - available for sale 452,707
Equity securities 12,366
Mortgage loans on real estate 29,836
Real estate 7,213
Policy loans 25,589
Short-term investments - net 14,991
____________
542,702
Acquisition of investments:
Fixed maturities - available for sale (614,575)
Equity securities (13,287)
Mortgage loans on real estate (512,943)
Real estate (681)
Policy loans (26,135)
____________
($1,167,621)
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Consolidated Statement of Cash Flows (Unaudited) (continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the nine
months ended
September 30
1996
____________
<S> <C>
INVESTING ACTIVITIES (CONTINUED)
Sales of property and equipment $86
Purchases of property and equipment (3,846)
____________
Net cash used in investing activities (628,679)
FINANCING ACTIVITIES
Proceeds from line of credit borrowing 572,682
Repayment of line of credit borrowing (572,682)
____________
--
Receipts from annuity and universal life policies credited to
policyholder account balances 995,317
Return of policyholder account balances on annuity and
universal life policies (621,143)
Dividends paid to parent (24,000)
____________
Net cash provided by financing activities 350,174
____________
Increase in cash and cash equivalents 8,164
Cash and cash equivalents at beginning of year 10,390
____________
Cash and cash equivalents at end of period $18,554
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $1,873
Income taxes 58,556
Noncash investing and financing activities:
Foreclosure of mortgage loans 675
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited)
September 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Equitable Life Insurance Company of Iowa ("the Company") is a wholly-owned
subsidiary of Equitable of Iowa Companies ("parent"). The Company and USG
Annuity & Life Company ("USG") offer various insurance products including
deferred fixed annuities, universal and term life insurance and variable
annuities. These products are marketed by the Company's career agency force,
brokers and through financial institutions. The Company's primary customers
are middle-income individuals and small businesses.
CONSOLIDATION
The consolidated financial statements include the Company and its
subsidiaries. The Company's principal subsidiaries are USG, Equitable
American Insurance Company ("EAIC") and Equitable Companies. At
September 30, 1996, all subsidiaries are wholly owned. All significant
intercompany accounts and transactions have been eliminated.
INVESTMENTS
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, Accounting for Certain Investments in
Debt and Equity Securities. Pursuant to SFAS No. 115, fixed maturity
securities are designated as either "available for sale", "held for
investment" or "trading". Sales of fixed maturities designated as "available
for sale" are not restricted by SFAS No. 115. Available for sale securities
are reported at market value and unrealized gains and losses on these
securities are included directly in stockholder's equity, after adjustment
for related changes in deferred policy acquisition costs, policy reserves and
deferred income taxes. At September 30, 1996, all of the Company's fixed
maturity securities are designated as available for sale although the Company
is not precluded from designating fixed maturity securities as held for
investment or trading at some future date. Securities the Company has the
positive intent and ability to hold to maturity are designated as held for
investment. Sales of securities designated as held for investment are
severely restricted by SFAS No. 115. Securities that are bought and held
principally for the purpose of selling them in the near term are designated
as trading securities. Unrealized gains and losses on trading securities are
included in current earnings.
Transfers of securities between categories are restricted and are recorded at
fair value at the time of the transfer. Securities that are determined to
have a decline in value that is other than temporary are written down
to estimated fair value which becomes the security's new cost basis by a
charge to realized losses in the Company's Statement of Income. Premiums and
discounts are amortized/accrued utilizing the scientific interest method
which results in a constant yield over the securities' expected life.
Amortization/accrual of premiums and discounts on mortgage-backed securities
incorporates a prepayment assumption to estimate the securities' expected life.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equity securities (common and non-redeemable preferred stocks) are reported
at fair value if readily marketable, or at cost if not readily marketable.
The change in unrealized appreciation and depreciation of marketable equity
securities (net of related deferred income taxes, if any) is included
directly in stockholder's equity. Equity securities that are determined to
have a decline in value that is other than temporary are written down to
estimated fair value which becomes the security's new cost basis by a charge
to realized losses in the Company's Statement of Income.
Mortgage loans on real estate are reported at cost adjusted for amortization
of premiums and accrual of discounts. If the value of any mortgage loan is
determined to be impaired (i.e., when it is probable that the Company will be
unable to collect all amounts due according to the contractual terms of the
loan agreement), the carrying value of the mortgage loan is reduced to the
present value of expected future cash flows from the loan, discounted at the
loan's effective interest rate, or to the loan's observable market price, or
the fair value of the underlying collateral. The carrying value of impaired
loans is reduced by the establishment of a valuation allowance which is
adjusted at each reporting date for significant changes in the calculated
value of the loan. Changes in this valuation allowance are charged or
credited to income.
Real estate, which includes real estate acquired through foreclosure, is
reported at cost less allowances for depreciation. Real estate acquired
through foreclosure, or in-substance foreclosure, is recorded at the lower of
cost (which includes the balance of the mortgage loan, any accrued interest
and any costs incurred to obtain title to the property) or fair value as
determined at or before the foreclosure date. The carrying value of these
assets is subject to regular review. If the fair value, less estimated sale
cost of real estate owned, decreases to an amount lower than its carrying
value, a valuation allowance is established for the difference. This
valuation allowance can be restored should the fair value of the property
increase. Changes in this valuation allowance are charged or credited to
income.
Policy loans are reported at unpaid principal. Short-term investments are
reported at cost adjusted for amortization of premiums and accrual of
discounts. Investments accounted for by the equity method include
investments in, and advances to, various joint ventures and partnerships.
Estimated fair values, as reported herein, of publicly-traded fixed maturity
securities are as reported by an independent pricing service. Fair values of
conventional mortgage-backed securities not actively traded in a liquid
market are estimated using a third-party pricing system, which uses a matrix
calculation assuming a spread over U.S. Treasury bonds based upon the
expected average lives of the securities. Fair values of private placement
bonds are estimated using a matrix that assumes a spread (based on interest
rates and a risk assessment of the bonds) over U.S. Treasury bonds.
Estimated fair values of redeemable preferred stocks are as reported by the
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
National Association of Insurance Commissioners ("NAIC"). Estimated fair
values of equity securities are based on the latest quoted market prices, or
where not readily marketable, at values which are representative of the fair
values of issues of comparable yield and quality. Realized gains and losses
are determined on the basis of specific identification and average cost methods
for manager initiated and issuer initiated disposals, respectively.
FINANCIAL INSTRUMENTS
Interest rate caps and cash settled put swaptions ("instruments") are
reported at amortized cost and included in other assets. These instruments
were purchased to reduce the negative effects of potential increases in
withdrawal activity related to the Company's annuity liabilities which may
result from extreme increases in interest rates. All outstanding instruments
are designated as hedges and, therefore, are not reported at fair value.
Premiums paid to enter into these instruments are deferred and amortized over
the term of the instruments on a straight-line basis. The instruments do not
require any additional payments by the company. Any payments received in
accordance with the terms of the instruments are recorded as an adjustment to
interest credited. Unrealized gains and losses on these instruments and
related assets or liabilities will not be recorded in income until realized.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated statement of cash flows, the Company
considers all demand deposits and interest-bearing accounts not related to
the investment function to be cash equivalents. All interest-bearing
accounts classified as cash equivalents have original maturities of three
months or less.
DEFERRED POLICY ACQUISITION COSTS
Certain costs of acquiring new insurance business, principally commissions
and other expenses related to the production of new business, have been
deferred. For annuity and universal life products, such costs are being
amortized generally in proportion to the present value (using the assumed
crediting rate) of expected gross profits. This amortization is adjusted
retrospectively, or "unlocked", when the Company revises its estimate of
current or future gross profits to be realized from a group of products. For
traditional life insurance products, such costs are being amortized over the
premium-paying period of the related policies in proportion to premium
revenues recognized, using principally the same assumptions for interest,
mortality and withdrawals that are used for computing liabilities for future
policy benefits subject to traditional "lock-in" concepts. Deferred policy
acquisition costs are adjusted to reflect the pro-forma impact of unrealized
gains and losses on fixed maturity securities the Company has designated as
"available for sale" under SFAS No. 115.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment primarily represent leasehold improvements at the
Company's headquarters and at various agency offices and office furniture and
equipment and computer software and are not considered to be significant to
the Company's overall operations. Property and equipment are reported at
cost less allowances for depreciation. Depreciation expense is computed
primarily on the basis of the straight-line method over the estimated useful
lives of the assets.
INTANGIBLE ASSETS
Intangible assets include the value of various licenses acquired in
conjunction with the purchase of USG which are being amortized over forty
years using the straight-line method.
FUTURE POLICY BENEFITS
The liability for future policy benefits for traditional life insurance
products has been calculated on a net-level premium basis. Interest
assumptions range from 2.75% for 1956 and prior issues to a 9.00% level,
graded to 6.00% after twenty years for current issues. Mortality, morbidity
and withdrawal assumptions generally are based on actual experience. These
assumptions have been modified to provide for possible unfavorable deviation
from the assumptions.
With respect to annuity and universal life products, the Company utilizes the
retrospective deposit accounting method. Policy reserves represent the
premiums received plus accumulated interest, less mortality and
administration charges.
The unearned revenue reserve reflects the unamortized balance of the excess
of first year administration charges over renewal period administration
charges (policy initiation fees) on annuity and universal life products.
These excess charges have been deferred and are being recognized in income
over the period benefited using the same assumptions and factors used to
amortize deferred policy acquisition costs.
RECOGNITION OF PREMIUM REVENUES AND COSTS
Traditional life insurance premiums are recognized as revenues over the
premium-paying period. Future policy benefits and policy acquisition costs
are associated with the premiums as earned by means of the provision for
future policy benefits and amortization of deferred policy acquisition costs.
Revenues for annuity and universal life products consist of policy charges
for the cost of insurance, policy administration charges, amortization of
policy initiation fees and surrender charges assessed against policyholder
account balances during the period. Expenses related to these products
include interest credited to policyholder account balances and benefit claims
incurred in excess of policyholder account balances.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED INCOME TAXES
Deferred tax assets or liabilities are computed based on the difference
between the financial statement and income tax bases of assets and
liabilities using the enacted marginal tax rate. Deferred tax assets or
liabilities are adjusted to reflect the pro-forma impact of unrealized gains
and losses on fixed maturity securities the Company has designated as
available for sale under SFAS No. 115. Changes in deferred tax assets or
liabilities resulting from this SFAS No. 115 adjustment are charged or
credited directly to stockholder's equity. Deferred income tax expenses or
credits reflected in the Company's Statement of Income are based on the
changes in the deferred tax asset or liability from period to period
(excluding the SFAS No. 115 adjustment).
SEPARATE ACCOUNTS
The transactions in the separate accounts (which are charged or credited
directly to the accounts) are excluded from the consolidated statement of
income.
DIVIDEND RESTRICTIONS
The Company's ability to pay dividends to its parent company is restricted
because prior approval of insurance regulatory authorities is required for
payment of dividends to the stockholder which exceed an annual limitation. On
August 12, 1996, the Company paid a dividend to its parent of $24,000,000.
During the remainder of 1996, the Company could pay additional dividends of
approximately $61,758,000 without prior approval of statutory authorities.
Also, the amount ($374,431,000 at September 30, 1996) by which the
stockholder's equity stated in conformity with generally accepted accounting
principles exceeds statutory capital and surplus as reported is restricted
and cannot be distributed.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the preparation period.
Actual results could differ from those estimates.
Significant estimates and assumptions are utilized in the calculation of
deferred policy acquisition costs, policyholder liabilities and accruals,
postretirement benefits, guaranty fund assessment accruals and valuation
allowances on investments and deferred tax benefits. It is reasonably
possible that actual experience could differ from the estimates and
assumptions utilized which could have a material impact on the financial
statements.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
2. BASIS OF FINANCIAL REPORTING
The financial statements of the Company differ from related statutory
financial statements principally as follows: (1) acquisition costs of
acquiring new business are deferred and amortized over the life of the
policies rather than charged to operations as incurred; (2) future policy
benefit reserves on traditional life insurance products are based on
reasonable assumptions of expected mortality, interest, and withdrawals which
include a provision for possible unfavorable deviation from such assumptions,
which may differ from reserves based upon statutory mortality rates and
interest; (3) future policy benefit reserves for annuity and universal life
products are based on full account values, rather than the greater of cash
surrender value or amounts derived from discounting methodologies utilizing
statutory interest rates; (4) reserves are reported before reduction for
reserve credits related to reinsurance ceded and a receivable is established,
net of an allowance for uncollectible amounts, for these credits rather than
presented net of these credits; (5) fixed maturity investments are designated
as "available for sale" and valued at fair value with unrealized
appreciation/depreciation, net of adjustments to deferred income taxes (if
applicable) and deferred policy acquisition costs, credited/charged directly
to stockholders' equity rather than valued at amortized cost; (6) the
carrying value of fixed maturity securities is reduced to fair value by a
charge to realized losses in the statement of income when declines in
carrying value are judged to be other than temporary, rather than through
the establishment of a formula-determined statutory investment reserve
(carried as a liability), changes in which are charged directly to surplus;
(7) deferred income taxes are provided for the difference between the
financial statement and income tax bases of assets and liabilities; (8) net
realized gains or losses attributed to changes in the level of interest rates
in the market are recognized when the sale is completed rather than deferred
and amortized over the remaining life of the fixed maturity security or
mortgage loan; (9) gains arising from sale lease-back transactions are
deferred and amortized over the life of the lease rather than recognized in
the period of sale; (10) a liability is established for anticipated guaranty
fund assessments, net of related anticipated premium tax credits, rather
than capitalized when assessed and amortized in accordance with procedures
permitted by insurance regulatory authorities; (11) a prepaid pension cost
asset established in accordance with SFAS No. 87, Employers' Accounting for
Pensions, agents' balances and certain other assets designated as "non-admitted
assets" for statutory purposes are reported as assets rather than being
charged to surplus; (12) revenues for annuity and universal life products
consist of policy charges for the cost of insurance, policy administration
charges, amortization of policy initiation fees and surrender charges assessed
rather than premiums received; (13) expenses for postretirement benefits other
than pensions are recognized for all qualified employees rather than for only
vested and fully-eligible employees, and the accumulated postretirement
benefit obligation for years prior to adoption of SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other than Pensions, was recognized as
a cumulative effect of change in accounting method rather than deferred and
amortized over twenty years, and (14) assets and liabilities are restated to
fair values when a change in ownership occurs, with provisions for goodwill
and other intangible assets, rather than continuing to be presented at
historical cost.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
2. BASIS OF FINANCIAL REPORTING (CONTINUED)
Net income for the Company, USG and EAIC as determined in accordance with
statutory accounting practices was $76,156,000 for the period ended September
30, 1996. Total statutory capital and surplus was $568,827,000 at
September 30, 1996.
3. INVESTMENT OPERATIONS
Effective January 1, 1994, the Company adopted SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities. SFAS No. 115 requires
companies to classify their securities as "held to maturity", "available for
sale" or "trading".
All of the Company's fixed maturity securities are designated as available
for sale although the Company is not precluded from designating fixed
maturity securities as held for investment or trading at some future date.
At September 30, 1996, amortized cost, gross unrealized gains and losses and
estimated fair value of the Company's fixed maturity securities designated as
available for sale are as follows:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
______________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
September 30, 1996
U.S. Government and
governmental agencies
and authorities:
Mortgage-backed securities $256,339 $8,339 ($2,395) $262,283
Other 87,380 1,754 (1,957) 87,177
States, municipalities and
political subdivisions 15,224 906 (2) 16,128
Foreign governments 10,572 2,248 -- 12,820
Public utilities 1,209,530 28,669 (28,266) 1,209,933
Investment grade corporate 2,514,379 123,434 (31,472) 2,606,341
Below investment grade
corporate 688,700 7,726 (24,468) 671,958
Mortgage-backed securities 2,282,717 29,011 (66,949) 2,244,779
Redeemable preferred stocks 620 -- (229) 391
___________ ___________ ___________ ___________
Total Available for
Sale $7,065,461 $202,087 ($155,738) $7,111,810
=========== =========== =========== ===========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
3. INVESTMENT OPERATIONS (CONTINUED)
No fixed maturity securities were designated as held for investment at
September 30, 1996. Short-term investments, all with maturities of 30 days
or less, have been excluded from the preceding schedule in this note.
Amortized cost approximates fair value for these securities.
Amortized cost and estimated fair value of fixed maturity securities at
September 30, 1996, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Estimated
Amortized Fair
AVAILABLE FOR SALE Cost Value
_____________________________________________________________________________
(Dollars in thousands)
<S> <C> <C>
Due within one year $16,891 $17,190
Due after one year through five years 180,584 184,639
Due after five years through ten years 1,790,449 1,813,182
Due after ten years 2,538,481 2,589,737
_____________ _____________
4,526,405 4,604,748
Mortgage-backed securities 2,539,056 2,507,062
_____________ _____________
TOTAL AVAILABLE FOR SALE $7,065,461 $7,111,810
============= =============
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
3. INVESTMENT OPERATIONS (CONTINUED)
The amortized cost and fair value of mortgage-backed securities, which
comprise approximately 36% of the Company's investment in fixed maturity
securities at September 30, 1996, are as follows:
<TABLE>
<CAPTION>
Estimated
Amortized Fair
Cost Value
___________________________________________________________________________
(Dollars in thousands)
<S> <C> <C>
Mortgage-backed securities:
Government and agency guaranteed pools:
Very accurately defined maturities $17,354 $17,735
Planned amortization class 70,267 72,916
Targeted amortization class 29,325 28,414
Sequential pay 64,228 63,915
Pass through 75,165 79,304
Private label CMOs and REMICs:
Very accurately defined maturities 30,646 31,061
Planned amortization class 25,553 26,369
Targeted amortization class 437,297 418,450
Sequential pay 1,726,956 1,706,777
Mezzanines 37,787 37,209
Private placements and subordinate issues 24,478 24,912
___________ ___________
TOTAL MORTGAGE-BACKED SECURITIES $2,539,056 $2,507,062
=========== ===========
</TABLE>
During periods of significant interest rate volatility, the mortgages
underlying mortgage-backed securities may prepay more quickly or more slowly
than anticipated. If the principal amount of such mortgages are prepaid
earlier than anticipated during periods of declining interest rates,
investment income may decline due to reinvestment of these funds at lower
current market rates. If principal repayments are slower than anticipated
during periods of rising interest rates, increases in investment yield may
lag behind increases in interest rates because funds will remain invested at
lower historical rates rather than reinvested at higher current rates. To
mitigate this prepayment volatility, the Company invests primarily in
intermediate tranche collateralized mortgage obligations ("CMOs"). CMOs are
pools of mortgages that are segregated into sections, or tranches, which
provide sequential retirement of bonds rather than a pro-rata share of
principal return in the pass-through structure. The Company owns no "interest
only" or "principal only" mortgage-backed securities. Further, the Company has
not purchased obligations at significant premiums, thereby limiting exposure
to loss during periods of accelerated prepayments. At September 30, 1996,
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
3. INVESTMENT OPERATIONS (CONTINUED)
unamortized premiums on mortgage-backed securities totaled $4,395,000 and
unaccrued discounts on mortgage-backed securities totaled $53,794,000.
An analysis of sales, maturities and principal repayments of the Company's
fixed maturities portfolio for the nine months ended September 30, 1996 is as
follows:
<TABLE>
<CAPTION>
Gross Gross Proceeds
Amortized Realized Realized from
Cost Gains Losses Sale
_______________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Nine months ended
September 30, 1996
Available for sale:
Scheduled principal repay-
ments, calls and tenders $235,667 $10,581 ($286) $245,962
Sales 203,750 3,400 (405) 206,745
___________ _________ _________ ___________
Total $439,417 $13,981 ($691) $452,707
=========== ========= ========= ===========
</TABLE>
At September 30, 1996, the Company owned equity securities with a combined
book value of $52,049,000 and an estimated market value of $68,311,000,
resulting from gross unrealized appreciation of $16,475,000 and gross
unrealized depreciation of $213,000.
At September 30, 1996, one mortgage loan with a carrying value of $44,000 was
delinquent by 90 days or more.
The carrying value of investments which have been non-income producing for
the twelve months preceding September 30, 1996 totaled $537,000 related to a
mortgage loan and two investment real estate properties in the amount of
$44,000 and $493,000 respectively.
The Company's investment policies related to its investment portfolio require
diversification by asset type, company and industry and set limits on the
amounts which can be invested in an individual issuer. Such policies are at
least as restrictive as those set forth by regulatory authorities. The
percentages quoted in the following sentences relate to the holdings at
September 30, 1996. Fixed maturity investments included investments in
various non-governmental mortgage-backed securities (32%), public utilities
(18%), basic industrials (23%), and consumer products (12%). Mortgage loans
on real estate have been analyzed by geographical locations and there are no
concentrations of mortgage loans in any state exceeding ten percent in 1996.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
3. INVESTMENT OPERATIONS (CONTINUED)
Mortgage loans on real estate have also been analyzed by collateral type with
significant concentrations identified in retail facilities (27%), industrial
buildings (29%), multi-family residential buildings (20%), and office
buildings (22%). Equity securities (which represent 0.74% of the Company's
investments) are comprised of investments in the Company's registered
separate account, an investment with an estimated fair value of $44,370,000
in a real estate investment trust and an investment in common stock of the
Company's parent with an estimated fair value of $4,648,000. Real estate
and investments accounted for by the equity method are not significant to the
Company's overall investment portfolio.
No investment in any person or its affiliates (other than bonds issued by
agencies of the United States government) exceeded ten percent of
stockholder's equity at September 30, 1996.
4. FINANCIAL INSTRUMENTS
During the second quarter of 1996, the Company implemented a hedging program
under which certain derivative financial instruments, interest rate caps and
cash settled put swaptions ("instruments"), were purchased to reduce the
negative effects of potential increases in withdrawal activity related to the
Company's annuity liabilities which may result from extreme increases in
interest rates. The Company purchased instruments, all during the second
quarter, with notional amounts totaling approximately $600,000,000 in
interest rate caps and $1,300,000,000 in cash settled put swaptions all of
which were outstanding at September 30, 1996. The Company paid approximately
$21,100,000 in premiums for these instruments. The cost of this program has
been incorporated into the Company's product pricing. The instruments do not
require any additional payments by the Company.
The agreements for these instruments entitle the Company to receive payments
from the instruments' counterparties on future reset dates if interest rates,
as specified in the agreements, rise above a specified fixed rate (9.0% and
9.5%). The amount of such payments to be received by the Company for the
interest rate caps, if any, will be calculated by taking the excess of the
current applicable rate over the specified fixed rate, and multiplying this
excess by the notional amount of the caps. Payments on cash settled put
swaptions are also calculated based upon the excess of the current applicable
rate over the specified fixed rate multiplied by the notional amount. The
product of this rate differential times the notional amount is assumed to
continue for a series of defined future semi-annual payment dates and the
resulting hypothetical payments are discounted to the current payment date
using the discount rate defined in the agreement. Any payments received from
the counterparties will be recorded as an adjustment to interest credited.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
4. FINANCIAL INSTRUMENTS (CONTINUED)
The following table summarizes the contractual maturities of notional amounts
by type of instrument at September 30, 1996:
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002 Total
_______________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest rate
caps $400,000 $200,000 $600,000
Cash settled
put swaptions $100,000 $400,000 $400,000 350,000 50,000 1,300,000
_______________________________________________________________
Total notional
amount $100,000 $400,000 $400,000 $750,000 $250,000 $1,900,000
===============================================================
</TABLE>
Premiums paid to enter into these instruments are deferred and included in
other assets. Premiums are amortized and included in interest credited to
account balances over the term of the instruments on a straight-line basis.
The Company has recorded amortization of $1,851,000 for the nine months ended
September 30, 1996. Unrealized gains and losses on these instruments and
related assets or liabilities will not be recorded in income until realized.
The Financial Accounting Standards Board ("FASB") and the Securities and
Exchange Commission are evaluating the accounting and disclosure requirements
for these instruments. FASB has issued an exposure draft titled "Accounting
for Derivative and Similar Financial Instruments and for Hedging Activities"
which, if adopted as a Statement of Financial Accounting Standards in its
current form, would require the Company to change its accounting treatment for
these instruments. The requirements of any final standard which may result
from this exposure process are not known at this time and, therefore, the
impact of such a standard on the Company's financial statements cannot be
determined at this time.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
4. FINANCIAL INSTRUMENTS (CONTINUED)
Any unrealized gain or loss on the instruments is off-balance sheet and
therefore, is not reflected in the financial statements. The following table
summarizes the amortized cost, gross unrealized gains and losses and
estimated fair value on these instruments as of September 30, 1996:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 1996 Cost Gains Losses Value
_______________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Interest rate caps $5,437 $15 ($519) $4,933
Cash settled put swaptions 13,834 574 (916) 13,492
_________________________________________________
Total $19,271 $589 ($1,435) $18,425
=================================================
</TABLE>
The decline in market value from amortized cost reflects changes in interest
rates and market conditions since time of purchase.
The Company is exposed to the risk of losses in the event of non-performance
by the counterparties of these instruments. Losses recorded in the Company's
financial statements in the event of non-performance will be limited to the
unamortized premium (remaining amortized cost) paid to enter into the
instrument because no additional payments are required by the Company on
these instruments after the initial premium. Counterparty non-performance
would result in an economic loss if interest rates exceeded the specified
fixed rate. Economic losses would be measured by the net replacement cost,
or estimated fair value, for such instruments. The estimated fair value is
the average of quotes obtained from related and unrelated counterparties.
The Company limits its exposure to such losses by: diversification among
counterparties, limiting exposure to any individual counterparty based upon
that counterparty's credit rating, and by limiting its exposure by instrument
type to only those instruments that do not require future payments. For
purposes of determining risk exposure to any individual counterparty, the
Company evaluates the combined exposure to that counterparty on both a
derivative financial instruments' level and on the total investment portfolio
credit risk and reports its exposure to senior management and the Company's
Board of Directors at least monthly. The maximum potential economic loss (the
cost of replacing an instrument or the net replacement value) due to
nonperformance of the counterparties will increase or decrease during the life
of the instruments as a function of maturity and market conditions.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
4. FINANCIAL INSTRUMENTS (CONTINUED)
The Company determines counterparty credit quality by reference to ratings
from independent rating agencies. As of September 30, 1996, the ratings
assigned by Standard & Poor's Corporation by instrument with respect to the
net replacement value (fair value) of the Company's instruments was as
follows:
<TABLE>
<CAPTION>
September 30, 1996 Net Replacement Value
______________________________________________________________________________
Interest Cash Settled
Rate Put
Caps Swaptions Total
____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Counterparties
credit quality:
AAA $3,301 $7,100 $10,401
A+ 1,632 6,392 $8,024
____________________________________________________
Total $4,933 $13,492 $18,425
====================================================
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
reinsurance to other insurance enterprises or reinsurers. Reinsurance coverages
for life insurance vary according to the age and risk classification of the
insured with retention limits ranging up to $500,000 of coverage per individual
life. The Company does not use financial or surplus relief reinsurance.
Reinsurance contracts do not relieve the Company from its obligations to its
policyholders. To the extent that reinsuring companies are later unable to
meet obligations under reinsurance agreements, the Company would be liable
for these obligations, and payment of these obligations could result in
losses to the Company. To limit the possibility of such losses, the Company
evaluates the financial condition of its reinsurers, monitors concentrations
of credit risk arising from factors such as similar geographic regions, and
limits its exposure to any one reinsurer. At September 30, 1996, the Company
had reinsurance treaties with 14 reinsurers, all of which are deemed to be
long-duration, retroactive contracts, and has established a receivable
totaling $18,370,000 for reserve credits, reinsurance claims and other
receivables from these reinsurers. No allowance for uncollectible amounts
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
has been established since none of the receivables are deemed to be
uncollectible, and because such receivables, either individually or in the
aggregate, are not material to the Company's operations. The Company's
liability for future policy benefits and notes and other receivables have
been increased by $16,940,000 at September 30, 1996 for reserve credits on
reinsured policies. This "gross-up" of assets and liabilities for reserve
credits on reinsurance had no impact on the Company's net income. Insurance
premiums and product charges have been reduced by $5,125,000 in the first
nine months of 1996 as a result of the cession agreements. Insurance
benefits and expenses have been reduced by $3,981,000 in the first nine
months of 1996. The amount of reinsurance assumed is not significant.
INVESTMENT COMMITMENTS
At September 30, 1996, outstanding commitments to fund mortgage loans on real
estate totaled $56,690,000. In addition, outstanding commitments to purchase
mortgage-backed securities totaled $26,810,000 at September 30, 1996.
GUARANTY FUND ASSESSMENTS
Assessments are levied on the Company by life and health guaranty
associations in most states in which the Company is licensed to cover losses
of policyholders of insolvent or rehabilitated insurers. In some states,
these assessments can be partially recovered through a reduction in future
premium taxes. The Company cannot predict whether and to what extent
legislative initiatives may affect the right to offset. The Company has
established a reserve to cover such assessments and regularly reviews
information regarding known failures and revises it's estimates of future
guaranty fund assessments accordingly. At September 30, 1996, the Company has
a reserve of $47,574,000 to cover estimated future assessments (net of related
anticipated premium tax credits) and has established an asset totaling
$13,421,000 for items expected to be recoverable through future premium tax
offsets. The Company believes this reserve is sufficient to cover expected
future insurance guaranty fund assessments related to known insolvencies at
this time.
LITIGATION
As previously reported, the Company and certain of its subsidiaries are
defendants in class action lawsuits filed in the United States District Court
for the Middle District of Florida, Tampa Division in February 1996 and in
the Court of Common Pleas of Allegheny County, Pennsylvania in June 1996.
The suits claim unspecified damages as a result of alleged improper life
insurance sales practices. The Company believes the allegations are without
merit. The suits are in the discovery and procedural stages and have not yet
been certified as class actions. The Company intends to defend the suits
vigorously. The amount of any liability which may arise as a result of these
suits, if any, cannot be reasonably estimated and no provision for loss has
been made in the Company's financial statements. The Company had also been a
party to a similar previously reported class action lawsuit filed in Iowa
which has now been dismissed.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (Unaudited) (continued)
5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
As previously reported, on December 15, 1995, USG received a Notice of
Intention to Arbitrate a dispute with one of its insurance brokerage agencies
before the American Arbitration Association regarding the payment of certain
commissions. The matter was submitted to arbitration and the determination
of the arbitration panel was that the Company must pay, over time, commissions
in amounts that are not material.
In the ordinary course of business, the Company and its subsidiaries are also
engaged in certain other litigation, none of which management believes is
material.
VULNERABILITY FROM CONCENTRATIONS
The Company has various concentrations in its investment portfolio (see Note
3 for further information). The Company's asset growth, net investment
income and cash flow are primarily generated from the sale of individual
fixed annuity policies and associated future policy benefits. Substantial
changes in tax laws that would make these products less attractive to
consumers or extreme fluctuations in interest rates which may result in
higher withdrawal experience than assumed, could cause a severe impact to the
Company's financial condition.
6. RELATED PARTY TRANSACTIONS
The Company purchases investment management services from an affiliate.
Payments for these services aggregated $6,863,000 for the nine months ended
September 30, 1996.
Additionally, the Company maintains a line of credit agreement with Equitable
of Iowa Companies to facilitate the handling of unusual and/or unanticipated
short-term cash requirements. Under the current agreement, which expires on
December 31, 1996, the Company can borrow up to $140 million. Interest on
any outstanding borrowings is charged at a rate of Equitable of Iowa
Companies' monthly average aggregate cost of short-term funds plus 1.00%. At
September 30, 1996, no amounts were outstanding under the line of credit.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Money
Market
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179) $17,528,179
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
____________
TOTAL INVESTMENTS 17,528,179
____________
Accrued investment income 63,794
____________
TOTAL NET ASSETS $17,591,973
============
NET ASSETS REPRESENTED BY:
Units 1,643,207
Unit Value 10.71
____________
Net Assets $17,591,973
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Mortgage-
Backed
Securities
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693) $9,170,801
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
____________
TOTAL INVESTMENTS 9,170,801
____________
Accrued investment income --
____________
TOTAL NET ASSETS $9,170,801
============
NET ASSETS REPRESENTED BY:
Units 805,409
Unit Value 11.39
____________
Net Assets $9,170,801
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
International
Fixed
Income
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330) $6,891,550
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
______________
TOTAL INVESTMENTS 6,891,550
______________
Accrued investment income --
______________
TOTAL NET ASSETS $6,891,550
==============
NET ASSETS REPRESENTED BY:
Units 590,459
Unit Value 11.67
______________
Net Assets $6,891,550
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
OTC
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489) $31,122,674
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
____________
TOTAL INVESTMENTS 31,122,674
____________
Accrued investment income --
____________
TOTAL NET ASSETS $31,122,674
============
NET ASSETS REPRESENTED BY:
Units 1,994,122
Unit Value 15.61
____________
Net Assets $31,122,674
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Research
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819) $54,170,330
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
____________
TOTAL INVESTMENTS 54,170,330
____________
Accrued investment income --
____________
TOTAL NET ASSETS $54,170,330
============
NET ASSETS REPRESENTED BY:
Units 3,562,977
Unit Value 15.20
____________
Net Assets $54,170,330
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Total
Return
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732) $43,361,831
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
____________
TOTAL INVESTMENTS 43,361,831
____________
Accrued investment income --
____________
TOTAL NET ASSETS $43,361,831
============
NET ASSETS REPRESENTED BY:
Units 3,387,074
Unit Value 12.80
____________
Net Assets $43,361,831
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Advantage
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521) $11,648,631
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
____________
TOTAL INVESTMENTS 11,648,631
____________
Accrued investment income --
____________
TOTAL NET ASSETS $11,648,631
============
NET ASSETS REPRESENTED BY:
Units 1,036,930
Unit Value 11.23
____________
Net Assets $11,648,631
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
International
Stock
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935) $10,662,008
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
______________
TOTAL INVESTMENTS 10,662,008
______________
Accrued investment income --
______________
TOTAL NET ASSETS $10,662,008
==============
NET ASSETS REPRESENTED BY:
Units 939,185
Unit Value 11.35
______________
Net Assets $10,662,008
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Value +
Growth
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043) $8,550,272
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
______________
TOTAL INVESTMENTS 8,550,272
______________
Accrued investment income --
______________
TOTAL NET ASSETS $8,550,272
==============
NET ASSETS REPRESENTED BY:
Units 791,732
Unit Value 10.80
______________
Net Assets $8,550,272
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Growth &
Income
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565) $15,573,189
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421)
______________
TOTAL INVESTMENTS 15,573,189
______________
Accrued investment income --
______________
TOTAL NET ASSETS $15,573,189
==============
NET ASSETS REPRESENTED BY:
Units 1,335,656
Unit Value 11.66
______________
Net Assets $15,573,189
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Warburg
Pincus
International
Equity
Account
_____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
17,528,179 shares at $1.00 per share (cost - $17,528,179)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
839,578 shares at $10.92 per share (cost - $9,147,693)
Equi-Select Series Trust International Fixed Income Portfolio,
611,055 shares at $11.28 per share (cost - $6,775,330)
Equi-Select Series Trust OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Equi-Select Series Trust Advantage Portfolio,
1,094,061 shares at $10.65 per share (cost - $11,495,521)
Equi-Select Series Trust International Stock Portfolio,
976,332 shares at $10.92 per share (cost - $10,226,935)
Equi-Select Series Trust Value + Growth Portfolio,
786,205 shares at $10.88 per share (cost - $8,015,043)
Equi-Select Series Trust Growth & Income Portfolio,
1,326,315 shares at $11.74 per share (cost - $14,521,565)
Warburg Pincus Trust International Equity Portfolio,
514,093 shares at $11.40 per share (cost - $5,866,421) $5,860,655
_____________
TOTAL INVESTMENTS 5,860,655
_____________
Accrued investment income --
_____________
TOTAL NET ASSETS $5,860,655
=============
NET ASSETS REPRESENTED BY:
Units 583,902
Unit Value 10.04
_____________
Net Assets $5,860,655
=============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
EQUI-SELECT PRODUCT
For the period January 1, 1996 or April 1, 1996*
through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Mortgage-
Money Backed
Market Securities
Account Account
________________ ________________
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $377,972 --
Capital gains distributions -- $161
Expenses (Note 2):
Annual contract charges (1,752) (2,041)
Transfer charges (125) (26)
Administrative charges (12,108) (10,233)
Mortality and expense
risk charges (100,551) (67,307)
________________ ________________
Net investment income (loss) 263,436 (79,446)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain (loss) on
investments -- 4,283
Net unrealized appreciation
(depreciation) of
investments -- 101,351
________________ ________________
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $263,436 $26,188
================ ================
<FN>
*Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
EQUI-SELECT PRODUCT
For the period January 1, 1996 or April 1, 1996*
through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
International
Fixed
Income OTC Research
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends $11,881 -- --
Capital gains distributions 14,042 $90,877 $117,838
Expenses (Note 2):
Annual contract charges (2,092) (8,169) (11,684)
Transfer charges (49) -- (25)
Administrative charges (5,820) (20,637) (36,594)
Mortality and expense
risk charges (48,315) (171,396) (303,908)
______________ ______________ ______________
Net investment income (loss) (30,353) (109,325) (234,373)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain (loss) on
investments 39,351 53,132 23,123
Net unrealized appreciation
(depreciation) of
investments 82,322 2,743,646 5,047,619
______________ ______________ ______________
NET INCREASE (DECREASE)IN NET
ASSETS RESULTING FROM OPERATIONS $91,320 $2,687,453 $4,836,369
============== ============== ==============
<FN>
*Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
EQUI-SELECT PRODUCT
For the period January 1, 1996 or April 1, 1996*
through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Total International
Return Advantage Stock
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends -- -- $27,511
Capital gains distributions $67,387 -- 66,905
Expenses (Note 2):
Annual contract charges (12,754) ($1,616) (4,804)
Transfer charges (50) (43) (25)
Administrative charges (31,771) (7,794) (10,084)
Mortality and expense
risk charges (263,826) (64,735) (83,705)
______________ ______________ ______________
Net investment income (loss) (241,014) (74,188) (4,202)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain (loss) on
investments 64,766 48,106 102,033
Net unrealized appreciation
(depreciation) of
investments 1,990,326 253,443 356,777
______________ ______________ ______________
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $1,814,078 $227,361 $454,608
============== ============== ==============
<FN>
*Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
EQUI-SELECT PRODUCT
For the period January 1, 1996 or April 1, 1996*
through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Warburg
Value + Growth & Pincus
Growth Income International
Account* Account* Equity Account*
______________ ______________ _______________
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends -- -- --
Capital gains distributions -- -- --
Expenses (Note 2):
Annual contract charges ($223) ($237) ($127)
Transfer charges (25) -- --
Administrative charges (2,441) (4,236) (1,790)
Mortality and expense
risk charges (20,326) (35,269) (14,898)
______________ ______________ _______________
Net investment income (loss) (23,015) (39,742) (16,815)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain (loss) on
investments 2,648 2,312 (5,152)
Net unrealized appreciation
(depreciation) of
investments 535,229 1,051,624 (5,766)
______________ ______________ _______________
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $514,862 $1,014,194 ($27,733)
============== ============== ===============
<FN>
*Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Money Market
Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $345,499
INCREASE IN NET ASSETS
Operations:
Net investment income 125,935
Net realized gain on investments --
Net unrealized appreciation (depreciation) of investments --
______________
Net increase in net assets resulting from operations 125,935
Changes from principal transactions:
Purchase payments 30,141,356
Contract distributions and terminations (18,210)
Transfer payments from (to) other Accounts and Funds and
Fixed Account (24,862,359)
______________
Increase in net assets derived from principal transactions 5,260,787
______________
Total increase 5,386,722
______________
NET ASSETS AT DECEMBER 31, 1995 5,732,221
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) 263,436
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
______________
Net increase (decrease) in net assets resulting from operations 263,436
Changes from principal transactions:
Purchase payments 65,426,132
Contract distributions and terminations (267,091)
Transfer payments from (to) other Accounts and Funds and
Fixed Account (53,562,725)
______________
Increase in net assets derived from principal transactions 11,596,316
______________
Total increase 11,859,752
______________
NET ASSETS AT SEPTEMBER 30, 1996 $17,591,973
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Mortgage-Backed
Securities
Account
_______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $28,822
INCREASE IN NET ASSETS
Operations:
Net investment income 216,981
Net realized gain on investments 994
Net unrealized appreciation (depreciation) of investments (77,915)
_______________
Net increase in net assets resulting from operations 140,060
Changes from principal transactions:
Purchase payments 1,764,376
Contract distributions and terminations (7,691)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 2,413,953
_______________
Increase in net assets derived from principal transactions 4,170,638
_______________
Total increase 4,310,698
_______________
NET ASSETS AT DECEMBER 31, 1995 4,339,520
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (79,446)
Net realized gain (loss) on investments 4,283
Net unrealized appreciation (depreciation) of investments 101,351
_______________
Net increase (decrease) in net assets resulting from operations 26,188
Changes from principal transactions:
Purchase payments 2,877,564
Contract distributions and terminations (192,720)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 2,120,249
_______________
Increase in net assets derived from principal transactions 4,805,093
_______________
Total increase 4,831,281
_______________
NET ASSETS AT SEPTEMBER 30, 1996 $9,170,801
===============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
International
Fixed Income
Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $51,288
INCREASE IN NET ASSETS
Operations:
Net investment income 149,959
Net realized gain on investments 4,271
Net unrealized appreciation (depreciation) of investments 34,190
______________
Net increase in net assets resulting from operations 188,420
Changes from principal transactions:
Purchase payments 1,703,537
Contract distributions and terminations (6,355)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 1,662,677
______________
Increase in net assets derived from principal transactions 3,359,859
______________
Total increase 3,548,279
______________
NET ASSETS AT DECEMBER 31, 1995 3,599,567
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (30,353)
Net realized gain (loss) on investments 39,351
Net unrealized appreciation (depreciation) of investments 82,322
______________
Net increase (decrease) in net assets resulting from operations 91,320
Changes from principal transactions:
Purchase payments 1,843,148
Contract distributions and terminations (122,502)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 1,480,017
______________
Increase in net assets derived from principal transactions 3,200,663
______________
Total increase 3,291,983
______________
NET ASSETS AT SEPTEMBER 30, 1996 $6,891,550
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
OTC
Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $660,106
INCREASE IN NET ASSETS
Operations:
Net investment income 933,058
Net realized gain on investments 36,066
Net unrealized appreciation (depreciation) of investments 20,313
______________
Net increase in net assets resulting from operations 989,437
Changes from principal transactions:
Purchase payments 4,028,128
Contract distributions and terminations (33,765)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 4,392,791
______________
Increase in net assets derived from principal transactions 8,387,154
______________
Total increase 9,376,591
______________
NET ASSETS AT DECEMBER 31, 1995 10,036,697
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (109,325)
Net realized gain (loss) on investments 53,132
Net unrealized appreciation (depreciation) of investments 2,743,646
______________
Net increase (decrease) in net assets resulting from operations 2,687,453
Changes from principal transactions:
Purchase payments 11,017,759
Contract distributions and terminations (450,268)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 7,831,033
______________
Increase in net assets derived from principal transactions 18,398,524
______________
Total increase 21,085,977
______________
NET ASSETS AT SEPTEMBER 30, 1996 $31,122,674
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Research
Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $672,603
INCREASE IN NET ASSETS
Operations:
Net investment income 190,119
Net realized gain on investments 19,662
Net unrealized appreciation (depreciation) of investments 1,548,017
______________
Net increase in net assets resulting from operations 1,757,798
Changes from principal transactions:
Purchase payments 8,333,228
Contract distributions and terminations (32,130)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 5,715,449
______________
Increase in net assets derived from principal transactions 14,016,547
______________
Total increase 15,774,345
______________
NET ASSETS AT DECEMBER 31, 1995 16,446,948
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (234,373)
Net realized gain (loss) on investments 23,123
Net unrealized appreciation (depreciation) of investments 5,047,619
______________
Net increase (decrease) in net assets resulting from operations 4,836,369
Changes from principal transactions:
Purchase payments 20,230,089
Contract distributions and terminations (667,401)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 13,324,325
______________
Increase in net assets derived from principal transactions 32,887,013
______________
Total increase 37,723,382
______________
NET ASSETS AT SEPTEMBER 30, 1996 $54,170,330
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Total Return
Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $324,925
INCREASE IN NET ASSETS
Operations:
Net investment income 246,476
Net realized gain on investments 6,083
Net unrealized appreciation (depreciation) of investments 1,034,214
______________
Net increase in net assets resulting from operations 1,286,773
Changes from principal transactions:
Purchase payments 7,285,539
Contract distributions and terminations (72,501)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 6,997,106
______________
Increase in net assets derived from principal transactions 14,210,144
______________
Total increase 15,496,917
______________
NET ASSETS AT DECEMBER 31, 1995 15,821,842
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (241,014)
Net realized gain (loss) on investments 64,766
Net unrealized appreciation (depreciation) of investments 1,990,326
______________
Net increase (decrease) in net assets resulting from operations 1,814,078
Changes from principal transactions:
Purchase payments 14,967,889
Contract distributions and terminations (796,216)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 11,554,238
______________
Increase in net assets derived from principal transactions 25,725,911
______________
Total increase 27,539,989
______________
NET ASSETS AT SEPTEMBER 30, 1996 $43,361,831
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Advantage
Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $459,024
INCREASE IN NET ASSETS
Operations:
Net investment income 219,723
Net realized gain on investments 15,065
Net unrealized appreciation (depreciation) of investments (96,273)
______________
Net increase in net assets resulting from operations 138,515
Changes from principal transactions:
Purchase payments 1,956,116
Contract distributions and terminations (15,339)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 1,205,921
______________
Increase in net assets derived from principal transactions 3,146,698
______________
Total increase 3,285,213
______________
NET ASSETS AT DECEMBER 31, 1995 3,744,237
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (74,188)
Net realized gain (loss) on investments 48,106
Net unrealized appreciation (depreciation) of investments 253,443
______________
Net increase (decrease) in net assets resulting from operations 227,361
Changes from principal transactions:
Purchase payments 5,459,203
Contract distributions and terminations (222,008)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 2,439,838
______________
Increase in net assets derived from principal transactions 7,677,033
______________
Total increase 7,904,394
______________
NET ASSETS AT SEPTEMBER 30, 1996 $11,648,631
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
International
Stock Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $233,470
INCREASE IN NET ASSETS
Operations:
Net investment income 190,096
Net realized gain on investments 9,684
Net unrealized appreciation (depreciation) of investments 79,172
______________
Net increase in net assets resulting from operations 278,952
Changes from principal transactions:
Purchase payments 2,770,444
Contract distributions and terminations (57,092)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 2,492,996
______________
Increase in net assets derived from principal transactions 5,206,348
______________
Total increase 5,485,300
______________
NET ASSETS AT DECEMBER 31, 1995 5,718,770
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (4,202)
Net realized gain (loss) on investments 102,033
Net unrealized appreciation (depreciation) of investments 356,777
______________
Net increase (decrease) in net assets resulting from operations 454,608
Changes from principal transactions:
Purchase payments 2,517,341
Contract distributions and terminations (223,548)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 2,194,837
______________
Increase in net assets derived from principal transactions 4,488,630
______________
Total increase 4,943,238
______________
NET ASSETS AT SEPTEMBER 30, 1996 $10,662,008
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Value + Growth
Account*
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income --
Net realized gain on investments --
Net unrealized appreciation (depreciation) of investments --
______________
Net increase in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) other Accounts and Funds and
Fixed Account --
______________
Increase in net assets derived from principal transactions --
______________
Total increase --
______________
NET ASSETS AT DECEMBER 31, 1995 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ($23,015)
Net realized gain (loss) on investments 2,648
Net unrealized appreciation (depreciation) of investments 535,229
______________
Net increase (decrease) in net assets resulting from operations 514,862
Changes from principal transactions:
Purchase payments 3,415,008
Contract distributions and terminations (35,239)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 4,655,641
______________
Increase in net assets derived from principal transactions 8,035,410
______________
Total increase 8,550,272
______________
NET ASSETS AT SEPTEMBER 30, 1996 $8,550,272
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Growth &
Income Account*
_______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income --
Net realized gain on investments --
Net unrealized appreciation (depreciation) of investments --
_______________
Net increase in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) other Accounts and Funds and
Fixed Account --
_______________
Increase in net assets derived from principal transactions --
_______________
Total increase --
_______________
NET ASSETS AT DECEMBER 31, 1995 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ($39,742)
Net realized gain (loss) on investments 2,312
Net unrealized appreciation (depreciation) of investments 1,051,624
_______________
Net increase (decrease) in net assets resulting from operations 1,014,194
Changes from principal transactions:
Purchase payments 6,838,488
Contract distributions and terminations (63,745)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 7,784,252
_______________
Increase in net assets derived from principal transactions 14,558,995
_______________
Total increase 15,573,189
_______________
NET ASSETS AT SEPTEMBER 30, 1996 $15,573,189
===============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
and for the period January 1, 1996 or April 1, 1996* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Warburg Pincus
International
Equity Account*
_______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income --
Net realized gain on investments --
Net unrealized appreciation (depreciation) of investments --
_______________
Net increase in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) other Accounts and Funds and
Fixed Account --
_______________
Increase in net assets derived from principal transactions --
_______________
Total increase --
_______________
NET ASSETS AT DECEMBER 31, 1995 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ($16,815)
Net realized gain (loss) on investments (5,152)
Net unrealized appreciation (depreciation) of investments (5,766)
_______________
Net increase (decrease) in net assets resulting from operations (27,733)
Changes from principal transactions:
Purchase payments 2,779,434
Contract distributions and terminations (32,395)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 3,141,349
_______________
Increase in net assets derived from principal transactions 5,888,388
_______________
Total increase 5,860,655
_______________
NET ASSETS AT SEPTEMBER 30, 1996 $5,860,655
===============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
EQUI-SELECT PRODUCT
September 30, 1996
(Unaudited)
NOTE 1 - INVESTMENT AND ACCOUNTING POLICIES
Equitable Life Insurance Company of Iowa Separate Account A was
organized by Equitable Life Insurance Company of Iowa (the "Company") in
accordance with the provisions of Iowa Insurance laws and is a part of
the total operations of the Company. The assets and liabilities of the
Equitable Life Insurance Company of Iowa Separate Account A are clearly
identified and distinguished from the other assets and liabilities of
the Company. Equitable Life Insurance Company of Iowa Separate Account A
commenced operations on October 7, 1994 with the initial sale of
contract units to contract owners. Investments are stated at the
closing net asset values per share on September 30, 1996.
Equitable Life Insurance Company of Iowa Separate Account A is a unit
investment trust, registered with Securities and Exchange Commission
under the Investment Company Act of 1940, as amended, and consists of
sixteen investment accounts, ten of which (the Money Market, Mortgage-
Backed Securities, International Fixed Income, OTC, Research, Total
Return, Advantage, International Stock, Value + Growth and Growth &
Income) are invested in specified portfolios of the Equi-Select Series
Trust, an open-end series management investment company registered with
the Securities and Exchange Commission under the Investment Company Act
of 1940, as amended, as directed by eligible contract owners. Activity in
these ten investment accounts is available to contract owners of the
Equi-Select Variable Annuity product. The Value + Growth and Growth &
Income accounts commenced operations on April 1, 1996.
The Warburg Pincus Trust International Equity Account, which invests in
the International Equity Portfolio of the Warburg Pincus Trust, commenced
operations on April 1, 1996 and is also available to contract owners of
the Equi-Select Variable Annuity Product.
The remaining five investment accounts are invested in specified
portfolios of the Travelers Series Fund Inc. These five investment
accounts and the Research, OTC and Total Return Accounts, which invest in
the Equi-Select Series Trust, are available to contract owners of the
PrimElite Variable Annuity product.
On May 16, 1996, the Government Securities and Short-Term Bond Accounts
were closed. Effective October 14, 1996, contract owners could no
longer purchase or transfer funds to the International Stock Account
invested in the Equi-Select Series Trust International Stock portfolio.
The financial statements included herein present only those investment
accounts available to contract owners of the Equi-Select Variable
Annuity product. The financial statements of the remaining investment
accounts and the Research, OTC and Total Return Accounts available to
contract owners of the PrimElite Variable Annuity product are presented
separately.
Effective January 1, 1996, the Company changed the method of reporting
realized gains and losses. For the nine months ended September 30,
1996, realized gains and losses are determined on the basis of specific
identification. For the year ended December 31, 1995, the average cost
NOTE 1 - INVESTMENT AND ACCOUNTING POLICIES (continued)
method was used to determine realized gains and losses. Dividends are
taken into income on an accrual basis as of the ex-dividend date.
NOTE 2 - EXPENSES
The Company is compensated for mortality and expense risks and
administrative costs by a charge equivalent to an annual rate of 1.25%
and 0.15%, respectively, of the total net assets of each Account. These
charges amounted to $1,174,236 and $143,508, respectively, for the
period ended September 30, 1996 ($348,739 and $42,078, respectively,
for the period ended December 31, 1995).
An annual contract charge of $30 is deducted on each contract
anniversary prior to the maturity date, upon full withdrawal of a
contract's value or upon commencement of annuity payments if such
withdrawal is made or annuity payments commence on a date other than the
contract anniversary. For the period ended September 30, 1996, annual
contract charges amounted to $45,499, and for the year ended December
31, 1995, these charges amounted to $2,806.
A transfer charge computed as the lesser of 2% of the contract value
transferred or $25 will be imposed on each transfer between Accounts in
excess of twelve in any one calendar year. Through September 30, 1996,
transfer charges amounted to $368. No transfer charges were assessed in
1995. A withdrawal charge may be imposed in the event of withdrawal of
any portion of the contract value or upon annuitization. The withdrawal
charge is 8% of the amount withdrawn prior to the first anniversary of
the purchase payment and reduces by 1% at each subsequent purchase
payment anniversary.
NOTE 3 - FEDERAL INCOME TAXES
Operations of the Equitable Life Insurance Company of Iowa Separate
Account A form a part of the operations of the Company which is taxed as
a life insurance company under the Internal Revenue Code. Under current
law, no federal income taxes are payable with respect to operations of
Equitable Life Insurance Company of Iowa Separate Account A.
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments
were as follows:
<TABLE>
<CAPTION>
Period From January 1, 1996
or Commencement of
Operations to Year Ended
September 30, 1996 December 31, 1995
_________________________ _________________________
Purchases Sales Purchases Sales
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Money Market Portfolio $31,198,377 $19,378,892 $18,116,828 $12,751,952
Mortgage-Backed Securities
Portfolio 6,303,905 1,343,272 4,186,979 33,921
International Fixed
Income Portfolio 3,801,989 471,268 3,461,113 111,334
OTC Portfolio 19,595,681 312,379 8,736,489 410,391
Research Portfolio 33,012,383 85,488 14,168,762 230,594
Total Return Portfolio 26,135,429 321,090 14,267,685 137,651
Advantage Portfolio 9,457,369 1,609,502 3,718,744 592,976
International Stock
Portfolio 5,460,008 747,804 5,388,124 218,038
Value + Growth Portfolio 8,203,855 194,460 -- --
Growth & Income Portfolio 14,562,041 42,788 -- --
Warburg Pincus Trust
International Equity
Portfolio 6,090,560 218,987 -- --
</TABLE>
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
Transactions in units were as follows:
<TABLE>
<CAPTION>
Period From January 1, 1996
or Commencement of
Operations to Year Ended
September 30, 1996 December 31, 1995
_________________________ _________________________
Purchases Sales Purchases Sales
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Money Market Account 6,398,468 5,304,028 2,969,444 2,454,999
Mortgage-Backed Securities
Account 631,156 205,778 380,372 3,227
International Fixed
Income Account 362,906 84,136 309,796 3,205
OTC Account 1,355,707 121,182 705,565 9,749
Research Account 2,442,852 135,627 1,196,506 9,931
Total Return Account 2,241,658 167,149 1,315,204 35,745
Advantage Account 936,193 244,038 359,214 59,955
International Stock
Account 521,366 123,751 535,682 17,774
Value + Growth Account 825,207 33,475 -- --
Growth & Income Account 1,356,809 21,153 -- --
Warburg Pincus Trust
International Equity
Account 613,430 29,528 -- --
</TABLE>
NOTE 6 - NET ASSETS
Net assets at September 30, 1996 consisted of the following:
<TABLE>
<CAPTION>
Mortgage- International
Money Backed Fixed
Market Securities Income OTC
Account Account Account Account
____________ _____________ ____________ _____________
<S> <C> <C> <C> <C>
Unit transactions $17,521,015 $9,012,625 $6,656,872 $27,539,968
Accumulated net investment
income (loss) 70,958 135,069 118,458 811,520
Net unrealized appreciation
(depreciation) of
investments -- 23,107 116,220 2,771,186
____________ _____________ ____________ _____________
$17,591,973 $9,170,801 $6,891,550 $31,122,674
============ ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
Total International
Research Return Advantage Stock
Account Account Account Account
____________ _____________ ____________ _____________
<S> <C> <C> <C> <C>
Unit transactions $47,633,662 $40,331,771 $11,347,968 $10,042,810
Accumulated net investment
income (loss) (38,844) 7,961 147,553 184,126
Net unrealized appreciation
(depreciation) of
investments 6,575,512 3,022,099 153,110 435,072
____________ _____________ ____________ _____________
$54,170,330 $43,361,831 $11,648,631 $10,662,008
============ ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
Warburg
Value + Growth & Pincus
Growth Income International
Account Account Equity Account
____________ _____________ ____________
<S> <C> <C> <C>
Unit transactions $8,038,058 $14,561,307 $5,883,236
Accumulated net
investment income (loss) (23,015) (39,742) (16,815)
Net unrealized appreciation
(depreciation) of
investments 535,229 1,051,624 (5,766)
____________ _____________ ____________
$8,550,272 $15,573,189 $5,860,655
============ ============= ============
</TABLE>
NOTE 7 - LEGAL PROCEEDINGS
Equitable Life Insurance Company and other affiliates are defendants in certain
legal proceedings. These legal proceedings are not likely to have a material
adverse effect on Equitable Life Insurance Separate Account A or upon the
ability of Equitable Life Insurance Company of Iowa to meet its obligations
under the variable annuity contracts.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Research
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819) $54,170,330
Equi-Select Series Trust
OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust
Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
653,413 shares at $12.26 per share (cost - $7,476,552)
Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
1,098,039 shares at $14.47 per share (cost - $14,625,668)
Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
471,220 shares at $12.04 per share (cost - $5,409,655)
Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
3,160,807 shares at $1.00 per share (cost - $3,160,807)
Smith Barney Series Fund
Appreciation Portfolio,
193,928 shares at $16.16 per share (cost - $2,987,605)
____________
TOTAL INVESTMENTS 54,170,330
Accrued investment income --
____________
TOTAL NET ASSETS $54,170,330
============
NET ASSETS REPRESENTED BY:
Units 3,562,977
Unit Value 15.20
____________
Net Assets $54,170,330
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
OTC
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust
OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489) $31,122,674
Equi-Select Series Trust
Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
653,413 shares at $12.26 per share (cost - $7,476,552)
Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
1,098,039 shares at $14.47 per share (cost - $14,625,668)
Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
471,220 shares at $12.04 per share (cost - $5,409,655)
Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
3,160,807 shares at $1.00 per share (cost - $3,160,807)
Smith Barney Series Fund
Appreciation Portfolio,
193,928 shares at $16.16 per share (cost - $2,987,605)
______________
TOTAL INVESTMENTS 31,122,674
Accrued investment income --
______________
TOTAL NET ASSETS $31,122,674
==============
NET ASSETS REPRESENTED BY:
Units 1,994,122
Unit Value 15.61
______________
Net Assets $31,122,674
==============
</TABLE>
See accompanying notes
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Total
Return
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust
OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust
Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732) $43,361,831
Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
653,413 shares at $12.26 per share (cost - $7,476,552)
Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
1,098,039 shares at $14.47 per share (cost - $14,625,668)
Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
471,220 shares at $12.04 per share (cost - $5,409,655)
Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
3,160,807 shares at $1.00 per share (cost - $3,160,807)
Smith Barney Series Fund
Appreciation Portfolio,
193,928 shares at $16.16 per share (cost - $2,987,605)
______________
TOTAL INVESTMENTS 43,361,831
Accrued investment income --
______________
TOTAL NET ASSETS $43,361,831
==============
NET ASSETS REPRESENTED BY:
Units 3,387,074
Unit Value 12.80
______________
Net Assets $43,361,831
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
International
Equity
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust
OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust
Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
653,413 shares at $12.26 per share (cost - $7,476,552) $8,010,839
Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
1,098,039 shares at $14.47 per share (cost - $14,625,668)
Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
471,220 shares at $12.04 per share (cost - $5,409,655)
Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
3,160,807 shares at $1.00 per share (cost - $3,160,807)
Smith Barney Series Fund
Appreciation Portfolio,
193,928 shares at $16.16 per share (cost - $2,987,605)
______________
TOTAL INVESTMENTS 8,010,839
Accrued investment income --
______________
TOTAL NET ASSETS $8,010,839
==============
NET ASSETS REPRESENTED BY:
Units 609,873
Unit Value 13.14
______________
Net Assets $8,010,839
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Income
and Growth
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust
OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust
Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
653,413 shares at $12.26 per share (cost - $7,476,552)
Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
1,098,039 shares at $14.47 per share (cost - $14,625,668) $15,888,630
Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
471,220 shares at $12.04 per share (cost - $5,409,655)
Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
3,160,807 shares at $1.00 per share (cost - $3,160,807)
Smith Barney Series Fund
Appreciation Portfolio,
193,928 shares at $16.16 per share (cost - $2,987,605)
______________
TOTAL INVESTMENTS 15,888,630
Accrued investment income --
______________
TOTAL NET ASSETS $15,888,630
==============
NET ASSETS REPRESENTED BY:
Units 1,184,697
Unit Value 13.41
______________
Net Assets $15,888,630
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
High
Income
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust
OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust
Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
653,413 shares at $12.26 per share (cost - $7,476,552)
Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
1,098,039 shares at $14.47 per share (cost - $14,625,668)
Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
471,220 shares at $12.04 per share (cost - $5,409,655) $5,673,494
Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
3,160,807 shares at $1.00 per share (cost - $3,160,807)
Smith Barney Series Fund
Appreciation Portfolio,
193,928 shares at $16.16 per share (cost - $2,987,605)
______________
TOTAL INVESTMENTS 5,673,494
Accrued investment income --
______________
TOTAL NET ASSETS $5,673,494
==============
NET ASSETS REPRESENTED BY:
Units 482,626
Unit Value 11.76
______________
Net Assets $5,673,494
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Money
Market
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust
OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust
Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
653,413 shares at $12.26 per share (cost - $7,476,552)
Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
1,098,039 shares at $14.47 per share (cost - $14,625,668)
Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
471,220 shares at $12.04 per share (cost - $5,409,655)
Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
3,160,807 shares at $1.00 per share (cost - $3,160,807) $3,160,807
Smith Barney Series Fund
Appreciation Portfolio,
193,928 shares at $16.16 per share (cost - $2,987,605)
______________
TOTAL INVESTMENTS 3,160,807
Accrued investment income 4,171
______________
TOTAL NET ASSETS $3,164,978
==============
NET ASSETS REPRESENTED BY:
Units 301,532
Unit Value 10.50
______________
Net Assets $3,164,978
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Appreciation
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Research Portfolio,
3,593,989 shares at $15.07 per share (cost - $47,594,819)
Equi-Select Series Trust
OTC Portfolio,
2,161,661 shares at $14.40 per share (cost - $28,351,489)
Equi-Select Series Trust
Total Return Portfolio,
3,399,599 shares at $12.75 per share (cost - $40,339,732)
Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
653,413 shares at $12.26 per share (cost - $7,476,552)
Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
1,098,039 shares at $14.47 per share (cost - $14,625,668)
Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
471,220 shares at $12.04 per share (cost - $5,409,655)
Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
3,160,807 shares at $1.00 per share (cost - $3,160,807)
Smith Barney Series Fund
Appreciation Portfolio,
193,928 shares at $16.16 per share (cost - $2,987,605) $3,133,871
______________
TOTAL INVESTMENTS 3,133,871
Accrued investment income --
______________
TOTAL NET ASSETS $3,133,871
==============
NET ASSETS REPRESENTED BY:
Units 296,349
Unit Value 10.57
______________
Net Assets $3,133,871
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PRIMELITE PRODUCT
For the period January 1, 1996 or Commencement of Operations*
through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Total
Research OTC Return
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends -- -- --
Capital gains distributions $117,838 $90,877 $67,387
Expenses (Note 2):
Annual contract charges (11,684) (8,169) (12,754)
Transfer charges (25) -- (50)
Administrative charges (36,594) (20,637) (31,771)
Mortality and expense
risk charges (303,908) (171,396) (263,826)
______________ ______________ ______________
Net investment income (loss) (234,373) (109,325) (241,014)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTE 4)
Net realized gain on
investments 23,123 53,132 64,766
Net unrealized appreciation
of investments 5,047,619 2,743,646 1,990,326
______________ ______________ ______________
NET INCREASE IN
NET ASSETS RESULTING FROM
OPERATIONS $4,836,369 $2,687,453 $1,814,078
============== ============== ==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PRIMELITE PRODUCT
For the period January 1, 1996 or Commencement of Operations*
through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
International Income High
Equity and Growth Income
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends -- -- --
Capital gains distribution -- -- --
Expenses (Note 2):
Annual contract charges ($819) ($1,510) ($316)
Transfer charges -- -- --
Administrative charges (5,127) (10,451) (3,211)
Mortality and expense
risk charges (42,584) (86,799) (26,677)
______________ ______________ ______________
Net investment income (loss) (48,530) (98,760) (30,204)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTE 4)
Net realized gain on
investments 13,305 52,792 9,044
Net unrealized appreciation
of investments 502,727 1,074,544 263,910
______________ ______________ ______________
NET INCREASE IN
NET ASSETS RESULTING FROM
OPERATIONS $467,502 $1,028,576 $242,750
============== ============== ==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PRIMELITE PRODUCT
For the period January 1, 1996 or Commencement of Operations*
through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Money
Market Appreciation
Account Account*
______________ ______________
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $77,597 --
Capital gains distribution -- --
Expenses (Note 2):
Annual contract charges ($41) ($7)
Transfer charges -- --
Administrative charges (2,424) (1,083)
Mortality and expense
risk charges (20,124) (9,011)
______________ ______________
Net investment income (loss) 55,008 (10,101)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTE 4)
Net realized gain on
investments -- 176
Net unrealized appreciation
of investments -- 146,266
______________ ______________
NET INCREASE IN
NET ASSETS RESULTING FROM
OPERATIONS $55,008 $136,341
============== ==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations* through
December 31, 1995 and for the period from January 1, 1996 or Commencement of
Operations* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Research
Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $672,603
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) 190,119
Net realized gain (loss) on investments 19,662
Net unrealized appreciation (depreciation) of investments 1,548,017
______________
Net increase in net assets resulting from operations 1,757,798
Changes from principal transactions:
Purchase payments 8,333,228
Contract distributions and terminations (32,130)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 5,715,449
______________
Increase in net assets derived from principal transactions 14,016,547
______________
Total increase 15,774,345
______________
NET ASSETS AT DECEMBER 31, 1995 16,446,948
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (234,373)
Net realized gain on investments 23,123
Net unrealized appreciation of investments 5,047,619
______________
Net increase in net assets resulting from operations 4,836,369
Changes from principal transactions:
Purchase payments 20,230,089
Contract distributions and terminations (667,401)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 13,324,325
______________
Increase in net assets derived from principal transactions 32,887,013
______________
Total increase 37,723,382
______________
NET ASSETS AT SEPTEMBER 30, 1996 $54,170,330
==============
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations* through
December 31, 1995 and for the period from January 1, 1996 or Commencement of
Operations* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
OTC
Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $660,106
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) 933,058
Net realized gain (loss) on investments 36,066
Net unrealized appreciation (depreciation) of investments 20,313
______________
Net increase in net assets resulting from operations 989,437
Changes from principal transactions:
Purchase payments 4,028,128
Contract distributions and terminations (33,765)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 4,392,791
______________
Increase in net assets derived from principal transactions 8,387,154
______________
Total increase 9,376,591
______________
NET ASSETS AT DECEMBER 31, 1995 10,036,697
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (109,325)
Net realized gain on investments 53,132
Net unrealized appreciation of investments 2,743,646
______________
Net increase in net assets resulting from operations 2,687,453
Changes from principal transactions:
Purchase payments 11,017,759
Contract distributions and terminations (450,268)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 7,831,033
______________
Increase in net assets derived from principal transactions 18,398,524
______________
Total increase 21,085,977
______________
NET ASSETS AT SEPTEMBER 30, 1996 $31,122,674
==============
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations* through
December 31, 1995 and for the period from January 1, 1996 or Commencement of
Operations* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Total Return
Account
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 $324,925
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) 246,476
Net realized gain (loss) on investments 6,083
Net unrealized appreciation (depreciation) of investments 1,034,214
______________
Net increase in net assets resulting from operations 1,286,773
Changes from principal transactions:
Purchase payments 7,285,539
Contract distributions and terminations (72,501)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 6,997,106
______________
Increase in net assets derived from principal transactions 14,210,144
______________
Total increase 15,496,917
______________
NET ASSETS AT DECEMBER 31, 1995 15,821,842
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (241,014)
Net realized gain on investments 64,766
Net unrealized appreciation of investments 1,990,326
______________
Net increase in net assets resulting from operations 1,814,078
Changes from principal transactions:
Purchase payments 14,967,889
Contract distributions and terminations (796,216)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 11,554,238
______________
Increase in net assets derived from principal transactions 25,725,911
______________
Total increase 27,539,989
______________
NET ASSETS AT SEPTEMBER 30, 1996 $43,361,831
==============
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations* through
December 31, 1995 and for the period from January 1, 1996 or Commencement of
Operations* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
International
Equity Account*
_______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ($3,744)
Net realized gain (loss) on investments (4)
Net unrealized appreciation (depreciation) of investments 31,560
_______________
Net increase in net assets resulting from operations 27,812
Changes from principal transactions:
Purchase payments 1,444,691
Contract distributions and terminations --
Transfer payments from (to) other Accounts and Funds and
Fixed Account 312,731
_______________
Increase in net assets derived from principal transactions 1,757,422
_______________
Total increase 1,785,234
_______________
NET ASSETS AT DECEMBER 31, 1995 1,785,234
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (48,530)
Net realized gain on investments 13,305
Net unrealized appreciation of investments 502,727
_______________
Net increase in net assets resulting from operations 467,502
Changes from principal transactions:
Purchase payments 4,299,105
Contract distributions and terminations (23,511)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 1,482,509
_______________
Increase in net assets derived from principal transactions 5,758,103
_______________
Total increase 6,225,605
_______________
NET ASSETS AT SEPTEMBER 30, 1996 $8,010,839
===============
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations* through
December 31, 1995 and for the period from January 1, 1996 or Commencement of
Operations* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Income and
Growth Account*
_______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $46,665
Net realized gain (loss) on investments 106
Net unrealized appreciation (depreciation) of investments 188,418
_______________
Net increase in net assets resulting from operations 235,189
Changes from principal transactions:
Purchase payments 2,609,690
Contract distributions and terminations (77)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 710,152
_______________
Increase in net assets derived from principal transactions 3,319,765
_______________
Total increase 3,554,954
_______________
NET ASSETS AT DECEMBER 31, 1995 3,554,954
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (98,760)
Net realized gain on investments 52,792
Net unrealized appreciation of investments 1,074,544
_______________
Net increase in net assets resulting from operations 1,028,576
Changes from principal transactions:
Purchase payments 8,769,586
Contract distributions and terminations (47,573)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 2,583,087
_______________
Increase in net assets derived from principal transactions 11,305,100
_______________
Total increase 12,333,676
_______________
NET ASSETS AT SEPTEMBER 30, 1996 $15,888,630
===============
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations* through
December 31, 1995 and for the period from January 1, 1996 or Commencement of
Operations* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
High Income
Account*
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $30,883
Net realized gain (loss) on investments 20
Net unrealized appreciation (depreciation) of investments (71)
______________
Net increase in net assets resulting from operations 30,832
Changes from principal transactions:
Purchase payments 672,913
Contract distributions and terminations (1,611)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 88,806
______________
Increase in net assets derived from principal transactions 760,108
______________
Total increase 790,940
______________
NET ASSETS AT DECEMBER 31, 1995 790,940
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) (30,204)
Net realized gain on investments 9,044
Net unrealized appreciation of investments 263,910
______________
Net increase in net assets resulting from operations 242,750
Changes from principal transactions:
Purchase payments 3,659,713
Contract distributions and terminations (19,433)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 999,524
______________
Increase in net assets derived from principal transactions 4,639,804
______________
Total increase 4,882,554
______________
NET ASSETS AT SEPTEMBER 30, 1996 $5,673,494
==============
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations* through
December 31, 1995 and for the period from January 1, 1996 or Commencement of
Operations* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Money Market
Account*
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $9,600
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
______________
Net increase in net assets resulting from operations 9,600
Changes from principal transactions:
Purchase payments 3,007,403
Contract distributions and terminations (13,913)
Transfer payments from (to) other Accounts and Funds and
Fixed Account (1,723,565)
______________
Increase in net assets derived from principal transactions 1,269,925
______________
Total increase 1,279,525
______________
NET ASSETS AT DECEMBER 31, 1995 1,279,525
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) 55,008
Net realized gain on investments --
Net unrealized appreciation of investments --
______________
Net increase in net assets resulting from operations 55,008
Changes from principal transactions:
Purchase payments 11,074,624
Contract distributions and terminations (6,625)
Transfer payments from (to) other Accounts and Funds and
Fixed Account (9,237,554)
______________
Increase in net assets derived from principal transactions 1,830,445
______________
Total increase 1,885,453
______________
NET ASSETS AT SEPTEMBER 30, 1996 $3,164,978
==============
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations* through
December 31, 1995 and for the period from January 1, 1996 or Commencement of
Operations* through September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Appreciation
Account*
______________
<S> <C>
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
______________
Net increase in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) other Accounts and Funds and
Fixed Account --
______________
Increase in net assets derived from principal transactions --
______________
Total increase --
______________
NET ASSETS AT DECEMBER 31, 1995 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ($10,101)
Net realized gain on investments 176
Net unrealized appreciation of investments 146,266
______________
Net increase in net assets resulting from operations 136,341
Changes from principal transactions:
Purchase payments 2,440,808
Contract distributions and terminations (616)
Transfer payments from (to) other Accounts and Funds and
Fixed Account 557,338
______________
Increase in net assets derived from principal transactions 2,997,530
______________
Total increase 3,133,871
______________
NET ASSETS AT SEPTEMBER 30, 1996 $3,133,871
==============
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
PRIMELITE PRODUCT
September 30, 1996
(Unaudited)
NOTE 1 - INVESTMENT AND ACCOUNTING POLICIES
Equitable Life Insurance Company of Iowa Separate Account A was
organized by Equitable Life Insurance Company of Iowa (the "Company") in
accordance with the provisions of Iowa Insurance laws and is a part of
the total operations of the Company. The assets and liabilities of the
Equitable Life Insurance Company of Iowa Separate Account A are clearly
identified and distinguished from the other assets and liabilities of
the Company. Commencement of operations is defined as the date of
initial sale of contract units to contract owners. The Equitable Life
Insurance Company of Iowa Separate Account A investment accounts
commenced operations on October 7, 1994 for the Research, OTC and Total
Return Accounts, March 27, 1995 for the International Equity Account,
April 5, 1995 for the Income and Growth Account, April 28, 1995 for the
High Income Account, May 24, 1995 for the Money Market Account, and
March 25, 1996 for the Appreciation Account. Investments are stated at
the closing net asset values per share on September 30, 1996.
Equitable Life Insurance Company of Iowa Separate Account A is a unit
investment trust, registered with the Securities and Exchange Commission
under the Investment Company Act of 1940, as amended, and consists of
sixteen investment accounts, four of which (International Equity, Income
and Growth, High Income, and Money Market), as directed by eligible
contract owners, are invested in specified portfolios of the Travelers
Series Fund Inc., an open-end management investment company, which
commenced operations on June 16, 1994. The Appreciation Account invests
in a portfolio in the Smith Barney Series Fund. Activity in these five
investment accounts, as well as the Research Account, OTC Account, and
Total Return Account, which invest in the Equi-Select Series Trust, an
open-end series management investment company registered with the Securities
and Exchange Commission, under the Investment Company Act of 1940, as amended,
are available to contract owners of the PrimElite Variable Annuity Product.
The Warburg Pincus International Equity Account, which invests in the
International Equity Portfolio of the Warburg Pincus Trust, commenced
operations on April 1, 1996 and is available to contract owners of the
Equi-Select Variable Annuity Product. The remaining ten investment
accounts (including the Research Account, OTC Account and Total Return
Account) are invested in specified portfolios of the Equi-Select Series
Trust, which commenced operations on October 4, 1994. These eleven
investment accounts are available to contract owners of the Equi-Select
Variable Annuity product.
The financial statements included herein present only those investment
accounts available to contract owners of the PrimElite Variable Annuity
product. The financial statements of the remaining investment accounts
available to contract owners of the Equi-Select Variable Annuity product
are presented separately.
Effective January 1, 1996, the Company changed the method of reporting
realized gains and losses. For the nine months ended September 30,
1996, realized gains and losses are determined on the basis of specific
identification. For the year ended December 31, 1995, the average cost
method was used to determine realized gains and losses. Dividends are
NOTE 1 - INVESTMENT AND ACCOUNTING POLICIES (continued)
taken into income on an accrual basis as of the ex-dividend date.
NOTE 2 - EXPENSES
The Company is compensated for mortality and expense risks and
administrative costs by a charge equivalent to an annual rate of 1.25%
and 0.15%, respectively, of the total net assets of each Account. These
charges amounted to $924,325 and $111,298, respectively, through
September 30, 1996 ($96,647 and $11,662, respectively for all of 1995).
An annual contract charge of $30 is deducted on each contract
anniversary prior to the maturity date, upon full withdrawal of a
contract's value or upon commencement of annuity payments if such
withdrawal is made or annuity payments commence on a date other than the
contract anniversary. Through September 30, 1996, annual contract
charges amounted to $35,300 and for the year ended December 31, 1995,
these charges amounted to $558.
A transfer charge computed as the lesser of 2% of the contract value
transferred or $25 will be imposed on each transfer between Accounts in
excess of twelve in any one calendar year. Through September 30, 1996,
transfer charges amounted to $75. No transfer charges were assessed in
1995. A withdrawal charge may be imposed in the event of withdrawal of
any portion of the contract value or upon annuitization. The withdrawal
charge is 8% of the amount withdrawn prior to the first anniversary of
the purchase payment and reduces by 1% at each subsequent purchase
payment anniversary.
NOTE 3 - FEDERAL INCOME TAXES
Operations of the Equitable Life Insurance Company of Iowa Separate
Account A form a part of the operations of the Company which is taxed as
a life insurance company under the Internal Revenue Code. Under current
law, no federal income taxes are payable with respect to operations of
Equitable Life Insurance Company of Iowa Separate Account A.
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments
were as follows:
<TABLE>
<CAPTION>
Period From Period From
January 1, 1996 or January 1, 1995 or
Commencement of Commencement of
Operations Operations
to September 30, 1996 to December 31, 1995
_______________________ _______________________
Purchases Sales Purchases Sales
____________ __________ ____________ __________
<S> <C> <C> <C> <C>
Research Portfolio $33,012,383 $85,487 $14,168,762 $230,594
OTC Portfolio 19,595,681 312,379 8,736,489 410,391
Total Return Portfolio 26,135,429 321,090 14,267,685 137,651
International Equity Portfolio 5,810,769 101,196 1,754,791 1,113
Income and Growth Portfolio 11,494,211 287,871 3,373,110 6,680
High Income Portfolio 4,804,963 195,363 792,963 1,972
Money Market Portfolio 7,594,831 5,711,916 2,614,578 1,336,686
Appreciation Portfolio 2,996,096 8,667 -- --
</TABLE>
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
Transactions in units were as follows:
<TABLE>
<CAPTION>
Period From Period From
January 1, 1996 or January 1, 1995 or
Commencement of Commencement of
Operations Operations
to September 30, 1996 to December 31, 1995
_______________________ _______________________
Purchases Sales Purchases Sales
____________ __________ ____________ __________
<S> <C> <C> <C> <C>
Research Account 2,442,852 135,627 1,196,506 9,931
OTC Account 1,355,707 121,182 705,565 9,749
Total Return Account 2,241,658 167,149 1,315,204 35,745
International Equity Account 457,397 1,912 154,388 --
Income and Growth Account 908,110 18,547 295,140 6
High Income Account 417,279 6,936 72,433 150
Money Market Account 1,066,604 890,120 295,977 170,929
Appreciation Account 296,426 77 -- --
</TABLE>
NOTE 6 - NET ASSETS
Net assets at September 30, 1996 consisted of the following:
<TABLE>
<CAPTION>
Total
Research OTC Return
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
Unit transactions $47,633,662 $27,539,968 $40,331,771
Accumulated net
investment income (loss) (38,844) 811,520 7,961
Net unrealized appreciation
of investments 6,575,512 2,771,186 3,022,099
______________ ______________ ______________
$54,170,330 $31,122,674 $43,361,831
============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
International Income High
Equity and Growth Income
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
Unit transactions $7,528,755 $14,677,782 $5,408,977
Accumulated net
investment income (loss) (52,203) (52,114) 677
Net unrealized appreciation
of investments 534,287 1,262,962 263,840
______________ ______________ ______________
$8,010,839 $15,888,630 $5,673,494
============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Money
Market Appreciation
Account Account
______________ ______________
<S> <C> <C>
Unit transactions $3,123,324 $2,997,706
Accumulated net
investment income (loss) 41,654 (10,101)
Net unrealized appreciation
of investments -- 146,266
______________ ______________
$3,164,978 $3,133,871
============== ==============
</TABLE>
NOTE 7 - LEGAL PROCEEDINGS
Equitable Life Insurance Company and other affiliates are defendants in certain
legal proceedings. These legal proceedings are not likely to have a material
adverse effect on Equitable Life Insurance Separate Account A or upon the
ability of Equitable Life Insurance Company of Iowa to meet its obligations
under the variable annuity contracts.
Financial Statements
Equitable Life Insurance Company of Iowa
Years ended December 31, 1995, 1994 and 1993
with Report of Independent Auditors
Equitable Life Insurance Company of Iowa
Financial Statements
Years ended December 31, 1995, 1994 and 1993
Contents
Report of Independent Auditors
Audited Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Stockholder's Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
The Board of Directors and Stockholder
Equitable Life Insurance Company of Iowa
We have audited the accompanying consolidated balance sheets of Equitable
Life Insurance Company of Iowa (wholly owned by Equitable of Iowa
Companies) as of December 31, 1995 and 1994, and the related consolidated
statements of income, changes in stockholder's equity, and cash flows for
each of the three years in the period ended December 31, 1995. Our audits
also include the financial statement schedules listed in the Index at Item
24. These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Equitable Life Insurance Company of Iowa at December 31, 1995
and 1994, and the consolidated 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. Also, in our
opinion, the related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
As discussed in Note 3 to the consolidated financial statements, in 1994
the Company changed its method of accounting for certain investments in
debt securities.
/s/ Ernst & Young LLP
Des Moines, Iowa
February 7, 1996
Equitable Life Insurance Company of Iowa
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
December 31
1995 1994
_________________________
<S> <C> <C>
Assets
Investments
Fixed maturities:
Available for sale, at market (cost:
1995-$6,884,837; 1994-$819,083) $7,352,211 $778,486
Held for investment, at amortized cost
(market: 1994-$5,059,090) -- 5,393,798
Equity securities of unaffiliated companies, at
market (cost: 1995 - $49,789; 1994 - $23,351) 50,595 22,978
Equity security of affiliated company, at market
(cost: 1995 and 1994 - $618) 3,599 3,164
Mortgage loans on real estate 1,169,456 610,185
Real estate, less allowance for depreciation
of $4,804 in 1995 and $4,659 in 1994 13,960 15,668
Policy loans 182,423 176,448
Short-term investments 35,282 45,796
___________ ___________
Total investments 8,807,526 7,046,523
Cash and cash equivalents 10,390 11,830
Securities and indebtedness of related parties 13,755 11,034
Accrued investment income 122,834 105,959
Notes and other receivables 32,395 23,173
Deferred policy acquisition costs 554,179 607,626
Property and equipment, less allowance for
depreciation of $9,628 in 1995 and $6,685 in 1994 8,026 7,806
Deferred income tax benefit -- 1,634
Intangible assets, less accumulated amortization
of $558 in 1995 and $483 in 1994 2,417 2,492
Other assets 47,991 43,784
Due from affiliates 1,995 13,598
Separate account assets 171,881 84,963
___________ ___________
Total assets $9,773,389 $7,960,422
=========== ===========
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Consolidated Balance Sheets (continued)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
December 31
1995 1994
_________________________
<S> <C> <C>
Liabilities and stockholder's equity
Policy liabilities and accruals:
Future policy benefits:
Annuity and universal life products $7,428,134 $6,237,107
Traditional life insurance products 778,857 777,100
Unearned revenue reserve 14,326 14,317
Other policy claims and benefits 8,980 7,785
___________ ___________
8,230,297 7,036,309
Other policyholders' funds:
Supplementary contracts without life contingencies 11,613 12,224
Advance premiums and other deposits 691 790
Accrued dividends 12,715 12,761
___________ ___________
25,019 25,775
Deferred income taxes 113,171 --
Due to affiliates 5,175 4,122
Other liabilities 180,452 136,408
Separate account liabilities 171,881 84,963
___________ ___________
Total liabilities 8,725,995 7,287,577
Commitments and contingencies
Stockholder's equity:
Common stock, par value $1.00 per share -
authorized 7,500,000 shares, issued and
outstanding 5,000,300 shares 5,000 5,000
Additional paid-in capital 274,009 224,009
Unrealized appreciation (depreciation) of fixed
maturities 208,932 (26,493)
Unrealized appreciation of equity securities 3,787 2,173
Retained earnings 555,666 468,156
___________ ___________
Total stockholder's equity 1,047,394 672,845
___________ ___________
Total liabilities and stockholder's equity $9,773,389 $7,960,422
=========== ===========
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Consolidated Statements of Income
(Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
_______________________________________
<S> <C> <C> <C>
Revenues:
Annuity and universal life
product charges $51,466 $43,767 $34,281
Traditional life insurance premiums 43,425 46,265 46,870
Net investment income 638,056 521,646 432,044
Realized gains on investments 9,524 19,697 44,996
Other income 8,883 8,297 6,663
___________ ___________ ___________
751,354 639,672 564,854
Benefits and expenses:
Annuity and universal life benefits:
Interest credited to account balances 390,039 320,312 268,992
Benefit claims incurred in excess of
account balances 10,396 8,877 5,618
Traditional life insurance benefits 68,338 56,923 54,262
Increase (decrease) in future
traditional policy benefits (6,867) 3,350 3,439
Distributions to participating
policyholders 25,125 24,988 25,861
Underwriting, acquisition and
insurance expenses:
Commissions 146,224 157,028 113,450
General expenses 40,941 43,402 37,553
Insurance taxes 45,472 9,961 6,335
Policy acquisition costs deferred (178,133) (193,263) (137,153)
Amortization of deferred policy
acquisition costs 72,537 50,921 42,078
___________ ___________ ___________
614,072 482,499 420,435
Interest expense 2,565 2,069 457
Other expenses (9) 1,880 322
___________ ___________ ___________
616,628 486,448 421,214
___________ ___________ ___________
134,726 153,224 143,640
Income taxes 47,233 53,262 50,469
___________ ___________ ___________
87,493 99,962 93,171
Equity income (loss), net of related
income taxes 17 (39) 126
___________ ___________ ___________
Net income $87,510 $99,923 $93,297
=========== =========== ===========
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Consolidated Statements of Changes in Stockholder's Equity
(Dollars in thousands)
<TABLE>
<CAPTION>
Unreal- Unreal-
ized ized
Appre- Appre-
ciation ciation
(Depre- (Depre-
ciation) ciation)
Addi- of of Total
tional Fixed Equity Stock-
Common Paid-In Matur- Secur- Retained holder's
Stock Capital ities ities Earnings Equity
________ _________ _________ _______ _________ ___________
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1993 $5,000 $134,009 -- $1,767 $274,936 $415,712
Net income for 1993 -- -- -- -- 93,297 93,297
Unrealized appre-
ciation of equity
securities -- -- -- 1,242 -- 1,242
Contributions from
parent -- 90,000 -- -- -- 90,000
________ _________ _________ _______ _________ ___________
Balance at December
31, 1993 5,000 224,009 3,009 368,233 600,251
Cumulative effect of
change in accounting
principle regarding
fixed maturity
securities -- -- $22,516 -- -- 22,516
Net income for 1994 -- -- -- -- 99,923 99,923
Unrealized depre-
ciation of fixed
maturity securities -- -- (49,009) -- -- (49,009)
Unrealized depre-
ciation of equity
securities -- -- -- (836) -- (836)
________ _________ _________ _______ _________ ___________
Balance at December
31, 1994 5,000 224,009 (26,493) 2,173 468,156 672,845
Net income for 1995 -- -- -- -- 87,510 87,510
Unrealized appre-
ciation of fixed
maturity securities -- -- 235,425 -- -- 235,425
Unrealized appre-
ciation of equity
securities -- -- -- 1,614 -- 1,614
Contributions from
parent -- 50,000 -- -- -- 50,000
________ _________ _________ _______ _________ ___________
Balance at December
31, 1995 $5,000 $274,009 $208,932 $3,787 $555,666 $1,047,394
======== ========= ========= ======= ========= ===========
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
_______________________________________
<S> <C> <C> <C>
Operating activities
Net income $87,510 $99,923 $93,297
Adjustments to reconcile net income to
net cash provided by operations:
Adjustments related to annuity and
universal life products:
Interest credited to account balances 390,039 320,312 268,992
Charges for mortality and administration (54,308) (46,280) (31,151)
Change in unearned revenues (293) (449) (840)
Increase in traditional life
policy liabilities and accruals 2,758 3,750 5,987
Decrease in other policyholders' funds (756) (130) (194)
Increase in accrued investment income (16,875) (13,486) (14,376)
Policy acquisition costs deferred (178,133) (193,263) (137,153)
Amortization of deferred policy
acquisition costs 72,537 50,921 42,078
Change in other assets, other
liabilities, and accrued income taxes 42,496 27,372 26,515
Provision for depreciation and
amortization (8,449) (1,089) (426)
Provision for deferred income taxes 1,117 9,958 (3,138)
Share of losses (equity in earnings)
of related parties (27) 51 (194)
Realized gains on investments (9,524) (19,697) (44,996)
___________ ___________ ___________
Net cash provided by operating
activities 328,092 237,893 204,401
Investing activities
Sale, maturity, or repayment of investments:
Fixed maturities-available for sale 145,173 204,847 --
Fixed maturities-held for investment 203,395 286,844 1,056,544
Equity securities 6,572 -- --
Mortgage loans on real estate 53,544 47,886 49,008
Real estate 2,030 5,662 289
Policy loans 28,436 30,397 25,963
Short-term investments - net 10,514 12,294 --
___________ ___________ ___________
449,664 587,930 1,131,804
Acquisition of investments:
Fixed maturities-available for sale (943,285) (181,303) --
Fixed maturities-held for investment (59,759) (1,422,409) (2,121,604)
Equity securities (32,097) (23,101) --
Mortgage loans on real estate (612,449) (314,255) (152,274)
Real estate (1,018) (876) (346)
Policy loans (34,411) (29,996) (26,083)
Short-term investments - net -- -- (48,395)
___________ ___________ ___________
(1,683,019) (1,971,940) (2,348,702)
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Consolidated Statements of Cash Flows (continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
_______________________________________
<S> <C> <C> <C>
Investing activities (continued)
Disposal of investments accounted for
by the equity method $498 $489 $939
Additions to investments accounted for
by the equity method -- (1,376) (467)
Repayments of notes receivable 1,317 221 --
Issuance of notes receivable -- (2,438) --
Sales of property and equipment 109 281 107
Purchases of property and equipment (3,397) (3,052) (4,300)
___________ ___________ ___________
Net cash used in investing activities (1,234,828) (1,389,885) (1,220,619)
Financing activities
Proceeds from line of credit borrowing 754,104 1,053,746 594,494
Repayment of line of credit borrowing (754,104) (1,053,746) (594,494)
___________ ___________ ___________
-- -- --
Receipts from annuity and universal
life policies credited to
policyholder account balances 1,691,189 1,746,108 1,190,024
Return of policyholder account balances
on annuity policies and universal life
policies (835,893) (586,762) (264,364)
Contributions from parent 50,000 -- 90,000
___________ ___________ ___________
Net cash provided by financing
activities 905,296 1,159,346 1,015,660
Increase (decrease) in cash and cash
equivalents (1,440) 7,354 (558)
Cash and cash equivalents at beginning
of year 11,830 4,476 5,034
___________ ___________ ___________
Cash and cash equivalents at end of year $10,390 $11,830 $4,476
=========== =========== ===========
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $2,567 $2,070 $457
Income taxes 33,490 60,610 43,552
Noncash investing and financing activities:
Foreclosure of mortgage loans, including
taxes and costs capitalized ($106) and
operating funds retained ($283) in 1993 -- 250 6,577
</TABLE>
See accompanying notes.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements
December 31, 1995
1. Significant Accounting Policies
Organization
Equitable Life Insurance Company of Iowa ("the Company") is a wholly-owned
subsidiary of Equitable of Iowa Companies ("parent"). The Company and USG
Annuity & Life Company ("USG") offer various insurance products including
deferred fixed annuities, universal and term life insurance and variable
annuities. These products are marketed by the Company's career agency
force, brokers and through financial institutions. The Company's primary
customers are middle-income individuals and small businesses.
Consolidation
The consolidated financial statements include the Company and its
subsidiaries. The Company's principal subsidiaries are USG, Equitable
American Insurance Company ("EAIC") and Equitable Companies. At
December 31, 1995 and 1994, all subsidiaries are wholly owned. All
significant intercompany accounts and transactions have been eliminated.
Investments
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, Accounting for Certain Investments
in Debt and Equity Securities. Pursuant to SFAS No. 115, fixed maturity
securities are designated as either "available for sale", "held for investment"
or "trading". Sales of fixed maturities designated as "available for sale"
are not restricted by SFAS No. 115. Available for sale securities are
reported at market value and unrealized gains and losses on these securities
are included directly in stockholder's equity, after adjustment for related
changes in deferred policy acquisition costs, policy reserves and deferred
income taxes. At December 31, 1995, all of the Company's fixed maturity
securities are designated as available for sale although the Company is not
precluded from designating fixed maturity securities as held for investment
or trading at some future date. Securities that the Company has the positive
intent and ability to hold to maturity are designated as "held for investment".
Held for investment securities are reported at cost adjusted for amortization
of premiums and discounts. Changes in the market value of these securities,
except for declines that are other than temporary, are not reflected in the
Company's financial statements. Sales of securities designated as held for
investment are severely restricted by SFAS No. 115. Securities that are
bought and held principally for the purpose of selling them in the near term
are designated as trading securities. Unrealized gains and losses on trading
securities are included in current earnings. Transfers of securities
between categories are restricted and are recorded at fair value at the time
of the transfer. Securities that are determined to have a decline in value
that is other than temporary are written down to estimated fair value which
becomes the security's new cost basis by a charge to realized losses in the
Company's Statement of Income. Premiums and discounts are amortized/accrued
utilizing the scientific interest method which results in a constant yield
over the securities' expected life.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
1. Significant Accounting Policies (continued)
Amortization/accrual of premiums and discounts on mortgage-backed securities
incorporates a prepayment assumption to estimate the securities' expected
life.
Prior to the adoption of SFAS No. 115, all of the Company's fixed maturity
securities were classified as "held to maturity". Fixed maturity
securities were written down to net realizable value (the sum of the
estimated nondiscounted cash flows from the securities) if the securities
were determined to have declines in value that were "other than temporary".
Future investment income was recognized at the rate implicit in this
calculation of net realizable value.
Equity securities (common and non-redeemable preferred stocks) are reported
at market if readily marketable, or at cost if not readily marketable. The
change in unrealized appreciation and depreciation of marketable equity
securities (net of related deferred income taxes, if any) is included
directly in stockholder's equity. Equity securities that are determined to
have a decline in value that is other than temporary are written down to
estimated fair value which becomes the security's new cost basis by a
charge to realized losses in the Company's Statement of Income.
Mortgage loans on real estate are reported at cost adjusted for
amortization of premiums and accrual of discounts. If the value of any
mortgage loan is determined to be impaired (i.e., when it is probable that
the Company will be unable to collect all amounts due according to the
contractual terms of the loan agreement), the carrying value of the
mortgage loan is reduced to the present value of expected future cash flows
from the loan, discounted at the loan's effective interest rate, or to the
loan's observable market price, or the fair value of the underlying
collateral. The carrying value of impaired loans is reduced by the
establishment of a valuation allowance which is adjusted at each reporting
date for significant changes in the calculated value of the loan. Changes
in this valuation allowance are charged or credited to income.
Real estate, which includes real estate acquired through foreclosure, is
reported at cost less allowances for depreciation. Real estate acquired
through foreclosure, or in-substance foreclosure, is recorded at the lower
of cost (which includes the balance of the mortgage loan, any accrued
interest and any costs incurred to obtain title to the property) or fair
value as determined at or before the foreclosure date. The carrying value
of these assets is subject to regular review. If the fair value, less
estimated sale cost, of real estate owned decreases to an amount lower than
its carrying value, a valuation allowance is established for the
difference. This valuation allowance can be restored should the fair value
of the property increase. Changes in this valuation allowance are charged
or credited to income.
Policy loans are reported at unpaid principal. Short-term investments are
reported at cost adjusted for amortization of premiums and accrual of
discounts. Investments accounted for by the equity method include investments
in, and advances to, various joint ventures and partnerships.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
1. Significant Accounting Policies (continued)
Market values, as reported herein, of publicly-traded fixed maturity
securities are as reported by an independent pricing service. Market
values of conventional mortgage-backed securities not actively traded in a
liquid market are estimated using a third-party pricing system, which uses
a matrix calculation assuming a spread over U.S. Treasury bonds based upon
the expected average lives of the securities. Market values of private
placement bonds are estimated using a matrix that assumes a spread (based
on interest rates and a risk assessment of the bonds) over U.S. Treasury
bonds. Market values of redeemable preferred stocks are as reported by the
National Association of Insurance Commissioners ("NAIC"). Market values of
equity securities are based on the latest quoted market prices, or where not
readily marketable, at values which are representative of the market values
of issues of comparable yield and quality. Realized gains and losses are
determined on the basis of specific identification and average cost methods
for manager initiated and issuer initiated disposals, respectively.
Cash and Cash Equivalents
For purposes of the consolidated statement of cash flows, the Company
considers all demand deposits and interest-bearing accounts not related to
the investment function to be cash equivalents. All interest-bearing
accounts classified as cash equivalents have original maturities of three
months or less.
Deferred Policy Acquisition Costs
Certain costs of acquiring new insurance business, principally commissions
and other expenses related to the production of new business, have been
deferred. For annuity and universal life products, such costs are being
amortized generally in proportion to the present value (using the assumed
crediting rate) of expected gross profits. This amortization is adjusted
retrospectively, or "unlocked", when the Company revises its estimate of
current or future gross profits to be realized from a group of products.
For traditional life insurance products, such costs are being amortized
over the premium-paying period of the related policies in proportion to
premium revenues recognized, using principally the same assumptions for
interest, mortality and withdrawals that are used for computing liabilities
for future policy benefits subject to traditional "lock-in" concepts.
Deferred policy acquisition costs are adjusted to reflect the pro-forma
impact of unrealized gains and losses on fixed maturity securities the
Company has designated as "available for sale" under SFAS No. 115.
Property and Equipment
Property and equipment primarily represent leasehold improvements at the
Company's headquarters and at various agency offices and office furniture
and equipment and are not considered to be significant to the Company's
overall operations. Property and equipment are reported at cost less
allowances for depreciation. Depreciation expense is computed primarily on
the basis of the straight-line method over the estimated useful lives of the
assets.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
1. Significant Accounting Policies (continued)
Intangible Assets
Intangible assets include the value of various licenses acquired in
conjunction with the purchase of USG which are being amortized over forty
years using the straight-line method.
Future Policy Benefits
The liability for future policy benefits for traditional life insurance
products has been calculated on a net-level premium basis. Interest
assumptions range from 2.75% for 1956 and prior issues to a 9.00% level,
graded to 6.00% after twenty years for current issues. Mortality,
morbidity and withdrawal assumptions generally are based on actual
experience. These assumptions have been modified to provide for possible
unfavorable deviation from the assumptions. Future dividends for
participating business (which accounted for 1.8% of premiums and 9.4% of
inforce in 1995) are provided for in the liability for future policy
benefits.
With respect to annuity and universal life products, the Company utilizes
the retrospective deposit accounting method. Policy reserves represent the
premiums received plus accumulated interest, less mortality and
administration charges. Interest credited to these policies ranged from
3.35% to 11.35% during 1995, 3.50% to 11.35% during 1994, and 4.50% to
10.00% during 1993.
The unearned revenue reserve reflects the unamortized balance of the excess
of first year administration charges over renewal period administration
charges (policy initiation fees) on annuity and universal life products.
These excess charges have been deferred and are being recognized in income
over the period benefited using the same assumptions and factors used to
amortize deferred policy acquisition costs.
Recognition of Premium Revenues and Costs
Traditional life insurance premiums are recognized as revenues over the
premium-paying period. Future policy benefits and policy acquisition costs
are associated with the premiums as earned by means of the provision for
future policy benefits and amortization of deferred policy acquisition
costs.
Revenues for annuity and universal life products consist of policy charges
for the cost of insurance, policy administration charges, amortization of
policy initiation fees and surrender charges assessed against policyholder
account balances during the period. Expenses related to these products
include interest credited to policyholder account balances and benefit
claims incurred in excess of policyholder account balances.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
1. Significant Accounting Policies (continued)
Deferred Income Taxes
Deferred tax assets or liabilities are computed based on the difference
between the financial statement and income tax bases of assets and
liabilities using the enacted marginal tax rate. Deferred tax assets or
liabilities are adjusted to reflect the pro-forma impact of unrealized
gains and losses on fixed maturity securities the Company has designated as
available for sale under SFAS No. 115. Changes in deferred tax assets or
liabilities resulting from this SFAS No. 115 adjustment are charged or
credited directly to stockholder's equity. Deferred income tax expenses or
credits reflected in the Company's Statement of Income are based on the
changes in the deferred tax asset or liability from period to period
(excluding the SFAS No. 115 adjustment).
Separate Accounts
The transactions in the separate accounts (which are charged or credited
directly to the accounts) are excluded from the consolidated statements of
income.
Dividend Restrictions
The Company's ability to pay dividends to its parent company is restricted
because prior approval of insurance regulatory authorities is required for
payment of dividends to the stockholder which exceed an annual limitation.
During 1996, the Company could pay dividends to the parent company of
approximately $85,758,000 without prior approval of statutory authorities.
Also, the amount ($514,576,000 at December 31, 1995) by which the
stockholder's equity stated in conformity with generally accepted
accounting principles exceeds statutory capital and surplus as reported is
restricted and cannot be distributed.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
preparation period. Actual results could differ from those estimates.
Significant estimates and assumptions are utilized in the calculation of
deferred policy acquisition costs, policyholder liabilities and accruals,
postretirement benefits, guaranty fund assessment accruals and valuation
allowances on investments and deferred tax benefits. It is reasonably
possible that actual experience could differ from the estimates and
assumptions utilized which could have a material impact on the financial
statements.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
1. Significant Accounting Policies (continued)
Reclassification
Certain amounts in the 1994 and 1993 financial statements have been
reclassified to conform to the 1995 financial statement presentation.
2. Basis of Financial Reporting
The financial statements of the Company differ from related statutory
financial statements principally as follows: (1) acquisition costs of
acquiring new business are deferred and amortized over the life of the
policies rather than charged to operations as incurred; (2) future policy
benefit reserves on traditional life insurance products are based on
reasonable assumptions of expected mortality, interest, and withdrawals
which include a provision for possible unfavorable deviation from such
assumptions, which may differ from reserves based upon statutory mortality
rates and interest; (3) future policy benefit reserves for annuity and
universal life products are based on full account values, rather than the
greater of cash surrender value or amounts derived from discounting
methodologies utilizing statutory interest rates; (4) reserves are reported
before reduction for reserve credits related to reinsurance ceded and a
receivable is established, net of an allowance for uncollectible amounts,
for these credits rather than presented net of these credits; (5) fixed
maturity investments are designated as "available for sale" and valued at
fair value with unrealized appreciation/depreciation, net of adjustments to
deferred income taxes (if applicable) and deferred policy acquisition costs,
credited/charged directly to stockholder's equity rather than valued at
amortized cost; (6) the carrying value of fixed maturity securities is reduced
to fair value by a charge to realized losses in the statements of income when
declines in carrying value are judged to be other than temporary, rather than
through the establishment of a formula-determined statutory investment
reserve (carried as a liability), changes in which are charged directly to
surplus; (7) deferred income taxes are provided for the difference between
the financial statement and income tax bases of assets and liabilities; (8)
net realized gains or losses attributed to changes in the level of interest
rates in the market are recognized when the sale is completed rather than
deferred and amortized over the remaining life of the fixed maturity security
or mortgage loan; (9) gains arising from sale lease-back transactions are
deferred and amortized over the life of the lease rather than recognized in
the period of sale; (10) a liability is established for anticipated guaranty
fund assessments, net of related anticipated premium tax credits, rather than
capitalized when assessed and amortized in accordance with procedures
permitted by insurance regulatory authorities; (11) a prepaid pension cost
asset established in accordance with SFAS No. 87, Employers' Accounting for
Pensions, agents' balances and certain other assets designated as
"non-admitted assets" for statutory purposes are reported as assets rather
than being charged to surplus; (12) revenues for annuity and universal life
products consist of policy charges for the cost of insurance, policy
administration charges, amortization of policy initiation fees and surrender
charges assessed rather than premiums received; (13) expenses for
postretirement benefits other than pensions are recognized for all qualified
employees rather than for only vested and fully-eligible employees, and the
accumulated postretirement benefit obligation for years prior to adoption of
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
2. Basis of Financial Reporting (continued)
SFAS No. 106, Employers' Accounting for Postretirement Benefits Other than
Pensions, was recognized as a cumulative effect of change in accounting
method rather than deferred and amortized over twenty years, and (14) assets
and liabilities are restated to fair values when a change in ownership occurs,
with provisions for goodwill and other intangible assets, rather than
continuing to be presented at historical cost.
Net income for the Company, USG and EAIC as determined in accordance with
statutory accounting practices was $87,179,000 in 1995, $61,421,000 in
1994, and $42,182,000 in 1993. Total statutory capital and surplus was
$532,817,000 at December 31, 1995 and $431,585,000 at December 31, 1994.
3. Investment Operations
Effective January 1, 1994, the Company adopted SFAS No. 115, Accounting
for Certain Investments in Debt and Equity Securities. SFAS No. 115
requires companies to classify their securities as "held to maturity",
"available for sale" or "trading".
On November 15, 1995, the Financial Accounting Standards Board issued a
special report A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities. This report allowed
companies a one-time opportunity to reassess the classification of their
securities holdings pursuant to SFAS No. 115. SFAS No. 115 significantly
restricts a company's ability to sell securities in the held to maturity
category without raising questions about the appropriateness of its
accounting policy for such securities. Classification of securities as
held to maturity therefore limits a company's ability to manage its
investment portfolio in many circumstances. For example, a company would
be prohibited from accepting a tender offer or responding to an anticipated
decline in the credit quality of assets in a particular industry when the
security is categorized as held to maturity. Additionally, a company is
unable to adjust its portfolio to take advantage of tax planning
opportunities or economic changes that would assist in providing the most
appropriate asset liability management. Thus a company's ability to maintain
the appropriate flexibility to make optimal investment decisions is
significantly restricted if it classifies securities as held to maturity.
In response to this opportunity, the Company reclassified 100% of the
securities in its "held to maturity" category to "available for sale" on
December 1, 1995 to maximize investment flexibility. As a result of this
reclassification, securities with combined cost totaling $5,250,921,000 and
estimated fair value of $5,560,519,000 were transferred from the Company's
held for investment portfolio to its available for sale portfolio. This
transfer caused the net unrealized investment gain component of stockholder's
equity to increase by $138,795,000 (net of deferred income taxes of
$74,735,000 and an adjustment of $96,068,000 to deferred policy acquisition
costs). The Company is not, however, precluded from classifying securities as
held to maturity in the future. While it is not the Company's current
practice to engage in active management of the fixed maturity securities
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
portfolio such that significant sales would occur, the inability to implement
prudent financial management decisions necessitated this change.
SFAS No. 115 requires the carrying value of fixed maturity securities
classified as available for sale to be adjusted for changes in market value,
primarily caused by interest rates. While other related accounts are adjusted
as discussed above, the insurance liabilities supported by these securities
are not adjusted under SFAS No. 115, thereby creating volatility in
stockholder's equity as interest rates change. As a result, the Company
expects that its stockholder's equity will be exposed to incremental
volatility due to changes in market interest rates and the accompanying
changes in the reported value of securities classified as available for sale,
with equity increasing as market interest rates decline and, conversely,
decreasing as market interest rates rise.
Due to this potential for distortion in stockholder's equity, fair value
disclosure is provided in Note 4. SFAS No. 107, Disclosures about Fair
Value of Financial Instruments requires disclosure of fair values for
selected financial instruments but does not require disclosure of fair
value of life insurance liabilities. Although the Company's life insurance
liabilities are specifically exempted from this disclosure requirement,
estimated fair value disclosure of these liabilities is provided in an
effort to more properly reflect changes in stockholder's equity from
fluctuations in interest rates.
The cumulative effect of the adoption of SFAS No. 115 was to increase
stockholder's equity by $22,516,000, at January 1, 1994. The change in
unrealized gain or loss included in stockholder's equity, net of
adjustments, totaled $235,425,000 of unrealized gains (including the
unrealized gain of $138,795,000 related to the December 1, 1995
reclassification of securities to available for sale) for the year ended
December 31, 1995 and $49,009,000 of unrealized losses for the year ended
December 31, 1994.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
Realized gains (losses) and unrealized appreciation (depreciation) on
investments are summarized below:
<TABLE>
<CAPTION>
Realized*
_______________________________________
Year ended December 31
1995 1994 1993
_______________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Fixed maturities:
Available for sale ($3,401) $7,417
Held for investment 9,330 11,364 $44,765
Equity securities 912 -- --
Mortgage loans on real estate -- (62) (363)
Real estate (161) 7 14
Equity investments 2,844 971 580
___________ ___________ ___________
Realized gains on investments $9,524 $19,697 $44,996
=========== =========== ===========
<FN>
*See Note 5 for the income tax effects attributable to realized gains and
losses on investments.
</TABLE>
<TABLE>
<CAPTION>
Unrealized
_______________________________________
Year ended December 31
1995 1994 1993
_______________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Fixed maturities:
Available for sale $507,971 ($40,597)
Held for investment 334,708 (663,840) 144,409
Equity securities 1,614 (836) 1,242
___________ ___________ ___________
Unrealized appreciation (depre-
ciation) of investments $844,293 ($705,273) $145,651
=========== =========== ===========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
Major categories of net investment income are summarized below:
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
_______________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Fixed maturities $558,903 $478,436 $397,912
Equity securities 1,255 303 45
Mortgage loans on real estate 76,382 39,117 28,408
Real estate 2,747 3,696 2,696
Policy loans 10,049 9,788 9,838
Short-term investments 1,275 886 933
Other - net 996 801 425
___________ ___________ ___________
651,607 533,027 440,257
Less investment expenses (13,551) (11,381) (8,213)
___________ ___________ ___________
Net investment income $638,056 $521,646 $432,044
=========== =========== ===========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
At December 31, 1995 and 1994, amortized cost, gross unrealized gains and
losses and estimated market value of the Company's fixed maturity securities
designated as available for sale are as follows:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
December 31, 1995
U.S. Government and
governmental agencies
and authorities:
Mortgage-backed
securities $289,422 $16,738 $306,160
Other 60,567 4,163 ($2) 64,728
States, municipalities
and political
subdivisions 15,485 1,639 -- 17,124
Foreign governments 10,573 3,426 -- 13,999
Public utilities 1,271,641 92,546 (2,077) 1,362,110
Investment grade
corporate 2,322,036 277,981 (1,303) 2,598,714
Below investment grade
corporate 574,284 19,428 (12,492) 581,220
Mortgage-backed
securities 2,340,194 75,704 (8,142) 2,407,756
Redeemable preferred
stocks 635 -- (235) 400
___________ ___________ ___________ ___________
Total available for sale $6,884,837 $491,625 ($24,251) $7,352,211
=========== =========== =========== ===========
December 31, 1994
U.S. Government and
governmental agencies
and authorities:
Mortgage-backed
securities $17,817 ($730) $17,087
Other 30,624 (1,178) 29,446
Public utilities 70,184 $704 (7,173) 63,715
Investment grade
corporate 365,162 9,288 (19,574) 354,876
Below investment grade
corporate 199,597 589 (23,417) 176,769
Mortgage-backed
securities 135,699 1,926 (1,032) 136,593
___________ ___________ ___________ ___________
Total available for sale $819,083 $12,507 ($53,104) $778,486
=========== =========== =========== ===========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
At December 31, 1994, the amortized cost, gross unrealized gains and
losses, and estimated market value of the Company's fixed maturity
securities designated as held for investment are as follows:
<TABLE>
<CAPTION>
HELD FOR INVESTMENT
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
December 31, 1994
U.S. Government and
governmental agencies
and authorities:
Mortgage-backed
securities $288,914 $2,971 ($13,949) $277,936
Other 3,980 66 (104) 3,942
States, municipalities
and political
subdivisions 15,557 -- (1,128) 14,429
Foreign governments 10,573 719 -- 11,292
Public utilities 1,231,799 7,148 (99,517) 1,139,430
Investment grade
corporate 1,594,095 33,750 (80,108) 1,547,737
Below investment grade
corporate 223,908 477 (19,074) 205,311
Mortgage-backed
securities 2,024,281 4,389 (170,091) 1,858,579
Redeemable preferred
stocks 691 -- (257) 434
___________ ___________ ___________ ___________
Total held for investment $5,393,798 $49,520 ($384,228) $5,059,090
=========== =========== =========== ===========
</TABLE>
No fixed maturity securities were designated as held for investment at
December 31, 1995. Short-term investments, all with maturities of 30 days or
less, have been excluded from the above schedules. Amortized cost
approximates market value for these securities.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
The amortized cost and estimated market value of fixed maturity securities,
by contractual maturity, at December 31, 1995, are shown below. Expected
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
Estimated
Amortized Market
Cost Value
_________________________
(Dollars in thousands)
<S> <C> <C>
December 31, 1995
Due after one year through five years $178,935 $183,442
Due after five years through ten years 1,343,419 1,450,436
Due after ten years 2,732,867 3,004,417
___________ ___________
4,255,221 4,638,295
Mortgage-backed securities 2,629,616 2,713,916
___________ ___________
Total available for sale $6,884,837 $7,352,211
=========== ===========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
The amortized cost and market value of mortgage-backed securities, which
comprise 37% of the Company's investment in fixed maturity securities at
December 31, 1995, by type, are as follows:
<TABLE>
<CAPTION>
Estimated
Amortized Market
Cost Value
__________________________
(Dollars in thousands)
<S> <C> <C>
December 31, 1995
Mortgage-backed securities:
Government and agency guaranteed pools:
Very accurately defined maturities $17,199 $18,646
Planned amortization class 84,746 91,044
Targeted amortization class 29,290 30,216
Sequential pay 69,084 71,439
Pass through 89,103 94,815
Private Label CMOs and REMICs:
Very accurately defined maturities 30,555 32,026
Planned amortization class 25,448 27,357
Targeted amortization class 445,545 449,932
Sequential pay 1,767,444 1,823,761
Mezzanines 38,026 39,655
Private placements and subordinate issues 33,176 35,025
___________ ___________
Total mortgage-backed securities $2,629,616 $2,713,916
=========== ===========
</TABLE>
During periods of significant interest rate volatility, the mortgages
underlying mortgage-backed securities may prepay more quickly or more
slowly than anticipated. If the principal amount of such mortgages are
prepaid earlier than anticipated during periods of declining interest
rates, investment income may decline due to reinvestment of these funds at
lower current market rates. If principal repayments are slower than
anticipated during periods of rising interest rates, increases in
investment yield may lag behind increases in interest rates because funds
will remain invested at lower historical rates rather than reinvested at
higher current rates. To mitigate this prepayment volatility, the Company
invests primarily in intermediate tranche collateralized mortgage
obligations ("CMOs"). CMOs are pools of mortgages that are segregated into
sections, or tranches, which provide sequential retirement of bonds rather
than a pro-rata share of principal return in the pass-through structure.
The Company owns no "interest only" or "principal only" mortgage-backed
securities. Further, the Company has not purchased obligations at
significant premiums, thereby limiting exposure to loss during periods of
accelerated prepayments. At December 31, 1995, unamortized premiums on
mortgage-backed securities totaled $5,611,000 and unaccrued discounts on
mortgage-backed securities totaled $61,808,000.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
An analysis of sales, maturities and principal repayments of the Company's
fixed maturities portfolio for the years ended December 31, 1995, 1994 and
1993 is as follows:
<TABLE>
<CAPTION>
Gross Gross Proceeds
Amortized Realized Realized from
Cost Gains Losses Sale
_________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Year ended December 31, 1995
Scheduled principal repayments
calls and tenders (available
for sale only):
Available for sale $59,935 $319 ($19) $60,235
Held for investment 172,082 5,279 (274) 177,087
Sales:
Available for sale 82,837 2,104 (3) 84,938
Held for investment 21,983 4,325 -- 26,308
___________ _________ _________ ___________
Total $336,837 $12,027 ($296) $348,568
=========== ========= ========= ===========
Year ended December 31, 1994
Scheduled principal repayments
calls and tenders (available
for sale only):
Available for sale $167,285 $4,877 ($11) $172,151
Held for investment 275,480 11,389 (25) 286,844
Sales:
Available for sale 29,526 3,184 (14) 32,696
___________ _________ _________ ___________
Total $472,291 $19,450 ($50) $491,691
=========== ========= ========= ===========
Year ended December 31, 1993
Scheduled principal
repayments, calls and
tenders $999,855 $50,924 $1,050,779
Sales 5,481 284 5,765
___________ _________ _________ ___________
Total $1,005,336 $51,208 $ -- $1,056,544
=========== ========= ========= ===========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
During the second quarter of 1995, the Company sold one security with an
amortized cost of $21,983,000 from the held for investment portfolio
generating a realized gain of $4,325,000. This sale was due to a
significant deterioration of the issuer's creditworthiness resulting from
the announced reorganization of the issuer.
At December 31, 1995, unrealized appreciation of equity securities of
$3,787,000, is comprised of gross unrealized appreciation of $4,000,000 on
the Company's investment in affiliated common stock and its registered
separate account and gross unrealized depreciation of $213,000 on the
Company's other equity securities.
The carrying value of investments which have been non-income producing for
the twelve months preceding December 31, 1995 totaled $239,000 related to
one real estate property.
The Company analyzes its investment portfolio at least quarterly in order
to determine if the carrying value of its investments has been impaired.
The carrying value of debt and equity securities is written down to fair
value by a charge to realized losses when an impairment in value appears to
be other than temporary. During 1995, the Company identified two below
investment grade securities as having impairments in value that were other
than temporary. As a result of those determinations, the Company
recognized pre-tax losses of $5,802,000 to reduce the carrying value of the
securities to their estimated fair value. These securities were
subsequently sold resulting in realized gains totaling $1,200,000. During
1994, the Company recognized a pre-tax loss of $619,000 to reduce the
carrying value of one fixed maturity security to its estimated fair value.
This security had been previously written down to its estimated net
realizable value by a charge to realized losses of $6,443,000 during 1993.
This security was sold in the fourth quarter of 1994 at a nominal gain.
At December 31, 1995, the Company had established valuation allowances of
$202,000 on two mortgage loans (one of which was delinquent by 90 days or
more) to reduce the carrying value of these investments to their estimated
fair value less costs to sell. At December 31, 1994, the Company had
established valuation allowances of $57,000 on one mortgage loan and
$959,000 on one real estate property (sold in 1995) to reduce the carrying
value of these investments to their estimated fair value, less costs to sell.
During the year ended December 31, 1993, the Company recognized a pre-tax
loss of $363,000 to reduce the carrying value of one mortgage loan (sold in
1994) and established a valuation allowance of $86,000 on one real estate
property to reduce the carrying value of these investments to their estimated
fair value, less costs to sell.
At December 31, 1995, affidavits of deposits covering bonds with a par
value of $1,693,573,000 (1994 - $1,519,564,000), mortgage loans with an
unpaid principal balance of $304,729,000 (1994 - $225,404,000) and policy
loans with an unpaid balance of $167,844,000 (1994 - $168,653,000) were on
deposit with state agencies to meet regulatory requirements. In addition,
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
3. Investment Operations (continued)
at December 31, 1995, pursuant to a reinsurance agreement, the Company had
investments with a carrying value of $64,350,000 (1994 - $84,156,000) and
estimated market values of $64,350,000 (1994 - $72,637,000) deposited in a
trust for the benefit of the ceding company.
The Company's investment policies related to its investment portfolio
require diversification by asset type, company and industry and set limits
on the amounts which can be invested in an individual issuer. Such
policies are at least as restrictive as those set forth by regulatory
authorities. Fixed maturity investments included investments in various non-
governmental mortgage-backed securities (33% in 1995 and 35% in 1994),
public utilities (19% in 1995 and 22% in 1994), basic industrials (21% in
1995 and 18% in 1994), and consumer products (12% in 1995 and 13% in 1994).
Mortgage loans on real estate have been analyzed by geographical locations
and there are no concentrations of mortgage loans in any state exceeding
ten percent in 1995 and 1994. Mortgage loans on real estate have also been
analyzed by collateral type with significant concentrations identified in
retail facilities (32% in 1995 and 33% in 1994), industrial buildings (26%
in 1995 and 25% in 1994), multi-family residential buildings (24% in 1995
and 25% in 1994), and office buildings (17% in 1995 and 15% in 1994).
Equity securities are comprised of investments in the Company's registered
separate account and other equity securities and do not contain any
concentrations of risk by issuer or industry. Real estate and investments
accounted for by the equity method are not significant to the Company's
overall investment portfolio.
No investment in any person or its affiliates (other than bonds issued by
agencies of the United States government) exceeded ten percent of
stockholder's equity at December 31, 1995.
4. Fair Values of Financial Instruments
SFAS No. 107, Disclosures about Fair Value of Financial Instruments,
requires disclosure of estimated fair value of all financial instruments,
including both assets and liabilities recognized and not recognized in a
Company's balance sheet, unless specifically exempted. SFAS No. 119,
Disclosure about Derivative Financial Instruments and Fair Value of Financial
Instruments, requires additional disclosures about derivative financial
instruments. Most of the Company's investments, insurance liabilities and
debt fall within the standards' definition of a financial instrument.
Although the Company's life insurance liabilities are specifically exempted
from this disclosure requirement, estimated fair value disclosure of these
liabilities is also provided in order to make the disclosures more meaningful.
Accounting, actuarial and regulatory bodies are continuing to study the
methodologies to be used in developing fair value information, particularly
as it relates to such things as liabilities for insurance contracts.
Accordingly, care should be exercised in deriving conclusions about the
Company's business or financial condition based on the information presented
herein.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
4. Fair Values of Financial Instruments (continued)
The Company closely monitors the level of its insurance liabilities, the
level of interest rates credited to its interest-sensitive products and the
assumed interest margin provided for within the pricing structure of its
other products. These amounts are taken into consideration in the
Company's overall management of interest rate risk, which attempts to
minimize exposure to changing interest rates through the matching of
investment cash flows with amounts expected to be due under insurance
contracts. In addition, the Company is not currently a party to any
financial instruments such as futures, forward, swap or option contracts,
or other financial instruments with similar characteristics. As such, the
Company believes that it has reduced the volatility inherent in its "fair
value" adjusted stockholder's equity, although such volatility will not be
reduced completely. As discussed below, the Company has used discount
rates in its determination of fair values for its liabilities which are
consistent with market yields for related assets. The use of the asset
market yield is consistent with management's opinion that the risks
inherent in its asset and liability portfolios are similar. This
assumption, however, might not result in values that are consistent with
those obtained through an actuarial appraisal of the Company's business or
values that might arise in a negotiated transaction.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
4. Fair Values of Financial Instruments (continued)
The following compares carrying values as shown for financial reporting
purposes with estimated fair values:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
_____________________________________________________
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
___________ ___________ ___________ ___________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Assets
Balance sheet financial assets:
Fixed maturities:
Available for sale $7,352,211 $7,352,211 $778,486 $778,486
Held for investment -- -- 5,393,798 5,059,090
Equity securities of
unaffiliated companies 50,595 50,595 22,978 22,978
Equity security of
affiliated company 3,599 3,599 3,164 3,164
Mortgage loans on real
estate 1,169,456 1,245,128 610,185 586,333
Short-term investments 35,282 35,282 45,796 45,796
Cash and cash equivalents 10,390 10,390 11,830 11,830
Notes and other
receivables 137,126 137,126 119,261 119,261
Separate account assets 171,881 171,881 84,963 84,963
___________ ___________ ___________ ___________
8,930,540 9,006,212 7,070,461 6,711,901
Deferred policy acquisition
costs and intangible
assets 556,596 -- 610,118 --
Prepaid pension and other
postretirement benefits 24,547 22,737 21,702 18,404
Non-financial assets 52,779 52,779 63,710 63,710
___________ ___________ ___________ ___________
Total assets $9,564,462 $9,081,728 $7,765,991 $6,794,015
=========== =========== =========== ===========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
4. Fair Values of Financial Instruments (continued)
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
_____________________________________________________
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
___________ ___________ ___________ ___________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Liabilities and stockholder's equity
Balance sheet financial liabilities:
Liabilities:
Future policy benefits (net
of related policy loans):
Annuity products $6,846,030 $5,905,241 $5,718,888 $4,312,559
Universal life and
current interest
products 441,726 309,142 390,061 258,852
Participating life insur-
ance and dividend
accumulations 577,599 444,497 580,043 377,577
Traditional life insurance
- nonpar 167,740 113,948 166,227 114,193
___________ ___________ ___________ ___________
8,033,095 6,772,828 6,855,219 5,063,181
Separate account
liabilities 171,881 171,881 84,963 84,963
___________ ___________ ___________ ___________
8,204,976 6,944,709 6,940,182 5,148,144
Deferred income taxes on fair
value adjustments -- 272,983 -- 287,894
Non-financial liabilities 312,092 312,092 152,964 152,964
___________ ___________ ___________ ___________
Total liabilities 8,517,068 7,529,784 7,093,146 5,589,002
Stockholder's equity 1,047,394 1,551,944 672,845 1,205,013
___________ ___________ ___________ ___________
Total liabilities and
stockholder's equity $9,564,462 $9,081,728 $7,765,991 $6,794,015
=========== =========== =========== ===========
</TABLE>
The following methods and assumptions were used by the Company in
estimating fair values:
Fixed maturities: Estimated market values of publicly traded securities
are as reported by an independent pricing service. Estimated market
values of conventional mortgage-backed securities not actively traded in
a liquid market are estimated using a third-party pricing system, which
uses a matrix calculation assuming a spread over U. S. Treasury bonds
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
4. Fair Values of Financial Instruments (continued)
based upon the expected average lives of the securities. Market values
of private placement bonds are estimated using a matrix that assumes a
spread (based on interest rates and a risk assessment of the bonds) over
U.S. Treasury bonds. Estimated market values of redeemable preferred
stocks are as reported by the NAIC.
Equity securities: Estimated fair values are based upon the latest
quoted market prices, where available. For equity securities not
actively traded, estimated fair values are based upon values of issues
of comparable yield and quality.
Mortgage loans on real estate: Fair values are estimated by discounting
expected cash flows, using interest rates currently being offered for
similar loans.
Short-term investments, cash and cash equivalents and notes and other
receivables: Carrying values reported in the Company's historical cost
basis balance sheet approximate estimated fair value for these
instruments, due to their short-term nature.
Prepaid pension and other postretirement benefits: Estimated fair value
of the prepaid pension costs asset and other postretirement benefits
obligations represents the fair value of plan assets less accumulated
benefit obligations (pension) and accumulated postretirement benefit
obligations. Differences in estimated fair value and carrying value are
the result of deferral of recognition of: prior service costs,
unrecognized gains and losses and the remaining balance of the
unrecognized transition asset for pensions.
Separate account assets and liabilities: Separate account assets and
liabilities are reported at estimated fair value in the Company's
historical cost basis balance sheet.
Future policy benefits: Estimated fair values of the Company's
liabilities for future policy benefits for annuity products, universal
life and current interest products, participating life insurance and
dividend accumulations and non-par traditional life insurance products
are based upon discounted cash flow calculations. Cash flows of future
policy benefits are discounted using the market yield rate of the assets
supporting these liabilities. Estimated fair values are presented net
of the estimated fair value of corresponding policy loans due to the
interdependent nature of the cash flows associated with these items.
Deferred policy acquisition costs and intangible assets: For historical
cost purposes, the recovery of policy acquisition costs is based on the
realization, among other things, of future interest spreads and gross
premiums on in-force business. Because these cash flows are considered
in the computation of the future policy benefit cash flows, the deferred
policy acquisition cost balance does not appear on the estimated fair
value balance sheet. Intangible assets do not appear in the estimated
fair value balance sheet because there are no cash flows related to
these assets.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
4. Fair Values of Financial Instruments (continued)
Derivative financial instruments: SFAS No. 119 requires disclosures
about derivative financial instruments such as futures, forward, swap or
option contracts, or other financial instruments with similar
characteristics. The Company was not a party to such derivative
financial instruments at any time during 1995 or 1994.
Deferred income taxes on fair value adjustments: Deferred income taxes
have been reported at the statutory rate for the differences (except for
those attributed to permanent differences) between the carrying value
and estimated fair value of assets and liabilities set forth herein.
Non-financial assets and liabilities: Values are presented at historical
cost. Non-financial assets consist primarily of real estate, securities
and indebtedness of related parties, property and equipment, current income
taxes recoverable and guaranty fund premium tax offset. Non-financial
liabilities consist primarily of other policy claims and benefits, accrued
dividends, deferred income taxes payable, guaranty fund assessments payable,
outstanding checks, suspense accounts, draft accounts payable and payable to
reinsurers.
SFAS No. 107 and SFAS No. 119 require disclosure of estimated fair value
information about financial instruments, whether or not recognized in the
consolidated balance sheet, for which it is practicable to estimate that
value. In cases where quoted market prices are not available, estimated
fair values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In
that regard, the derived fair value estimates cannot be substantiated by
comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument. The above presentation should
not be viewed as an appraisal as there are several factors, such as the
fair value associated with customer or agent relationships and other
intangible items, which have not been considered. In addition, interest
rates and other assumptions might be modified if an actual appraisal were
to be performed. Accordingly, the aggregate estimated fair value amounts
presented herein are limited by each of these factors and do not purport to
represent the underlying value of the Company.
5. Income Taxes
The Company and all of its subsidiaries file a consolidated federal income
tax return with its parent company. The parent company and its subsidiaries
each report current income tax expense as allocated under a consolidated tax
allocation agreement. Taxes payable (receivable) to/from the parent under
this agreement were $3,149,000 and $(9,487,000) at December 31, 1995 and 1994,
respectively. Generally, this allocation results in profitable companies
recognizing a tax provision as if the individual company filed a separate
return and loss companies recognizing benefits to the extent their losses
contribute to reduce consolidated taxes. Deferred income taxes have been
established by each member of the consolidated group based upon the temporary
differences, the reversal of which will result in taxable or deductible
amounts in future years when the related asset or liability is recovered or
settled, within each entity.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
5. Income Taxes (continued)
Income tax expenses (credits) are included in the consolidated financial
statements as follows:
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
_______________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Taxes provided in consolidated statements
of income on:
Income before equity income (loss):
Current $46,168 $43,357 $53,650
Deferred 1,065 9,905 (3,181)
___________ ___________ ___________
47,233 53,262 50,469
Equity income (loss):
Current (43) (65) 25
Deferred 52 52 43
___________ ___________ ___________
9 (13) 68
Taxes provided in consolidated
statement changes in stockholder's
equity on unrealized gains and
losses, less valuation allowance
of $9,403 in 1994 - deferred 113,503 -- --
___________ ___________ ___________
$160,745 $53,249 $50,537
=========== =========== ===========
</TABLE>
Income tax expense (credits) attributed to realized gains and losses on
investments amounted to $3,333,000, $6,744,000 and $15,749,000 for the years
ended December 31, 1995, 1994 and 1993, respectively. The effective tax rate
on income before income taxes and equity income (loss) is different from the
prevailing federal income tax rate as follows:
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
_______________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Income before income taxes and
equity income (loss) $134,726 $153,224 $143,640
Income tax at federal statutory rate 47,154 53,628 50,274
Tax effect (decrease) of:
Taxes provided for IRS examinations -- -- 200
Other items 79 (366) (5)
___________ ___________ ___________
Income tax expense $47,233 $53,262 $50,469
=========== =========== ===========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
5. Income Taxes (continued)
The Internal Revenue Service ("IRS") is currently examining, or has
examined, the parent company's consolidated income tax returns through
1992. The 1993 and 1994 consolidated income tax returns remain open to
examination. Management believes amounts provided for IRS examinations are
adequate to settle any adjustments raised by the IRS.
The tax effect of temporary differences giving rise to the Company's
deferred income tax assets and liabilities at December 31, 1995 and 1994,
is as follows:
<TABLE>
<CAPTION>
December 31
1995 1994
_________________________
(Dollars in thousands)
<S> <C> <C>
Deferred tax assets:
Net unrealized depreciation of available for sale
fixed maturity securities $14,339
Future policy benefits $208,431 187,609
Accrued dividends 4,375 4,397
Guaranty fund assessment accruals 17,030 5,557
Other 9,194 8,534
___________ ___________
239,030 220,436
Deferred tax liabilities:
Net unrealized appreciation of available for sale
fixed maturity securities (163,581) --
Deferred policy acquisition costs (168,753) (192,061)
Prepaid pension costs (11,532) (10,434)
Other (8,335) (6,904)
___________ ___________
(352,201) (209,399)
Valuation allowance, for amounts attributable
to net unrealized depreciation for assets
available for sale -- (9,403)
___________ ___________
Deferred income tax asset (liability) ($113,171) $1,634
=========== ===========
</TABLE>
A valuation allowance of $9,403,000 was established to offset the deferred
tax asset related to the unrealized depreciation of assets held in the
available for sale account at December 31, 1994. No valuation allowance was
established for 1995 because the available for sale account reflected net
unrealized appreciation.
Prior to 1984, a portion of the Company's current income was not subject to
current income taxation, but was accumulated, for tax purposes, in a
memorandum account designated as "policyholders' surplus account". The
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
5. Income Taxes (continued)
aggregate accumulation in this account at December 31, 1995 was $14,388,000.
Should the policyholders' surplus account of the Company exceed the
limitation prescribed by federal income tax law, or should distributions be
made by the Company to the parent company in excess of $358,918,000, such
excess would be subject to federal income taxes at rates then effective.
Deferred income taxes of $5,036,000 have not been provided on amounts
included in this memorandum account since the Company contemplates no
action and can foresee no events that would create such a tax.
Deferred income taxes (credits) were also reported on equity income during
these periods. These taxes arise from the recognition of income and losses
differently for purposes of filing federal income tax returns than for
financial reporting purposes.
6. Employee Stock Compensation and Retirement Plans
Certain key employees of the Company participate in stock incentive plans
sponsored by Equitable of Iowa Companies, which provide for the award of
stock options or shares of stock of Equitable of Iowa Companies through
three means: qualified incentive stock options (as defined in the Internal
Revenue Code), non-qualified stock options and restricted shares. The non-
qualified stock options are compensatory, and require the accrual of
compensation expense over the period of service from the date the options
are granted until they become fully exercisable if market values exceed the
option price on the measurement date. During the years ended December 31,
1995, 1994 and 1993, compensation (income)/expense of $(4,000), $15,000 and
$78,000, respectively, was recognized related to these options.
The Company also awards restricted common stock of Equitable of Iowa
Companies to certain key employees. These shares are subject to forfeiture
to Equitable of Iowa Companies should the individuals terminate their
relationship with the Company for reasons other than death, permanent
disability or change in Company control prior to full vesting. Shares
granted to key employees generally vest over three to five years from the
date of grant. The Company amortizes as compensation expense the market
value on date of grant of restricted stock using the straight-line method
over the vesting periods. Compensation expense recognized during the years
ended December 31, 1995, 1994 and 1993 aggregated $533,000, $696,000 and
$450,000, respectively.
The Company also participates in a discretionary stock award plan under
which employees and agents are awarded shares of Equitable of Iowa
Companies' stock for superior performance. During the years ended
December 31, 1995, 1994 and 1993, awards of 1,370, 495 and 580 shares of
stock resulted in charges to income of $42,000, $16,000 and $15,000,
respectively.
The Company sponsors a long-term incentive compensation plan which allows
certain agents to earn units equal to shares of Equitable of Iowa
Companies' common stock based on personal production and the maintenance of
specific levels of assets under management. At December 31, 1995 and 1994,
the Company held 112,000 shares of common stock of Equitable of Iowa
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
6. Employee Stock Compensation and Retirement Plans (continued)
Companies, with a market value of $3,599,000 and $3,164,000, respectively
(cost - $618,000), to provide for projected distributions based on current
performance levels, under this plan. This program resulted in
expense/(income) of $736,000, $(129,000) and $926,000 in the years ended
December 31, 1995, 1994 and 1993, respectively.
Substantially all full-time employees of the Company are covered by a non-
contributory self-insured defined benefit pension plan. The benefits are
based on years of service and the employee's compensation during the last
five years of employment. Further, the parent sponsors a supplemental
defined benefit plan to provide benefits in excess of amounts allowed
pursuant to Internal Revenue Code Section 401(a)(17) and those allowed due
to integration rules. The Company's funding policy with respect to the plan
is consistent with the funding requirements of federal law and regulations.
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated balance sheet:
<TABLE>
<CAPTION>
December 31
1995 1994
________________________
(Dollars in thousands)
<S> <C> <C>
Accumulated benefit obligation, including vested
benefits of $53,522 in 1995 and $45,788 in 1994 $54,441 $46,534
=========== ===========
Plan assets at fair value, primarily bonds, common
stocks (including 400,000 shares of the Equitable
of Iowa Companies' common stock), mortgage loans
and short-term investments $92,827 $78,120
Projected benefit obligation for service rendered
to date 61,332 51,778
___________ ___________
Plan assets in excess of projected benefit obligation 31,495 26,342
Unrecognized net loss from past experience different
from that assumed and effects of changes in
assumptions 2,793 7,002
Prior service cost not yet recognized 619 760
Unrecognized net asset at the transition date, net
of amortization (1,109) (3,456)
___________ ___________
Prepaid pension cost $33,798 $30,648
=========== ===========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
6. Employee Stock Compensation and Retirement Plans (continued)
Net periodic pension benefit included the following components:
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
_____________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Actual return on plan assets $18,201 ($7,681) $13,647
Service cost-benefits earned during
the period (1,052) (1,221) (935)
Interest cost on projected benefit
obligation (4,096) (3,867) (3,623)
Net amortization and deferral (9,979) 16,761 (4,932)
___________ ___________ ___________
Net periodic pension benefit $3,074 $3,992 $4,157
=========== =========== ===========
</TABLE>
The discount rate and rate of increase in future compensation levels used
in determining the actuarial present value of the projected benefit
obligation were 7.0% and 5.0%, respectively, at December 31, 1995, and 8.0%
and 5.0%, respectively, at December 31, 1994. The average expected long-
term rate of return on plan assets was 8.0% in 1995 and 1994 and 8.5% in
1993.
In addition to the Company's defined benefit pension plan, the Company
sponsors plans that provide postretirement medical and group term life
insurance benefits to full-time employees and agents who have worked for
the Company for five years and attained age 55 as of January 1, 1992. The
medical plans are contributory, with retiree contributions adjusted
annually, and contain other cost-sharing features such as deductibles and
coinsurance. The accounting for these plans anticipates that the Company's
contributions will increase annually by the lesser of the health care
inflation rate or 3%, with increases in excess of these amounts borne by
the employee or agent. All payments of the liability for group term life
insurance are funded by the Company on a pay-as-you-go (cash) basis.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
6. Employee Stock Compensation and Retirement Plans (continued)
The Company has chosen not to fund any amounts in excess of current
benefits. The following table sets forth the amounts recognized in the
Company's consolidated balance sheet:
<TABLE>
<CAPTION>
December 31, 1995
_____________________________
Life
Medical Insurance
Plans Plans Total
_____________________________
(Dollars in thousands)
<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $4,033 $1,981 $6,014
Fully eligible active plan participants 969 140 1,109
Other active plan participants 1,236 73 1,309
_________ _________ _________
Accumulated postretirement benefit obligation
in excess of plan assets 6,238 2,194 8,432
Prior service cost not yet recognized in net
postretirement benefit cost 360 83 443
Unrecognized net loss (358) (116) (474)
_________ _________ _________
Accrued postretirement benefit cost $6,240 $2,161 $8,401
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
_____________________________
Life
Medical Insurance
Plans Plans Total
_____________________________
(Dollars in thousands)
<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $3,374 $1,854 $5,228
Fully eligible active plan participants 1,026 160 1,186
Other active plan participants 1,232 82 1,314
_________ _________ _________
Accumulated postretirement benefit obligation
in excess of plan assets 5,632 2,096 7,728
Prior service cost not yet recognized in net
postretirement benefit cost 393 90 483
Unrecognized net loss (72) (28) (100)
_________ _________ _________
Accrued postretirement benefit cost $5,953 $2,158 $8,111
========= ========= =========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
6. Employee Stock Compensation and Retirement Plans (continued)
Net periodic postretirement benefit costs include the following components:
<TABLE>
<CAPTION>
December 31, 1995
_____________________________
Life
Medical Insurance
Plans Plans Total
_____________________________
(Dollars in thousands)
<S> <C> <C> <C>
Service cost $250 $10 $260
Interest cost 409 153 562
Net amortization of prior service cost (33) (7) (40)
_________ _________ _________
Net periodic postretirement benefit cost $626 $156 $782
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
_____________________________
Life
Medical Insurance
Plans Plans Total
_____________________________
(Dollars in thousands)
<S> <C> <C> <C>
Service cost $279 $13 $292
Interest cost 405 159 564
Net amortization of prior service cost and
amortization of unrecognized loss (26) (6) (32)
_________ _________ _________
Net periodic postretirement benefit cost $658 $166 $824
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
_____________________________
Life
Medical Insurance
Plans Plans Total
_____________________________
(Dollars in thousands)
<S> <C> <C> <C>
Service cost $244 $27 $271
Interest cost 381 163 544
_________ _________ _________
Net periodic postretirement benefit cost $625 $190 $815
========= ========= =========
</TABLE>
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
6. Employee Stock Compensation and Retirement Plans (continued)
The weighted-average annual assumed rate of increase in the per capita cost
of health care benefits (i.e., health care cost trend rate) used in
determining the actuarial present value of the accumulated postretirement
benefit obligation was 12.5% at December 31, 1995 and 13.5% at December 31,
1994 for employees under 65 and 8.5% at December 31, 1995 and 9.0% at
December 31, 1994 for employees over 65, with the rates for both groups to
be graded down to 5.5% for 2005 and thereafter. The health care cost trend
rate assumption has a significant effect on the amounts reported. For
example, increasing the assumed health care trend rates by one percent
would increase the accumulated postretirement benefit obligation as of
December 31, 1995 by $744,000 and net periodic postretirement benefit costs
for the year ended December 31, 1995 by $95,000. The discount rate used in
determining the accumulated postretirement benefit obligation was 7.0% at
December 31, 1995 and 8.0% at December 31, 1994.
The Company also sponsors an unfunded deferred compensation plan providing
benefits to certain former employees. The Company recognized benefits of
$20,000, $38,000 and $44,000 during the years ended December 31, 1995, 1994
and 1993, respectively, in connection with this plan.
The Company sponsors pension plans for its employees which are qualified
under Internal Revenue Code Section 401(k). Employees may contribute a
portion of their annual salary, subject to limitation, to the plans. The
Company contributes an additional amount, subject to limitation, based on
the voluntary contribution of the employee. Company contributions charged
to expense with respect to these plans during the years ended December 31,
1995, 1994 and 1993 were $292,000, $289,000 and $259,000, respectively.
The Company has non-contributory self-insured defined contribution pension
plans for its agents. Contributions charged to expense under these plans
during the years ended December 31, 1995, 1994 and 1993 amounted to
$368,000, $389,000 and $566,000, respectively.
Certain of the assets related to these plans are on deposit with the
Company and amounts relating to these plans are included in these
consolidated financial statements.
7. Commitments and Contingencies
Reinsurance
In the normal course of business, the Company seeks to limit its exposure
to loss on any single insured and to recover a portion of benefits paid by
ceding reinsurance to other insurance enterprises or reinsurers. Reinsurance
coverages for life insurance vary according to the age and risk classification
of the insured with retention limits ranging up to $500,000 of coverage per
individual life. The Company does not use financial or surplus relief
reinsurance. At December 31, 1995, life insurance in force ceded on a
consolidated basis amounted to $1,459,523,000, or approximately 13.4% of
total life insurance in force.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
7. Commitments and Contingencies (continued)
Reinsurance contracts do not relieve the Company of its obligations to its
policyholders. To the extent that reinsuring companies are later unable to
meet obligations under reinsurance agreements, the Company would be liable
for these obligations, and payment of these obligations could result in
losses to the Company. To limit the possibility of such losses, the
Company evaluates the financial condition of its reinsurers, monitors
concentrations of credit risk arising from factors such as similar
geographic regions, and limits its exposure to any one reinsurer. At
December 31, 1995, the Company had reinsurance treaties with 16 reinsurers,
all of which are deemed to be long-duration, retroactive contracts, and has
established a receivable totaling $19,298,000 for reserve credits
($11,986,000 in 1994), reinsurance claims and other receivables from these
reinsurers. No allowance for uncollectible amounts has been established
since none of the receivables are deemed to be uncollectible, and because
such receivables, either individually or in the aggregate, are not material
to the Company's operations. The Company's liability for future policy
benefits and notes and other receivables have been increased by $18,103,000
at December 31, 1995 ($9,871,000 in 1994) for reserve credits on reinsured
policies. This "gross-up" of assets and liabilities for reserve credits on
reinsurance had no impact on the Company's net income. Insurance premiums
and product charges have been reduced by $6,271,000, $5,916,000 and
$5,653,000 and insurance benefits have been reduced by $8,281,000,
$5,310,000 and $3,498,000 in 1995, 1994 and 1993, respectively, as a result
of the cession agreements. The amount of reinsurance assumed is not
significant.
Guaranty Fund Assessments
Assessments are levied on the Company by life and health guaranty associations
in most states in which the Company is licensed to cover losses of
policyholders of insolvent or rehabilitated insurers. In some states, these
assessments can be partially recovered through a reduction in future premium
taxes. Based upon information currently available from the National
Organization of Life and Health Guaranty Association, the Company believes
that it is probable that these insolvencies will result in future assessments
which will be material to the Company's financial statements. The Company
regularly reviews its reserve for these insolvencies and updates its reserve
based upon the Company's interpretation of information recently received.
Information received during December 1995 reflected an increase in the
estimated cost to the insurance industry of approximately 44% from 1994. The
associated cost for a particular insurance company can vary significantly
based upon its premium volume by line of business in a particular state and
its potential for premium tax offset. The Company reported record premium
levels in 1994 which served as the basis for determining the associated
liability for several new insolvencies. As a result, the Company accrued and
charged to expense an additional $36,492,000 during 1995 ($1,763,000 in 1994
and $2,109,000 in 1993). At December 31, 1995, the Company has reserved
$48,562,000 to cover estimated future assessments (net of related anticipated
premium tax credits) and has established an asset totaling $14,877,000 for
items expected to be recoverable through future premium tax offsets. The
Company cannot predict whether and to what extent legislative initiatives may
affect the right to offset.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
7. Commitments and Contingencies (continued)
Litigation
The Company and certain of its subsidiaries are defendants in class action
lawsuits filed in the Iowa District Court for Polk County in May 1995 and
the United States District Court for the Middle District of Florida, Tampa
Division in February 1996. The Florida suit is similar to the Iowa suit
and was filed by some of the same law firms as in the earlier Iowa suit.
The Company believes the new action was filed in response to jurisdictional
and procedural problems faced by the plaintiffs in the Iowa suit. The
suits claim unspecified damages as a result of the sale of life insurance
policies with so-called "vanishing premiums" wherein cash values are used
to pay insurance premiums under certain interest rate scenarios. The
complaints allege that the policyholders were misled by optimistic policy
illustrations. The Company believes the allegations are without merit
because full and appropriate disclosure was made as a matter of practice.
The suits are in the early discovery and procedural stages and have not yet
been certified as class actions. The Company intends to defend the suits
vigorously. The amount of any liability which may arise as a result of
these suits, if any, cannot be reasonably estimated and no provision for
loss has been made in the accompanying financial statements.
On December 15, 1995, USG received a Notice of Intention to Arbitrate a
dispute with one of its insurance brokerage agencies before the American
Arbitration Association. The agency alleges that USG has failed to pay an
unspecified amount of commissions for the sale of insurance products,
including alleged future commissions on future policy values if the
policies stay in force. USG believes the claims are without merit based
upon its interpretation of the agreements between the parties, the business
relations between the parties and custom and practice in the industry.
Therefore, USG has denied the allegations and intends to defend the
proceeding vigorously. The amount of any liability which may arise as a
result of this arbitration, if any, cannot be reasonably estimated and no
provision for loss has been made in the accompanying financial statements.
In the ordinary course of business, the Company and its subsidiaries are
also engaged in certain other litigation, none of which management believes
is material.
Vulnerability from Concentrations
The Company has various concentrations in its investment portfolio (see
Note 3 for further information). The Company's asset growth, net investment
income and cash flow are primarily generated from the sale of individual
fixed annuity policies and associated future policy benefits. Substantial
changes in tax laws that would make these products less attractive to
consumers or extreme fluctuations in interest rates which may result in
higher lapse experience than assumed, could cause a severe impact to the
Company's financial condition.
Equitable Life Insurance Company of Iowa
Notes to Consolidated Financial Statements (continued)
7. Commitments and Contingencies (continued)
Leases and Other Commitments
The Company leases its home office space and certain other equipment under
operating leases which expire through 2017. During the years ended
December 31, 1995, 1994 and 1993, rent expense totaled $2,001,000,
$1,995,000 and $1,769,000, respectively. At December 31, 1995, minimum
rental payments due under all non-cancelable operating leases with initial
terms of one year or more are: 1996 - $1,821,000; 1997 - $1,485,000; 1998
- - $3,960,000; 1999 - $2,784,000; and 2000 - $2,553,000.
At December 31, 1995, outstanding commitments to fund mortgage loans on
real estate totaled $146,560,000.
8. Related Party Transactions
The Company purchases investment management services from an affiliate.
Payments for these services aggregated $8,143,000, $6,734,000 and
$5,317,000 during the years ended December 31, 1995, 1994 and 1993,
respectively.
Additionally, the Company maintains a line of credit agreement with
Equitable of Iowa Companies to facilitate the handling of unusual and/or
unanticipated short-term cash requirements. Under the current agreement,
which expires on December 31, 1996, the Company can borrow up to $140
million. Interest on any outstanding borrowings is charged at a rate of
Equitable of Iowa Companies' monthly average aggregate cost of short-term
funds plus 1.00%. At December 31, 1995, no amounts were outstanding under
the line of credit.
Equitable Life Insurance Company of Iowa
SCHEDULE I
SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES
(Dollars in thousands)
<TABLE>
<CAPTION>
Balance
Sheet
December 31, 1995 Cost 1 Value Amount
_______________________________________________________________________________
<S> <C> <C> <C>
TYPE OF INVESTMENT
Fixed maturities, available for sale:
Bonds:
United States Government and governmental
agencies and authorities $349,989 $370,888 $370,888
States, municipalities and
political subdivisions 15,485 17,124 17,124
Foreign governments 10,573 13,999 13,999
Public utilities 1,271,641 1,362,110 1,362,110
Investment grade corporate 2,322,036 2,598,714 2,598,714
Below investment grade corporate 574,284 581,220 581,220
Mortgage-backed securities 2,340,194 2,407,756 2,407,756
Redeemable preferred stocks 635 400 400
___________ ___________ ___________
Total fixed maturities, available
for sale 6,884,837 7,352,211 7,352,211
Equity securities:
Common stocks:
Affiliates 618 3,599 3,599
Industrial, miscellaneous and
all other 49,789 50,595 50,595
___________ ___________ ___________
Total equity securities 50,407 54,194 54,194
Mortgage loans on real estate 1,169,456 1,169,456
Real estate:
Investment properties 3,672 3,672
Acquired in satisfaction of debt 10,288 10,288
___________ ___________
Total real estate 13,960 13,960
Policy loans 182,423 182,423
Short-term investments 35,282 35,282
___________ ___________
Total investments $8,336,365 $8,807,526
=========== ===========
<FN>
Note 1: Except as stated in Note 2 below, cost is defined as original cost
for stocks and other invested assets, amortized cost for bonds and
unpaid principal for policy loans and mortgage loans on real estate,
adjusted for amortization of premiums, accrual of discounts and
cost less allowances for depreciation for real estate.
Note 2: Original cost and amortized cost of investments have been adjusted
to reflect other than temporary declines in value by charges to
income as follows. Mortgage loans on real estate: 1995 - $145,000;
1994 - $57,000. Real estate: 1991 - $123,000 and 1990 - $90,000.
</TABLE>
Equitable Life Insurance Company of Iowa
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
(Dollars in thousands)
<TABLE>
<CAPTION>
Column Column Column Column Column Column
A B C D E F
_______________________________________________________________________________
Future
Policy Other
De- Benefits, Policy
ferred Losses, Claims Insur-
Policy Claims Un- and ance
Acqui- and earned Bene- Premiums
sition Loss Revenue fits and
Segment Costs Expenses Reserve Payable Charges
_______________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Life insurance $554,179 $8,206,991 $14,326 $8,980 $94,891
Year ended December 31, 1994:
Life insurance 607,626 7,014,207 14,317 7,785 90,032
Year ended December 31, 1993:
Life insurance 451,180 5,578,085 14,451 5,765 81,151
</TABLE>
<TABLE>
<CAPTION>
Column Column Column Column Column Column
A G H I J K
_______________________________________________________________________________
Amorti-
Benefits zation
Claims, of
Losses Deferred
Net and Policy Other
Invest- Settle- Acqui- Opera-
ment ment sitions ting Premiums
Segment Income Expenses Costs Expenses Written
_______________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Life insurance $638,056 $487,031 $72,537 $54,504 --
Year ended December 31, 1994:
Life insurance 521,646 414,450 50,921 17,128 --
Year ended December 31, 1993:
Life insurance 432,044 358,172 42,078 20,185 --
</TABLE>
Equitable Life Insurance Company of Iowa
SCHEDULE IV
REINSURANCE
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
________________________________________________________________________________
Percentage
Ceded to Assumed of Amount
Gross Other from Other Net Assumed
Amount Companies Companies Amount to Net
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Life insurance in
force $10,927,445 $1,459,523 $ -- $9,467,922 --
============ ============ ========= =========== ==========
Insurance premiums
and charges $101,095 $6,271 $67 $94,891 --
============ ============ ========= =========== ==========
Year ended December 31, 1994:
Life insurance in
force $10,146,940 $1,421,608 $ -- $8,725,332 --
============ ============ ========= =========== ==========
Insurance premiums
and charges $95,821 $5,916 $127 $90,032 --
============ ============ ========= =========== ==========
Year ended December 31, 1993:
Life insurance in
force $9,617,881 $1,326,020 $ -- $8,291,861 --
============ ============ ========= =========== ==========
Insurance premiums
and charges $86,615 $5,653 $189 $81,151 --
============ ============ ========= =========== ==========
</TABLE>
Report of Independent Auditors
The Board of Directors
Equitable Life Insurance Company of Iowa
We have audited the accompanying statements of net assets of certain
accounts of Equitable Life Insurance Company of Iowa Separate Account
A (comprising, respectively, the Money Market, Mortgage-Backed
Securities, International Fixed Income, OTC, Research, Total Return,
Advantage, Government Securities, International Stock and Short-Term
Bond Accounts) as of December 31, 1995, and the related statements of
operations for the year ended December 31, 1995 and statements of
changes in net assets for the period from October 7, 1994
(commencement of operations) through December 31, 1994 and for the
year ended December 31, 1995. These financial statements are the
responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with the
transfer agent. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of certain
accounts of the Equitable Life Insurance Company of Iowa Separate
Account A at December 31, 1995, and the results of their operations
for the year ended December 31, 1995 and the changes in their net
assets for the period from October 7, 1994 through December 31, 1994
and for the year ended December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Des Moines, Iowa
February 7, 1996
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Money
Market
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694) $5,708,694
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777)
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258)
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055)
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627)
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548)
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887)
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698)
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138)
____________
TOTAL INVESTMENTS 5,708,694
Accrued investment income 23,527
____________
TOTAL NET ASSETS $5,732,221
============
NET ASSETS REPRESENTED BY:
Units 548,767
Unit Value 10.45
____________
Net Assets $5,732,221
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Mortgage-
Backed
Securites
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777) $4,104,533
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258)
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055)
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627)
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548)
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887)
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698)
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138)
____________
TOTAL INVESTMENTS 4,104,533
Accrued investment income 234,987
____________
TOTAL NET ASSETS $4,339,520
============
NET ASSETS REPRESENTED BY:
Units 380,031
Unit Value 11.42
____________
Net Assets $4,339,520
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
International
Fixed
Income
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777)
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258) $3,439,156
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055)
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627)
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548)
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887)
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698)
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138)
______________
TOTAL INVESTMENTS 3,439,156
Accrued investment income 160,411
______________
TOTAL NET ASSETS $3,599,567
==============
NET ASSETS REPRESENTED BY:
Units 311,689
Unit Value 11.55
______________
Net Assets $3,599,567
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
OTC
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777)
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258)
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055) $9,042,595
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627)
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548)
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887)
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698)
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138)
____________
TOTAL INVESTMENTS 9,042,595
Accrued investment income 994,102
____________
TOTAL NET ASSETS $10,036,697
============
NET ASSETS REPRESENTED BY:
Units 759,597
Unit Value 13.21
____________
Net Assets $10,036,697
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Research
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777)
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258)
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055)
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800) $16,172,693
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627)
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548)
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887)
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698)
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138)
____________
TOTAL INVESTMENTS 16,172,693
Accrued investment income 274,255
____________
TOTAL NET ASSETS $16,446,948
============
NET ASSETS REPRESENTED BY:
Units 1,255,752
Unit Value 13.10
____________
Net Assets $16,446,948
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Total
Return
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777)
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258)
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055)
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627) $15,492,400
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548)
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887)
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698)
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138)
____________
TOTAL INVESTMENTS 15,492,400
Accrued investment income 329,442
____________
TOTAL NET ASSETS $15,821,842
============
NET ASSETS REPRESENTED BY:
Units 1,312,565
Unit Value 12.05
____________
Net Assets $15,821,842
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Advantage
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777)
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258)
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055)
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627)
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548) $3,499,215
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887)
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698)
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138)
____________
TOTAL INVESTMENTS 3,499,215
Accrued investment income 245,022
____________
TOTAL NET ASSETS $3,744,237
============
NET ASSETS REPRESENTED BY:
Units 344,775
Unit Value 10.86
____________
Net Assets $3,744,237
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Government
Securities
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777)
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258)
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055)
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627)
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548)
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887) $583,367
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698)
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138)
____________
TOTAL INVESTMENTS 583,367
Accrued investment income 77,967
____________
TOTAL NET ASSETS $661,334
============
NET ASSETS REPRESENTED BY:
Units 56,258
Unit Value 11.76
____________
Net Assets $661,334
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
International
Stock
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777)
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258)
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055)
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627)
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548)
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887)
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698) $5,490,993
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138)
______________
TOTAL INVESTMENTS 5,490,993
Accrued investment income 227,777
______________
TOTAL NET ASSETS $5,718,770
==============
NET ASSETS REPRESENTED BY:
Units 541,570
Unit Value 10.56
______________
Net Assets $5,718,770
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
EQUI-SELECT PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Short-Term
Bond
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust Money Market Portfolio,
5,708,694 shares at $1.00 per share (cost - $5,708,694)
Equi-Select Series Trust Mortgage-Backed Securities Portfolio,
378,660 shares at $10.84 per share (cost - $4,182,777)
Equi-Select Series Trust International Fixed Income Portfolio,
310,243 shares at $11.09 per share (cost - $3,405,258)
Equi-Select Series Trust OTC Portfolio,
748,553 shares at $12.08 per share (cost - $9,015,055)
Equi-Select Series Trust Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Equi-Select Series Trust Total Return Portfolio,
1,301,515 shares at $11.90 per share (cost - $14,460,627)
Equi-Select Series Trust Advantage Portfolio,
343,572 shares at $10.18 per share (cost - $3,599,548)
Equi-Select Series Trust Government Securities Portfolio,
55,971 shares at $10.42 per share (cost - $603,887)
Equi-Select Series Trust International Stock Portfolio,
541,371 shares at $10.14 per share (cost - $5,412,698)
Equi-Select Series Trust Short-Term Bond Portfolio,
31,925 shares at $10.09 per share (cost - $332,138) $322,215
____________
TOTAL INVESTMENTS 322,215
Accrued investment income 29,396
____________
TOTAL NET ASSETS $351,611
============
NET ASSETS REPRESENTED BY:
Units 32,032
Unit Value 10.98
____________
Net Assets $351,611
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Mortgage-
Money Backed
Market Securities
Account Account
______________ ______________
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $173,300 $192,773
Capital gains distributions -- 42,213
Expenses (Note 2):
Annual contract charges (74) (97)
Administrative charges (5,092) (1,928)
Mortality and expense
risk charges (42,199) (15,980)
______________ ______________
Net investment income 125,935 216,981
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain on
investments -- 994
Net unrealized appreciation
(depreciation) of
investments -- (77,915)
______________ ______________
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $125,935 $140,060
============== ==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
<TABLE>
<CAPTION>
International
Fixed
Income OTC Research
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends $139,030 -- $39,906
Capital gains distributions 33,016 $994,102 234,349
Expenses (Note 2):
Annual contract charges (107) (579) (558)
Administrative charges (2,366) (6,510) (8,999)
Mortality and expense
risk charges (19,614) (53,955) (74,579)
______________ ______________ ______________
Net investment income 149,959 933,058 190,119
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain on
investments 4,271 36,066 19,662
Net unrealized appreciation
(depreciation) of
investments 34,190 20,313 1,548,017
______________ ______________ ______________
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $188,420 $989,437 $1,757,798
============== ============== ==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Total Government
Return Advantage Securities
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends $265,808 $243,949 $50,921
Capital gains distributions 63,634 1,219 27,115
Expenses (Note 2):
Annual contract charges (737) (174) (18)
Administrative charges (8,853) (2,721) (1,074)
Mortality and expense
risk charges (73,376) (22,550) (8,900)
______________ ______________ ______________
Net investment income 246,476 219,723 68,044
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain on
investments 6,083 15,065 57,031
Net unrealized appreciation
(depreciation) of
investments 1,034,214 (96,273) (20,436)
______________ ______________ ______________
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,286,773 $138,515 $104,639
============== ============== ==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
EQUI-SELECT PRODUCT
For the year ended December 31, 1995
<TABLE>
<CAPTION>
International Short-Term
Stock Bond
Account Account
______________ ______________
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $93,741 $26,296
Capital gains distributions 134,583 3,120
Expenses (Note 2):
Annual contract charges (433) (29)
Administrative charges (4,069) (466)
Mortality and expense
risk charges (33,726) (3,860)
______________ ______________
Net investment income 190,096 25,061
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain on
investments 9,684 11,985
Net unrealized appreciation
(depreciation) of
investments 79,172 (9,796)
______________ ______________
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $278,952 $27,250
============== ==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
Money
Market
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $1,504
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
______________
Net increase (decrease) in net assets resulting from operations 1,504
Changes from principal transactions:
Purchase payments 947,439
Contract distributions and terminations --
Transfer payments from (to) other Accounts (603,444)
______________
Increase in net assets derived from principal transactions 343,995
______________
Total increase 345,499
______________
NET ASSETS AT DECEMBER 31, 1994 345,499
INCREASE IN NET ASSETS
Operations:
Net investment income 125,935
Net realized gain on investments --
Net unrealized appreciation (depreciation) of investments --
______________
Net increase in net assets resulting from operations 125,935
Changes from principal transactions:
Purchase payments 30,141,356
Contract distributions and terminations (18,210)
Transfer payments from (to) other Accounts (22,930,581)
Transfer payments from (to) Fixed Account and other Funds (1,931,778)
______________
Increase in net assets derived from principal transactions 5,260,787
______________
Total increase 5,386,722
______________
NET ASSETS AT DECEMBER 31, 1995 $5,732,221
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
Mortgage-
Backed
Securities
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $414
Net realized gain (loss) on investments 3
Net unrealized appreciation (depreciation) of investments (329)
______________
Net increase (decrease) in net assets resulting from operations 88
Changes from principal transactions:
Purchase payments 8,983
Contract distributions and terminations --
Transfer payments from (to) other Accounts 19,751
______________
Increase in net assets derived from principal transactions 28,734
______________
Total increase 28,822
______________
NET ASSETS AT DECEMBER 31, 1994 28,822
INCREASE IN NET ASSETS
Operations:
Net investment income 216,981
Net realized gain on investments 994
Net unrealized appreciation (depreciation) of investments (77,915)
______________
Net increase in net assets resulting from operations 140,060
Changes from principal transactions:
Purchase payments 1,764,376
Contract distributions and terminations (7,691)
Transfer payments from (to) other Accounts 2,246,463
Transfer payments from (to) Fixed Account and other Funds 167,490
______________
Increase in net assets derived from principal transactions 4,170,638
______________
Total increase 4,310,698
______________
NET ASSETS AT DECEMBER 31, 1995 $4,339,520
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
International
Fixed
Income
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $342
Net realized gain (loss) on investments 3
Net unrealized appreciation (depreciation) of investments (292)
______________
Net increase (decrease) in net assets resulting from operations 53
Changes from principal transactions:
Purchase payments 21,572
Contract distributions and terminations --
Transfer payments from (to) other Accounts 29,663
______________
Increase in net assets derived from principal transactions 51,235
______________
Total increase 51,288
______________
NET ASSETS AT DECEMBER 31, 1994 51,288
INCREASE IN NET ASSETS
Operations:
Net investment income 149,959
Net realized gain on investments 4,271
Net unrealized appreciation (depreciation) of investments 34,190
______________
Net increase in net assets resulting from operations 188,420
Changes from principal transactions:
Purchase payments 1,703,537
Contract distributions and terminations (6,355)
Transfer payments from (to) other Accounts 1,593,333
Transfer payments from (to) Fixed Account and other Funds 69,344
______________
Increase in net assets derived from principal transactions 3,359,859
______________
Total increase 3,548,279
______________
NET ASSETS AT DECEMBER 31, 1995 $3,599,567
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
OTC
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ($908)
Net realized gain (loss) on investments (66)
Net unrealized appreciation (depreciation) of investments 7,227
______________
Net increase (decrease) in net assets resulting from operations 6,253
Changes from principal transactions:
Purchase payments 585,144
Contract distributions and terminations --
Transfer payments from (to) other Accounts 68,709
______________
Increase in net assets derived from principal transactions 653,853
______________
Total increase 660,106
______________
NET ASSETS AT DECEMBER 31, 1994 660,106
INCREASE IN NET ASSETS
Operations:
Net investment income 933,058
Net realized gain on investments 36,066
Net unrealized appreciation (depreciation) of investments 20,313
______________
Net increase in net assets resulting from operations 989,437
Changes from principal transactions:
Purchase payments 4,028,128
Contract distributions and terminations (33,765)
Transfer payments from (to) other Accounts 4,236,805
Transfer payments from (to) Fixed Account and other Funds 155,986
______________
Increase in net assets derived from principal transactions 8,387,154
______________
Total increase 9,376,591
______________
NET ASSETS AT DECEMBER 31, 1995 $10,036,697
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
Research
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $4,874
Net realized gain (loss) on investments (3)
Net unrealized appreciation (depreciation) of investments (20,124)
______________
Net increase (decrease) in net assets resulting from operations (15,253)
Changes from principal transactions:
Purchase payments 635,302
Contract distributions and terminations (50)
Transfer payments from (to) other Accounts 52,604
______________
Increase in net assets derived from principal transactions 687,856
______________
Total increase 672,603
______________
NET ASSETS AT DECEMBER 31, 1994 672,603
INCREASE IN NET ASSETS
Operations:
Net investment income 190,119
Net realized gain on investments 19,662
Net unrealized appreciation (depreciation) of investments 1,548,017
______________
Net increase in net assets resulting from operations 1,757,798
Changes from principal transactions:
Purchase payments 8,333,228
Contract distributions and terminations (32,130)
Transfer payments from (to) other Accounts 4,960,660
Transfer payments from (to) Fixed Account and other Funds 754,789
______________
Increase in net assets derived from principal transactions 14,016,547
______________
Total increase 15,774,345
______________
NET ASSETS AT DECEMBER 31, 1995 $16,446,948
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
Total
Return
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $2,657
Net realized gain (loss) on investments (37)
Net unrealized appreciation (depreciation) of investments (2,441)
______________
Net increase (decrease) in net assets resulting from operations 179
Changes from principal transactions:
Purchase payments 198,999
Contract distributions and terminations --
Transfer payments from (to) other Accounts 125,747
______________
Increase in net assets derived from principal transactions 324,746
______________
Total increase 324,925
______________
NET ASSETS AT DECEMBER 31, 1994 324,925
INCREASE IN NET ASSETS
Operations:
Net investment income 246,476
Net realized gain on investments 6,083
Net unrealized appreciation (depreciation) of investments 1,034,214
______________
Net increase in net assets resulting from operations 1,286,773
Changes from principal transactions:
Purchase payments 7,285,539
Contract distributions and terminations (72,501)
Transfer payments from (to) other Accounts 6,787,996
Transfer payments from (to) Fixed Account and other Funds 209,110
______________
Increase in net assets derived from principal transactions 14,210,144
______________
Total increase 15,496,917
______________
NET ASSETS AT DECEMBER 31, 1995 $15,821,842
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
Advantage
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $4,252
Net realized gain (loss) on investments 166
Net unrealized appreciation (depreciation) of investments (4,060)
______________
Net increase (decrease) in net assets resulting from operations 358
Changes from principal transactions:
Purchase payments 225,148
Contract distributions and terminations --
Transfer payments from (to) other Accounts 233,518
______________
Increase in net assets derived from principal transactions 458,666
______________
Total increase 459,024
______________
NET ASSETS AT DECEMBER 31, 1994 459,024
INCREASE IN NET ASSETS
Operations:
Net investment income 219,723
Net realized gain on investments 15,065
Net unrealized appreciation (depreciation) of investments (96,273)
______________
Net increase in net assets resulting from operations 138,515
Changes from principal transactions:
Purchase payments 1,956,116
Contract distributions and terminations (15,339)
Transfer payments from (to) other Accounts 1,159,684
Transfer payments from (to) Fixed Account and other Funds 46,237
______________
Increase in net assets derived from principal transactions 3,146,698
______________
Total increase 3,285,213
______________
NET ASSETS AT DECEMBER 31, 1995 $3,744,237
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
Government
Securities
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $166
Net realized gain (loss) on investments 1
Net unrealized appreciation (depreciation) of investments (84)
______________
Net increase (decrease) in net assets resulting from operations 83
Changes from principal transactions:
Purchase payments 14,453
Contract distributions and terminations --
Transfer payments from (to) other Accounts (100)
______________
Increase in net assets derived from principal transactions 14,353
______________
Total increase 14,436
______________
NET ASSETS AT DECEMBER 31, 1994 14,436
INCREASE IN NET ASSETS
Operations:
Net investment income 68,044
Net realized gain on investments 57,031
Net unrealized appreciation (depreciation) of investments (20,436)
______________
Net increase in net assets resulting from operations 104,639
Changes from principal transactions:
Purchase payments 932,770
Contract distributions and terminations (17,843)
Transfer payments from (to) other Accounts (357,771)
Transfer payments from (to) Fixed Account and other Funds (14,897)
______________
Increase in net assets derived from principal transactions 542,259
______________
Total increase 646,898
______________
NET ASSETS AT DECEMBER 31, 1995 $661,334
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
International
Stock
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $1,275
Net realized gain (loss) on investments (74)
Net unrealized appreciation (depreciation) of investments (877)
______________
Net increase (decrease) in net assets resulting from operations 324
Changes from principal transactions:
Purchase payments 159,544
Contract distributions and terminations (50)
Transfer payments from (to) other Accounts 73,652
______________
Increase in net assets derived from principal transactions 233,146
______________
Total increase 233,470
______________
NET ASSETS AT DECEMBER 31, 1994 233,470
INCREASE IN NET ASSETS
Operations:
Net investment income 190,096
Net realized gain on investments 9,684
Net unrealized appreciation (depreciation) of investments 79,172
______________
Net increase in net assets resulting from operations 278,952
Changes from principal transactions:
Purchase payments 2,770,444
Contract distributions and terminations (57,092)
Transfer payments from (to) other Accounts 2,444,365
Transfer payments from (to) Fixed Account and other Funds 48,631
______________
Increase in net assets derived from principal transactions 5,206,348
______________
Total increase 5,485,300
______________
NET ASSETS AT DECEMBER 31, 1995 $5,718,770
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
EQUI-SELECT PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the year ended December 31, 1995
<TABLE>
<CAPTION>
Short-Term
Bond
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $129
Net realized gain (loss) on investments 2
Net unrealized appreciation (depreciation) of investments (127)
______________
Net increase (decrease) in net assets resulting from operations 4
Changes from principal transactions:
Purchase payments 11,675
Contract distributions and terminations --
Transfer payments from (to) other Accounts (100)
______________
Increase in net assets derived from principal transactions 11,575
______________
Total increase 11,579
______________
NET ASSETS AT DECEMBER 31, 1994 11,579
INCREASE IN NET ASSETS
Operations:
Net investment income 25,061
Net realized gain on investments 11,985
Net unrealized appreciation (depreciation) of investments (9,796)
______________
Net increase in net assets resulting from operations 27,250
Changes from principal transactions:
Purchase payments 431,525
Contract distributions and terminations (9,551)
Transfer payments from (to) other Accounts (140,954)
Transfer payments from (to) Fixed Account and other Funds 31,762
______________
Increase in net assets derived from principal transactions 312,782
______________
Total increase 340,032
______________
NET ASSETS AT DECEMBER 31, 1995 $351,611
==============
<FN>
* Commencement of operations
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
EQUI-SELECT PRODUCT
December 31, 1995
NOTE 1 - INVESTMENT AND ACCOUNTING POLICIES
Equitable Life Insurance Company of Iowa Separate Account A was organized by
Equitable Life Insurance Company of Iowa (the "Company") in accordance with
the provisions of Iowa Insurance laws and is a part of the total operations
of the Company. The assets and liabilities of the Equitable Life Insurance
Company of Iowa Separate Account A are clearly identified and distinguished
from the other assets and liabilities of the Company. Equitable Life Insurance
Company of Iowa Separate Account A commenced operations on October 7, 1994
with the initial sale of contract units to contract owners. Investments are
stated at the closing net asset values per share on December 31, 1995.
Equitable Life Insurance Company of Iowa Separate Account A consists of
fourteen investment accounts, ten of which (the Money Market, Mortgage-Backed
Securities, International Fixed Income, OTC, Research, Total Return, Advantage,
Government Securities, International Stock and Short-Term Bond) are invested
in specified portfolios of the Equi-Select Series Trust, an open-end series
management investment company under the Investment Company Act of 1940, as
directed by eligible contract owners. Activity in these ten investment
accounts is available to contract owners of the Equi-Select Variable Annuity
product. Effective September 22, 1995, contract owners could no longer
purchase or transfer funds to the Government Securities or Short-Term Bond
Accounts.
The remaining four investment accounts are invested in specified portfolios of
the Smith Barney/Travelers Series Fund Inc. These four investment accounts
and the Research Account, which invests in the Equi-Select Series Trust, are
available to contract owners of the PrimElite Variable Annuity product.
The financial statements included herein present only those investment
accounts available to contract owners of the Equi-Select Variable Annuity
product. The financial statements of the remaining investment accounts and
the Research Account available to contract owners of the PrimElite Variable
Annuity product are presented separately.
The average cost method is used to determine realized gains and losses.
Dividends are taken into income on an accrual basis as of the ex-dividend
date.
NOTE 2 - EXPENSES
The Company is compensated for mortality and expense risks and
administrative costs by a charge equivalent to an annual rate of 1.25%
and 0.15%, respectively, of the total net assets of each Account. These
charges amounted to $348,739 and $42,078, respectively, for the year
ended December 31, 1995 ($3,241 and $391, respectively, for the period
ended December 31, 1994).
An annual contract charge of $30 is deducted on each contract anniversary
prior to the maturity date, upon full withdrawal of a contract's value or
upon commencement of annuity payments if such withdrawal is made or annuity
payments commence on a date other than the contract anniversary. During
1995, annual contract charges amounted to $2,806. No annual contract
charges were assessed in 1994.
NOTE 2 - EXPENSES (continued)
A transfer charge computed as the lesser of 2% of the contract value
transferred or $25 will be imposed on each transfer between Accounts in
excess of twelve in any one calendar year. A withdrawal charge may be
imposed in the event of withdrawal of any portion of the contract value
or upon annuitization. The withdrawal charge is 8% of the amount withdrawn
prior to the first anniversary of the purchase payment and reduces by 1% at
each subsequent purchase payment anniversary.
NOTE 3 - FEDERAL INCOME TAXES
Operations of the Equitable Life Insurance Company of Iowa Separate
Account A form a part of the operations of the Company which is taxed as
a life insurance company under the Internal Revenue Code. Under current
law, no federal income taxes are payable with respect to operations of
Equitable Life Insurance Company of Iowa Separate Account A.
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments
were as follows:
<TABLE>
<CAPTION>
Period From
Year Ended October 7, 1994 to
December 31, 1995 December 31, 1994
_________________________ _________________________
Purchases Sales Purchases Sales
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Money Market Portfolio $18,116,828 $12,751,952 $759,639 $415,821
Mortgage-Backed Securities
Portfolio 4,186,979 33,921 29,782 1,060
International Fixed
Income Portfolio 3,461,113 111,334 52,990 1,785
OTC Portfolio 8,736,489 410,391 654,619 1,662
Research Portfolio 14,168,762 230,594 687,042 69
Total Return Portfolio 14,267,685 137,651 325,895 1,348
Advantage Portfolio 3,718,744 592,976 535,350 76,801
Government Securities
Portfolio 1,537,791 1,005,281 14,453 108
International Stock
Portfolio 5,388,124 218,038 234,384 1,382
Short-Term Bond Portfolio 683,300 374,720 11,675 104
</TABLE>
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
Transactions in units were as follows:
<TABLE>
<CAPTION>
Period From
Year Ended October 7, 1994 to
December 31, 1995 December 31, 1994
_________________________ _________________________
Purchases Sales Purchases Sales
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Money Market Account 2,969,444 2,454,999 101,861 67,539
Mortgage-Backed Securities
Account 380,372 3,227 2,896 10
International Fixed
Income Account 309,796 3,205 5,135 37
OTC Account 705,565 9,749 63,781 --
Research Account 1,196,506 9,931 69,182 5
Total Return Account 1,315,204 35,745 33,106 --
Advantage Account 359,214 59,955 53,240 7,724
Government Securities
Account 224,515 169,685 1,438 10
International Stock
Account 535,682 17,774 23,667 5
Short-Term Bond Account 65,845 34,954 1,151 10
</TABLE>
NOTE 6 - NET ASSETS
Net assets at December 31, 1995 consisted of the following:
<TABLE>
<CAPTION>
Mortgage- International
Money Backed Fixed
Market Securities Income OTC
Account Account Account Account
____________ _____________ ____________ _____________
<S> <C> <C> <C> <C>
Unit transactions $5,708,819 $4,200,698 $3,415,456 $9,076,800
Accumulated net
investment income 23,402 217,066 150,213 932,357
Net unrealized appreciation
(depreciation) of
investments -- (78,244) 33,898 27,540
____________ _____________ ____________ _____________
$5,732,221 $4,339,520 $3,599,567 $10,036,697
============ ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
Total
Research Return Advantage
Account Account Account
____________ _____________ ____________
<S> <C> <C> <C>
Unit transactions $14,724,226 $14,542,050 $3,620,601
Accumulated net
investment income 194,829 248,019 223,969
Net unrealized appreciation
(depreciation) of
investments 1,527,893 1,031,773 (100,333)
____________ _____________ ____________
$16,446,948 $15,821,842 $3,744,237
============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
Government International Short-Term
Securities Stock Bond
Account Account Account
____________ _____________ ____________
<S> <C> <C> <C>
Unit transactions $636,052 $5,450,703 $343,325
Accumulated net
investment income 45,802 189,772 18,209
Net unrealized appreciation
(depreciation) of
investments (20,520) 78,295 (9,923)
____________ _____________ ____________
$661,334 $5,718,770 $351,611
============ ============= ============
</TABLE>
Report of Independent Auditors
The Board of Directors
Equitable Life Insurance Company of Iowa
We have audited the accompanying statements of net assets of certain
accounts of Equitable Life Insurance Company of Iowa Separate Account
A (comprising, respectively, the Research, International Equity,
Income and Growth, High Income, and Money Market Accounts) as of
December 31, 1995, and the related statements of operations for the
period January 1, 1995 or commencement of operations through December
31, 1995, and the statements of changes in net assets for the period
from October 7, 1994 through December 31, 1994 and for the period
January 1, 1995 or commencement of operations through December 31,
1995. These financial statements are the responsibility of the
Account's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with the
transfer agent. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of certain
accounts of the Equitable Life Insurance Company of Iowa Separate
Account A at December 31, 1995, and the results of their operations
for the period January 1, 1995 or commencement of operations through
December 31, 1995 and the changes in their net assets for the period
from October 7, 1994 through December 31, 1994 and the period from
January 1, 1995 or commencement of operations through December 31,
1995 in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Des Moines, Iowa
February 7, 1996
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Research
Account
____________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Equi-Select Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800) $16,172,693
Smith Barney/Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
167,157 shares at $10.68 per share (cost - $1,753,674)
Smith Barney/Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
276,435 shares at $12.86 per share (cost - $3,366,536)
Smith Barney/Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
71,320 shares at $11.09 per share (cost - $791,011)
Smith Barney/Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
1,277,892 shares at $1.00 per share (cost - $1,277,892)
____________
TOTAL INVESTMENTS 16,172,693
Accrued investment income 274,255
____________
TOTAL NET ASSETS $16,446,948
============
NET ASSETS REPRESENTED BY:
Units 1,255,752
Unit Value 13.10
____________
Net Assets $16,446,948
============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
International
Equity
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Equi-Select Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Smith Barney/Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
167,157 shares at $10.68 per share (cost - $1,753,674) $1,785,234
Smith Barney/Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
276,435 shares at $12.86 per share (cost - $3,366,536)
Smith Barney/Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
71,320 shares at $11.09 per share (cost - $791,011)
Smith Barney/Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
1,277,892 shares at $1.00 per share (cost - $1,277,892)
______________
TOTAL INVESTMENTS 1,785,234
Accrued investment income --
______________
TOTAL NET ASSETS $1,785,234
==============
NET ASSETS REPRESENTED BY:
Units 154,388
Unit Value 11.56
______________
Net Assets $1,785,234
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Income and
Growth
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Equi-Select Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Smith Barney/Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
167,157 shares at $10.68 per share (cost - $1,753,674)
Smith Barney/Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
276,435 shares at $12.86 per share (cost - $3,366,536) $3,554,954
Smith Barney/Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
71,320 shares at $11.09 per share (cost - $791,011)
Smith Barney/Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
1,277,892 shares at $1.00 per share (cost - $1,277,892)
______________
TOTAL INVESTMENTS 3,554,954
Accrued investment income --
______________
TOTAL NET ASSETS $3,554,954
==============
NET ASSETS REPRESENTED BY:
Units 295,134
Unit Value 12.05
______________
Net Assets $3,554,954
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
High
Income
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Equi-Select Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Smith Barney/Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
167,157 shares at $10.68 per share (cost - $1,753,674)
Smith Barney/Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
276,435 shares at $12.86 per share (cost - $3,366,536)
Smith Barney/Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
71,320 shares at $11.09 per share (cost - $791,011) $790,940
Smith Barney/Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
1,277,892 shares at $1.00 per share (cost - $1,277,892)
______________
TOTAL INVESTMENTS 790,940
Accrued investment income --
______________
TOTAL NET ASSETS $790,940
==============
NET ASSETS REPRESENTED BY:
Units 72,283
Unit Value 10.94
______________
Net Assets $790,940
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF NET ASSETS
PRIMELITE PRODUCT
December 31, 1995
<TABLE>
<CAPTION>
Money
Market
Account
______________
<S> <C>
ASSETS
Investments at net asset value:
Equi-Select Series Trust
Equi-Select Research Portfolio,
1,255,727 shares at $12.88 per share (cost - $14,644,800)
Smith Barney/Travelers Series Fund Inc.
Smith Barney International Equity Portfolio,
167,157 shares at $10.68 per share (cost - $1,753,674)
Smith Barney/Travelers Series Fund Inc.
Smith Barney Income and Growth Portfolio,
276,435 shares at $12.86 per share (cost - $3,366,536)
Smith Barney/Travelers Series Fund Inc.
Smith Barney High Income Portfolio,
71,320 shares at $11.09 per share (cost - $791,011)
Smith Barney/Travelers Series Fund Inc.
Smith Barney Money Market Portfolio,
1,277,892 shares at $1.00 per share (cost - $1,277,892) $1,277,892
______________
TOTAL INVESTMENTS 1,277,892
Accrued investment income 1,633
______________
TOTAL NET ASSETS $1,279,525
==============
NET ASSETS REPRESENTED BY:
Units 125,048
Unit Value 10.23
______________
Net Assets $1,279,525
==============
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995
<TABLE>
<CAPTION>
International Income
Research Equity and Growth
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $39,906 $2,011 $46,777
Capital gains distributions 234,349 -- 12,711
Expenses (Note 2):
Annual contract charges (558) -- --
Administrative charges (8,999) (620) (1,381)
Mortality and expense
risk charges (74,579) (5,135) (11,442)
______________ ______________ ______________
Net investment income (loss) 190,119 (3,744) 46,665
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain (loss) on
investments 19,662 (4) 106
Net unrealized appreciation
(depreciation) of
investments 1,548,017 31,560 188,418
______________ ______________ ______________
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,757,798 $27,812 $235,189
============== ============== ==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
PRIMELITE PRODUCT
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995
<TABLE>
<CAPTION>
High Money
Income Market
Account Account
______________ ______________
<S> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $33,656 $12,980
Capital gains distributions -- --
Expenses (Note 2):
Annual contract charges -- --
Administrative charges (298) (364)
Mortality and expense
risk charges (2,475) (3,016)
______________ ______________
Net investment income (loss) 30,883 9,600
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain (loss) on
investments 20 --
Net unrealized appreciation
(depreciation) of
investments (71) --
______________ ______________
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $30,832 $9,600
============== ==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the period from January 1, 1995 or Commencement of Operations*
through December 31, 1995
<TABLE>
<CAPTION>
Research
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income $4,874
Net realized loss on investments (3)
Net unrealized depreciation of investments (20,124)
______________
Net decrease in net assets resulting from operations (15,253)
Changes from principal transactions:
Purchase payments 635,302
Contract distributions and terminations (50)
Transfer payments from other Accounts 52,604
______________
Increase in net assets derived from principal transactions 687,856
______________
Total increase 672,603
______________
NET ASSETS AT DECEMBER 31, 1994 672,603
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) 190,119
Net realized gain (loss) on investments 19,662
Net unrealized appreciation (depreciation) of investments 1,548,017
______________
Net increase in net assets resulting from operations 1,757,798
Changes from principal transactions:
Purchase payments 8,333,228
Contract distributions and terminations (32,130)
Transfer payments from (to) other Accounts 588,563
Transfer payments from (to) Fixed Account and other Funds 5,126,886
______________
Increase in net assets derived from principal transactions 14,016,547
______________
Total increase 15,774,345
______________
NET ASSETS AT DECEMBER 31, 1995 $16,446,948
==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the period from January 1, 1995 or Commencement of Operations*
through December 31, 1995
<TABLE>
<CAPTION>
International
Equity
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income --
Net realized loss on investments --
Net unrealized depreciation of investments --
______________
Net decrease in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from other Accounts --
______________
Increase in net assets derived from principal transactions --
______________
Total increase --
______________
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ($3,744)
Net realized gain (loss) on investments (4)
Net unrealized appreciation (depreciation) of investments 31,560
______________
Net increase in net assets resulting from operations 27,812
Changes from principal transactions:
Purchase payments 1,444,691
Contract distributions and terminations --
Transfer payments from (to) other Accounts 300,075
Transfer payments from (to) Fixed Account and other Funds 12,656
______________
Increase in net assets derived from principal transactions 1,757,422
______________
Total increase 1,785,234
______________
NET ASSETS AT DECEMBER 31, 1995 $1,785,234
==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the period from January 1, 1995 or Commencement of Operations*
through December 31, 1995
<TABLE>
<CAPTION>
Income
and Growth
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income --
Net realized loss on investments --
Net unrealized depreciation of investments --
______________
Net decrease in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from other Accounts --
______________
Increase in net assets derived from principal transactions --
______________
Total increase --
______________
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $46,665
Net realized gain (loss) on investments 106
Net unrealized appreciation (depreciation) of investments 188,418
______________
Net increase in net assets resulting from operations 235,189
Changes from principal transactions:
Purchase payments 2,609,690
Contract distributions and terminations (77)
Transfer payments from (to) other Accounts 697,496
Transfer payments from (to) Fixed Account and other Funds 12,656
______________
Increase in net assets derived from principal transactions 3,319,765
______________
Total increase 3,554,954
______________
NET ASSETS AT DECEMBER 31, 1995 $3,554,954
==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the period from January 1, 1995 or Commencement of Operations*
through December 31, 1995
<TABLE>
<CAPTION>
High
Income
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income --
Net realized loss on investments --
Net unrealized depreciation of investments --
______________
Net decrease in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from other Accounts --
______________
Increase in net assets derived from principal transactions --
______________
Total increase --
______________
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $30,883
Net realized gain (loss) on investments 20
Net unrealized appreciation (depreciation) of investments (71)
______________
Net increase in net assets resulting from operations 30,832
Changes from principal transactions:
Purchase payments 672,913
Contract distributions and terminations (1,611)
Transfer payments from (to) other Accounts 76,650
Transfer payments from (to) Fixed Account and other Funds 12,156
______________
Increase in net assets derived from principal transactions 760,108
______________
Total increase 790,940
______________
NET ASSETS AT DECEMBER 31, 1995 $790,940
==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
PRIMELITE PRODUCT
For the period from October 7, 1994* through December 31, 1994
and for the period from January 1, 1995 or Commencement of Operations*
through December 31, 1995
<TABLE>
<CAPTION>
Money
Market
Account
______________
<S> <C>
NET ASSETS AT OCTOBER 7, 1994* --
INCREASE IN NET ASSETS
Operations:
Net investment income --
Net realized loss on investments --
Net unrealized depreciation of investments --
______________
Net in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from other Accounts --
______________
Increase in net assets derived from principal transactions --
______________
Total increase --
______________
NET ASSETS AT DECEMBER 31, 1994 --
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $9,600
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
______________
Net increase in net assets resulting from operations 9,600
Changes from principal transactions:
Purchase payments 3,007,403
Contract distributions and terminations (13,913)
Transfer payments from (to) other Accounts (1,662,784)
Transfer payments from (to) Fixed Account and other Funds (60,781)
______________
Increase in net assets derived from principal transactions 1,269,925
______________
Total increase 1,279,525
______________
NET ASSETS AT DECEMBER 31, 1995 $1,279,525
==============
<FN>
*Commencement of operations - see Note 1
</TABLE>
See accompanying notes.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
PRIMELITE PRODUCT
December 31, 1995
NOTE 1 - INVESTMENT AND ACCOUNTING POLICIES
Equitable Life Insurance Company of Iowa Separate Account A was
organized by Equitable Life Insurance Company of Iowa (the
"Company") in accordance with the provisions of Iowa Insurance
laws and is a part of the total operations of the Company. The
assets and liabilities of the Equitable Life Insurance Company of
Iowa Separate Account A are clearly identified and distinguished
from the other assets and liabilities of the Company.
Commencement of operations is defined as the date of initial sale
of contract units to contract owners. The Equitable Life
Insurance Company of Iowa Separate Account A investment accounts
commenced operations on October 7, 1994 for the Research Account,
March 27, 1995 for the International Equity Account, April 5,
1995 for the Income and Growth Account, April 28, 1995 for the
High Income Account, and May 24, 1995 for the Money Market
Account. Investments are stated at the closing net asset values
per share on December 31, 1995.
Equitable Life Insurance Company of Iowa Separate Account A
consists of fourteen investment accounts, four of which
(International Equity, Income and Growth, High Income, and Money
Market), as directed by eligible contract owners, are invested in
specified portfolios of the Smith Barney/Travelers Series Fund
Inc., an open-end management investment company under the
Investment Company Act of 1940, which commenced operations on
June 16, 1994. Activity in these four investment accounts, as
well as the Research Account, which invests in the Equi-Select
Series Trust, is available to contract owners of the PrimElite
Variable Annuity Product.
The remaining ten investment accounts (including the Research
Account) are invested in specified portfolios of the Equi-Select
Series Trust, which commenced operations on October 4, 1994.
These ten investment accounts are available to contract owners of
the Equi-Select Variable Annuity product.
The financial statements included herein present only those
investment accounts available to contract owners of the PrimElite
Variable Annuity product. The financial statements of the
remaining investment accounts available to contract owners of the
Equi-Select Variable Annuity product are presented separately.
The average cost method is used to determine realized gains and
losses. Dividends are taken into income on an accrual basis as
of the ex-dividend date.
NOTE 2 - EXPENSES
The Company is compensated for mortality and expense risks and
administrative costs by a charge equivalent to an annual rate of
1.25% and 0.15%, respectively, of the total net assets of each
Account. These charges amounted to $96,647 and $11,662,
respectively, during 1995 ($980 and $118, respectively in 1994).
NOTE 2 - EXPENSES (continued)
An annual contract charge of $30 is deducted on each contract
anniversary prior to the maturity date, upon full withdrawal of a
contract's value or upon commencement of annuity payments if such
withdrawal is made or annuity payments commence on a date other
than the contract anniversary. During 1995, annual contract
charges amounted to $558. No annual contract charges were
assessed in 1994.
A transfer charge computed as the lesser of 2% of the contract
value transferred or $25 will be imposed on each transfer between
Accounts in excess of twelve in any one calendar year. A
withdrawal charge may be imposed in the event of withdrawal of
any portion of the contract value or upon annuitization. The
withdrawal charge is 8% of the amount withdrawn prior to the
first anniversary of the purchase payment and reduces by 1% at
each subsequent purchase payment anniversary.
NOTE 3 - FEDERAL INCOME TAXES
Operations of the Equitable Life Insurance Company of Iowa
Separate Account A form a part of the operations of the Company
which is taxed as a life insurance company under the Internal
Revenue Code. Under current law, no federal income taxes are
payable with respect to operations of Equitable Life Insurance
Company of Iowa Separate Account A.
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of
investments were as follows:
<TABLE>
<CAPTION>
Period From
January 1, 1995 or
Commencement of Period From
Operations October 7, 1994 to
to December 31, 1995 December 31, 1994
_________________________ _________________________
Purchases Sales Purchases Sales
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Research Portfolio $14,168,762 $230,594 $687,042 $69
International Equity
Portfolio 1,754,791 1,113 -- --
Income and Growth Portfolio 3,373,110 6,680 -- --
High Income Portfolio 792,963 1,972 -- --
Money Market Portfolio 2,614,578 1,336,686 -- --
</TABLE>
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
Transactions in units were as follows:
<TABLE>
<CAPTION>
Period From
January 1, 1995 or
Commencement of Period From
Operations October 7, 1994 to
to December 31, 1995 December 31, 1994
_________________________ _________________________
Purchases Sales Purchases Sales
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Research Account 1,196,506 9,931 69,182 5
International Equity Account 154,388 -- -- --
Income and Growth Account 295,140 6 -- --
High Income Account 72,433 150 -- --
Money Market Account 295,977 170,929 -- --
</TABLE>
NOTE 6 - NET ASSETS
Net assets at December 31, 1995 consisted of the following:
<TABLE>
<CAPTION>
International Income
Research Equity and Growth
Account Account Account
______________ ______________ ______________
<S> <C> <C> <C>
Unit transactions $14,724,226 $1,757,418 $3,319,871
Accumulated net
investment income (loss) 194,829 (3,744) 46,665
Net unrealized appreciation
(depreciation) of
investments 1,527,893 31,560 188,418
______________ ______________ ______________
$16,446,948 $1,785,234 $3,554,954
============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
High Money
Income Market
Account Account
______________ ______________
<S> <C> <C>
Unit transactions $760,190 $1,275,454
Accumulated net
investment income (loss) 30,821 4,071
Net unrealized appreciation
(depreciation) of
investments (71) --
______________ ______________
$790,940 $1,279,525
============== ==============
</TABLE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The following financial statements of the Company are included in Part B
hereof:
Unaudited Consolidated Financial Statements:
1. Consolidated Balance Sheet - as of September 30, 1996 (Unaudited).
2. Consolidated Statement of Income - For the nine months ended
September 30, 1996 (Unaudited).
3. Consolidated Statement of Cash Flows - For the nine months ended
September 30, 1996 (Unaudited).
4. Notes to Consolidated Financial Statements - September 30, 1996
(Unaudited).
The following financial statements of the Separate Account are included in
Part B hereof:
Unaudited Financial Statements:
1. Statements of Net Assets - Equi-Select Product - September 30, 1996
(Unaudited).
2. Statements of Operations - Equi-Select Product - For the period
January 1, 1996 or April 1, 1996 through September 30, 1996
(Unaudited).
3. Statements of Changes in Net Assets - Equi-Select Product - For the
year ended December 31, 1995 and for the period January 1, 1996 or
April 1, 1996 through September 30, 1996 (Unaudited).
4. Notes to the Financial Statements - Equi-Select Product - September
30, 1996 (Unaudited).
5. Statements of Net Assets - PrimElite Product - September 30, 1996
(Unaudited).
6. Statements of Operations - PrimElite Product - For the period January
1, 1996 or Commencement of Operations through September 30, 1996
(Unaudited).
7. Statements of Changes in Net Assets - PrimElite Product - For the
period January 1, 1995 or Commencement of Operations through
December 31, 1995 and for the period January 1, 1996 or Commencement
of Operations through September 30, 1996 (Unaudited).
8. Notes to the Financial Statements - PrimElite Product - September 30,
1996 (Unaudited).
The following financial statements of the Company are included in Part B
hereof:
Audited Consolidated Financial Statements:
1. Report of Independent Auditors
2. Consolidated Balance Sheets - as of December 31, 1995 and 1994.
3. Consolidated Statements of Income - for the years ended December 31,
1995, 1994 and 1993.
4. Consolidated Statements of Changes in Stockholder's Equity - for the
years ended December 31, 1995, 1994 and 1993.
5. Consolidated Statements of Cash Flows - for the years ended December
31, 1995, 1994 and 1993.
6. Notes to Consolidated Financial Statements - December 31, 1995.
Schedules to Consolidated Financial Statements - December 31, 1995:
Schedule I - Summary of Investments Other Than Investment in
Related Parties
Schedule III - Supplementary Insurance Information
Schedule IV - Reinsurance
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and therefore have been omitted.
The following financial statements of the Separate Account are included in
Part B hereof:
Audited Financial Statements:
1. Statements of Net Assets - Equi-Select Product - December 31, 1995.
2. Statements of Operations - Equi-Select Product - For the year ended
December 31, 1995.
3. Statements of Changes in Net Assets - Equi-Select Product - For the
period from October 7, 1994 through December 31, 1994 and for the
year ended December 31, 1995.
4. Notes to Financial Statements - Equi-Select Product - December 31,
1995.
5. Statements of Net Assets - PrimElite Product - December 31, 1995.
6. Statements of Operations - PrimElite Product - For the period
January 1, 1995 or Commencement of Operations through December 31,
1995.
7. Statements of Changes in Net Assets - PrimElite Product - For the
period from October 7, 1994 through December 31, 1994 and for the
period from January 1, 1995 or Commencement of Operations through
December 31, 1995.
8. Notes to Financial Statements - PrimElite Product - December 31,
1995.
B. EXHIBITS
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Separate Account.**
2. Not Applicable.
3. Principal Underwriter's Agreement dated October 1, 1994 between
Equitable Life Insurance Company of Iowa on behalf of the Registrant
and Equitable of Iowa Securities Network, Inc.**
4. Individual Flexible Purchase Payment Deferred Variable Annuity
Contract.**
5. Application Form.**
6. (i) Copy of Restated Articles of Incorporation of the Company.*
(ii) Copy of the Restated Bylaws of the Company.*
7. Not Applicable.
8. (i) Form of Fund Participation Agreement between the Company and
Smith Barney/Travelers Series Fund, Inc.*
(ii) Form of Fund Participation Agreement between the Company and
and Warburg Pincus Trust.
(iii)Form of Fund Participation Agreement between the Company and
Smith Barney Concert Series Inc. (to be filed by Amendment).
9. Opinion and Consent of Counsel.
10. Consent of Independent Auditors.
11. Not Applicable.
12. (i) Agreement Governing Initial Contribution to Equi-Select Series
Trust by Equitable Life Insurance Company of Iowa dated
September 15, 1994.**
(ii) Agreement Governing Contribution of Working Capital to
Equi-Select Series Trust by Equitable Life Insurance Company of
Iowa dated October 4, 1994.**
(iii) Agreement Governing Initial Contribution to Equi-Select Series
Trust by Equitable Life Insurance Company of Iowa dated March
20, 1996.**
(iv) Agreement Governing Contribution of Working Capital to
Equi-Select Series Trust by Equitable Life Insurance Company of
Iowa dated April 1, 1996.**
13. Calculation of Performance Information.
14. Company Organizational Chart.
27. Financial Data Schedules
* Incorporated by reference to Registrant's Post-Effective Amendment No. 3 as
filed electronically on February 9, 1996.
**Incorporated by reference to Registrant's Post-Effective Amendment No. 4 as
filed electronically on March 29, 1996.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Executive Officers and Directors of the Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Position and Offices
Business Address with Depositor
- ------------------------ ----------------------------------------
Frederick S. Hubbell President, Chairman of the Board, Chief
604 Locust Street Executive Officer and Director
Des Moines, Iowa 50309
Paul E. Larson Executive Vice President, Chief Financial
604 Locust Street Officer, Assistant Secretary and Director
Des Moines, Iowa 50309
Doug Lourens Vice President, Corporate Actuary
604 Locust Street and Assistant Secretary
Des Moines, Iowa 50309
Beth B. Neppl Vice President-
604 Locust Street Human Resources and Director
Des Moines, Iowa 50309
Dennis D. Hargens Treasurer
604 Locust Street
Des Moines, Iowa 50309
Paul R. Schlaack Director
604 Locust Street
Des Moines, Iowa 50309
John A. Merriman General Counsel, Secretary
604 Locust Street and Director
Des Moines, Iowa 50309
Terry L. Kendall Executive Vice President and Director
1001 Jefferson Street, Suite 400
Wilmington, Delaware 19801
Jerome L. Sychowski Senior Vice President and Chief
604 Locust Street Information Officer and Director
Des Moines, Iowa 50309
David A. Terwilliger Vice President, Controller, Assistant
604 Locust Street Treasurer and Assistant Secretary
Des Moines, Iowa 50309
Arthur E. Kent Senior Vice President - Sales and
604 Locust Street Marketing
Des Moines, Iowa 50309
Lawrence V. Durland, Jr. Senior Vice President, Assistant
604 Locust Street Secretary and Director
Des Moines, Iowa 50309
Thomas L. May Senior Vice President - Marketing
604 Locust Street and Director
Des Moines, Iowa 50309
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Company organizational chart is included as Exhibit 14.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of December 31, 1996, there were 5,034 Qualified Contract Owners and 5,993
Non-Qualified Contract Owners.
ITEM 28. INDEMNIFICATION
The Restated Articles of Incorporation of the Company (Article VII) provide,
in part, that:
Section 1. In the manner and to the fullest extent permitted by the Iowa
Business Corporation Act as the same now exists or may hereafter be amended,
the Corporation shall indemnify directors, officers, employees and agents and
shall pay or reimburse them for reasonable expenses in any proceeding to which
said person is or was a party.
Section 2. A director of this Corporation shall not be personally liable to
the Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a Director, except for liability (i) for any breach of any
duty of the Director of loyalty to the Corporation or its shareholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for any transaction from which
the Director derived an improper personal benefit, or (iv) under Section
490.833 of the Iowa Business Corporation Act for assenting to or voting for an
unlawful distribution. If Chapter 490 of the Code of Iowa, is subsequently
amended to authorize corporate action further eliminating or limiting personal
liability of directors, then the liability of a director to the Corporation
shall be eliminated or limited to the fullest extent permitted by Chapter 490
of the Code of Iowa, as so amended. Any repeal or modification of the
provisions of this Article shall not adversely affect any right or protection
of a director of the Corporation existing at the time of such repeal or
modification.
The Restated Bylaws of the Company (Article VI, Section 2) provide that:
Any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or enterprise, shall be
indemnified to the following extent and under the following circumstances:
(a) In an action, suit or proceeding other than an action by or in the
right of the Corporation, such person shall be indemnified against expenses
(including attorney's fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he reasonably believed
to be in the best interests of the Corporation, in the case of conduct in his
official capacity with the Corporation, or, in all other cases, at least not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, if he had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(b) In an action, suit or proceedings by or in the right of the
Corporation, notwithstanding any provision precluding liability in the
Articles of Incorporation, such person shall nonetheless be indemnified
against expenses (including attorney's fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in the
best interests of the Corporation, in the case of conduct in his official
capacity with the Corporation, or, in all other cases, at least not opposed to
the best interests of the Corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Corporation unless and only to the extent that
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability, but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not Applicable.
(b) Equitable of Iowa Securities Network, Inc. ("Securities Network") is the
principal underwriter for the Contracts. The following persons are the
officers and directors of Securities Network. The principal business address
for each officer and director of Securities Network is 604 Locust Street, Des
Moines, Iowa 50309.
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Underwriter
- ------------------- ---------------------
William L. Lowe President
Lawrence V. Durland, Jr. Director
Frederick S. Hubbell Director
Paul E. Larson Director
Terry L. Kendall Director
Jerome L. Sychowski Director
Thomas L. May Director
John A. Merriman Director and Secretary
Paul R. Schlaack Director
Edward J. Berkson Vice President
Merlyn P. Schwickerath Treasurer
Beth B. Neppl Director
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
David A. Terwilliger, Vice President and Controller, whose address is 604
Locust Street, Des Moines, Iowa 50309, maintains physical possession of the
accounts, books or documents of the Separate Account required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the rules
promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more than
sixteen (16) months old for so long as payment under the variable annuity
contracts may be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under
this Form promptly upon written or oral request.
d. Equitable Life Insurance Company of Iowa ("Company") hereby
represents that the fees and charges deducted under the Contract described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
REPRESENTATIONS
The Company hereby represents that it is relying upon a No-Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase
the contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment
alternatives available under the employer's Section 403(b) arrangement to
which the participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities
Act Rule 485(b) for effectiveness of this Registration Statement and has
caused this Registration Statement to be signed on its behalf, in the City of
Des Moines, and State of Iowa on this 31st day of January, 1997.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
Registrant
By: EQUITABLE LIFE INSURANCE COMPANY OF IOWA
By: /S/ FRED S. HUBBELL
___________________________________________
Fred S. Hubbell, Chairman of the Board and
Chief Executive Officer
By: EQUITABLE LIFE INSURANCE COMPANY OF IOWA
Depositor
By: /S/ FRED S. HUBBELL
___________________________________________
Fred S. Hubbell, Chairman of the Board and
Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
President, Chairman of the
/S/ FRED S. HUBBELL Board and Chief Executive 1-31-97
- ------------------------- -------
Fred S. Hubbell Officer and Director Date
Executive Vice President,
Paul E. Larson* Chief Financial Officer, 1-31-97
- ------------------------- -------
Paul E. Larson Assistant Secretary and Director Date
Senior Vice President-
Thomas L. May* Marketing and Director 1-31-97
- ------------------------- -------
Thomas L. May Date
Paul R. Schlaack* Director 1-31-97
- ------------------------- -------
Paul R. Schlaack Date
General Counsel, Secretary
John A. Merriman* and Director 1-31-97
- ------------------------- -------
John A. Merriman Date
Senior Vice President,
Lawrence V. Durland, Jr.* Assistant Secretary and 1-31-97
- ------------------------- Director -------
Lawrence V. Durland, Jr. Date
Senior Vice President, Chief
Jerome L. Sychowski* Information Officer and 1-31-97
- ------------------------- Director -------
Jerome L. Sychowski Date
Vice President- Human Resources
Beth B. Neppl* and Director 1-31-97
- ------------------------- -------
Beth B. Neppl Date
- ------------------------- Executive Vice President -------
Terry L. Kendall and Director Date
</TABLE>
*By: /S/ FRED S. HUBBELL
-------------------------------------
Fred S. Hubbell, Attorney-in-Fact
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Jerome L. Sychowski, a Director
of Equitable Life Insurance Company of Iowa, a corporation duly organized
under the laws of the State of Iowa, do hereby appoint, Fred S. Hubbell, Paul
E. Larson and David A. Terwilliger, or any one of the foregoing individually,
as my attorney and agent, for me, and in my name as a Director of this Company
on behalf of the Company or otherwise, with full power to execute, deliver and
file with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts under
the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 13th day of January, 1997.
WITNESS:
/S/ ALISON R. TRASK /S/ JEROME L. SYCHOWSKI
________________________________ __________________________________
Jerome L. Sychowski
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 5
TO
FORM N-4
FOR
EQUITABLE LIFE INSURANCE COMPANY OF IOWA SEPARATE ACCOUNT A
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
INDEX TO EXHIBITS
EXHIBIT PAGE
99.B8(ii) Form of Fund Participation Agreement between the
Company and Warburg Pincus Trust
99.B9 Opinion and Consent of Counsel
99.B10 Consent of Independent Auditors
99.B13 Calculation of Performance Information
99.B14 Company Organizational Chart
27 Financial Data Schedules
PARTICIPATION AGREEMENT
BY AND AMONG
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
AND
WARBURG, PINCUS TRUST
AND
WARBURG, PINCUS COUNSELLORS, INC.
AND
COUNSELLORS SECURITIES INC.
THIS AGREEMENT, made and entered into this 29th day of March, 1996, and
effective as of the 1st day of April, 1996, by and among Equitable Life
Insurance Company of Iowa, organized under the laws of the State of Iowa (the
"Company"), on its own behalf and on behalf of each separate account of the
Company named in Schedule 1 to this Agreements as may be amended from time to
time (each account referred to as the "Account"), Warburg, Pincus Trust, an
open-end management investment company and business trust organized under the
laws of the Commonwealth of Massachusetts (the "Fund"); Warburg, Pincus
Counsellors, Inc. a corporation organized under the laws of the State of
Delaware (the "Adviser"); and Counsellors Securities Inc., a corporation
organized under the laws of the State of New York ("CSI").
WHEREAS, the Fund engages in business as an open-end management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts to be offered by insurance
companies that have entered into participation agreements similar to this
Agreement (the "Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Fund are divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and variable
annuity separate accounts and variable life insurance separate accounts relief
from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended, (the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by variable annuity separate
accounts and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and qualified pension and
retirement plans outside of the separate account context (the "Mixed and
Shared Funding Exemptive Order"). The parties to this Agreement agree that
the conditions or undertakings specified in the Mixed and Shared Funding
Exemptive Order and that may be imposed on the Company, the Fund, the Adviser
and/or CSI by virtue of the receipt of such order by the SEC will be
incorporated herein by reference, and such parties agree to comply with such
conditions and undertakings to the extent applicable to each such party; and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain variable
annuity contracts (the "Contracts") under the 1933 Act; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company under the insurance laws of the State of Iowa, to set aside and invest
assets attributable to the Contracts; and
WHEREAS, the Company has registered the Account as a unit investment
trust under the 1940 Act; and
WHEREAS, CSI, the Fund's distributor, is registered as a broker-dealer
with the SEC under the Securities Exchange Act of 1934, as amended (the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios named in
Schedule 2, as such schedule may be amended from time to time (the "Designated
Portfolios") on behalf of the Account to fund the Contracts, and the Fund is
authorized to sell such shares to unit investment trusts such as the Account
at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, the Adviser and CSI agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Fund agrees to sell to the Company those shares of the Designated
Portfolios that each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt and acceptance by the Fund or
its designee of the order for the shares of the Fund. For purposes of this
Section 1.1, the Company will be the designee of the Fund for receipt of such
orders from each Account and receipt by such designee will constitute receipt
by the Fund; provided that the Fund receives notice of such order by 10:00
a.m. Eastern Time on the next following business day ("T+1"). "Business Day"
will mean any day on which the New York Stock Exchange is open for trading and
on which the Fund calculates its net asset value pursuant to the rules of the
SEC.
1.2. The Company will pay for Fund shares on T+1 that an order to purchase
Fund shares is made in accordance with Section 1.1 above. Payment will be in
federal funds transmitted by wire. This wire transfer will be initiated by
12:00 p.m. Eastern Time.
1.3. The Fund agrees to make shares of the Designated Portfolios available
indefinitely for purchase at the applicable net asset value per share by
Participating Insurance Companies and their separate accounts on those days on
which the Fund calculates its Designated Portfolio net asset value pursuant to
rules of the SEC and the Fund shall use reasonable efforts to calculate such
net asset value on each day the New York Stock Exchange is open for trading;
provided, however, that the Board of Trustees of the Fund (the "Fund Board")
may refuse to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action is required
by law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Fund Board, acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Portfolio.
1.4. On each Business Day on which the Fund calculates its net asset
value, the Company will aggregate and calculate the net purchase or redemption
orders for each Account maintained by the Fund in which contract owner assets
are invested. Net orders will only reflect orders that the Company has
received prior to the close of regular trading on the New York Stock Exchange,
Inc. (the "NYSE") (currently 4:00 p.m., Eastern Time) on that Business Day.
Orders that the Company has received after the close of regular trading on the
NYSE will be treated as though received on the next Business Day. Each
communication of orders by the Company will constitute a representation that
such orders were received by it prior to the close of regular trading on the
NYSE on the Business Day on which the purchase or redemption order is priced
in accordance with Rule 22c-1 under the 1940 Act. Other procedures relating
to the handling of orders will be in accordance with the prospectus and
statement of information of the relevant Designated Portfolio or with oral or
written instructions that CSI or the Fund will forward to the Company from
time to time.
1.5. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts, qualified
pension and retirement plans or such other persons as are permitted under
applicable provisions of the Internal Revenue Code of 1986, as amended, (the
"Internal Revenue Code"), and regulations promulgated thereunder, the sale to
which will not impair the tax treatment currently afforded the Contracts. No
shares of any Portfolio will be sold to the general public except as set forth
in this Section 1.5.
1.6. The Fund agrees to redeem for cash, upon the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt
and acceptance by the Fund or its agent of the request for redemption. For
purposes of this Section 1.6, the Company will be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
designee will constitute receipt by the Fund, provided the Fund receives
notice of request for redemption by 10:00 a.m. Eastern Time on the next
following Business Day. Payment will be in federal funds transmitted by wire
to the Company's account as designated by the Company in writing from time to
time, on the same Business Day the Fund receives notice of the redemption
order from the Company. The Fund reserves the right to delay payment of
redemption proceeds, but in no event may such payment be delayed longer than
the period permitted by the 1940 Act. The Fund will not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds; the Company alone will be responsible for such action.
If notification of redemption is received after 10:00 a.m. Eastern Time,
payment for redeemed shares will be made on the next following Business Day.
1.7. The Company agrees to purchase and redeem the shares of the
Designated Portfolios offered by the then current prospectus of the Fund in
accordance with the provisions of such prospectus.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of each
Account.
1.9. The Fund will furnish same day notice (by telecopier, followed by
written confirmation) to the Company of the declaration of any income,
dividends or capital gain distributions payable on each Designated Portfolio's
shares. The Company hereby elects to receive all such dividends and
distributions as are payable on the Designated Portfolio shares in the form of
additional shares of that Designated Portfolio. The Fund will notify the
Company of the number of shares so issued as payment of such dividends and
distributions. The Company reserves the right to revoke this election upon
reasonable prior notice to the Fund and to receive all such dividends and
distributions in cash.
1.10. The Fund will make the net asset value per share for each Designated
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and will use its
best efforts to make such net asset value per share available by 6:00 p.m.,
Eastern Time, but in no event later than 7:00 p.m., Eastern Time, each
business day.
1.11. In the event adjustments are required to correct any error in the
computation of the net asset value of the Fund's shares, the Fund or CSI will
notify the Company as soon as practicable after discovering the need for those
adjustments that result in an aggregate reimbursement of $150 or more to any
one Account maintained by a Designated Portfolio unless notified otherwise by
the Company (or, if greater, results in an adjustment of $10 or more to each
contractowner's account). Any such notice will state for each day for which
an error occurred the incorrect price, the correct price and, to the extent
communicated to the Fund's shareholders, the reason for the price change. The
Company may send this notice or a derivation thereof (so long as such
derivation is approved in advance by CSI or the Adviser) to contractowners
whose accounts are affected by the price change. The parties will negotiate
in good faith to develop a reasonable method for effecting such adjustments.
The Fund shall provide the Company, on behalf of the Account, with a prompt
adjustment to the number of shares purchased or redeemed to reflect the
correct share net asset value.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act and that the Contracts will be issued and sold
in compliance with all applicable federal and state laws, including state
insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account as a separate account under applicable state law and has registered
the Account as a unit investment trust in accordance with the provisions of
thin 1940 Act to serve as a segregated investment account for the Contracts,
and that it will maintain such registration for so long as any Contracts are
outstanding. The Company will amend the registration statement under the 1933
Act for the Contracts and the registration statement under the 1940 Act for
the Account from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable law.
The Company will register and qualify the Contracts for sale in accordance
with the securities laws of the various states only if and to the extent
deemed necessary by the Company.
2.2. The Company represents that the Contracts are currently and at the
time of issuance will be treated as endowment, annuity or life insurance
contracts under applicable provisions of the Internal Revenue Code, and that
it will make every effort to maintain such treatment and that it will notify
the Fund and the Adviser immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might
not be so treated in the future.
2.3. The Company represents and warrants that it will not purchase shares
of the Designated Portfolios with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection with such
plans.
2.4. The Fund represents and warrants that Fund shares of the Designated
Portfolios sold pursuant to this Agreement will be registered under the 1933
Act and duly authorized for issuance in accordance with applicable law and
that the Fund is and will remain registered under the 1940 Act for as long as
such shares of the Designated Portfolios are outstanding. The Fund will amend
the registration statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of
its shares. The Fund will register and qualify the shares of the Designated
Portfolios for sale in accordance with the laws of the various states only if
and to the extent deemed advisable by the Fund.
2.5. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code, and that
it will make every effort to maintain such qualification (under Subchapter M
or any successor or similar provision) and that it will notify the Company
immediately upon having a reasonable basis for believing that it has ceased to
so qualify or that it might not so qualify in the future.
2.6. The Fund represents and warrants that in performing the services
described in this Agreement, the Fund will comply with all applicable laws,
rules and regulations. The Fund makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies, objectives and restrictions) complies with the insurance
laws and regulations of any state. The Fund and CSI agree that upon request
they will use their best efforts to furnish the information required by state
insurance laws so that the Company can obtain the authority needed to issue
the Contracts in the various states.
2.7. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it
reserves the right to make such payments in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1 the Fund
undertakes to have its Fund Board formulate and approve any plan under Rule
12b-1 to finance distribution expenses in accordance with the 1940 Act.
2.8. CSI represents and warrants that it will distribute the Fund shares
of the Designated Portfolios in accordance with all applicable federal and
state securities laws including, without limitation, the 1933 Act, the 1934
Act and the 1940 Act.
2.9. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with applicable provisions of the
1940 Act.
2.10. CSI represents and warrants that it is and will remain duly
registered under all applicable federal and state securities laws and that it
will perform its obligations for the Fund in accordance in all material
respects with any applicable state and federal securities laws.
2.11. The Fund and CSI represent and warrant that all of their trustees,
officers, employees, investment advisers, and other individuals/entities
having access to the funds and/or securities of the Fund are and continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimal coverage as
required currently by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding company.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Fund or CSI will provide the Company, at the Fund's or its
affiliate's expense, with as many copies of the current Fund prospectus for
the Designated Portfolios as the Company may reasonably request for
distribution, at the Company's expense, to prospective contractowners and
applicants. The Fund or CSI will provide, at the Fund's or its affiliate's
expense, as many copies of said prospectus as necessary for distribution, at
the Company's expense, to existing contractowners. The Fund or CSI will
provide the copies of said prospectus to the Company or to its mailing agent.
If requested by the Company in lieu thereof, the Fund or CSI will provide such
documentation, including a computer diskette or a final copy of a current
prospectus set in type at the Fund's or its affiliate's expense, and such
other assistance as is reasonably necessary in order for the Company at least
annually (or more frequently if the Fund prospectus is amended more
frequently) to have the Fund's prospectus and the prospectuses of other mutual
funds in which assets attributable to the Contracts may be invested printed
together in one document, in which case the Fund or its affiliate will bear
its reasonable share of expenses as described above, allocated based on the
proportionate number of pages of the Fund's and other fund's respective
portions of the document.
3.2. The Fund or CSI will provide the Company, at the Fund's or its
affiliate's expense, with as many copies of the statement of additional
information as the Company may reasonably request for distribution, at the
Company's expense, to prospective contractowners and applicants. The Fund or
CSI will provide, at the Fund's or its affiliate's expense, as many copies of
said statement of additional information as necessary for distribution, at the
Company's expense, to any existing contractowner who requests such statement
or whenever state or federal law otherwise requires that such statement be
provided. The Fund or CSI will provide the copies of said statement of
additional information to the Company or to its mailing agent.
3.3. The Fund or CSI, at the Fund's or its affiliate's expense, will
provide the Company or its mailing agent with copies of its proxy material, if
any, reports to shareholders and other communications to shareholders in such
quantity as the Company will reasonably require. The Company will distribute
this proxy material, reports and other communications to existing contract
owners and tabulate the votes.
3.4. If and to the extent required by law the Company will:
(a) solicit voting instructions from contractowners;
(b) vote the shares of the Designated Portfolios held in the
Account in accordance with instructions received from contractowners; and
(c) vote shares of the Designated Portfolios held in the Account
for which no timely instructions have been received, as well as shares it
owns, in the same proportion as shares of such Designated Portfolio for which
instructions have been received from the Company's contractowners;
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for variable contractowners. Except
as set forth above, the Company reserves the right to vote Fund shares held in
any segregated asset account in its own right, to the extent permitted by law.
The Company will be responsible for assuring that each of its separate
accounts participating in the Fund calculates voting privileges in a manner
consistent with all legal requirements, including the Mixed and Shared Funding
Exemptive Order.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund either will provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the
1940 Act not to require such meetings) or, as the Fund currently intends to
comply with Section 16(c) of the 1940 Act (although the Fund is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, the Fund will act in accordance
with the SEC's interpretation of the requirements of Section 16(a) with
respect to periodic elections of trustees and with whatever rules the SEC may
promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. CSI will provide the Company on a timely basis with investment
performance information for each Designated Portfolio in which the Company
maintains an Account, including total return for the preceding calendar month
and calendar quarter, the calendar year to date, and the prior one-year,
five-year, and ten year (or life of the Fund) periods. The Company may, based
on the SEC mandated information supplied by CSI, prepare communications for
contractowners ("Contractowner Materials"). The Company will provide copies
of all Contractowner Materials concurrently with their first use for CSI's
internal recordkeeping purposes. It is understood that neither CSI nor any
Designated Portfolio will be responsible for errors or omissions in, or the
content of, Contractowner Materials except to the extent that the error or
omission resulted from information provided by or on behalf of CSI or the
Designated Portfolio. Any printed information that is furnished to the
Company pursuant to this Agreement other than each Designated Portfolio's
prospectus or statement of additional information (or information supplemental
thereto), periodic reports and proxy solicitation materials is CSI's sole
responsibility and not the responsibility of any Designated Portfolio or the
Fund. The Company agrees that the Portfolios, the shareholders of the
Portfolios and the officers and governing Board of the Fund will have no
liability or responsibility to the Company in these respects.
4.2. The Company will not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement, prospectus or statement of additional
information for Fund shares, as such registration statement, prospectus and
statement of additional information may be amended or supplemented from time
to time, or in reports or proxy statements for the Fund, or in published
reports for the Fund which are in the public domain or approved by the Fund or
CSI for distribution, or in sales literature or other material provided by the
Fund, Adviser or by CSI, except with permission of CSI. Any piece of sales
literature or other promotional material intended to be used by the Company
which requires the permission of CSI prior to use will be furnished by Company
to CSI, or its designee, at least ten (10) business days prior to its use. No
such material will be used if CSI reasonably objects to such use within five
(5) business days after receipt.
Nothing in this Section 4.2 will be construed as preventing the Company or its
employees or agents from giving advice on investment in the Fund.
4.3. The Fund, the Adviser or CSI will furnish, or will cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company or its Account is named, at
least ten (10) business days prior to its use. No such material will be used
if the Company reasonably objects to such use within five (5) business days
after receipt of such material.
4.4. The Fund, the Adviser and CSI will not give any information or make
any representations or statements on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or statement
of additional information for the Contracts, as such registration statement,
prospectus and statement of additional information may be amended or
supplemented from time to time, or in published reports for each Account or
the Contracts which are in the public domain or approved by the Company for
distribution to contractowners, or in sales literature or other material
provided by the Company, except with permission of the Company. The Company
agrees to respond to any request for approval on a prompt and timely basis.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additions
information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the SEC, the NASD or
other regulatory authority.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC, the NASD or other regulatory authority.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (e.g.,
on-line networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisements sales literature, or published article), educational
or training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
4.8. The Fund and CSI hereby consent to the Company's use of the names
Warburg, Pincus Trust - International Equity Portfolio, or other Designated
Portfolio, and Warburg, Pincus Counsellors, Inc. in connection with the
marketing of the Contracts, subject to the terms of Sections 4.1 and 4.2 of
this Agreement. Such consent will terminate with the termination of this
Agreement.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund, the Adviser and CSI will pay no fee or other compensation
to the Company under this Agreement except if the Fund or any Designated
Portfolio adopts and implements a plan pursuant to Rule 12b-1 under the 1940
Act to finance distribution expenses, then, subject to obtaining any required
exemptive orders or other regulatory approvals, the Fund may make payments to
the Company or to the underwriter for the Contracts if and in such amounts
agreed to by the Fund in writing.
5.2. All expenses incident to performance by the Fund of this Agreement
will be paid by the Fund to the extent permitted by law. The Fund will bear
the expenses for the cost of registration and qualification of the Fund's
shares; preparation and filing of the Fund's prospectus, statement of
additional information and registration statement, proxy materials and
reports; setting in type and printing the Fund's prospectus; setting in type
and printing proxy materials and reports by it to contractowners (including
the costs of printing a Fund prospectus that constitutes an annual report);
the preparation of all statements and notices required by any federal or state
law; all taxes on the issuance or transfer of the Fund's shares; any expenses
permitted to be paid or assumed by the Fund pursuant to a plan, if any, under
Rule 12b-1 under the 1940 Act; and all other expenses set forth in Article III
of this Agreement.
ARTICLE VI. DIVERSIFICATION
6.1. The Adviser will ensure that the Fund will at all times invest money
from the Contracts in such a manner as to ensure that the Contracts will be
treated as variable annuity contracts under the Internal Revenue Code and the
regulations issued thereunder. Without limiting the scope of the foregoing,
the Fund will comply with Section 817(h) of the Internal Revenue Code and
Treasury Regulation 1.817-5, as amended from time to time, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such Section
or Regulation. In the event of a breach of this Article VI by the Fund, it
will take all reasonable steps: (a) to notify the Company of such breach; and
(b) to adequately diversify the Fund so as to achieve compliance within the
grace period afforded by Treasury Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the contractowners of
all separate accounts investing in the Fund. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Portfolio are being managed; (e) a difference
in voting instructions given by Participating Insurance Companies or by
variable annuity and variable life insurance contractowners; or (f) a decision
by an insurer to disregard the voting instructions of contractowners. The
Fund Board will promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Fund Board. The Company agrees to assist the Fund Board in
carrying out its responsibilities, as delineated in the Mixed and Shared
Funding Exemptive Order, by providing the Fund Board with all information
reasonably necessary for the Fund Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the
Fund Board whenever contractowner voting instructions are to be disregarded.
The Company's responsibilities hereunder will be carried out with a view only
to the interest of contractowners.
7.3. If it is determined by a majority of the Fund Board, or a majority of
its disinterested directors, that an irreconcilable material conflict exists,
the Company will, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors), take whatever steps
are necessary to remedy or eliminate the irreconcilable material conflict, up
to and including: (a) withdrawing the assets allocable to some or all of the
Accounts from the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another Portfolio
of the Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected contractowners and, as appropriate,
segregating the assets of any appropriate group (i.e., variable annuity
contractowners or variable life insurance contractowners of one or more
Participating Insurance Companies) that votes in favor of such segregation, or
offering to the affected contractowners the option of making such a change;
and (b) establishing a new registered management investment company or managed
separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contractowner voting instructions, and the Company's
judgment represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
subaccount of the Account's investment in the Fund and terminate this
Agreement with respect to such subaccount; provided, however, that such
withdrawal and termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a majority of the
disinterested directors of the Fund Board. No charge or penalty will be
imposed as a result of such withdrawal.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state insurance regulators, then the Company will
withdraw the affected subaccount of the Account's investment in the Fund and
terminate this Agreement with respect to such subaccount; provided, however,
that such withdrawal and termination will be limited to the extent required by
the foregoing irreconcilable material conflict as determined by a majority of
the disinterested directors of the Fund Board. No charge or penalty will be
imposed as a result of such withdrawal.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Fund Board will determine whether
any proposed action adequately remedies any irreconcilable material conflict,
but in no event will the Fund or the Adviser (or any other investment adviser
to the Fund) be required to establish a new funding medium for the Contracts.
The Company will not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of contractowners materially affected by the irreconcilable material
conflict.
7.7. The Company will at least annually submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so that
the Fund Board may fully carry out the duties imposed upon it as delineated in
the Mixed and Shared Funding Exemptive Order, and said reports, materials and
data will be submitted more frequently if deemed appropriate by the Fund
Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and
Shared Funding Exemptive Order, then: (a) the Fund and/or the Participating
Insurance Companies, as appropriate, will take such steps as may be necessary
to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted,
to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2,
7.3, 7.4, and 7.5 of this Agreement will continue in effect only to the extent
that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, CSI, and each person, if any, who controls or is associated with the
Fund, the Adviser or CSI within the meaning of such terms under the federal
securities laws and any director, trustee, officer, partner, employee or agent
of the foregoing (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including reasonable legal and other expenses), to
which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements:
(1) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the registration
statement, prospectus or statement of additional information for the Contracts
or contained in the Contracts or sales literature or other promotional
material for the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated or necessary
to make such statements not misleading in light of the circumstances in which
they were made; provided that this agreement to indemnify will not apply as to
any Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company by the Fund, the Adviser or CSI for use
in the registration statement, prospectus or statement of additional
information for the Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company or wrongful conduct of the
Company or persons under its control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund registration statement,
prospectus, statement of additional information or sales literature or other
promotional material of the Fund (or amendment or supplement) or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make such statements not misleading in light of the
circumstances in which they were made, if such a statement or omission was
made in reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company or persons under its control; or
(4) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this Agreement; or
(5) arise out of any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other material breach by the Company of this Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Company
otherwise may have.
(b) No party will be entitled to indemnification under Section
8.1(a) to the extent such loss, claim, damage, liability or litigation is due
to the willful misfeasance, bad faith, or gross negligence in the performance
of such party's duties under this Agreement, or by reason of such party's
reckless disregard of its obligations or duties under this Agreement by the
party seeking indemnification.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with the issuance or sale of
the Fund shares or the Contracts or the operation of the Fund.
8.2. Indemnification By The Adviser, the Fund and CSI
(a) The Adviser, the Fund and CSI, in each case solely to the extent
relating to such party's responsibilities hereunder, agree to indemnify and
hold harmless the Company and each person, if any, who controls or is
associated with the Company within the meaning of such terms under the federal
securities laws and any director, trustee, officer, partner, employee or agent
of the foregoing (collectively, the "Indemnified Parties" for purposes of this
Section 8.2) against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the written consent of
the Adviser) or litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement, prospectus or statement of additional information for the Fund or
sales literature or other promotional material of the Fund (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated or necessary to make such statements not misleading in light of the
circumstances in which they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Adviser, CSI or the Fund by or
on behalf of the Company for use in the registration statement, prospectus or
statement of additional information for the Fund or in sales literature of the
Fund (or any amendment or supplement thereto) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations or wrongful conduct of the Adviser, the Fund or CSI or persons
under the control of the Adviser, the Fund or CSI respectively, with respect
to the sale of the Fund shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, statement of additional information or sales literature or other
promotional material covering the Contracts (or any amendment or supplement
thereto), or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make such statement or statements not
misleading in light of the circumstances in which they were made, if such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company by the Adviser, the Fund or CSI or
persons under the control of the Adviser, the Fund or CSI; or
(4) arise as a result of any failure by the Fund, the Adviser or
CSI to provide the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements and procedures
related thereto specified in Article VI of this Agreement); or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser, the Fund or CSI in this
Agreement, or arise out of or result from any other material breach of this
Agreement by the Adviser the Fund or CSI;
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Fund, Adviser or
CSI otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a)
to the extent such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this Agreement by the party
seeking indemnification.
(c) The Indemnified Parties will promptly notify the Adviser, the
Fund and CSI of the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection with the issuance
or sale of the Contracts or the operation of the account.
8.4. Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be liable
under the indemnification provisions of this Article VIII with respect to any
claim made against a party entitled to indemnification under this Article VIII
("Indemnified Party" for the purpose of this Section 8.4) unless such
Indemnified Party will have notified the Indemnifying Party in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim will have been served upon such
Indemnified Party (or after such party will have received notice of such
service on any designated agent), but failure to notify the Indemnifying Party
of any such claim will not relieve the Indemnifying Party from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of the indemnification provision of this Article
VIII, except to the extent that the failure to notify results in the failure
of actual notice to the Indemnifying Party and such Indemnifying Party is
damaged solely as a result of failure to give such notice. In case any such
action is brought against the Indemnified Party, the Indemnifying Party will
be entitled to participate, at its own expense, in the defense thereof. The
Indemnifying Party also will be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Indemnifying Party to the Indemnified Party of the Indemnifying Party's
election to assume the defense thereof, the Indemnified Party will bear the
fees and expenses of any additional counsel retained by it, and the
Indemnifying Party will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently
in connection with the defense thereof other than reasonable costs of
investigation, unless: (a) the Indemnifying Party and the Indemnified Party
will have mutually agreed to the retention of such counsel; or (b) the named
parties to any such proceeding (including any impleaded parties) include both
the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party will not be liable
for any settlement of any proceeding effected without its written consent but
if settled with such consent or if there is a final judgment for the
plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party
from and against any loss or liability by reason of such settlement or
judgment. A successor by law of the parties to this Agreement will be
entitled to the benefits of the indemnification contained in this Article
VIII. The indemnification provisions contained in this Article VIII will
survive any termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement will be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Iowa.
9.2. This Agreement will be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant (including, but not limited to, the Mixed and
Shared Funding Exemptive Order) and the terms hereof will be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, with respect
to some or all of the Designated Portfolios, upon one hundred eighty (180)
days' advance written notice to the other parties or, if later, upon receipt
of any required exemptive relief or orders from the SEC, unless otherwise
agreed in a separate written agreement Strong the parties; or
(b) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any Designated Portfolio
if shares of the Designated Portfolio are not reasonably available to meet the
requirements of the Contracts as determined in good faith by the Company; or
(c) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any Designated Portfolio
in the event any of the Designated Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or Federal law or such
law precludes the use of such shares as the underlying investment media of the
Contracts issued or to be issued by Company; or
(d) at the option of the Fund, upon receipt of the Fund's written
notice by the other parties, upon institution of formal proceedings against
the Company by the NASD, the SEC, the insurance commission of any state or any
other regulatory body regarding the Company's duties under this Agreement or
related to the sale of the Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund shares, provided that
the Fund determines in its sole judgment, exercised in good faith, that any
such proceeding would have a material adverse effect on the Company's ability
to perform its obligations under this Agreement; or
(e) at the option of the Company, upon receipt of the Company's
written notice by the other parties, upon institution of formal proceedings
against the Fund, Adviser or CSI by the NASD, the SEC, or any state securities
or insurance department or any other regulatory body, provided that the
Company determines in its sole judgment, exercised in good faith, that any
such proceeding would have a material adverse effect on the Fund's or CSI's
ability to perform its obligations under this Agreement; or
(f) at the option of the Company, upon receipt of the Company's
written notice by the other parties, if the Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code,
or under any successor or similar provision, or if the Company reasonably and
in good faith believes that the Fund may fail to so qualify; or
(g) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any Designated Portfolio
if the Fund fails to meet the diversification requirements specified in
Article VI hereof or if the Company reasonably and in good faith believes the
Fund may fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon written notice
to the other parties, upon another party's material breach of any provision of
this Agreement which material breach is not cured within thirty (30) days of
said notice; or
(i) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith, that either the Fund, the Adviser or
CSI has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company, such termination to be
effective sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(j) at the option of the Fund or CSI, if the Fund or CSI
respectively, determines in its sole judgment exercised in good faith, that
the Company has suffered a material adverse change in its business, operations
or financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Fund or the Adviser, such termination
to be effective sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the contractowners having an
interest in the Account (or any subaccount) to substitute the shares of
another investment company for the corresponding Designated Portfolio shares
of the Fund in accordance with the terms of the Contracts for which those
Designated Portfolio shares had been selected to serve as the underlying
investment media. The Company will give sixty (60) days' prior written notice
to the Fund of the date of any proposed vote or other action taken to replace
the Fund's shares; or
(l) at the option of the Company or the Fund upon a determination by
a majority of the Fund Board, or a majority of the disinterested Fund Board
members, that an irreconcilable material conflict exists among the interests
of: (1) all contractowners of variable insurance products of all separate
accounts; or (2) the interests of the Participating Insurance Companies
investing in the Fund as set forth in Article VII of this Agreement; or
(m) at the option of the Fund in the event any of the Contracts are
not issued or sold in accordance with applicable federal and/or state law.
Termination will be effective immediately upon such occurrence without notice.
10.2. Notice Requirement
No termination of this Agreement will be effective unless and until the party
terminating this Agreement gives prior written notice to all other parties of
its intent to terminate, which notice will set forth the basis for the
termination.
10.3. Effect of Termination
Notwithstanding any termination of this Agreement, the Fund and CSI will, at
the option of the Company, continue to make available additional shares of the
Fund pursuant to the terms and conditions of this Agreement, for all Contracts
in effect on the effective date of termination of this Agreement ( hereinafter
referred to as "Existing Contracts.") . Specifically, without limitation, the
owners of the Existing Contracts will be permitted to reallocate investments
in the Portfolios (as in effect on such date), redeem investments in the
Portfolios and/or invest in the Portfolios upon the making of additional
purchase payments under the Existing Contracts.
10.4. Surviving Provisions
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify other parties will survive and not be affected
by any termination of this Agreement. In addition, each party's obligations
under Section 12.7 will survive and not be affected by any termination of this
Agreement. Finally, with respect to Existing Contracts, all provisions of
this Agreement also will survive and not be affected by any termination of
this Agreement.
ARTICLE XI. NOTICES
11.1. Any notice will be deemed duly given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in
writing to the other parties.
If to the Company: If to the Fund, the Adviser and/or CSI:
Equitable Life Insurance 466 Lexington Avenue
Company of Iowa New York, NY 10017
604 Locust Street Attn: Eugene P. Grace
Des Moines, IA 50309 Senior Vice President
Attn: John A. Merriman
General Counsel
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither the
directors, trustees, officers, partners, employees, agents or shareholders
assume any personal liability for obligations entered into on behalf of the
Fund. No Portfolio or series of the Fund will be liable for the obligations
or liabilities of any other Portfolio or series.
12.2. The Fund, the Adviser and CSI acknowledge that the identities of the
customers of the Company or any of its affiliates (collectively the "Company
Protected Parties" for purposes of this Section 12.2), information maintained
regarding those customers, and all computer programs and procedures or other
information developed or used by the Company Protected Parties or any of their
employees or agents in connection with the Company's performance of its duties
under this Agreement are the valuable property of the Company Protected
Parties. The Fund, the Adviser and CSI agree that if they come into
possession of any list or compilation of the identities of or other
information about the Company Protected Parties' customers, or any other
information or property of the Company Protected Parties, other than such
information as is publicly available or as may be independently developed or
compiled by the Fund, the Adviser or CSI from information supplied to them by
the Company Protected Parties' customers who also maintain accounts directly
with the Fund, the Adviser or CSI, the Fund, the Adviser and CSI will hold
such information or property in confidence and refrain from using, disclosing
or distributing any of such information or other property except: (a) with the
Company's prior written consent; or (b) as required by law or judicial
process. The Company acknowledges that the identities of the customers of the
Fund, the Adviser, CSI or any of their affiliates (collectively the "Adviser
Protected Parties" for purposes of this Section 12.2), information maintained
regarding those customers, and all computer programs and procedures or other
information developed or used by the Adviser Protected Parties or any of their
employees or agents in connection with the Fund's, the Adviser's or CSI's
performance of their respective duties under this Agreement are the valuable
property of the Adviser Protected Parties. The Company agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the Adviser Protected Parties' customers, or any other
information or property of the Adviser Protected Parties, other than such
information as is publicly available or as may be independently developed or
compiled by the Company from information supplied to them by the Adviser
Protected Parties' customers who also maintain accounts directly with the
Company, the Company will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or
other property except: (a) with the Fund's, the Adviser's or CSI's prior
written consent; or (b) as required by law or judicial process. Each party
acknowledges that any breach of the agreements in this Section 12.2 would
result in immediate and irreparable harm to the other parties for which there
would be no adequate remedy at law and agree that in the event of such a
breach, the other parties will be entitled to equitable relief by way of
temporary and permanent injunctions, as well as such other relief as any court
of competent jurisdiction deems appropriate.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
12.5. If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
will not be affected thereby.
12.6. This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
12.7. Each party to this Agreement will maintain all records required by
law, including records detailing the services it provides. Such records will
be preserved, maintained and made available to the extent required by law and
in accordance with the 1940 Act and the rules thereunder. Each party to this
Agreement will cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD and
state insurance regulators) and will permit each other and such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Upon request by the Fund or CSI, the Company agrees to
promptly make copies or, if required, originals of all records pertaining to
the performance of services under this Agreement available to the Fund or CSI,
as the case may be. The Fund agrees that the Company will have the right to
inspect, audit and copy all records pertaining to the performance of services
under this Agreement pursuant to the requirements of any state insurance
department. Each party also agrees to promptly notify the other parties if it
experiences any difficulty in maintaining the records in an accurate and
complete manner. This provision will survive termination of this Agreement.
12.8. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this Agreement
will be the valid and binding obligation of such party enforceable in
accordance with its terms.
12.9. The parties to this Agreement acknowledge and agree that all
liabilities of the Fund arising, directly or indirectly, under this agreement,
will be satisfied solely out of the assets of the Fund and that no trustee,
officer, agent or holder of shares of beneficial interest of the Fund will be
personally liable for any such liabilities.
12.10. The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the
Contracts, the Accounts or the Designated Portfolios of the Fund or other
applicable terms of this Agreement.
12.11. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEAL By:/S/ FRED S. HUBBELL
----------------------------------------
Fred S. Hubbell, Chairman, President and
Chief Executive Officer
ATTEST: By: /S/ JOHN A. MERRIMAN
-------------------------------
John A. Merriman, General Counsel
and Secretary
SEAL WARBURG, PINCUS TRUST
By:/S/ EUGENE P. GRACE
----------------------------------------
Name: Eugene P. Grace
------------------------------------
Title: Vice President & Secretary
------------------------------------
SEAL WARBURG, PINCUS COUNSELLORS, INC.
By:/S/ EUGENE P. GRACE
----------------------------------------
Name: Eugene P. Grace
----------------------------------
Title: Senior Vice President & Assistant
Secretary
-----------------------------------
SEAL COUNSELLORS SECURITIES, INC.
By:/S/ EUGENE P. GRACE
----------------------------------------
Name: Eugene P. Grace
----------------------------------
Title: Vice President & Assistant Secretary
------------------------------------
ATTEST:
/S/ MARYANN MAGLIA
-------------------------------------------
SCHEDULE 1
PARTICIPATION AGREEMENT
BY AND AMONG
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
AND
WARBURG, PINCUS TRUST
AND
WARBURG, PINCUS COUNSELLORS, INC.
AND
COUNSELLORS SECURITIES INC.
The following separate accounts of Equitable Life Insurance Company of Iowa
are permitted in accordance with the provisions of this Agreement to invest in
Designated Portfolios of the Fund shown in Schedule 2:
Equitable Life Insurance Company of Iowa Separate Account A,
established January 24, 1994.
_______________, 1996
SCHEDULE 2
PARTICIPATION AGREEMENT
BY AND AMONG
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
WARBURG, PINCUS TRUST
AND
WARBURG, PINCUS COUNSELLORS, INC.
AND
COUNSELLORS SECURITIES INC.
The Separate Account(s) shown on Schedule 1 may invest in the following
Designated Portfolios of the Warburg, Pincus Trust:
International Equity Portfolio
______________, 1996
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
January 31, 1997
Board of Directors
Equitable Life Insurance Company of Iowa
604 Locust Street
Des Moines, Iowa 50309
RE: Opinion of Counsel - Equitable Life
Insurance Company of Iowa Separate Account A
Gentlemen:
You have requested our Opinion of Counsel in connection with the filing with
the Securities and Exchange Commission of a Registration Statement on Form N-4
for the Individual Flexible Purchase Payment Deferred Variable and Annuity
Contracts (the "Contracts") to be issued by Equitable Life Insurance Company
of Iowa and its separate account, Equitable Life Insurance Company of Iowa
Separate Account A.
We have made such examination of the law and have examined such records and
documents as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below.
We are of the following opinions:
1. Equitable Life Insurance Company of Iowa is a valid and existing
stock life insurance company of the state of Iowa.
2. Equitable Life Insurance Company of Iowa Separate Account A is a
separate investment account of Equitable Life Insurance Company of Iowa
created and validly existing pursuant to the Iowa Insurance Laws and the
Regulations thereunder.
3. Upon the acceptance of purchase payments made by an Owner pursuant to
a Contract issued in accordance with the Prospectus contained in the
Registration Statement and upon compliance with applicable law, such an Owner
will have a legally-issued, fully paid, non-assessable contractual interest
under such Contract.
You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration Statement.
We consent to the reference to our Firm under the caption "Legal Opinions"
contained in the Statement of Additional Information which forms a part of the
Registration Statement.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By: /S/ LYNN KORMAN STONE
_____________________________________
Lynn Korman Stone
EXHIBIT 10 - CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated February 7, 1996, with respect to Equitable Life
Insurance Company of Iowa and each account within Equitable Life Insurance
Company of Iowa Separate Account A in Post-Effective Amendment No. 5 to the
Registration Statement (Form N-4 No. 33-79170) and related Prospectus of
Equitable Life Insurance Company of Iowa Separate Account A.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Des Moines, Iowa
January 27, 1997
EX-99.B13
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
Equi-Select Money Market Subaccount
Calculation of Yield and Effective Yield
For the Seven Day Period from: 23-Sep-96 through 30-Sep-96
SUBACCOUNT DETAIL
Date AUV per Unit
___________ ______________
23-Sep-96 BOP AUV 10.699021
30-Sep-96 10.705876
PRO-RATION OF ANNUAL CONTRACT MAINTENANCE CHARGE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Annual Contract Maintenance Charge $ 30.00
Period pro-ration factor (7 / 365) 0.01918
---------
Portion attributable to a seven day period MM Average All Fund Avg 0.57534
Subaccount pro-ration factor 27,616.90 / 121,990.60 0.22639
---------
Portion attributable to Money Market Subaccount 0.13025
Allocation to assumed contract
Average assumed value of contract 10.705876
-------------
Average account balance 27,616.90 0.00039
---------
Pro-rated annual contract maintenance charge 0.000050
=========
</TABLE>
CALCULATION OF YIELD
<TABLE>
<CAPTION>
<S> <C> <C>
Value of one accumulation unit - end of period
Value of one accumulation unit - end of period 10.705876
Deduct: Pro-rated annual contract maintenance charge (0.000050)
----------
Value after deductions* 10.705826
Base Period Return
Change in account value (Adjstd EOP - BOP) 0.006805
----------
Value of account - beginning of period 10.699021 0.000636
Yield (Base Period Return * 365 / 7) 3.31649%
Effective Yield [(1 + Base Period Return)^365/7] - 1 3.37101%
<FN>
* Deductions for M&E and Admin Charges are already reflected in calculation of AUV.
</TABLE>
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
SEPARATE ACCOUNT A
Smith Barney Money Market Subaccount
Calculation of Yield and Effective Yield
For the Seven Day Period from: 23-Sep-96 through 30-Sep-96
SUBACCOUNT DETAIL
Date AUV per Unit
___________ ______________
23-Sep-96 BOP AUV 10.489523
30-Sep-96 10.496322
PRO-RATION OF ANNUAL CONTRACT MAINTENANCE CHARGE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Annual Contract Maintenance Charge $ 30.00
Period pro-ration factor (7 / 365) 0.01918
---------
Portion attributable to a seven day period MM Average All Fund Avg 0.57534
Subaccount pro-ration factor 20,159.10 / 121,098.95 0.16647
---------
Portion attributable to Money Market Subaccount 0.09578
Allocation to assumed contract
Average assumed value of contract 10.496322
----------
Average account balance 20,159.10 0.00052
Pro-rated annual contract maintenance charge 0.000050
=========
</TABLE>
CALCULATION OF YIELD
<TABLE>
<CAPTION>
<S> <C> <C>
Value of one accumulation unit - end of period
Value of one accumulation unit - end of period 10.496322
Deduct: Pro-rated annual contract maintenance charge (0.000050)
---------
Value after deductions* 10.496272
Base Period Return
Change in account value (Adjstd EOP - BOP) 0.006749
---------
Value of account - beginning of period 10.489523 0.000643
Yield (Base Period Return * 365 / 7) 3.35489%
Effective Yield [(1 + Base Period Return)^365/7] - 1 3.41069%
<FN>
* Deductions for M&E and Admin Charges are already reflected in calculation of AUV.
</TABLE>
Equitable Life Insurance Company of Iowa
Separate Account A
Total Return
P(1 + t)Nth power = ERV
Valuation Date: 30-Sep-96
ONE YEAR ENDED
<TABLE>
<CAPTION>
Average
Years Total Annual
Purchase Years Value of Total Total
Subaccount Amount Invested Units Held Return Return
- -------------------------------------------------------------------------------------------------------------------
Equi-Select Variable Annuity
<S> <C> <C> <C> <C> <C>
Equi-Select Advantage SubAcct $1,000.00 1.00 $969.37 -3.05%
Equi-Select International Fixed Income SubAcct $1,000.00 1.00 $962.43 -3.75%
Equi-Select International Stock SubAcct $1,000.00 1.00 $1,009.39 0.94%
Equi-Select Mortgage-Backed Sec SubAcct $1,000.00 1.00 $943.53 -5.63%
Equi-Select OTC SubAcct $1,000.00 1.00 $1,104.40 10.41%
Equi-Select Research SubAcct $1,000.00 1.00 $1,152.00 15.16%
Equi-Select Total Return SubAcct $1,000.00 1.00 $1,038.24 3.81%
Equi-Select Value + Growth $1,000.00 0.50 $998.26 -0.35% -0.17%
Equi-Select Growth & Income $1,000.00 0.50 $1,083.83 17.42% 8.38%
Warburg Pincus International Equity $1,000.00 0.50 $922.32 -14.89% -7.77%
</TABLE>
<TABLE>
<CAPTION>
PrimElite Variable Annuity
<S> <C> <C> <C> <C> <C>
Smith Barney Income & Growth SubAcct $1,000.00 1.00 $1,096.37 9.61%
Smith Barney International Equity SubAcct $1,000.00 1.00 $1,053.30 5.32%
Smith Barney High Income SubAcct $1,000.00 1.00 $1,035.29 3.52%
Smith Barney Appreciation SubAcct $1,000.00 0.53 $975.07 -4.66% -2.49%
Equi-Select Research SubAcct $1,000.00 1.00 $1,150.42 15.00%
Equi-Select Total Return SubAcct $1,000.00 1.00 $1,038.32 3.82%
Equi-Select OTC SubAcct $1,000.00 1.00 $1,103.92 10.36%
</TABLE>
SEC Rule 482 - Total Return
Equitable Life Insurance Company of Iowa
Separate Account A
One Year Ended
Valuation Date: 30-Sep-96
<TABLE>
<CAPTION>
Equi-Select Advantage SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $10.671090 93.711 93.711 $1,000.00
30-Sep-96 Annual Contract Maint Charge (3.36) 11.233766 (0.299) 93.412 1,049.37
30-Sep-96 Withdrawal Charge 8.0% (80.00) 11.233766 (7.121) 86.291 969.37
30-Sep-96 Remaining Value 11.233766 0.000 86.291 969.37
</TABLE>
<TABLE>
<CAPTION>
Equi-Select International Fixed Income SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $11.180511 89.441 89.441 $1,000.00
30-Sep-96 Annual Contract Maint Charge (1.48) 11.671506 (0.127) 89.314 1,042.43
30-Sep-96 Withdrawal Charge 8.0% (80.00) 11.671506 (6.854) 82.460 962.43
30-Sep-96 Remaining Value 11.671506 0.000 82.460 962.43
</TABLE>
<TABLE>
<CAPTION>
Equi-Select International Stock SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $10.406176 96.097 96.097 $1,000.00
30-Sep-96 Annual Contract Maint Charge (1.54) 11.352405 (0.136) 95.961 1,089.39
30-Sep-96 Withdrawal Charge 8.0% (80.00) 11.352405 (7.047) 88.914 1,009.39
30-Sep-96 Remaining Charge 11.352405 0.000 88.914 1,009.39
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Mortgage-Backed Securities SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $11.103626 90.061 90.061 $1,000.00
30-Sep-96 Annual Contract Maint Charge (1.95) 11.386514 (0.171) 89.890 1,023.53
30-Sep-96 Withdrawal Charge 8.0% (80.00) 11.386514 (7.026) 82.864 943.53
30-Sep-96 Remaining Value 11.386514 0.000 82.864 943.53
</TABLE>
<TABLE>
<CAPTION>
Equi-Select OTC SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $13.158910 75.994 75.994 $1,000.00
30-Sep-96 Annual Contract Maint Charge (1.65) 15.607205 (0.106) 75.888 1,184.40
30-Sep-96 Withdrawal Charge 8.0% (80.00) 15.607205 (5.126) 70.762 1,104.40
30-Sep-96 Remaining Value 15.607205 0.000 70.762 1,104.40
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Research SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $12.321440 81.159 81.159 $1,000.00
30-Sep-96 Annual Contract Maint Charge (1.92) 15.203669 (0.126) 81.033 1,232.00
30-Sep-96 Withdrawal Charge 8.0% (80.00) 15.203669 (5.262) 75.771 1,152.00
30-Sep-96 Remaining Value 15.203669 0.000 75.771 1,152.00
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Total Return SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $11.424695 87.530 87.530 $1,000.00
30-Sep-96 Annual Contract Maint Charge (2.33) 12.802152 (0.182) 87.348 1,118.24
30-Sep-96 Withdrawal Charge 8.0% (80.00) 12.802152 (6.249) 81.099 1,038.24
30-Sep-96 Remaining Value 12.802152 0.000 81.099 1,038.24
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Value + Growth
Inception Date: 01-Apr-96
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01-Apr-96 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (1.68) 10.799452 (0.156) 99.844 1,078.26
30-Sep-96 Withdrawal Charge 8.0% (80.00) 10.799452 (7.408) 92.437 998.26
30-Sep-96 Remaining Value 10.799452 0.000 92.437 998.26
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Growth & Income
Inception Date: 01-Apr-96
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01-Apr-96 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (2.13) 11.659578 (0.183) 99.817 1,163.83
30-Sep-96 Withdrawal Charge 8.0% (80.00) 11.659578 (6.861) 92.956 1,083.83
30-Sep-96 Remaining Value 11.659578 0.000 92.956 1,083.83
</TABLE>
<TABLE>
<CAPTION>
Warburg Pincus International Equity
Inception Date: 01-Apr-96
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01-Apr-96 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (1.39) 10.037055 (0.138) 99.862 1,002.32
30-Sep-96 Withdrawal Charge 8.0% (80.00) 10.037055 (7.970) 91.891 922.32
30-Sep-96 Remaining Value 10.037055 0.000 91.891 922.32
</TABLE>
<TABLE>
<CAPTION>
Smith Barney Income & Growth SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $11.365337 87.987 87.987 $1,000.00
30-Sep-96 Annual Contract Maint Charge (3.68) 13.411558 (0.274) 87.713 1,176.37
30-Sep-96 Withdrawal Charge 8.0% (80.00) 13.411558 (5.965) 81.748 1,096.37
30-Sep-96 Remaining Value 13.411558 0.000 81.748 1,096.37
</TABLE>
<TABLE>
<CAPTION>
Smith Barney International Equity SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $11.568521 86.441 86.441 $999.99
30-Sep-96 Annual Contract Maint Charge (2.12) 13.135254 (0.162) 86.279 1,133.30
30-Sep-96 Withdrawal Charge 8.0% (80.00) 13.135254 (6.090) 80.189 1,053.30
30-Sep-96 Remaining Value 13.135254 0.000 80.189 1,053.30
</TABLE>
<TABLE>
<CAPTION>
Smith Barney High Income SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $10.510219 95.145 95.145 $999.99
30-Sep-96 Annual Contract Maint Charge (3.19) 11.755461 (0.271) 94.874 1,115.29
30-Sep-96 Withdrawal Charge 8.0% (80.00) 11.755461 (6.805) 88.069 1,035.29
30-Sep-96 Remaining Value 11.755461 0.000 88.069 1,035.29
</TABLE>
<TABLE>
<CAPTION>
Smith Barney Appreciation SubAccount
Inception Date: 22-Mar-96
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
22-Mar-96 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (2.43) 10.574916 (0.229) 99.771 1,055.07
30-Sep-96 Withdrawal Charge 8.0% (80.00) 10.574916 (7.565) 92.206 975.07
30-Sep-96 Remaining Value 10.574916 0.000 92.206 975.07
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Research SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $12.321440 81.159 81.159 $1,000.00
30-Sep-96 Annual Contract Maint Charge (3.50) 15.203669 (0.230) 80.929 1,230.42
30-Sep-96 Withdrawal Charge 8.0% (80.00) 15.203669 (5.262) 75.667 1,150.42
30-Sep-96 Remaining Value 15.203669 0.000 75.667 1,150.42
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Total Return SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $11.424695 87.530 87.530 $1,000.00
30-Sep-96 Annual Contract Maint Charge (2.25) 12.802152 (0.176) 87.354 1,118.32
30-Sep-96 Withdrawal Charge 8.0% (80.00) 12.802152 (6.249) 81.105 1,038.32
30-Sep-96 Remaining Value 12.802152 0.000 81.105 1,038.32
</TABLE>
<TABLE>
<CAPTION>
Equi-Select OTC SubAccount
Inception Date: 30-Sep-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-95 Purchase $1,000.00 $13.158910 75.994 75.994 $1,000.00
30-Sep-96 Annual Contract Maint Charge (2.14) 15.607205 (0.137) 75.857 1,183.92
30-Sep-96 Withdrawal Charge 8.0% (80.00) 15.607205 (5.126) 70.731 1,103.92
30-Sep-96 Remaining Value 15.607205 0.000 70.731 1,103.92
</TABLE>
Equitable Life Insurance Company of Iowa
Separate Account A
Total Return
P(1 + t)Nth power = ERV
Valuation Date: 30-Sep-96
INCEPTION TO DATE
<TABLE>
<CAPTION>
Average
Years Total Annual
Purchase Years Value of Total Total
Subaccount Amount Invested Units Held Return Return
- -------------------------------------------------------------------------------------------------------------------
Equi-Select Variable Annuity
<S> <C> <C> <C> <C> <C>
Equi-Select Advantage SubAcct $1,000.00 1.98 $1,046.66 2.33%
Equi-Select International Fixed Income SubAcct $1,000.00 1.98 $1,094.18 4.64%
Equi-Select International Stock SubAcct $1,000.00 1.98 $1,062.15 3.09%
Equi-Select Mortgage-Backed Sec SubAcct $1,000.00 1.98 $1,064.75 3.21%
Equi-Select OTC SubAcct $1,000.00 1.98 $1,487.41 22.16%
Equi-Select Research SubAcct $1,000.00 1.98 $1,446.53 20.46%
Equi-Select Total Return SubAcct $1,000.00 1.98 $1,205.55 9.88%
Equi-Select Value + Growth $1,000.00 0.50 $998.26 -0.35% -0.17%
Equi-Select Growth & Income $1,000.00 0.50 $1,083.83 17.42% 8.38%
Warburg Pincus International Equity $1,000.00 0.50 $922.32 -14.89% -7.77%
</TABLE>
<TABLE>
<CAPTION>
PrimElite Variable Annuity
<S> <C> <C> <C> <C> <C>
Smith Barney Income & Growth SubAcct $1,000.00 1.49 $1,263.81 17.01%
Smith Barney International Equity SubAcct $1,000.00 1.52 $1,239.28 15.21%
Smith Barney High Income SubAcct $1,000.00 1.43 $1,099.17 6.85%
Smith Barney Appreciation SubAcct $1,000.00 0.53 $975.07 -4.66% -2.49%
Equi-Select Research SubAcct $1,000.00 1.98 $1,443.37 20.32%
Equi-Select Total Return SubAcct $1,000.00 1.98 $1,205.71 9.89%
Equi-Select OTC SubAcct $1,000.00 1.98 $1,486.44 22.12%
SEC Rule 482 - Total Return
Equitable Life Insurance Company of Iowa
Separate Account A
Since Inception
Valuation Date: 30-Sep-96
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Advantage SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (6.72) 11.233766 (0.598) 99.402 1,116.66
30-Sep-96 Withdrawal Charge 7.0% (70.00) 11.233766 (6.231) 93.171 1,046.66
30-Sep-96 Remaining Value 11.233766 0.000 93.171 1,046.66
</TABLE>
<TABLE>
<CAPTION>
Equi-Select International Fixed Income SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.00000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (2.97) 11.671506 (0.254) 99.746 1,164.18
30-Sep-96 Withdrawal Charge 7.0% (70.00) 11.671506 (5.998) 93.748 1,094.18
30-Sep-96 Remaining Value 11.671506 0.000 93.748 1,094.18
</TABLE>
<TABLE>
<CAPTION>
Equi-Select International Stock SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (3.09) 11.352405 (0.272) 99.728 1,132.15
30-Sep-96 Withdrawal Charge 7.0% (70.00) 11.352405 (6.166) 93.562 1,062.15
30-Sep-96 Remaining Value 11.352405 0.000 93.562 1,062.15
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Mortgage-Backed Securities SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (3.90) 11.386514 (0.342) 99.658 1,134.75
30-Sep-96 Withdrawal Charge 7.0% (70.00) 11.386514 (6.148) 93.510 1,064.75
30-Sep-96 Remaining Charge 11.386514 0.000 93.510 1,064.75
</TABLE>
<TABLE>
<CAPTION>
Equi-Select OTC SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (3.31) 15.607205 (0.212) 99.788 1,557.41
30-Sep-96 Withdrawal Charge 7.0% (70.00) 15.607205 (4.485) 95.303 1,487.41
30-Sep-96 Remaining Value 15.607205 0.000 95.303 1,487.41
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Research SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (3.83) 15.203669 (0.252) 99.748 1,516.53
30-Sep-96 Withdrawal Charge 7.0% (70.00) 15.203669 (4.604) 95.144 1,446.53
30-Sep-96 Remaining Value 15.203669 0.000 95.144 1,446.53
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Total Return SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (4.66) 12.802152 (0.364) 99.636 1,275.55
30-Sep-96 Withdrawal Charge 7.0% (70.00) 12.802152 (5.468) 94.168 1,205.55
30-Sep-96 Remaining Value 12.802152 0.000 94.168 1,205.55
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Value + Growth
Inception Date: 01-Apr-96
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01-Apr-96 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (1.68) 10.799452 (0.156) 99.844 1,078.26
30-Sep-96 Withdrawal Charge 8.0% (80.00) 10.799452 (7.408) 92.437 998.26
30-Sep-96 Remaining Value 10.799452 0.000 92.437 998.26
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Growth & Income
Inception Date: 01-Apr-96
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01-Apr-96 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (2.13) 11.659578 (0.183) 99.817 1,163.83
30-Sep-96 Withdrawal Charge 8.0% (80.00) 11.659578 (6.861) 92.956 1,083.83
30-Sep-96 Remaining Value 11.659578 0.000 92.956 1,083.83
</TABLE>
<TABLE>
<CAPTION>
Warburg Pincus International Equity
Inception Date: 01-Apr-96
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01-Apr-96 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (1.39) 10.037055 (0.138) 99.862 1,002.32
30-Sep-96 Withdrawal Charge 8.0% (80.00) 10.037055 (7.970) 91.891 922.32
30-Sep-96 Remaining Value 10.037055 0.000 91.891 922.32
</TABLE>
<TABLE>
<CAPTION>
Smith Barney Income & Growth SubAccount
Inception Date: 05-Apr-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
05-Apr-95 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (7.35) 13.411558 (0.548) 99.452 1,333.81
30-Sep-96 Withdrawal Charge 7.0% (70.00) 13.411558 (5.219) 94.233 1,263.81
30-Sep-96 Remaining Value 13.411558 0.000 94.233 1,263.81
</TABLE>
<TABLE>
<CAPTION>
Smith Barney International Equity SubAccount
Inception Date: 27-Mar-95
Date:
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
27-Mar-95 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (4.24) 13.135254 (0.323) 99.677 1,309.28
30-Sep-96 Withdrawal Charge 7.0% (70.00) 13.135254 (5.329) 94.348 1,239.28
30-Sep-96 Remaining Value 13.135254 0.000 94.348 1,239.28
</TABLE>
<TABLE>
<CAPTION>
Smith Barney High Income SubAccount
Inception Date: 28-Apr-95
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
28-Apr-95 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (6.37) 11.755461 (0.542) 99.458 1,169.17
30-Sep-96 Withdrawal Charge 7.0% (70.00) 11.755461 (5.955) 93.503 1,099.17
30-Sep-96 Remaining Value 11.755461 0.000 93.503 1,099.17
</TABLE>
<TABLE>
<CAPTION>
Smith Barney Appreciation SubAccount
Inception Date: 22-Mar-96
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
22-Mar-96 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (2.43) 10.574916 (0.229) 99.771 1,055.07
30-Sep-96 Withdrawal Charge 8.0% (80.00) 10.574916 (7.565) 92.206 975.07
30-Sep-96 Remaining Value 10.574916 0.000 92.206 975.07
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Research SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (7.00) 15.203669 (0.460) 99.540 1,513.37
30-Sep-96 Withdrawal Charge 7.0% (70.00) 15.203669 (4.604) 94.936 1,443.37
30-Sep-96 Remaining Value 15.203669 0.000 94.936 1,443.37
</TABLE>
<TABLE>
<CAPTION>
Equi-Select Total Return SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (4.51) 12.802152 (0.352) 99.648 1,275.71
30-Sep-96 Withdrawal Charge 7.0% (70.00) 12.802152 (5.468) 94.180 1,205.71
30-Sep-96 Remaining Value 12.802152 0.000 94.180 1,205.71
</TABLE>
<TABLE>
<CAPTION>
Equi-Select OTC SubAccount
Inception Date: 07-Oct-94
Unit Units this Total Total
Date Transaction Type Rate Amount Value Transaction Units Held Value
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
07-Oct-94 Purchase $1,000.00 $10.000000 100.000 100.000 $1,000.00
30-Sep-96 Annual Contract Maint Charge (4.28) 15.607205 (0.274) 99.726 1,556.44
30-Sep-96 Withdrawal Charge 7.0% (70.00) 15.607205 (4.485) 95.241 1,486.44
30-Sep-96 Remaining Value 15.607205 0.000 95.241 1,486.44
</TABLE>
EXHIBIT 99.B14
COMPANY ORGANIZATIONAL CHART
EQUITABLE ORGANIZATIONAL CHART
EQUITABLE OF IOWA COMPANIES - a publicly traded holding company which owns 100%
of the following:
1. Equitable Investment Services, Inc.
2. Locust Street Securities, Inc.
3. Equitable Life Insurance Company of Iowa
4. Tower Locust, Ltd.
5. Shiloh Farming Company
6. Equitable of Iowa Securities Network, Inc.
7. EIC Variable, Inc.
8. Equitable of Iowa Companies Capital Trust*
EQUITABLE AMERICAN INSURANCE COMPANY is a wholly owned subsidiary of
Equitable Life Insurance Company of Iowa.
EQUITABLE COMPANIES is a wholly owned subsidiary of Equitable Life Insurance
Company of Iowa.
USG ANNUITY & LIFE COMPANY is a wholly owned subsidiary of Equitable Life
Insurance Company of Iowa.
EQUITABLE CREATIVE SERVICES, LTD. is a wholly owned subsidiary of Equitable
American Insurance Company.
USGL SERVICE CORPORATION is a wholly owned subsidiary of USG Annuity & Life
Company.
YOUNKERS INSURANCE & INVESTMENTS, LTD. is a wholly owned subsidiary of
Equitable Companies.
EQUITABLE MARKETING SERVICES, INC. is a wholly owned subsidiary of Equitable
Companies.
CLC, LTD. is a subsidiary owned 75% by Equitable Companies.
EQUITABLE AMERICAN MARKETING SERVICES, INC. is a wholly owned subsidiary of
Equitable Companies.
GOLDEN AMERICAN LIFE INSURANCE COMPANY is a wholly owned subsidiary of EIC
Variable, Inc.
DIRECTED SERVICES, INC. is a wholly owned subsidiary of EIC Variable, Inc.
FIRST GOLDEN AMERICAN LIFE INSURANCE COMPANY OF NEW YORK is a wholly owned
subsidiary of Golden American Life Insurance Company.
*100% of common securities owned by Equitable of Iowa Companies; 100% of
preferred securities owned by public.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> MONEY MARKET ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 17,528,179
<INVESTMENTS-AT-VALUE> 17,528,179
<RECEIVABLES> 63,794
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,591,973
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 17,521,015
<SHARES-COMMON-PRIOR> 5,708,819
<ACCUMULATED-NII-CURRENT> 70,958
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 17,591,973
<DIVIDEND-INCOME> 377,972
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (114,536)
<NET-INVESTMENT-INCOME> 263,436
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 263,436
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 65,426,132
<NUMBER-OF-SHARES-REDEEMED> (53,829,816)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 11,859,752
<ACCUMULATED-NII-PRIOR> 23,402
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 02
<NAME> MORTGAGE-BACKED SECURITIES
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 9,147,693
<INVESTMENTS-AT-VALUE> 9,170,801
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,170,801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 9,012,625
<SHARES-COMMON-PRIOR> 4,200,698
<ACCUMULATED-NII-CURRENT> 135,069
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,108
<NET-ASSETS> 9,170,801
<DIVIDEND-INCOME> 161
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (79,607)
<NET-INVESTMENT-INCOME> (79,446)
<REALIZED-GAINS-CURRENT> 4,283
<APPREC-INCREASE-CURRENT> 101,351
<NET-CHANGE-FROM-OPS> 26,188
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,997,813
<NUMBER-OF-SHARES-REDEEMED> (192,720)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,831,281
<ACCUMULATED-NII-PRIOR> 217,066
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> INTERNATIONAL FIXED INCOME ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 6,775,330
<INVESTMENTS-AT-VALUE> 6,891,550
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,891,550
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6,656,872
<SHARES-COMMON-PRIOR> 3,415,456
<ACCUMULATED-NII-CURRENT> 118,458
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 116,220
<NET-ASSETS> 6,891,550
<DIVIDEND-INCOME> 25,923
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (56,276)
<NET-INVESTMENT-INCOME> (30,353)
<REALIZED-GAINS-CURRENT> 39,351
<APPREC-INCREASE-CURRENT> 82,322
<NET-CHANGE-FROM-OPS> 91,320
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,323,165
<NUMBER-OF-SHARES-REDEEMED> (122,502)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,291,983
<ACCUMULATED-NII-PRIOR> 150,213
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> OTC ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 28,351,489
<INVESTMENTS-AT-VALUE> 31,122,674
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,122,674
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 27,539,968
<SHARES-COMMON-PRIOR> 9,076,800
<ACCUMULATED-NII-CURRENT> 811,520
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,771,185
<NET-ASSETS> 31,122,674
<DIVIDEND-INCOME> 90,877
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (200,202)
<NET-INVESTMENT-INCOME> (109,325)
<REALIZED-GAINS-CURRENT> 53,132
<APPREC-INCREASE-CURRENT> 2,743,646
<NET-CHANGE-FROM-OPS> 2,687,453
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,848,792
<NUMBER-OF-SHARES-REDEEMED> (450,268)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 21,085,977
<ACCUMULATED-NII-PRIOR> 932,357
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 05
<NAME> RESEARCH ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 47,594,819
<INVESTMENTS-AT-VALUE> 54,170,330
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54,170,330
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 47,633,662
<SHARES-COMMON-PRIOR> 14,724,226
<ACCUMULATED-NII-CURRENT> (38,844)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,575,511
<NET-ASSETS> 54,170,330
<DIVIDEND-INCOME> 117,838
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (352,211)
<NET-INVESTMENT-INCOME> (234,373)
<REALIZED-GAINS-CURRENT> 23,123
<APPREC-INCREASE-CURRENT> 5,047,619
<NET-CHANGE-FROM-OPS> 4,836,369
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33,554,414
<NUMBER-OF-SHARES-REDEEMED> (667,401)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 37,723,382
<ACCUMULATED-NII-PRIOR> 194,829
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 06
<NAME> TOTAL RETURN ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 40,339,732
<INVESTMENTS-AT-VALUE> 43,361,831
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,361,831
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 40,331,771
<SHARES-COMMON-PRIOR> 14,542,050
<ACCUMULATED-NII-CURRENT> 7,961
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,022,099
<NET-ASSETS> 43,361,831
<DIVIDEND-INCOME> 67,387
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (308,401)
<NET-INVESTMENT-INCOME> (241,014)
<REALIZED-GAINS-CURRENT> 64,766
<APPREC-INCREASE-CURRENT> 1,990,326
<NET-CHANGE-FROM-OPS> 1,814,078
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26,522,127
<NUMBER-OF-SHARES-REDEEMED> (796,216)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 27,539,989
<ACCUMULATED-NII-PRIOR> 248,019
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 07
<NAME> ADVANTAGE ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 11,495,521
<INVESTMENTS-AT-VALUE> 11,648,631
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,648,631
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 11,347,968
<SHARES-COMMON-PRIOR> 3,620,601
<ACCUMULATED-NII-CURRENT> 147,553
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 153,110
<NET-ASSETS> 11,648,631
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (74,188)
<NET-INVESTMENT-INCOME> (74,188)
<REALIZED-GAINS-CURRENT> 48,106
<APPREC-INCREASE-CURRENT> 253,443
<NET-CHANGE-FROM-OPS> 227,361
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,899,041
<NUMBER-OF-SHARES-REDEEMED> (222,008)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,904,394
<ACCUMULATED-NII-PRIOR> 223,969
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 08
<NAME> INTERNATIONAL STOCK ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 10,226,935
<INVESTMENTS-AT-VALUE> 10,662,008
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,662,008
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 10,042,810
<SHARES-COMMON-PRIOR> 5,450,703
<ACCUMULATED-NII-CURRENT> 184,126
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 435,072
<NET-ASSETS> 10,662,008
<DIVIDEND-INCOME> 94,416
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (98,618)
<NET-INVESTMENT-INCOME> (4,202)
<REALIZED-GAINS-CURRENT> 102,033
<APPREC-INCREASE-CURRENT> 356,777
<NET-CHANGE-FROM-OPS> 454,608
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,712,178
<NUMBER-OF-SHARES-REDEEMED> (223,548)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,943,238
<ACCUMULATED-NII-PRIOR> 189,772
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 09
<NAME> VALUE + GROWTH ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 8,015,043
<INVESTMENTS-AT-VALUE> 8,550,272
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,550,272
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 8,038,058
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (23,015)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 535,229
<NET-ASSETS> 8,550,272
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (23,015)
<NET-INVESTMENT-INCOME> (23,015)
<REALIZED-GAINS-CURRENT> 2,648
<APPREC-INCREASE-CURRENT> 535,229
<NET-CHANGE-FROM-OPS> 514,862
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,070,649
<NUMBER-OF-SHARES-REDEEMED> (35,239)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,550,272
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 10
<NAME> GROWTH & INCOME ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 14,521,565
<INVESTMENTS-AT-VALUE> 15,573,189
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,573,189
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 14,561,307
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (39,742)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,051,624
<NET-ASSETS> 15,573,189
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (39,742)
<NET-INVESTMENT-INCOME> (39,742)
<REALIZED-GAINS-CURRENT> 2,312
<APPREC-INCREASE-CURRENT> 1,051,624
<NET-CHANGE-FROM-OPS> 1,014,194
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,622,740
<NUMBER-OF-SHARES-REDEEMED> (63,745)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,573,189
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 11
<NAME> WARBURG PINCUS INTERNATIONAL EQUITY ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 5,866,421
<INVESTMENTS-AT-VALUE> 5,860,655
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,860,655
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 5,883,236
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (16,815)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,766)
<NET-ASSETS> 5,860,655
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (16,815)
<NET-INVESTMENT-INCOME> (16,815)
<REALIZED-GAINS-CURRENT> (5,152)
<APPREC-INCREASE-CURRENT> (5,766)
<NET-CHANGE-FROM-OPS> (27,733)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,920,783
<NUMBER-OF-SHARES-REDEEMED> (32,395)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,860,655
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 12
<NAME> INTERNATIONAL EQUITY ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 7,476,552
<INVESTMENTS-AT-VALUE> 8,010,839
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,010,839
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 7,528,755
<SHARES-COMMON-PRIOR> 1,757,418
<ACCUMULATED-NII-CURRENT> (52,203)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 534,287
<NET-ASSETS> 8,010,839
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (48,530)
<NET-INVESTMENT-INCOME> (48,530)
<REALIZED-GAINS-CURRENT> 13,305
<APPREC-INCREASE-CURRENT> 502,727
<NET-CHANGE-FROM-OPS> 467,502
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,781,614
<NUMBER-OF-SHARES-REDEEMED> (23,511)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,225,605
<ACCUMULATED-NII-PRIOR> (3,744)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 13
<NAME> INCOME AND GROWTH ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 14,625,668
<INVESTMENTS-AT-VALUE> 15,888,630
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,888,630
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 14,677,782
<SHARES-COMMON-PRIOR> 3,319,871
<ACCUMULATED-NII-CURRENT> (52,114)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,262,962
<NET-ASSETS> 15,888,630
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (98,760)
<NET-INVESTMENT-INCOME> (98,760)
<REALIZED-GAINS-CURRENT> 52,792
<APPREC-INCREASE-CURRENT> 1,074,544
<NET-CHANGE-FROM-OPS> 1,028,576
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,352,673
<NUMBER-OF-SHARES-REDEEMED> (47,573)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,333,676
<ACCUMULATED-NII-PRIOR> 46,665
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 14
<NAME> HIGH INCOME ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 5,409,655
<INVESTMENTS-AT-VALUE> 5,673,494
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,673,494
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 5,408,977
<SHARES-COMMON-PRIOR> 760,190
<ACCUMULATED-NII-CURRENT> 677
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 263,839
<NET-ASSETS> 5,673,494
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (30,204)
<NET-INVESTMENT-INCOME> (30,204)
<REALIZED-GAINS-CURRENT> 9,044
<APPREC-INCREASE-CURRENT> 263,910
<NET-CHANGE-FROM-OPS> 242,750
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,659,237
<NUMBER-OF-SHARES-REDEEMED> (19,433)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,882,554
<ACCUMULATED-NII-PRIOR> 30,821
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 15
<NAME> MONEY MARKET ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 3,160,807
<INVESTMENTS-AT-VALUE> 3,160,807
<RECEIVABLES> 4,171
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,164,978
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,123,324
<SHARES-COMMON-PRIOR> 1,275,454
<ACCUMULATED-NII-CURRENT> 41,654
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,164,978
<DIVIDEND-INCOME> 77,597
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (22,589)
<NET-INVESTMENT-INCOME> 55,008
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 55,008
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,074,624
<NUMBER-OF-SHARES-REDEEMED> (9,244,179)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,885,453
<ACCUMULATED-NII-PRIOR> 4,071
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, STATEMENTS OF OPERATIONS, STATEMENTS OF CHANGES IN
NET ASSETS, AND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 16
<NAME> APPRECIATION ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 2,987,605
<INVESTMENTS-AT-VALUE> 3,133,871
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,133,871
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2,997,706
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (10,101)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 146,266
<NET-ASSETS> 3,133,871
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (10,101)
<NET-INVESTMENT-INCOME> (10,101)
<REALIZED-GAINS-CURRENT> 176
<APPREC-INCREASE-CURRENT> 146,266
<NET-CHANGE-FROM-OPS> 136,341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,998,146
<NUMBER-OF-SHARES-REDEEMED> (616)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,133,871
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
