REGISTRATION NO. 333-216083
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
PRE-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-3/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
AXA EQUITABLE LIFE INSURANCE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-----------------
NEW YORK
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
13-5570651
(I.R.S. EMPLOYER IDENTIFICATION NO.)
1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104
(212) 554-1234
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
SHANE DALY
VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
AXA EQUITABLE LIFE INSURANCE COMPANY
1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104
(212) 554-1234
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
-----------------
Approximate date of commencement of proposed sale to the public: As soon after
the effective date of this Registration Statement as is practicable.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act Registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a registration statement pursuant to General Instruction I.D.
or a post-effective amendment thereto that shall become effective upon filing
with the commission pursuant to Rule 462(e) under the Securities Act, check the
following box. [_]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box. [_]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [X] (do not check if a smaller reporting company) Smaller reporting company [_]
-----------------
CALCULATION OF REGISTRATION FEE
---------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT (1) OFFERING PRICE (1) FEE (2)
------------------------------------------------------------------------------------------------------------------
Interests in Structured Capital Strategies PLUS. $1,001,000,000 100% 100% $116,015.90
------------------------------------------------------------------------------------------------------------------
AXA Equitable Life Insurance Company............ -- -- -- None
===============================================================================================================
(1)An indeterminate number or amount of interests in the Structured Capital
Strategies PLUS of AXA Equitable Life Insurance Company that may from time
to time be issued at indeterminate prices, in U.S. dollars. Units of
interest are only sold in U.S. dollar amounts. In no event will the
aggregate maximum offering price of all securities issued pursuant to this
registration statement exceed $1,001,000,000.
(2)$115.90 of the registration fee was paid with the initial filing of this
Registration Statement on February 15, 2017, and, $115,900.00 of the
registration fee was paid with the Pre-Effective Amendment No. 1 of this
Registration Statement on May 2, 2017.
-----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
Structured Capital Strategies(R) PLUS
A variable and index-linked deferred annuity contract
PROSPECTUS DATED JUNE 1, 2017
PLEASE READ AND KEEP THIS PROSPECTUS FOR FUTURE REFERENCE. IT CONTAINS
IMPORTANT INFORMATION THAT YOU SHOULD KNOW BEFORE PURCHASING OR TAKING ANY
OTHER ACTION UNDER YOUR CONTRACT. YOU SHOULD READ THE PROSPECTUSES FOR EACH
TRUST WHICH CONTAIN IMPORTANT INFORMATION ABOUT THE PORTFOLIOS.
--------------------------------------------------------------------------------
WHAT IS STRUCTURED CAPITAL STRATEGIES(R) PLUS?
Structured Capital Strategies(R) PLUS is a variable and index-linked deferred
annuity contract issued by AXA EQUITABLE LIFE INSURANCE COMPANY. The Structured
Capital Strategies(R) contract provides for the accumulation of retirement
savings. The contract also offers a number of payout options. You invest to
accumulate value on a tax-deferred basis in one or more of our variable
investment options, in one or more of the Segments comprising the Structured
Investment Option or in our Dollar Cap Averaging Program. See "Definition of
key terms" later in this Prospectus for a more detailed explanation of terms
associated with the Structured Investment Option.
This Prospectus is a disclosure document and describes all of the contract's
material features, benefits, rights and obligations, as well as other
information. The description of the contract's material provisions in this
Prospectus is current as of the date of this Prospectus. If certain material
provisions under the contract are changed after the date of this Prospectus in
accordance with the contract, those changes will be described in a supplement
to this Prospectus. You should carefully read this Prospectus in conjunction
with any applicable supplements. The contract should also be read carefully.
The contract may not currently be available in all states. In addition, certain
features described in this Prospectus may vary in your state. Not all Indices
are available in all states. For a state-by-state description of all material
variations to this contract, see "Appendix II" later in this Prospectus. We can
refuse to accept any application or contribution from you at any time,
including after you purchase the contract.
WE RESERVE THE RIGHT TO DISCONTINUE THE ACCEPTANCE OF, AND/OR PLACE ADDITIONAL
LIMITATIONS ON, CONTRIBUTIONS INTO CERTAIN INVESTMENT OPTIONS, INCLUDING ANY OR
ALL OF THE SEGMENTS COMPRISING THE STRUCTURED INVESTMENT OPTION. IF WE EXERCISE
THIS RIGHT, YOUR ABILITY TO INVEST IN YOUR CONTRACT, INCREASE YOUR ACCOUNT
VALUE AND, CONSEQUENTLY, INCREASE YOUR DEATH BENEFIT WILL BE LIMITED.
--------------------------------------------------------------------------------
PLEASE REFER TO PAGE 13 OF THIS PROSPECTUS FOR A DISCUSSION OF RISK FACTORS.
--------------------------------------------------------------------------------
Our variable investment options are subaccounts offered through Separate
Account No. 49. Each variable investment option, in turn, invests in a
corresponding securities portfolio ("portfolio") of the EQ Advisors Trust (the
"Trust"). Your investment results in a variable investment option will depend
on the investment performance of the related portfolio. Below is a complete
list of the variable investment options:
VARIABLE INVESTMENT OPTIONS
--------------------------------------------------------------------------------
.. AXA Balanced Strategy
.. EQ/Money Market
--------------------------------------------------------------------------------
We also offer our Structured Investment Option, which permits you to invest in
one or more Segments, each of which provides performance tied to the
performance of an Index for a set period. Segment Durations are for six years,
unless the next Segment Start Date is less than six years from the contract's
maturity date, in which case Segment Durations are for one year. The Structured
Investment Option does not involve an investment in any underlying portfolio.
Instead, it is an obligation of AXA Equitable Life Insurance Company. Unlike an
index fund, the Structured Investment Option provides a return at Segment
maturity designed to provide a combination of protection against certain
decreases in the index and a limitation on participation in certain increases
in the index through the use of Performance Cap Rates. Our minimum Performance
Cap Rate for 6 year Standard Segments is 12% (2% for 1 year Standard Segments
when available). Our minimum Performance Cap Rate for Annual Lock Segments is
2%. WE WILL NOT OPEN A SEGMENT WITH A PERFORMANCE CAP RATE BELOW THE APPLICABLE
MINIMUM PERFORMANCE CAP RATE. The extent of the downside protection at Segment
maturity varies by segment, ranging from the first 10%, 20% or 30% of loss. All
guarantees are subject to AXA Equitable's claims paying ability. THERE IS A
RISK OF A SUBSTANTIAL LOSS OF YOUR PRINCIPAL BECAUSE YOU AGREE TO ABSORB ALL
LOSSES TO THE EXTENT THEY EXCEED THE DOWNSIDE PROTECTION PROVIDED BY THE
STRUCTURED INVESTMENT OPTION AT SEGMENT MATURITY. IF YOU WOULD LIKE A GUARANTEE
OF PRINCIPAL, WE OFFER OTHER PRODUCTS THAT PROVIDE SUCH GUARANTEES.
The total amount earned on an investment in a Segment of the Structured
Investment Option is only applied at Segment maturity. If you take a withdrawal
from a Segment on any date prior to Segment maturity, we calculate the interim
value of the Segment as described in "Appendix III -- Segment Interim Value."
This amount may be less than the amount invested and may be less than the
amount you would receive had you held the investment until Segment maturity.
The Segment Interim Value will generally be negatively affected by increases in
the expected volatility of index prices, interest rate increases, and by poor
market performance. All other factors being equal, the Segment Interim Value
would be lower the earlier a withdrawal or surrender is made during a Segment.
Also, participation in upside performance for early withdrawals is pro-rated
based on the period those amounts were invested in a Segment. This means you
participate to a lesser extent in upside performance the earlier you take a
withdrawal.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE CONTRACTS ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK
GUARANTEED. THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL.
SCS PLUS
#302156
We currently offer the Structured Investment Option using the following Indices:
INDICES
--------------------------------------------------------------------------------
.. S&P 500 Price Return Index
.. Russell 2000(R) Price Return Index
.. iShares(R) MSCI EAFE ETF
--------------------------------------------------------------------------------
TYPES OF CONTRACTS. We offer the contracts for use as:
.. A nonqualified annuity ("NQ") for after-tax contributions only.
.. An individual retirement annuity ("IRA"), either traditional IRA or Roth
IRA.
.. An annuity that is an investment vehicle for a qualified plan ("QP")
(whether defined contribution or defined benefit; transfer contributions
only).
A minimum contribution of $25,000 is required to purchase a contract.
The principal underwriters of the contract are AXA Advisors, LLC and AXA
Distributors, LLC. The offering of the contract is intended to be continuous.
Registration statements relating to this offering have been filed with the
Securities and Exchange Commission ("SEC"). The statement of additional
information ("SAI") dated June 1, 2017, is a part of the registration statement
filed on Form N-4. The SAI is available free of charge. You may request one by
writing to our processing office at P.O. Box 1547, Secaucus, NJ 07096-1547 or
calling 1-800-789-7771. The SAI is incorporated by this reference into this
Prospectus. This Prospectus and the SAI can also be obtained from the SEC's
website at www.sec.gov. The table of contents for the SAI appears at the back
of this Prospectus.
Contents of this Prospectus
--------------------------------------------------------------------------------
Who is AXA Equitable? 5
Definitions of key terms 6
Structured Capital Strategies(R) PLUS at a glance
-- key features 8
------------------------------------------------------
FEE TABLE 11
------------------------------------------------------
Examples 12
Condensed financial information 12
------------------------------------------------------
1. RISK FACTORS 13
------------------------------------------------------
Cybersecurity 15
Fiduciary Rule 16
------------------------------------------------------
2. HOW TO REACH US 17
------------------------------------------------------
------------------------------------------------------
3. CONTRACT FEATURES AND BENEFITS 19
------------------------------------------------------
How you can purchase and contribute to your
contract 19
Owner and annuitant requirements 22
How you can make your contributions 22
Allocating your contributions 23
What are your investment options under the
contract? 23
Portfolios of the Trust 24
Structured Investment Option 25
Dollar Cap Averaging Program 32
Your right to cancel within a certain number of
days 33
------------------------------------------------------
4. DETERMINING YOUR CONTRACT'S VALUE 35
------------------------------------------------------
Your account value and cash value 35
Your contract's value in the variable investment
options, Segment Type Holding Accounts and the
Dollar Cap Averaging Account 35
Your contract's value in the Structured
Investment Option 35
------------------------------------------------------
5. TRANSFERRING YOUR MONEY AMONG INVESTMENT
OPTIONS 36
------------------------------------------------------
Transferring your account value 36
Disruptive transfer activity 36
-------------
"We," "our," and "us" refer to AXA Equitable.
When we address the reader of this Prospectus with words such as "you" and
"your," we mean the person who has the right or responsibility that the
Prospectus is discussing at that point. This is usually the contract owner.
When we use the word "contract" it also includes certificates that are issued
under group contracts in some states.
3
CONTENTS OF THIS PROSPECTUS
------------------------------------------------------
6. ACCESSING YOUR MONEY 38
------------------------------------------------------
Withdrawing your account value 38
How withdrawals are taken from your account value 39
Surrendering your contract to receive its cash
value 39
Withdrawals treated as surrenders 39
When to expect payments 39
Your annuity payout options 40
------------------------------------------------------
7. CHARGES AND EXPENSES 42
------------------------------------------------------
Charges that AXA Equitable deducts 42
Charges under the contracts 42
Charges that the Trust deducts 44
Group or sponsored arrangements 44
Other distribution arrangements 44
------------------------------------------------------
8. PAYMENT OF DEATH BENEFIT 45
------------------------------------------------------
Your beneficiary and payment of benefit 45
Non-spousal joint owner contract continuation 45
Spousal continuation 46
Beneficiary continuation option 46
------------------------------------------------------
9. TAX INFORMATION 49
------------------------------------------------------
Overview 49
Buying a contract to fund a retirement arrangement 49
Transfers among investment options 49
Taxation of nonqualified annuities 49
Individual retirement arrangements ("IRAs") 51
Traditional individual retirement annuities
("traditional IRAs") 52
Roth individual retirement annuities ("Roth IRAs") 56
Federal and state income tax withholding and
information reporting 59
Impact of taxes to AXA Equitable 60
------------------------------------------------------
10. MORE INFORMATION 61
------------------------------------------------------
About Separate Account No. 49 61
About Separate Account No. 68 61
About the Trust 61
About the general account 62
About other methods of payment 62
Dates and prices at which contract events occur 62
About your voting rights 63
Statutory compliance 63
About legal proceedings 63
Financial statements 63
Transfers of ownership, collateral assignments,
loans, and borrowing 64
About Custodial IRAs 64
Distribution of the contracts 64
------------------------------------------------------
11. INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE 67
------------------------------------------------------
----------------------------------------------------------------
APPENDICES
----------------------------------------------------------------
I -- Condensed financial information I-1
II -- State contract availability and/or variations of
certain features and benefits II-1
III -- Segment Interim Value III-1
IV -- Index Publishers IV-1
V -- Segment Maturity Date and Segment Start Date
examples V-1
VI -- Purchase considerations for defined benefit and
defined contribution plans VI-1
----------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
Table of contents
----------------------------------------------------------------
4
CONTENTS OF THIS PROSPECTUS
Who is AXA Equitable?
--------------------------------------------------------------------------------
We are AXA Equitable Life Insurance Company ("AXA Equitable") a New York stock
life insurance corporation. We have been doing business since 1859. AXA
Equitable Life Insurance Company is an indirect wholly owned subsidiary of AXA
Financial, Inc., which is an indirect wholly owned subsidiary of AXA S.A.
("AXA"), a French holding company for an international group of insurance and
related financial services companies. As the ultimate sole shareholder of AXA
Equitable, AXA exercises significant influence over the operations and capital
structure of AXA Equitable. No company other than AXA Equitable, however, has
any legal responsibility to pay amounts that AXA Equitable owes under the
contracts. AXA Equitable is solely responsible for paying all amounts owed to
you under your contract.
AXA Financial, Inc. and its consolidated subsidiaries managed approximately
$558.7 billion in assets as of December 31, 2016. For more than 150 years AXA
Equitable has been among the largest insurance companies in the United States.
We are licensed to sell life insurance and annuities in all fifty states, the
District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office
is located at 1290 Avenue of the Americas, New York, NY 10104.
5
WHO IS AXA EQUITABLE?
Definitions of key terms
--------------------------------------------------------------------------------
ACCOUNT VALUE -- Your "account value" is the total of: (i) the values you have
in the variable investment options, (ii) the values you have in the Segment
Type Holding Accounts and (iii) your Segment Interim Values.
ANNUAL LOCK ANNIVERSARY -- The end of each Annual Lock Period.
ANNUAL LOCK ANNIVERSARY ENDING AMOUNT -- The amount on an Annual Lock
Anniversary calculated for the first Annual Lock Period by adding the Annual
Lock Yearly Return Amount to the Segment Investment, as adjusted for any
withdrawals from that Segment. For subsequent Annual Lock Periods the amount is
calculated by adding the Annual Lock Yearly Return Amount to the previous
Annual Lock Anniversary Starting Amount, as adjusted for any withdrawals from
that Segment. The Annual Lock Anniversary Ending Amount is used solely to
calculate the Segment Maturity Value for Annual Lock Segments. The Annual Lock
Anniversary Ending Amount is not credited to the contract, is not the Segment
Interim Value and cannot be received upon surrender or withdrawal.
ANNUAL LOCK ANNIVERSARY STARTING AMOUNT -- The Annual Lock Anniversary Starting
Amount for the first Annual Lock Period is equal to the Segment Investment, as
adjusted for any withdrawals from that Segment. For subsequent Annual Lock
Periods, it is equal to the Annual Lock Anniversary Ending Amount for the prior
Annual Lock Period, as adjusted for any withdrawals from that Segment. The
Annual Lock Anniversary Starting Amount is not credited to the contract, is not
the Segment Interim Value and cannot be received upon surrender or withdrawal.
ANNUAL LOCK PERIOD -- Each of the one-year periods during an Annual Lock
Segment.
ANNUAL LOCK YEARLY RETURN AMOUNT -- Equals the Segment Investment multiplied by
the Annual Lock Yearly Rate of Return for the first Annual Lock Period. For
subsequent Annual Lock Periods, it is equal to the Annual Lock Anniversary
Starting Amount multiplied by the corresponding Annual Lock Yearly Rate of
Return.
ANNUAL LOCK SEGMENT -- Any multi-year duration Segment belonging to a Segment
Type whose name includes "Annual Lock". Unlike other Segments, your return is
cumulatively calculated based on Index performance each Annual Lock Period
subject to the Performance Cap Rate and Segment Buffer.
ANNUAL LOCK YEARLY RATE OF RETURN -- The Rate of Return for an Annual Lock
Segment during an Annual Lock Period as calculated on the Annual Lock
Anniversary. If the Index Performance Rate is positive, then the Annual Lock
Yearly Rate of Return is a rate equal to the Index Performance Rate, but not
more than the Performance Cap Rate. If the Index Performance Rate is negative,
but declines by a percentage less than or equal to the Segment Buffer, then the
Annual Lock Yearly Rate of Return is 0%. If the Index Performance Rate is
negative, and declines by more than the Segment Buffer, then the Annual Lock
Yearly Rate of Return is negative, but will not reflect the amount of the
Segment Buffer (i.e., the first -10% of downside performance).
ANNUITANT -- The "annuitant" is the person who is the measuring life for
determining the contract's maturity date. The annuitant is not necessarily the
contract owner. Where the owner of a contract is non-natural, the annuitant is
the measuring life for determining contract benefits.
BUSINESS DAY -- Our "business day" is generally any day the New York Stock
Exchange ("NYSE") is open for regular trading and generally ends at 4:00 p.m.
Eastern Time (or as of an earlier close of regular trading). If the Securities
and Exchange Commission determines the existence of emergency conditions on any
day, and consequently, the NYSE does not open, then that day is not a business
day.
CASH VALUE -- At any time before annuity payments begin, your contract's cash
value is equal to the account value less any applicable withdrawal charges.
CONTRACT DATE -- The "contract date" is the effective date of a contract. This
usually is the business day we receive the properly completed and signed
application, along with any other required documents, and your initial
contribution. Your contract date will be shown in your contract.
CONTRACT DATE ANNIVERSARY -- The end of each 12 month period is your "contract
date anniversary." For example, if your contract date is May 1, your contract
date anniversary is April 30.
CONTRACT YEAR -- The 12 month period beginning on your contract date and each
12 month period after that date is a "contract year."
DOLLAR CAP AVERAGING PROGRAM -- Our Dollar Cap Averaging Program allows for the
systematic transfer of amounts in the dollar cap averaging account into the
Segment Type Holding Accounts.
INDEX -- An Index is used to determine the Segment Rate of Return for a
Segment. We currently offer Segment Types based on the performance of (1)
securities indices or (2) exchange-traded funds. Throughout this Prospectus, we
refer to these indices and exchange-traded funds using the term "Index" or,
collectively, "Indices." In the future, we may offer Segment Types based on
other types of Indices.
INDEX PERFORMANCE RATE -- For a Segment, the percentage change in the value of
the related Index from the Segment Start Date to the Segment Maturity Date or
from the Segment Start Date to the first Annual Lock Anniversary (and
thereafter from one Annual Lock Anniversary to the next) for Annual Lock
Segments. The Index Performance Rate may be positive, negative or zero.
IRA -- Individual retirement annuity contract, either traditional IRA or Roth
IRA (may also refer to an individual retirement account or an individual
retirement arrangement).
IRS -- Internal Revenue Service
NQ CONTRACT -- Nonqualified contract.
OWNER -- The "owner" is the person who is the named owner in the contract and,
if an individual, is the measuring life for determining contract benefits.
6
DEFINITIONS OF KEY TERMS
PERFORMANCE CAP RATE -- For Standard Segments the Performance Cap Rate is the
highest Segment Rate of Return that can be credited on a Segment Maturity Date.
For Annual Lock Segments the Performance Cap Rate is the highest Annual Lock
Yearly Rate of Return that can be applied on an Annual Lock Anniversary. The
Performance Cap Rate is not an annual rate of return.
PERFORMANCE CAP THRESHOLD -- A minimum rate you may specify as a participation
requirement that the Performance Cap Rate for a new Segment must equal or
exceed in order for amounts to be transferred from a Segment Type Holding
Account into a new Segment.
QP CONTRACT -- An annuity contract that is an investment vehicle for a
qualified plan.
SAI -- Statement of Additional Information.
SEC -- Securities and Exchange Commission.
SEGMENT -- An investment option we establish with the Index, Segment Duration
and Segment Buffer of a specific Segment Type, and for which we also specify a
Segment Maturity Date and Performance Cap Rate. We currently offer Standard
Segments and Annual Lock Segments.
SEGMENT BUFFER -- The portion of any negative Index Performance Rate that we
absorb on a Segment Maturity Date or each Annual Lock Anniversary for a
particular Segment. Any percentage decline in a Segment's Index Performance
Rate in excess of the Segment Buffer reduces your Segment Maturity Value and
any Annual Lock Anniversary Ending Amount. We currently offer Segment Buffers
of -10%, -20% and -30% for 6-year Standard Segments and -10% for Annual Lock
Segments. The Segment Buffer for 1-year Standard Segments is -10%.
SEGMENT BUSINESS DAY -- A business day that all Indices underlying available
Segments are scheduled to be open and to publish prices. A scheduled holiday
for any one Index disqualifies that day from being scheduled as a Segment
Business Day for all Segments. We use Segment Business Days in this manner so
that, based on published holiday schedules, we mature all Segments on the same
day and start all new Segments on a subsequent day. This design, among other
things, facilitates the roll over of maturing Segment Investments into new
Segments.
SEGMENT DURATION -- The period from the Segment Start Date to the Segment
Maturity Date. Segment Durations are for six years, unless the next Segment
Start Date is less than six years from the contract's maturity date, in which
case Segment Durations are for one year.
SEGMENT INTERIM VALUE -- The value of your investment in a Segment prior to the
Segment Maturity Date.
SEGMENT INVESTMENT -- The amount transferred to a Segment on its Segment Start
Date, as adjusted for any withdrawals from that Segment.
SEGMENT MATURITY DATE -- The Segment Business Day on which a Segment ends.
SEGMENT MATURITY DATE REQUIREMENT -- You will not be permitted to invest in a
Segment if the Segment Maturity Date is later than your contract maturity date.
SEGMENT MATURITY VALUE -- The value of your investment in a Segment on the
Segment Maturity Date.
SEGMENT PARTICIPATION REQUIREMENTS -- The requirements that must be met before
we transfer amounts from a Segment Type Holding Account to a new Segment on a
Segment Start Date.
SEGMENT RATE OF RETURN -- The rate of return earned by a Segment as calculated
on the Segment Maturity Date. The Segment Rate of Return is calculated
differently for Standard Segments and Annual Lock Segments.
SEGMENT RETURN AMOUNT -- Equals the Segment Investment multiplied by the
Segment Rate of Return.
SEGMENT START DATE -- The Segment Business Day on which a new Segment is
established.
SEGMENT TYPE -- Comprises all Standard Segments or Annual Lock Segments having
the same Index, Segment Duration and Segment Buffer. Each Segment Type has a
corresponding Segment Type Holding Account.
SEGMENT TYPE HOLDING ACCOUNT -- An account that holds all contributions and
transfers allocated to a Segment Type pending investment in a Segment. There is
a Segment Type Holding Account for each Segment Type. The Segment Type Holding
Accounts are part of the EQ/Money Market variable investment option.
STANDARD SEGMENT -- Any Segment that is not an Annual Lock Segment.
STRUCTURED INVESTMENT OPTION -- An investment option that permits you to invest
in various Segments, each tied to the performance of an Index, and participate
in the performance of that Index.
7
DEFINITIONS OF KEY TERMS
Structured Capital Strategies(R) PLUS at a glance -- key features
--------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS The variable investment options invest in portfolios
sub-advised by professional investment advisers. The
contract currently offers two variable investment options.
Depending upon the performance of the variable investment
options, you could lose money by investing in one or more
variable investment options.
-----------------------------------------------------------------------------------------
STRUCTURED INVESTMENT See "Definition of key terms" on the prior page and
OPTION "Contract features and benefits" later in this Prospectus
for more detailed explanations of terms associated with the
Structured Investment Option.
------------------------------------------------------------
. Investments in Segments are not investments in
underlying mutual funds; Segments are not "index
funds." Each Segment Type offers an opportunity to
invest in a Segment that is tied to the performance of
a Securities Index or exchange-trade fund. Throughout
this Prospectus, we refer to these indices and
exchange-traded funds using the term "Index" or,
collectively, "Indices." You participate in the
performance of that Index by investing in the Segment.
You do not participate in the investment results of any
assets we hold in relation to the Segments. We hold
assets in a "non-unitized" separate account we have
established under the New York Insurance Law to support
our obligations under the Structured Investment Option.
We calculate the results of an investment in a Segment
pursuant to one or more formulas described later in
this Prospectus. Depending upon the performance of the
Indices, you could lose money by investing in one or
more Segments.
. An "Index" is used to determine the Segment Rate of
Return for a Segment. We currently offer Segment Types
based on the performance of (1) securities indices and
(2) exchange-traded funds. In the future, we may offer
Segment Types based on other types of Indices. The
Indices are as follows:
-- S&P 500 Price Return Index;
-- Russell 2000(R) Price Return Index; and
-- iShares(R) MSCI EAFE ETF.
. The Segment Return Amount will only be applied on the
Segment Maturity Date.
. The Segment Rate of Return could be positive, zero, or
negative. THERE IS A RISK OF A SUBSTANTIAL LOSS OF YOUR
PRINCIPAL BECAUSE YOU AGREE TO ABSORB ALL LOSSES TO THE
EXTENT THEY EXCEED THE APPLICABLE SEGMENT BUFFER.
. We will declare a Performance Cap Rate for each Segment
on the Segment Start Date. The Performance Cap Rate for
the same Segment may be different for owners who elect
that Segment during their first Contract Year than for
owners who are in their second or later Contract Year.
The Performance Cap Rate is the maximum Segment Rate of
Return that can be credited on the Segment Maturity
Date or used to calculate the maximum Annual Lock
Yearly Rate of Return on an Annual Lock Anniversary for
that Segment. The Performance Cap Rate may limit your
participation in any increases in the underlying Index
associated with a Segment. Our minimum Performance Cap
Rates for 6 year Standard Segments is 12% (2% for 1
year Standard Segments when available). Our minimum
Performance Cap Rate for Annual Lock Segments is 2%. WE
WILL NOT OPEN A SEGMENT WITH A PERFORMANCE CAP RATE
BELOW THE APPLICABLE MINIMUM PERFORMANCE CAP RATE. In
some cases, we may decide not to declare a Performance
Cap Rate for a Segment, in which case there is no
maximum Segment Rate of Return for that Segment.
. On any date prior to segment maturity, we calculate the
Segment Interim Value for each Segment as described in
"Appendix III -- Segment Interim Value". This amount
may be less than the amount invested, may be less than
the Annual Lock Anniversary Ending Amount on each
Annual Lock Anniversary and may be less than the amount
you would receive had you held the investment until
Segment maturity. The Segment Interim Value will
generally be negatively affected by increases in the
expected volatility of index prices, interest rate
increases, and by poor market performance. All other
factors being equal, the Segment Interim Value would be
lower the earlier a withdrawal or surrender is made
during a Segment. Also, participation in upside
performance for early withdrawals is pro-rated based on
the period those amounts were invested in a Segment.
This means you participate to a lesser extent in upside
performance the earlier you take a withdrawal.
. You can set a Performance Cap Threshold for any Segment
Type in which you plan to invest. By doing so, amounts
you allocate to a Segment Type Holding Account will
only be transferred into a new Segment if the
Performance Cap Rate we declare for that Segment is
equal to or exceeds your Performance Cap Threshold.
A Performance Cap Threshold will remain in effect
through the first scheduled Segment Start Date that is
at least two months after your Performance Cap Threshold
election (the "PCT Expiry Date"). For example, if a
Performance Cap Threshold becomes effective on Monday,
August 1st, it is effective through Thursday, October
6th. If a Performance Cap Threshold becomes effective on
December 29th, 30th, 31st, or July 31st, then the PCT
Expiry Date will be the day of the first scheduled
Segment Start Date in March or October,
-----------------------------------------------------------------------------------------
8
STRUCTURED CAPITAL STRATEGIES(R) PLUS AT A GLANCE -- KEY FEATURES
-----------------------------------------------------------------------------------
STRUCTURED INVESTMENT respectively. This means that if the declared
OPTION (CONTINUED) Performance Cap Rate for a Segment has not matched or
exceeded your Performance Cap Threshold on any of the
scheduled Segment Start Dates on or before the PCT
Expiry Date, any amounts in the applicable Segment Type
Holding Account (including any funds transferred to that
holding account after the Performance Cap Threshold
becomes effective) on the business day immediately
preceding the next scheduled Segment Start Date after
the PCT Expiry Date will automatically be transferred
into the Segment created on that Segment Start Date,
unless you specify a new Performance Cap Threshold prior
to that date.
If you do not specify a Performance Cap Threshold, or
your Performance Cap Threshold expires, you run the risk
that you will be automatically transferred into a
Segment with a Performance Cap Rate that is not
acceptable to you. Performance Cap Thresholds are not
available if you invest in the Dollar Cap Averaging
Program. For more information about the operation of
Performance Cap Thresholds, see "Segment Partic- ipation
Requirements" in "Contract features and benefits" later
in this Prospectus.
. The following chart provides a comparison of certain
differences between Segment Types.
--------------------------------------------------------------------------------
MINIMUM
SEGMENT SEGMENT SEGMENT PERFORMANCE
TYPE DURATIONS BUFFERS CAP RATES
--------------------------------------------------------------------------------
Standard 6 year, (1 year*) -10%, -20%, -30% 12%, (2%*)
--------------------------------------------------------------------------------
Annual Lock 6 year -10% 2%
--------------------------------------------------------------------------------
* 1 year Standard Segments are not available until the Segment Maturity Date
Requirement for 6 year Standard Segments and 6 year Annual Lock Segments can
no longer be met (i.e., the next Segment Start Date is less than six years
from your maturity date). The 1 year Standard Segments are only available
with the -10% buffer. The iShares(R) MSCI EAFE EFT is not available with the
1 year Standard Segments.
. BOTH THE PERFORMANCE CAP RATE AND THE SEGMENT BUFFER
ARE RATES OF RETURN FROM THE SEGMENT START DATE TO THE
SEGMENT MATURITY DATE OR FROM THE SEGMENT START DATE TO
THE FIRST ANNUAL LOCK ANNIVERSARY (AND THEREAFTER FROM
EACH ANNUAL LOCK ANNIVERSARY TO THE NEXT) FOR ANNUAL
LOCK SEGMENTS, NOT ANNUAL RATES OF RETURN, EVEN IF THE
SEGMENT DURATION IS LONGER THAN ONE YEAR. YOUR
PERFORMANCE CAP THRESHOLD IS ALSO NOT AN ANNUAL RATE OF
RETURN.
. THE HIGHEST LEVEL OF PROTECTION ON A SEGMENT MATURITY
DATE IS THE -30% SEGMENT BUFFER AND LOWEST LEVEL OF
PROTECTION IS THE -10% SEGMENT BUFFER.
. THIS PRODUCT GENERALLY OFFERS GREATER UPSIDE POTENTIAL,
BUT LESS DOWNSIDE PROTECTION, ON A SEGMENT MATURITY
DATE THAN FIXED INDEXED ANNUITIES, WHICH PROVIDE A
GUARANTEED MINIMUM RETURN.
----------------------------------------------------------------------------------
TAX CONSIDERATIONS . On earnings inside the No tax until you make withdrawals
contract from your contract or receive
annuity payments.
--------------------------------------------------------------------
. On transfers inside the No tax on transfers among
contract investment options, including on a
Segment Maturity Date.
--------------------------------------------------------------------
If you are purchasing an annuity contract as an Individual
Retirement Annuity (IRA) or to fund an employer retirement plan
(QP or Qualified Plan), you should be aware that such annuities
do not provide tax deferral benefits beyond those already
provided by the Internal Revenue Code for individual retirement
arrangements. Before purchasing this contract, you should
consider whether its features and benefits beyond tax deferral
meet your needs and goals. You may also want to consider the
relative features, benefits and costs of this contract with any
other investment that you may use in connection with your
individual retirement arrangement. You should also be aware that
income received under the contract is taxable as ordinary income
and not as capital gain. For more information, see "Tax
information" later in this Prospectus.
----------------------------------------------------------------------------------------
CONTRIBUTION AMOUNTS . NQ
$25,000 (initial) (minimum)
$500 (subsequent) (minimum)
. Traditional or Roth IRA
$25,000 (initial) (minimum)
$50 (subsequent) (minimum)
. QP (defined contribution or defined benefit)
$25,000 (initial) (minimum)
$500 (subsequent) (minimum)
. Maximum contribution limitations apply to all contracts.
--------------------------------------------------------------
In general, contributions are limited to $1.5 million under
all Structured Capital Strategies(R) contracts with the
same owner or annuitant and $2.5 million under all AXA
Equitable annuity accumulation contracts with the same
owner or annuitant. Higher contributions may only be made
with our prior approval. Upon advance notice to you, we may
exercise certain rights we have under the contract
regarding contributions, including our rights to (i) change
minimum and maximum contribution requirements and
limitations, and (ii) discontinue acceptance of
contributions including contributions in general, or to
particular investment options. In addition, we may, at any
time, exercise our right to limit or terminate transfers
into any variable investment option. For more information,
see "How you can purchase and contribute to your contract"
in "Contract features and benefits" later in this
Prospectus. For contracts issued to qualified plans, see
"Appendix VI" later in this Prospectus.
------------------------------------------------------------------------------------
9
STRUCTURED CAPITAL STRATEGIES(R) PLUS AT A GLANCE -- KEY FEATURES
---------------------------------------------------------------------------------------
ACCESS TO YOUR MONEY . Partial withdrawals
. Contract surrender
. You may be subject to tax on any income you receive
and, unless you are 59 1/2 or another exception
applies, an additional 10% federal income tax penalty.
You may also incur a withdrawal charge for certain
withdrawals or if you surrender your contract.
---------------------------------------------------------------------------------------
ADDITIONAL FEATURES . Dollar Cap Averaging Program
---------------------------------------------------------------------------------------
FEES AND CHARGES Please see "Fee table" later in this section for complete
details.
---------------------------------------------------------------------------------------
OWNER AND ANNUITANT ISSUE 0-85
AGES
---------------------------------------------------------------------------------------
YOUR RIGHT TO CANCEL To exercise your cancellation right you must notify us,
with a signed letter of instruction electing this right, to
our processing office within 10 days after you receive your
contract. If state law requires, this "free look" period
may be longer. See "Your right to cancel within a certain
number of days" in "Contract features and benefits" later
in this Prospectus for more information.
---------------------------------------------------------------------------------------
THE TABLE ABOVE SUMMARIZES ONLY CERTAIN CURRENT KEY FEATURES OF THE CONTRACT.
THE TABLE ALSO SUMMARIZES CERTAIN CURRENT LIMITATIONS, RESTRICTIONS AND
EXCEPTIONS TO THOSE FEATURES THAT WE HAVE THE RIGHT TO IMPOSE UNDER THE
CONTRACT AND THAT ARE SUBJECT TO CHANGE IN THE FUTURE. IN SOME CASES, OTHER
LIMITATIONS, RESTRICTIONS AND EXCEPTIONS MAY APPLY. THE CONTRACT MAY NOT
CURRENTLY BE AVAILABLE IN ALL STATES. ALL SEGMENT TYPES MAY NOT BE AVAILABLE IN
ALL STATES. FOR A STATE-BY-STATE DESCRIPTION OF ALL MATERIAL VARIATIONS TO THIS
CONTRACT, SEE "APPENDIX II" LATER IN THIS PROSPECTUS.
For more detailed information, we urge you to read the contents of this
Prospectus, as well as your contract. This Prospectus is a disclosure document
and describes all of the contract's material features, benefits, rights and
obligations, as well as other information. The Prospectus should be read
carefully before investing. Please feel free to speak with your financial
professional, or call us, if you have any questions.
OTHER CONTRACTS
We offer a variety of fixed and variable annuity contracts. They may offer
features, including investment options, and have fees and charges, that are
different from those in the contracts offered by this Prospectus. Not every
contract we issue is offered through every selling broker-dealer. Some selling
broker-dealers may not offer and/or limit the offering of certain features or
options, as well as limit the availability of the contracts, based on issue age
or other criteria established by the selling broker-dealer. Upon request, your
financial professional can show you information regarding other AXA Equitable
annuity contracts that he or she distributes. You can also contact us to find
out more about the availability of any of the AXA Equitable annuity contracts.
You should work with your financial professional to decide whether this
contract is appropriate for you based on a thorough analysis of your particular
insurance needs, financial objectives, investment goals, time horizons and risk
tolerance.
10
STRUCTURED CAPITAL STRATEGIES(R) PLUS AT A GLANCE -- KEY FEATURES
Fee table
--------------------------------------------------------------------------------
The following tables describe the fees and expenses that you will pay when
buying, owning, and surrendering the contract. Each of the charges and expenses
is more fully described in "Charges and expenses" later in this Prospectus.
The first table describes fees and expenses that you will pay at the time that
you surrender the contract, make certain withdrawals, request special services
or make certain transfers and exchanges. Charges designed to approximate
certain taxes that may be imposed on us, such as premium taxes in your state,
may also apply./(1)/
----------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE AT THE TIME YOU REQUEST
CERTAIN TRANSACTIONS
----------------------------------------------------------------------
Maximum withdrawal charge as a percentage of
contributions withdrawn (deducted if you
surrender your contract or make certain
withdrawals or apply your cash value to certain
payout options). 6.00%/(2)/
Charge for each additional transfer in excess of Maximum Charge: $35
12 transfers per contract year:/(3)/ Current Charge: $0
SPECIAL SERVICES CHARGES
.. Wire transfer charge Current and Maximum Charge: $90
.. Express mail charge Current and Maximum Charge: $35
.. Duplicate contract charge Current and Maximum Charge: $35/(5)/
.. Check preparation Maximum Charge $85
charge/(4)/ Current Charge $0
.. Charge for third-party Maximum Charge $125
transfer or exchange/(4)/ Current Charge $65/(5)/
---------------------------------------------------------------------
The following tables describe the fees and expenses that
you will pay periodically during the time that you own the
contract, not including underlying Trust portfolio fees and
expenses.
------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS
(INCLUDING THE SEGMENT TYPE HOLDING ACCOUNTS) EXPRESSED AS AN
ANNUAL PERCENTAGE OF DAILY NET ASSETS
------------------------------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES:
Variable Investment Option fee/(6)/ 1.15%
This fee does not apply to amounts held in a Segment.
-------------------------------------------------------------------------------------
ADJUSTMENTS FOR EARLY SURRENDER OR WITHDRAWAL FROM A SEGMENT
-------------------------------------------------------------------------------------
WHEN CALCULATION IS MADE MAXIMUM AMOUNT THAT MAY BE LOST/(7)/
-------------------------------------------------------------------------------------
-10% BUFFER -20% BUFFER -30% BUFFER
-------------------------------------------------------------------------------------
Segment Interim Value is applied on 90% of Segment 80% of Segment 70% of Segment
surrender or withdrawal from a Segment Investment Investment Investment
prior to its Segment Maturity Date
-------------------------------------------------------------------------------------
You also bear your proportionate share of all fees and expenses paid by a
"portfolio" that corresponds to any variable investment option you are using.
This table shows the lowest and highest total operating expenses charged by any
of the portfolios that you will pay periodically during the time that you own
the contract. These fees and expenses are reflected in the portfolio's net
asset value each day. Therefore, they reduce the investment return of the
portfolio and the related variable investment option. Actual fees and expenses
are likely to fluctuate from year to year. More detail concerning each
portfolio's fees and expenses is contained in the Trust Prospectus for the
portfolio.
-------------------------------------------------------------------------------------------------------------
PORTFOLIO OPERATING EXPENSES EXPRESSED AS AN ANNUAL PERCENTAGE OF DAILY NET ASSETS
-------------------------------------------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses for 2016 (expenses that are deducted from portfolio Lowest Highest
assets including management fees, 12b-1 fees, service fees, and/or other expenses)/(8)/ 0.72% 1.05%
-------------------------------------------------------------------------------------------------------------
(1)The current tax charge that might be imposed varies by jurisdiction and
currently ranges from 0% to 3.5%.
(2)Deducted upon a withdrawal of amounts in excess of the 10% free withdrawal
amount. Important exceptions and limitations may eliminate or reduce this
charge.
The withdrawal charge percentage we use is determined by the contract year
in which you make the withdrawal, surrender your contract to receive its
cash value, or surrender your contract to apply your cash value to a
non-life contingent annuity payment option. For each contribution, we
consider the contract year in which we receive that contribution to be
"contract year 1").
11
FEE TABLE
Contract Year
-------------
1........ 6.00%
2........ 6.00%
3........ 5.00%
4........ 5.00%
5........ 4.00%
6........ 3.00%
7+....... 0.00%
(3)Currently, we do not charge for transfers among variable investment options
under the contract. However, we reserve the right to charge for transfers in
excess of 12 transfers per contract year. We will charge no more than $35
for each variable transfer at the time each transfer is processed. See
"Transfer charge" in "Charges and expenses" later in this Prospectus. We
will not count transfers from Segment Type Holding Accounts into Segments on
a Segment Start Date, or the allocation of Segment Maturity Value on a
Segment Maturity Date in calculating the number of transfers subject to this
charge.
(4)The charge will not exceed 2% of the amount disbursed or transferred.
(5)This charge is currently waived. This waiver may be discontinued at any
time, with or without notice.
(6)On a non-guaranteed basis, we may waive any portion of the variable
investment option fee as it applies to the EQ/Money Market variable
investment option (including any amounts in the dollar cap averaging
account) to the extent that the fee exceeds the income distributed by the
underlying EQ/Money Market Portfolio. This waiver is limited to the variable
investment option fee, and it is not a fee waiver or performance guarantee
for the underlying EQ/Money Market Portfolio. See "Variable Investment
Option fee" in "Charges and expenses" later in this Prospectus.
(7)The actual amount of the Segment Interim Value is determined by a formula
that depends on, among other things, the Segment Buffer and how the Index
has performed since the Segment Start Date, as discussed in "Appendix III"
later in this Prospectus. The maximum loss would occur if there is a total
distribution for a Segment with a -10%, -20% or -30% buffer at a time when
the Index price has declined to zero. For Annual Lock Segments, this is the
maximum amount you could lose during each Annual Lock Period. The maximum
loss for an Annual Lock Segment could be greater than 90%. If you surrender
or cancel your contract, die or make a withdrawal from a Segment before the
Segment Maturity Date, the Segment Buffer will not necessarily apply to the
extent it would on the Segment Maturity Date or Annual Lock Anniversary, any
upside performance will be limited to a percentage lower than the
Performance Cap Rate.
(8)"Total Annual Portfolio Operating Expenses" may be based, in part, on
estimated amounts of such expenses.
EXAMPLES
These examples are intended to help you compare the cost of investing in the
contract with the cost of investing in other variable annuity contracts. These
costs include contract owner transaction expenses, separate account annual
expenses, and underlying Trust fees and expenses (including underlying
portfolio fees and expenses). These examples do not reflect charges for any
special service you may request. For a complete description of portfolio
charges and expenses, please see the prospectuses for the Trust.
The examples below show the expenses that a hypothetical contract owner would
pay in the situations illustrated.
The Dollar Cap Averaging Program is not covered by the fee table and examples.
While there is no fee for using the Dollar Cap Averaging Program, any
applicable variable investment option fee amount and withdrawal charges do
apply to amounts residing in the dollar cap averaging account.
You can find examples illustrating the Structured Investment Option under
"Structured Investment Option" in "Contract Features and Benefits." Withdrawal
charges, if any, also apply to the Structured Investment Option.
These examples should not be considered a representation of past or future
expenses for any variable investment option. Actual expenses may be greater or
less than those shown. Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
The examples assume that you invest $10,000 in the contract for the time
periods indicated and that your investment has a 5% return each year. The
examples also assume (i) the total annual expenses of the portfolios set forth
in the previous tables; and (ii) there is no waiver of any withdrawal charge.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:
---------------------------------------------------------------------------------------------------------------
IF YOU DO NOT SURRENDER YOUR
IF YOU SURRENDER YOUR CONTRACT AT THE CONTRACT AT THE END OF THE APPLICABLE
END OF THE APPLICABLE TIME PERIOD TIME PERIOD
---------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------------------------------------------------------
AXABalanced Strategy $831 $1,212 $1,619 $2,611 $231 $712 $1,219 $2,611
---------------------------------------------------------------------------------------------------------------
EQ/MoneyMarket $796 $1,107 $1,443 $2,255 $196 $607 $1,043 $2,255
---------------------------------------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Please see Appendix I at the end of this Prospectus for the unit values and the
number of units outstanding as of the end of the periods shown for each of the
variable investment options available as of December 31, 2016.
12
FEE TABLE
1. Risk factors
--------------------------------------------------------------------------------
This section discusses risks associated with some features of the contract. See
"Definition of key terms" earlier in this Prospectus and "Contract features and
benefits" later in this Prospectus for more detailed explanations of terms
associated with the Structured Investment Option.
.. There is a risk of a substantial loss of your principal because you agree
to absorb all losses from the portion of any negative Index Performance
Rate that exceeds the Segment Buffer on the Segment Maturity Date or Annual
Lock Anniversary. The highest level of protection provided by a single
Segment Investment Option is the -30% Segment Buffer (only available on
certain Segments) and the lowest level of protection is the -10% Segment
Buffer.
FOR STANDARD SEGMENTS. For example, the -10% Segment Buffer protects your
Segment Investment against the first 10% of loss. If the Index Performance
Rate declines by more than the Segment Buffer, you will lose an amount equal
to 1% of your Segment Investment for every 1% that the Index Performance
Rate declines below the Segment Buffer. This means that you could lose up to
70% of your principal with a -30% Segment Buffer, up to 80% of your
principal with a -20% Segment Buffer and up to 90% of your principal with a
-10% Segment Buffer. Each time you roll over your Segment Maturity Value
into a new Standard Segment you are subject to the same risk of loss as
described above.
FOR ANNUAL LOCK SEGMENTS. The -10% Segment Buffer protects against the first
10% of loss each Annual Lock Period. If the Index Performance Rate declines
by more than the Segment Buffer during an Annual Lock Period, you will lose
an amount equal to 1% of your Segment Investment (if the decline occurs
during the first Annual Lock Period and of your Annual Lock Anniversary
Starting Amount thereafter) for every 1% that the Index Performance Rate
declines below the Segment Buffer. This means that during an Annual Lock
Period you could lose up to 90% of your Segment Investment (if the decline
occurs during the first Annual Lock Period and of your Annual Lock
Anniversary Starting Amount thereafter) with the -10% Segment Buffer. The
cumulative result means that you could lose more than 90% of your principal
in an Annual Lock Segment. Each time you roll over your Segment Maturity
Value into a new Annual Lock Segment you are subject to the same risk of
loss as described above.
.. For Standard Segments, your Segment Rate of Return for any Segment is
limited by its Performance Cap Rate, which could cause your Segment Rate of
Return to be lower than it would otherwise be if you invested in a mutual
fund or exchange-traded fund designed to track the performance of the
applicable Index. For Annual Lock Segments, your Annual Lock Yearly Rate of
Return for any Segment is limited by its Performance Cap Rate, which could
cause your Annual Lock Yearly Rate of Return and Segment Rate of Return to
be lower than it would otherwise be if you invested in a mutual fund or
exchange-traded fund designed to track the performance of the applicable
Index.
.. We declare a Performance Cap Rate for each Segment, which is the maximum
Segment Rate of Return that can be credited on the Segment Maturity Date or
used to calculate the maximum Annual Lock Yearly Rate of Return on each
Annual Lock Anniversary for that Segment. The Performance Cap Rate may
limit your participation in any increases in the underlying Index
associated with a Segment. Our minimum Performance Cap Rates for 6 year
Standard Segments is 12% (2% for 1 year Standard Segments when available).
Our minimum Performance Cap Rate for Annual Lock Segments is 2%. WE WILL
NOT OPEN A SEGMENT WITH A PERFORMANCE CAP RATE BELOW THE APPLICABLE MINIMUM
PERFORMANCE CAP RATE. In some cases, we may decide not to declare a
Performance Cap Rate for a Segment, in which case there is no maximum
Segment Rate of Return for that Segment.
.. The Performance Cap Rate is determined on the Segment Start Date. The
Performance Cap Rate for the same Segment may be higher for owners who
elect that Segment during their first Contract Year than for owners who are
in their second or later Contract Year. You will not know the rate in
advance. Prior to the Segment Start Date, you may elect a Performance Cap
Threshold. The threshold represents the minimum Performance Cap Rate you
find acceptable for a particular Segment. If we declare a cap that is lower
than the threshold you specify, you will not be invested in that Segment
and your contribution will remain in that Segment Type Holding Account, for
as long as the Performance Cap Threshold is in effect.
A Performance Cap Threshold will be in effect until the PCT Expiry Date.
This means that if the declared Performance Cap Rate for a Segment has not
matched or exceeded your Performance Cap Threshold on any of the scheduled
Segment Start Dates before the PCT Expiry Date, any amounts in the
applicable Segment Type Holding Account (including any funds transferred to
that holding account after your election) on the business day immediately
preceding the next scheduled Segment Start Date after your PCT Expiry Date
will be transferred into the Segment created on that Segment Start Date,
unless you specify a new the Performance Cap Threshold prior to that date.
YOU MUST SET A NEW PERFORMANCE CAP THRESHOLD PRIOR TO THE NEXT SCHEDULED
SEGMENT START DATE AFTER YOUR PERFORMANCE CAP THRESHOLD EXPIRES TO AVOID
HAVING AMOUNTS AUTOMATICALLY TRANSFERRED INTO THE ASSOCIATED SEGMENT, WHICH
MAY HAVE A PERFORMANCE CAP RATE THAT DOES NOT MEET YOUR INVESTMENT
OBJECTIVES. In addition, if your Performance Cap Threshold was satisfied on
a scheduled Segment Start Date before the PCT Expiry Date and amounts in the
applicable Segment Type Holding Account were transferred into a Segment, the
Performance Cap Threshold will continue to apply to any amounts you
subsequently transfer into that Segment Type Holding Account until the PCT
Expiry Date. A "scheduled Segment Start Date" includes any date on which a
Segment was scheduled to start but was not offered as of that date. A
suspension of the Segment Type will not extend the PCT Expiry Date.
13
RISK FACTORS
If you do not specify a threshold or your Performance Cap Threshold has
expired, you risk the possibility that the Performance Cap Rate established
will have a lower cap than you would find acceptable. Performance Cap
Thresholds are not available if you invest in the Dollar Cap Averaging
Program. The Performance Cap Rate is a rate of return from the Segment Start
Date to the Segment Maturity Date or from the Segment Start Date to the
first Annual Lock Anniversary (and thereafter from each Annual Lock
Anniversary to the next), NOT an annual rate of return, even if the Segment
Duration is longer than one year.
.. The method we use in calculating your Segment Interim Value may result in
an amount lower than your Segment Investment, even if the corresponding
Index has experienced positive investment performance since the Segment
Start Date. Also, this amount may be less than the amount you would receive
had you held the investment until the Segment Maturity Date.
-- If you take a withdrawal, including required minimum distributions, and
there is insufficient value in the variable investment options, the
Segment Type Holding Accounts and the dollar cap averaging account, we
will withdraw amounts from any active Segments in your contract. Amounts
withdrawn from active Segments will be valued using the formula for
calculating the Segment Interim Value and will reduce your Segment
Investment.
-- If you die or cancel or surrender your contract before the Segment
Maturity Date, we will pay the Segment Interim Value.
-- Any calculation of the Segment Interim Value will generally be affected
by changes in both the volatility and level of the relevant Index, as
well as interest rates. The calculation of the Segment Interim Value is
linked to various factors, including the value of hypothetical fixed
instruments and derivatives as described in "Appendix III" of this
Prospectus. The Segment Interim Value will generally be negatively
affected by increases in the expected volatility of index prices,
interest rate increases, and by poor market performance. Prior to the
Segment Maturity Date you will not receive the full potential of the
Performance Cap since the participation in upside performance for early
withdrawals is pro-rated based on the period those amounts were invested
in a Segment or Annual Lock Period. Generally, you will not receive the
full protection of the Segment Buffer prior to the Segment Maturity Date
because the Segment Interim Value only reflects a portion of the downside
protection expected to be provided on the Segment Maturity Date or Annual
Lock Anniversary. As a Segment moves closer to the Segment Maturity Date
or Annual Lock Anniversary, the Segment Interim Value would generally
reflect higher realized gains of the Index performance or, in the case of
negative performance, increased downside Segment Buffer protection. All
other factors being equal, the Segment Interim Value would be lower the
earlier a withdrawal or surrender is made during a Segment or Annual Lock
Period. This means you participate to a lesser extent in upside
performance and downside protection the earlier you take a withdrawal.
-- The Company's decision to use investment rates, which are generally
higher than swap rates, to calculate the Fair Value of Hypothetical Fixed
Instruments component of the Segment Interim Value will result in a lower
value for that component relative to using swap rates to calculate that
component and, all other things being equal, will result in a lower
recalculated Segment Investment if a partial withdrawal is taken from a
Segment or a lower withdrawal amount if a full withdrawal is taken from a
Segment.
.. You cannot transfer out of a Segment prior to its maturity to another
investment option. You can only make withdrawals out of a Segment or
surrender your contract. The amount you would receive would be calculated
using the formula for the Segment Interim Value.
.. We may not offer new Segments of any or all Segment Types, so a Segment may
not be available for you to transfer your Segment Maturity Value into after
the Segment Maturity Date.
.. If a beneficiary elects the "5-year rule" under the Beneficiary
continuation option (i.e., the entire account value must be fully withdrawn
by the end of the calendar year which contains the fifth anniversary of the
owner's death), that beneficiary is not permitted to transfer any account
value that is in a variable investment option into any Segment nor are they
permitted to transfer any account value from a maturing Segment into any
Segment. This means that such a beneficiary can only transfer account value
to the variable investment options.
.. The 1-year Standard Segments are not available until the Segment Maturity
Date Requirement can no longer be met for the 6-year Standard Segments and
6-year Annual Lock Segments. This means that you can only invest in
Segments with a Segment Duration of 6 years until the next Segment Start
Date is less than six years from your contract's maturity date and,
thereafter, you can only invest in 1-year Standard Segments (and the
iShares(R) MSCI EAFE EFT is not available).
.. We have the right to substitute an alternative index prior to Segment
Maturity if the publication of one or more Indices is discontinued or at
our sole discretion we determine that our use of such Indices should be
discontinued or if the calculation of one or more of the Indices is
substantially changed. If we substitute an index for an existing Segment,
we would not change the Segment Buffer or Performance Cap Rate. We would
attempt to choose a substitute index that has a similar investment
objective and risk profile to the replaced index.
.. If a Segment cannot be matured until after the scheduled Segment Start
Date, we may create new Segments of Segment Types that utilize unaffected
Indices on the scheduled Segment Start Date. This may occur if the Segment
Maturity Date for a Segment is delayed more than once because the value for
the relevant underlying Index of the Segment is not published on the
designated Segment Maturity Date. If your instructions include an
allocation from a Segment whose Segment Maturity Date has been delayed to a
new Segment whose underlying Index is unaffected, we will not be able to
transfer that portion of your Segment Maturity Value from the affected
Segment to the unaffected Segment. We will use reasonable efforts to
allocate your Segment Maturity Value in accordance with your instructions,
which may include holding amounts in Segment Type Holding Accounts until
the next Segment Start Date.
.. The amounts held in a Segment Type Holding Account may earn a return that
is less than the return you might have earned if those amounts were held in
another variable investment option.
14
RISK FACTORS
.. Standard Segment Types with greater protection tend to have lower
Performance Cap Rates than other Standard Segment Types that use the same
Index and duration but provide less protection.
.. The value of your variable investment options will fluctuate and you could
lose some or all of your account value.
.. The level of risk you bear and your potential investment performance will
differ depending on the investments you choose.
.. If your account value falls below the applicable minimum account size as a
result of a withdrawal, the contract will terminate.
.. If you surrender your contract, any applicable withdrawal charge is
calculated as a percentage of contributions, not account value. It is
possible that the percentage of account value withdrawn could exceed the
applicable withdrawal charge percentage. For example, assume you make a
onetime contribution of $1,000 at contract issue. If your account value is
$800 in contract year 3 and you surrender your contract, a withdrawal
charge percentage of 5% is applied. The withdrawal charge would be $50 (5%
of the $1,000 contribution). This is a 6.25% reduction of your account
value, which results in a cash value of $750 paid to you.
.. No company other than AXA Equitable has any legal responsibility to pay
amounts that AXA Equitable owes under the contract. An owner should look to
the financial strength of AXA Equitable for its claims-paying ability.
.. The Segments track the performance of an Index. By investing in the
Structured Investment Option, you are not actually invested in an index, an
exchange-traded fund that tracks an index, or any underlying securities.
.. Your Segment Maturity Value is subject to application of the Performance
Cap Rate and the Segment Buffer. For Standard Segments, your Segment
Maturity Value is not affected by the price of the Index on any date
between the Segment Start Date and the Segment Maturity Date. For Annual
Lock Segments, your Annual Lock Anniversary Ending Amount is not affected
by the price of the Index on any date between the Segment Start Date and
the first Annual Lock Anniversary (and thereafter from each Annual Lock
Anniversary to the next).
.. As an investor in the Segment, you will not have voting rights or rights to
receive cash dividends or other distributions or other rights that holders
of the shares of the funds or holders of securities comprising the indices
would have.
.. Values of securities can fluctuate, and sometimes wildly fluctuate, in
response to changes in the financial condition of a company as well as
general market, economic or political conditions.
-- Foreign securities involve risks not associated with U.S. securities.
Foreign markets may be less liquid, more volatile and subject to less
government supervision than domestic markets. Differences between U.S.
and foreign legal, political and economic systems, regulatory regimes and
market practices also may impact security values. There are greater risks
involved with investments linked to emerging market countries and/or
their securities markets. Investments in these countries and/or markets
may present market, credit, currency, liquidity, legal, political,
technical and other risks different from, or greater than, the risks of
investing in developed countries.
.. If you invest in a Segment that provides performance tied to the
performance of the iShares(R) MSCI EAFE ETF, you should consider the
following:
-- The performance of the iShares(R) MSCI EAFE ETF may not replicate the
performance of, and may underperform the MSCI EAFE Index (the "underlying
index"). The price of the iShares(R) MSCI EAFE ETF will reflect expenses
and fees that will reduce its relative performance. Moreover, it is also
possible that the iShares(R) MSCI EAFE ETF may not fully replicate or
may, in certain circumstances, diverge significantly from the performance
of the underlying index. Because the return on your Segment Investment
(subject to the Performance Cap and downside Segment Buffer protection)
is linked to the performance of the iShares(R) MSCI EAFE ETF and not the
underlying index, the return on your Segment Investment may be less than
that of an alternative investment linked directly to the underlying index
or the components of the underlying index.
-- The investment objective and strategies of the iShares(R) MSCI EAFE ETF
are potentially subject to change.
-- The iShares(R) MSCI EAFE ETF invests in foreign securities.
.. Past performance of an index is not an indication of its future performance.
CYBERSECURITY
We rely heavily on interconnected computer systems and digital data to conduct
our variable product business. Because our variable product business is highly
dependent upon the effective operation of our computer systems and those of our
business partners, our business is vulnerable to disruptions from utility
outages, and susceptible to operational and information security risks
resulting from information systems failure (e.g., hardware and software
malfunctions), and cyber-attacks. These risks include, among other things, the
theft, misuse, corruption and destruction of data maintained online or
digitally, interference with or denial of service, attacks on websites and
other operational disruption and unauthorized release of confidential customer
information. Such systems failures and cyber-attacks affecting us, any third
party administrator, the underlying funds, intermediaries and other affiliated
or third-party service providers may adversely affect us and your account
value. For instance, systems failures and cyber-attacks may interfere with our
processing of contract transactions, including the processing of orders from
our website or with the underlying funds, impact our ability to calculate
account unit values, cause the release and possible destruction of confidential
customer or business information, impede order processing, subject us and/or
our service providers and intermediaries to regulatory fines and financial
losses and/or cause reputational damage. Cybersecurity risks may also impact
the issuers of securities in which the underlying funds invest, which may cause
the funds underlying your Contract to lose value. While there can be no
assurance that we or the underlying funds or our service providers will avoid
losses affecting your Contract due to cyber-attacks or information security
breaches in the future, we take reasonable steps to mitigate these risks and
secure our systems from such failures and attacks.
15
RISK FACTORS
FIDUCIARY RULE
In 2016, the Department of Labor issued a final rule that significantly expands
the definition of "investment advice" and increases the circumstances in which
companies and broker-dealers, insurance agencies and other financial
institutions that sell our products could be deemed a fiduciary when providing
investment advice with respect to plans under the Employee Retirement Income
Security Act of 1974 ("ERISA") or individual retirement accounts ("IRAs"). It
is not yet certain how, if at all, the implementation of this rule will change
our business, results of operations or financial condition. The Department of
Labor also introduced amendments to longstanding exemptions from the prohibited
transaction provisions under ERISA that would increase fiduciary requirements
in connection with transactions involving ERISA plans, plan participants and
IRAs, and that would apply more onerous disclosure and contract requirements to
such transactions. The Department of Labor has delayed the rule's
implementation. If the rule does take effect, it may be necessary for us to
change sales representative and/or broker compensation, limit the assistance or
advice provided to owners of our annuities, or otherwise change the manner of
design and sales support of the annuities at that time. These changes could
have an adverse impact on the level and type of services provided and
compliance with the rule could also increase our overall operational costs for
providing some of the services currently provided. Further, these changes may
lead to greater exposure to legal claims in certain circumstances, including an
increased risk of Department of Labor enforcement actions, and an increased
risk of litigation, including class-actions.
16
RISK FACTORS
2. How to reach us
--------------------------------------------------------------------------------
Please communicate with us at the mailing addresses listed below for the
purposes described. Certain methods of contacting us, such as by telephone or
electronically, may be unavailable or delayed. For example, our facsimile
service may not be available at all times and/or we may be unavailable due to
emergency closing. In addition, the level and type of service available may be
restricted based on criteria established by us. In order to avoid delays in
processing, please send your correspondence and check to the appropriate
location, as follows:
--------------------------------------------------------------------------------
FOR CORRESPONDENCE WITH CHECKS:
FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Retirement Service Solutions
P.O. Box 1577
Secaucus, NJ 07096-1577
FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY:
Retirement Service Solutions
500 Plaza Drive, 6th Floor
Secaucus, NJ 07094
--------------------------------------------------------------------------------
FOR CORRESPONDENCE WITHOUT CHECKS:
FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY REGULAR MAIL:
Retirement Service Solutions
P.O. Box 1547
Secaucus, NJ 07096-1547
FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY EXPRESS DELIVERY:
Retirement Service Solutions
500 Plaza Drive, 6th Floor
Secaucus, NJ 07094
Your correspondence will be picked up at the mailing address noted above and
delivered to our processing office. Your correspondence, however, is not
considered received by us until it is received at our processing office. Where
this Prospectus refers to the day when we receive a contribution, request,
election, notice, transfer or any other transaction request from you, we mean
the day on which that item (or the last thing necessary for us to process that
item) arrives in complete and proper form at our processing office or via the
appropriate telephone or fax number if the item is a type we accept by those
means. There are two main exceptions: if the item arrives (1) on a day that is
not a business day or (2) after the close of a business day, then, in each
case, we are deemed to have received that item on the next business day. Our
processing office is: 500 Plaza Drive, 6th Floor, Secaucus, New Jersey 07094.
--------------------------------------------------------------------------------
REPORTS WE PROVIDE:
.. written confirmation of financial transactions and certain non-financial
transactions, including when money is transferred into a Segment from a
Segment Type Holding Account; when money is not transferred from a Segment
Type Holding Account into a Segment on a Segment Start Date for any reason;
when a Segment matures; when you change a Performance Cap Threshold; or
when you change your current instructions; and
.. at the close of each calendar quarter and statement of your contract values
at the close of each calendar year.
See "Definition of key terms" earlier in this Prospectus for a more detailed
explanation of terms associated with the Structured Investment Option.
--------------------------------------------------------------------------------
ONLINE ACCOUNT ACCESS SYSTEM:
Online Account Access is designed to provide you with up-to-date information
through the Internet. You can obtain information on:
.. your current account value;
.. your current allocation percentages;
.. your Performance Cap Threshold;
.. your instructions on file for allocating the Segment Maturity Value on the
Segment Maturity Date;
.. the number of units you have in the variable investment options and the
Segment Type Holding Accounts;
.. the daily unit values for the variable investment options and the Segment
Type Holding Accounts; and
.. performance information regarding the variable investment options.
You can also:
.. change your allocation percentages and/or transfer among the variable
investment options (not available for transfers to Segment Type Holding
Accounts);
.. change your password;
.. elect to receive certain contract statements electronically;
.. change your address;
.. elect or change your Performance Cap Threshold; and
.. access "Frequently Asked Questions" and certain service forms.
Online Account Access is normally available seven days a week, 24 hours a day.
You may use Online Account Access by visiting our website at www.axa.com and
clicking on Online Account Access. Of course, for reasons beyond our control,
this service may sometimes be unavailable.
We have established procedures to reasonably confirm that the instructions
communicated through the Internet are genuine. For example, we will require
certain personal identification information before we will act on Internet
instructions and we will provide written confirmation of your transfers. If we
do not employ reasonable
17
HOW TO REACH US
procedures to confirm the genuineness of Internet instructions, we may be
liable for any losses arising out of any act or omission that constitutes
negligence, lack of good faith, or willful misconduct. In light of our
procedures, we will not be liable for following Internet instructions we
reasonably believe to be genuine.
We reserve the right to limit access to this service if we determine that you
engaged in a disruptive transfer activity such as "market timing" (see
"Disruptive transfer activity" in "Transferring your money among investment
options" later in this Prospectus).
--------------------------------------------------------------------------------
CUSTOMER SERVICE REPRESENTATIVE:
You may also use our toll-free number (1-877-899-3743) to speak with one of our
customer service representatives. Our customer service representatives are
available on the following business days.
.. Monday through Thursday from 8:30 a.m. until 7:00 p.m., Eastern time.
.. Friday from 8:30 a.m. until 5:30 p.m., Eastern time.
WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE
PROVIDE FOR THAT PURPOSE:
(1)authorization for transfers, including transfers of your Segment Maturity
Value on a Segment Maturity Date, by your financial professional;
(2)conversion of a traditional IRA to a Roth IRA contract;
(3)tax withholding elections (see withdrawal request form);
(4)election of the beneficiary continuation option;
(5)election of a predetermined form of death benefit payout;
(6)IRA contribution recharacterizations;
(7)Section 1035 exchanges;
(8)direct transfers and specified direct rollovers;
(9)death claims;
(10)change in ownership (NQ only, if available under your contract);
(11)purchase by, or change of ownership to, a non-natural owner;
(12)requests to transfer, re-allocate, make subsequent contributions and change
your future allocations (except that certain transactions may be permitted
through the Online Account Access systems);
(13)establishing and changing a Performance Cap Threshold;
(14)providing instructions for allocating the Segment Maturity Value on the
Segment Maturity Date;
(15)requests for withdrawals, including withdrawals of the Segment Maturity
Value on the Segment Maturity Date; and
(16)requests for contract surrender.
TO CANCEL OR CHANGE ANY OF THE FOLLOWING, WE REQUIRE WRITTEN NOTIFICATION
GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION:
(1)instructions on file for allocating the Segment Maturity Value on the
Segment Maturity Date; and
(2)instructions to withdraw your Segment Maturity Value on the Segment Maturity
Date.
WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES
OF REQUESTS:
(1)beneficiary changes; and
(2)dollar cap averaging.
TO CANCEL OR CHANGE ANY OF THE FOLLOWING, WE REQUIRE WRITTEN NOTIFICATION
GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION:
(1)the date annuity payments are to begin; and
(2)dollar cap averaging.
-------------------
You must sign and date all these requests. Any written request that is not on
one of our forms must include your name and your contract number along with
adequate details about the notice you wish to give or the action you wish us to
take.
SIGNATURES:
The proper person to sign forms, notices and requests would normally be the
owner. If there are joint owners, both must sign.
18
HOW TO REACH US
3. Contract features and benefits
--------------------------------------------------------------------------------
HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT
You may purchase a contract by making payments to us that we call
"contributions." We can refuse to accept any contribution from you at any time,
including after you purchase the contract. We require a minimum contribution
amount for each type of contract purchased. Maximum contribution limitations
also apply. The following table summarizes our current rules regarding
contributions to your contract, which rules are subject to change. For a
traditional IRA contract, your initial contribution must be a direct transfer
from another traditional IRA or a rollover from an eligible retirement plan
(including another traditional IRA). For a Roth IRA contract, your initial
contribution must be a direct transfer from another Roth IRA or a rollover from
an eligible retirement plan including traditional IRA or another Roth IRA. For
a QP contract, your initial contribution and any subsequent contributions must
be a direct transfer from other investments within an existing qualified plan
trust. Both the owner and annuitant named in the contract must meet the issue
age requirements shown in the table, and contributions are based on the age of
the older of the original owner and annuitant. Subsequent contributions may not
be permitted in your state. Please see Appendix II later in this Prospectus for
any applicable state variations.
--------------------------------------------------------------------------------
WE RESERVE THE RIGHT TO CHANGE OUR CURRENT LIMITATIONS ON YOUR CONTRIBUTIONS
AND TO DISCONTINUE ACCEPTANCE OF CONTRIBUTIONS.
--------------------------------------------------------------------------------
We currently do not accept any contribution if (i) the aggregate contributions
under one or more Structured Capital Strategies(R) contracts with the same
owner or annuitant would then total more than $1,500,000; or (ii) the aggregate
contributions under all AXA Equitable annuity accumulation contracts with the
same owner or annuitant would then total more than $2,500,000. We may waive
these and other contribution limitations based on certain criteria we
determine, including issue age, aggregate contributions, variable investment
option allocations and selling broker-dealer compensation. These and other
contribution limitations may not be applicable in your state. Please see
Appendix II later in this Prospectus for more information on state variations.
Upon advance notice to you, we may exercise certain rights we have under the
contract regarding contributions, including our rights to:
.. Change our contribution requirements and limitations and our transfer
rules, including to:
-- increase or decrease our minimum contribution requirements and increase
or decrease our maximum contribution limitations;
-- discontinue the acceptance of subsequent contributions to the contract;
-- discontinue the acceptance of subsequent contributions and/or transfers
into one or more of the variable investment options; and
-- discontinue the acceptance of subsequent contributions and/or transfers
into one or more of the Segment Type Holding Accounts or the Segments.
.. Further limit the number of Segment Type Holding Accounts and Segments you
may invest in at any one time.
.. Limit or terminate new contributions or transfers to any variable
investment option, Segment Type Holding Account or Segment ("investment
options").
WE RESERVE THE RIGHT IN OUR SOLE DISCRETION TO DISCONTINUE THE ACCEPTANCE OF,
AND/OR PLACE ADDITIONAL LIMITATIONS ON CONTRIBUTIONS AND TRANSFERS INTO CERTAIN
INVESTMENT OPTIONS, INCLUDING ANY OR ALL OF THE SEGMENT TYPES. IF WE EXERCISE
THIS RIGHT, YOUR ABILITY TO INVEST IN YOUR CONTRACT, INCREASE YOUR ACCOUNT
VALUE AND, CONSEQUENTLY, INCREASE YOUR DEATH BENEFIT WILL BE LIMITED.
19
CONTRACT FEATURES AND BENEFITS
-----------------------------------------------------------------------------------------------------------------------
ADDITIONAL
AVAILABLE FOR OWNER AND MINIMUM SOURCE OF LIMITATIONS ON
CONTRACT TYPE ANNUITANT ISSUE AGES CONTRIBUTIONS CONTRIBUTIONS CONTRIBUTIONS TO YOUR CONTRACT/(1)/
-----------------------------------------------------------------------------------------------------------------------
NQ 0 through 85 . $25,000 . After-tax money. . You may make
(initial) . Paid to us by subsequent
. $500 check or contributions
(subsequent) transfer of to the contract
contract value until the later
in a tax of attained age
deferred 86 or, if
exchange under later, the
Section 1035 of first contract
the Internal date
Revenue Code. anniversary.
-----------------------------------------------------------------------------------------------------------------------
Traditional IRA 0 through 85 . $25,000 . Eligible . You may make
(initial) rollover rollover or
. $50 (subsequent) distributions direct transfer
from 403(b) contributions
plans, until the later
qualified plans of attained age
and 86 or the first
governmental contract date
employer 457(b) anniversary.
plans. . Contributions
. Rollovers from made after age
another 70 1/2 must be
traditional net of required
individual minimum
retirement distributions.
arrangement. . Although we
. Direct accept regular
custodian-to- IRA
custodian contributions
transfers from (limited to
another $5,500 per
traditional calendar year)
individual under
retirement traditional IRA
arrangement. contracts, we
. Regular IRA intend that the
contributions. contract be
. Additional used primarily
catch-up for rollover
contributions. and direct
transfer
contributions.
. Subsequent
catch-up
contributions
of up to $1,000
per calendar
year where the
owner is at
least age 50
but under age
70 1/2 at any
time during the
calendar year
for which the
contribution is
made.
-----------------------------------------------------------------------------------------------------------------------
(1)Subsequent contributions may not be permitted under certain conditions in
your state. Please see Appendix II later in this Prospectus for more
information on contribution limitations in your state. In addition to the
limitations described here, we also reserve the right to refuse to accept
any contribution under the contract at any time or change our contribution
limits and requirements. We further reserve the right to discontinue the
acceptance of, or place additional limitations on, contributions to the
contract or contributions and/or transfers into any investment option at any
time.
20
CONTRACT FEATURES AND BENEFITS
-----------------------------------------------------------------------------------------------------------------------
ADDITIONAL
AVAILABLE FOR OWNER AND MINIMUM SOURCE OF LIMITATIONS ON
CONTRACT TYPE ANNUITANT ISSUE AGES CONTRIBUTIONS CONTRIBUTIONS CONTRIBUTIONS TO YOUR CONTRACT/(1)/
-----------------------------------------------------------------------------------------------------------------------
Roth IRA 0 through 85 . $25,000 . Rollovers from . You may make
(initial) another Roth rollover or
. $50 (subsequent) IRA. direct transfer
. Rollovers from contributions
a designated until the later
Roth of attained age
contribution 86 or the first
account under contract date
specified anniversary.
retirement . Conversion
plans. rollovers after
. Conversion age 70 1/2 must
rollovers from be net of
a traditional required
IRA or other minimum
eligible distributions
retirement plan. for the
. Direct traditional IRA
custodian-to- or other
custodian eligible
transfers from retirement plan
another Roth that is the
individual source of the
retirement conversion
arrangement. rollover.
. Regular Roth . Although we
IRA accept Roth IRA
contributions. contributions
. Additional (limited to
catch-up $5,500 per
contributions. calendar year)
under Roth IRA
contracts, we
intend that the
contract be
used primarily
for rollover
and direct
transfer
contributions.
. Subsequent
catch-up
contributions
of up to $1,000
per calendar
year where the
owner is at
least 50 at any
time during the
calendar year
for which the
contribution is
made.
-----------------------------------------------------------------------------------------------------------------------
QP (defined 20-75 . $25,000 . Only transfer . For 401(k)
benefit and (initial) contributions plans,
defined . $500 from other transferred
contribution) (subsequent) investments contributions
within an may not include
existing any after-tax
qualified plan contributions,
trust. including
. The plan must designated Roth
be qualified contributions.
under Section . We do not
401(a) of the accept
Internal contributions
Revenue Code. directly from
the employer.
. We reserve the
right to limit
aggregate
contributions
made each
contract year
after the first
contract year
to 100% of the
first contract
year
contributions.
-----------------------------------------------------------------------------------------------------------------------
(1)Subsequent contributions may not be permitted under certain conditions in
your state. Please see Appendix II later in this Prospectus for more
information on contribution limitations in your state. In addition to the
limitations described here, we also reserve the right to refuse to accept
any contribution under the contract at any time or change our contribution
limits and requirements. We further reserve the right to discontinue the
acceptance of, or place additional limitations on, contributions to the
contract or contributions and/or transfers into any investment option at any
time.
21
CONTRACT FEATURES AND BENEFITS
OWNER AND ANNUITANT REQUIREMENTS
Under NQ contracts, the annuitant can be different from the owner. Only natural
persons can be joint owners. This means that an entity such as a corporation
cannot be a joint owner. We reserve the right to prohibit availability of this
contract to any non-natural owner.
Owners which are not individuals may be required to complete the appropriate
Form W-8 describing the entity type to avoid 30% FATCA withholding from
U.S.-source income.
For NQ contracts (with a single owner, joint owners, or a non-natural owner) we
permit the naming of joint annuitants only when the contract is purchased
through an exchange that is intended not to be taxable under Section 1035 of
the Internal Revenue Code and only where the joint annuitants are spouses.
Under all IRA contracts, the owner and annuitant must be the same person. In
some cases, an IRA contract may be held in a custodial individual retirement
account for the benefit of the individual annuitant.
For the Spousal continuation feature to apply, the spouses must either be joint
owners, or, for single owner contracts, the surviving spouse must be the sole
primary beneficiary. The determination of spousal status is made under
applicable state law. However, in the event of a conflict between federal and
state law, we follow federal rules. Certain same-sex civil union and domestic
partners may not be eligible for tax benefits under federal law and may be
required to take post-death distributions.
In general, we will not permit a contract to be owned by a minor unless it is
pursuant to the Uniform Gift to Minors Act or the Uniform Transfers to Minors
Act in your state.
Under QP contracts, the owner must be the qualified plan trust and the
annuitant must be the plan participant/employee. See Appendix VI later in this
Prospectus for more information on QP contracts.
In certain states, where QP contracts are not available, we permit defined
benefit and defined contribution plan trusts to use pooled plan assets to
purchase NQ contracts. See "Appendix VI: Purchase considerations for defined
benefit and defined contribution plans" later in this Prospectus.
In this Prospectus, when we use the terms OWNER and JOINT OWNER, we intend
these to be references to ANNUITANT and JOINT ANNUITANT, respectively, if the
contract has a non-natural owner. Unless otherwise stated, if the contract is
jointly owned or is issued to a non-natural owner, benefits are based on the
age of the older joint owner or older joint annuitant, as applicable.
PURCHASE CONSIDERATIONS FOR A CHARITABLE REMAINDER TRUST
If you are purchasing the contract to fund a charitable remainder trust and
allocate any account value to the Structured Investment Option, you should
strongly consider "split-funding": that is the trust holds investments in
addition to this Structured Capital Strategies(R) contract. Charitable
remainder trusts are required to make specific distributions. The charitable
remainder trust annual distribution requirement may be equal to a percentage of
the donated amount or a percentage of the current value of the donated amount.
If your Structured Capital Strategies(R) contract is the only source for such
distributions, you may need to take withdrawals from Segments before their
Segment Maturity Dates. See the discussion of the Structured Investment Option
later in this section.
HOW YOU CAN MAKE YOUR CONTRIBUTIONS
Except as noted below, contributions must be by check drawn on a U.S. bank, in
U.S. dollars, and made payable to AXA Equitable. We may also apply
contributions made for NQ contracts, pursuant to an intended Section 1035
tax-free exchange or for IRA contracts, pursuant to a direct transfer. For a
traditional IRA contract, your initial contribution must be a direct transfer
from another traditional IRA or a rollover from an eligible retirement plan
(including a traditional IRA). For a Roth IRA contract, your initial
contribution must be a direct transfer from another Roth IRA or a rollover from
an eligible retirement plan including a traditional IRA or another Roth IRA.
For QP contracts, all contributions must be transfers from another investment
within an existing qualified plan trust. We do not accept starter checks or
travelers' checks. All checks are subject to our ability to collect the funds.
We reserve the right to reject a payment if it is received in an unacceptable
form or not in accordance with our administrative procedures.
For your convenience, we will accept initial and subsequent contributions by
wire transmittal from certain broker-dealers who have agreements with us for
this purpose, including circumstances under which such contributions are
considered received by us when your order is taken by such broker-dealers.
These methods of payment are discussed in detail in "More information" later in
this Prospectus.
If your contract is sold by a financial professional of AXA Advisors, AXA
Advisors will direct us to hold your initial contribution, whether received via
check or wire, in a non-interest bearing "Special Bank Account for the
Exclusive Benefit of Customers" while AXA Advisors ensures your application is
complete and that suitability standards are met. AXA Advisors will either
complete this process or instruct us to return your contribution to you within
the time requirements set by applicable rules of the Financial Industry
Regulatory Authority ("FINRA"). Upon timely and successful completion of this
review, AXA Advisors will instruct us to transfer your contribution into our
non-interest bearing suspense account and transmit your application to us, so
that we can consider your application for processing. If the period for
obtaining this information extends through a Segment Start Date, your initial
investment will not be allocated to new Segments until the next Segment Start
Date.
If your application is in good order when we receive it from AXA Advisors for
application processing purposes, your contribution will be applied within two
business days. If any information we require to issue your contract is missing
or unclear, we will hold your contribution while we try to obtain this
information. If we are unable to obtain all of the information we require
within five business days after we receive an incomplete application or form,
we will inform the financial professional submitting the application on your
behalf. We will then return the contribution to you, unless you or your
financial professional acting on your behalf, specifically direct us to keep
your contribution until we receive the required information. The contribution
will be applied as of the date we receive the missing information. If the
period for obtaining this information extends through a Segment Start Date,
your initial investment will not be allocated to new Segments until the next
Segment Start Date.
If your financial professional is with a selling broker-dealer other than AXA
Advisors, your initial contribution must generally be accompanied by a
completed application and any other form we need to process the payments. If
any information is missing or unclear, we will hold the contribution, whether
received via check or wire, in a non-interest bearing suspense account while we
try to obtain this information. If we are
22
CONTRACT FEATURES AND BENEFITS
unable to obtain all of the information we require within five business days
after we receive an incomplete application or form, we will inform the
financial professional submitting the application on your behalf. We will then
return the contribution to you unless you or your financial professional on
your behalf, specifically direct us to keep your contribution until we receive
the required information. The contribution will be applied as of the date we
receive the missing information. If the period for obtaining this information
extends through a Segment Start Date, your initial investment will not be
allocated to new Segments until the next Segment Start Date.
ALLOCATING YOUR CONTRIBUTIONS
Your allocation instructions determine how your contributions are allocated,
which may be among one or more of the investment options. The maximum number of
Segments that may be active in your contract at any time is 136. If a transfer
from a Segment Type Holding Account into a Segment will cause a contract to
exceed that limit, such transfers will be defaulted to the EQ/Money Market
variable investment option. If there are multiple Segments scheduled to be
established on a Segment Start Date, new Segments will be established in the
order of those that would have the largest initial Segment Investment first
until the limit is reached. Any remaining amount that is not transferred into a
Segment will then be defaulted to the EQ/Money Market variable investment
option. We will notify you that your allocation instructions have exceeded the
maximum number of Segments and request new instructions when the proceeds are
defaulted into the EQ/Money Market Account. Allocations must be in whole
percentages and you may change your allocation percentages at any time.
However, the total of your allocations must equal 100%. Once your contributions
are allocated to the investment options they become part of your account value.
Subsequent contributions are allocated according to instructions on file unless
you provide new instructions. We discuss account value in "Determining your
contract's value" later in this Prospectus.
The contract is between you and AXA Equitable. The contract is not an
investment advisory account, and AXA Equitable is not providing any investment
advice or managing the allocations under your contract. In the absence of a
specific written arrangement to the contrary, you, as the owner of the
contract, have the sole authority to make investment allocations and other
decisions under the contract. Your AXA Advisors financial professional is
acting as a broker-dealer registered representative, and is not authorized to
act as an investment advisor or to manage the allocations under your contract.
WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT?
Your investment options are the variable investment options, the Segments
comprising the Structured Investment Option and the Dollar Cap Averaging
Program. The term variable investment options includes the Segment Type Holding
Accounts unless otherwise noted. The Segment Type Holding Accounts are part of
the EQ/Money Market variable investment option. The Structured Investment
Option and the Segment Type Holding Accounts are discussed later in this
section under "Structured Investment Option." The Dollar Cap Averaging Program
invests in the dollar cap averaging account, which is part of the EQ/Money
Market variable investment option. See "Dollar Cap Averaging Program" later in
this section for more information.
VARIABLE INVESTMENT OPTIONS
Your investment results in any one of the variable investment options will
depend on the investment performance of the underlying portfolios. Because the
variable investment options are not Segments, they are not subject to any
Segment Buffer. You can lose all of your principal when investing in the
variable investment options. In periods of poor market performance, the net
return, after charges and expenses, may result in negative yields, including
for the EQ/Money Market variable investment option. Listed below are the
currently available portfolios, their investment objectives, and their
sub-advisers. We may, at any time, exercise our rights to limit or terminate
your contributions, allocations and transfers into any of the variable
investment options and to limit the number of variable investment options you
may elect.
23
CONTRACT FEATURES AND BENEFITS
PORTFOLIOS OF THE TRUST
We offer an affiliated Trust, which in turn offers one or more Portfolios. AXA
Equitable Funds Management Group, LLC ("AXA FMG"), a wholly owned subsidiary of
AXA Equitable, serves as the investment manager of the Portfolios of EQ
Advisors Trust. For some Portfolios, AXA FMG has entered into sub-advisory
agreements with investment advisers (the "sub-advisers") to carry out
investment decisions for the Portfolios. As such, among other responsibilities,
AXA FMG oversees the activities of the sub-advisers with respect to the Trust
and is responsible for retaining or discontinuing the services of those
sub-advisers. The chart below indicates the sub-adviser(s) for each Portfolio,
if any. The chart below also shows the currently available Portfolios and their
investment objectives.
You should be aware that AXA Advisors, LLC and AXA Distributors, LLC (together,
the "Distributors") directly or indirectly receive 12b-1 fees from the
Portfolios for providing certain distribution and/or shareholder support
services. These fees will not exceed 0.25% of the Portfolios' average daily net
assets. The Portfolios' sub-advisers and/or their affiliates may also
contribute to the cost of expenses for sales meetings or seminar sponsorships
that may relate to the contracts and/or the sub-advisers' respective
Portfolios. In addition, AXA FMG receives management fees and administrative
fees in connection with the services it provides to the Portfolios.
As a contract owner, you may bear the costs of some or all of these fees and
payments through your indirect investment in the Portfolios. (See the
Portfolios' prospectuses for more information.) These fees and payments, as
well as the Portfolios' investment management fees and administrative expenses,
will reduce the underlying Portfolios' investment returns. AXA Equitable may
profit from these fees and payments. AXA Equitable considers the availability
of these fees and payment arrangements during the selection process for the
underlying Portfolios. These fees and payment arrangements may create an
incentive for us to select Portfolios (and classes of shares of Portfolios)
that pay us higher amounts.
As described in more detail in the Portfolio prospectuses, the AXA Managed
Volatility Portfolios may utilize a proprietary volatility management strategy
developed by AXA FMG (the "AXA volatility management strategy") and, in
addition, certain AXA Fund of Fund Portfolios may invest in affiliated
Portfolios that utilize this strategy. The AXA volatility management strategy
uses futures and options, such as exchange-traded futures and options contracts
on securities indices, to reduce the Portfolio's equity exposure during periods
when certain market indicators indicate that market volatility is above
specific thresholds set for the Portfolio. When market volatility is increasing
above the specific thresholds set for a Portfolio utilizing the AXA volatility
management strategy, the manager of the Portfolio may reduce equity exposure.
Although this strategy is intended to reduce the overall risk of investing in
the Portfolio, it may not effectively protect the Portfolio from market
declines and may increase its losses. Further, during such times, the
Portfolio's exposure to equity securities may be less than that of a
traditional equity portfolio. This may limit the Portfolio's participation in
market gains and result in periods of underperformance, including those periods
when the specified benchmark index is appreciating, but market volatility is
high.
The AXA Managed Volatility Portfolios that include the AXA volatility
management strategy as part of their investment objective and/or principal
investment strategy, and the AXA Fund of Fund Portfolios that invest in
Portfolios that use the AXA volatility management strategy, are identified
below in the chart by a "(check mark)" under the column entitled "Volatility
Management."
ASSET TRANSFER PROGRAM. Portfolio allocations in certain AXA variable annuity
contracts with guaranteed benefits are subject to our Asset Transfer Program
(ATP) feature. The ATP helps us manage our financial exposure in connection
with providing certain guaranteed benefits, by using predetermined mathematical
formulas to move account value between the AXA Ultra Conservative Strategy
Portfolio (an investment option utilized solely by the ATP) and the other
Portfolios offered under those contracts. You should be aware that operation of
the predetermined mathematical formulas underpinning the ATP has the potential
to adversely impact the Portfolios, including their performance, risk profile
and expenses. This means that Portfolio investments in contracts with no ATP
feature, such as yours, could still be adversely impacted. Particularly during
times of high market volatility, if the ATP triggers substantial asset flows
into and out of a Portfolio, it could have the following effects on all
contract owners invested in that Portfolio:
(a)By requiring a Portfolio sub-adviser to buy and sell large amounts of
securities at inopportune times, a Portfolio's investment performance and
the ability of the sub-adviser to fully implement the Portfolio's investment
strategy could be negatively affected; and
(b)By generating higher turnover in its securities or other assets than it
would have experienced without being impacted by the ATP, a Portfolio could
incur higher operating expense ratios and transaction costs than comparable
funds. In addition, even Portfolios structured as funds-of-funds that are
not available for investment by contract owners who are subject to the ATP
could also be impacted by the ATP if those Portfolios invest in underlying
funds that are themselves subject to significant asset turnover caused by
the ATP. Because the ATP formulas generate unique results for each contract,
not all contract owners who are subject to the ATP will be affected by
operation of the ATP in the same way. On any particular day on which the ATP
is activated, some contract owners may have a portion of their account value
transferred to the AXA Ultra Conservative Strategy Portfolio investment
option and others may not. If the ATP causes significant transfers of total
account value out of one or more Portfolios, any resulting negative effect
on the performance of those Portfolios will be experienced to a greater
extent by a contract owner (with or without the ATP) invested in those
Portfolios whose account value was not subject to the transfers.
------------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST
(CLASS IB SHARES) VOLATILITY
PORTFOLIO NAME OBJECTIVE SUB-ADVISER MANAGEMENT
------------------------------------------------------------------------------------------------------------------
AXA BALANCED Seeks long-term capital appreciation and . AXA Equitable Funds (check mark)
STRATEGY current income. Management Group, LLC
------------------------------------------------------------------------------------------------------------------
EQ/MONEY MARKET Seeks to obtain a high level of current income, . The Dreyfus Corporation
preserve its assets and maintain liquidity.
------------------------------------------------------------------------------------------------------------------
YOU SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS AND CHARGES AND EXPENSES
OF THE PORTFOLIOS CAREFULLY BEFORE INVESTING. THE PROSPECTUSES FOR THE TRUST
CONTAIN THIS AND OTHER IMPORTANT INFORMATION ABOUT THE PORTFOLIOS. THE
PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE INVESTING. IN ORDER TO OBTAIN
COPIES OF THE TRUST PROSPECTUSES THAT DO NOT ACCOMPANY THIS PROSPECTUS, YOU MAY
CALL ONE OF OUR CUSTOMER SERVICE REPRESENTATIVES AT 1-877-899-3743.
24
CONTRACT FEATURES AND BENEFITS
STRUCTURED INVESTMENT OPTION
The Structured Investment Option consists of a number of Segment Types, each of
which provides a rate of return tied to the performance of a specified
Securities Index or exchange-traded fund. You generally have the opportunity to
invest in any of the Segment Types described below, subject to the
requirements, limitations and procedures disclosed in this section. You
participate in the performance of an Index by investing in the corresponding
Segment. Investments in Segments are not investments in underlying mutual
funds; Segments are not "index funds."
SEGMENT TYPES
You can invest in Standard Segment Types and Annual Lock Segment Types. We are
not obligated to offer any one particular Segment Type. Also, we are not
obligated to offer any Segment Types. Each investment in a Segment Type that
starts on a particular Segment Start Date is referred to as a Segment.
A Segment Type refers to all Standard Segments or Annual Lock Segments that
have the same Index, Segment Duration, and Segment Buffer. Each Segment Type
has a corresponding Segment Type Holding Account. Please refer to the
"Definitions of key terms" section earlier in this Prospectus for a discussion
of these terms.
The following chart lists the current Standard Segment Types:
------------------------------------------------------------------------------------------------------
INDEX SEGMENT DURATION SEGMENT BUFFER
------------------------------------------------------------------------------------------------------
S&P 500 Price Return Index 6 year -10%; -20%; -30%
1 year* -10%
------------------------------------------------------------------------------------------------------
Russell 2000(R) Price Return 6 year -10%; -20%; -30%
Index 1 year* -10%
------------------------------------------------------------------------------------------------------
iShares(R) MSCI EAFE EFT 6 year -10%
------------------------------------------------------------------------------------------------------
* Standard Segments with a 1 year Segment Duration are not available until the
Segment Maturity Date Requirement for 6 year Standard Segments and 6 year
Annual Lock Segments can no longer be met (i.e., the next Segment Start Date
is less than six years from your maturity date). The 1 year Segments are
only available with the -10% buffer.
The following chart lists the current Annual Lock Segment Types:
--------------------------------------------------------------------------------------------------------------------------
INDEX SEGMENT DURATION ANNUAL BUFFER
--------------------------------------------------------------------------------------------------------------------------
S&P 500 Price Return Index Annual Lock 6 year -10%
--------------------------------------------------------------------------------------------------------------------------
Russell 2000 Price Return Index Annual 6 year -10%
Lock
--------------------------------------------------------------------------------------------------------------------------
iShares(R) MSCI EAFE EFT Annual Lock 6 year -10%
--------------------------------------------------------------------------------------------------------------------------
ON A SEGMENT MATURITY DATE, THE HIGHEST LEVEL OF PROTECTION IS THE -30% SEGMENT
BUFFER AND LOWEST LEVEL OF PROTECTION IS THE -10% SEGMENT BUFFER.
The Indices are described in more detail below, under the heading "Indices."
Each Segment has a Performance Cap Rate that we set on the Segment Start Date.
See "Performance Cap Rate" below. The Performance Cap Rate for the same Segment
may be higher for owners who elect that Segment during their first Contract
Year than for owners who are in their second or later Contract Year.
STANDARD SEGMENT EXAMPLE: For the S&P 500 Price Return Index/6 year/-20%
Segment Type, a Segment could be established as S&P 500 Price Return Index/6
year/-20% with a 45% Performance Cap Rate declared on the Segment Start Date.
This means that you will participate in the performance of the S&P 500 Price
Return Index for six years starting from the Segment Start Date. If the Index
performs positively during this period, your Segment Rate of Return could be as
much as 45% for that Segment Duration. If the Index performs negatively during
this period, at maturity you will be protected from the first 20% of the
Index's decline. If the Index performance is between -20% and 0%, your Segment
Maturity Value on the Segment Maturity Date will be equal to your Segment
Investment.
ANNUAL LOCK SEGMENT EXAMPLE: For the S&P 500 Price Return Index Annual Lock/6
year annual lock/-10% Segment Type, a Segment could be established as S&P 500
Price Return Index Annual Lock/6 year annual lock/-10% with a 10% Performance
Cap Rate declared on the Segment Start Date. This means that you will
participate in the performance of the S&P 500 Price Return Index for six
one-year periods starting from the Segment Start Date. If the Index performs
positively during an Annual Lock Period, your Rate of Return could be as much
as 10% for that Annual Lock Period. If the Index performs negatively during an
Annual Lock Period, at that Annual Lock Anniversary you will be protected from
the first 10% of the Index's decline. If the Index performance is between -10%
and 0% for that Annual Lock Period, your Annual Lock Anniversary Ending Amount
on that Annual Lock Anniversary will be equal to the Annual Lock Anniversary
Starting Amount (or Segment Investment for the first Annual Lock Period).
PLEASE NOTE THE FOLLOWING:
.. STANDARD SEGMENT TYPES WITH GREATER PROTECTION TEND TO HAVE LOWER
PERFORMANCE CAP RATES THAN OTHER STANDARD SEGMENT TYPES THAT USE THE SAME
INDEX AND DURATION BUT PROVIDE LESS PROTECTION.
BOTH THE PERFORMANCE CAP RATE AND THE SEGMENT RATE OF RETURN ARE RATES OF
RETURN FROM THE SEGMENT START DATE TO THE SEGMENT MATURITY DATE (OR FROM THE
SEGMENT START DATE TO THE FIRST ANNUAL LOCK ANNIVERSARY AND THEREAFTER FROM
EACH ANNUAL LOCK ANNIVERSARY TO THE NEXT FOR ANNUAL LOCK SEGMENTS), NOT ANNUAL
RATES OF RETURN, EVEN IF THE SEGMENT DURATION IS LONGER THAN ONE YEAR.
THEREFORE THE INDEX PERFORMANCE RATE AND THE PERFORMANCE CAP THRESHOLD ARE ALSO
NOT ANNUAL RATES. The performance of the Index, the Performance Cap Rate and
the Segment Buffer are all measured from the Segment Start Date to the Segment
Maturity Date (or from the Segment Start Date to the first Annual Lock
Anniversary and thereafter from each Annual Lock Anniversary to the next for
Annual Lock Segments), and the Performance Cap Rate and Segment Buffer apply if
you hold the Segment until the Segment Maturity Date (or from the Segment Start
Date to the first Annual Lock Anniversary and thereafter from each Annual Lock
Anniversary to the next for Annual Lock Segments). If you surrender or cancel
your contract, die or make a withdrawal from a Segment before the Segment
Maturity Date, the Segment Buffer will not necessarily apply to the extent it
would on the Segment Maturity Date (or Annual Lock Anniversary for Annual Lock
Segments), and any upside performance will be limited to a percentage lower
than the Performance Cap Rate. Please see "Your contract's value in the
Structured Investment Option" in "Determining your contract's value" later in
this Prospectus. A partial withdrawal from a Segment does not affect the
25
CONTRACT FEATURES AND BENEFITS
Performance Cap Rate and Segment Buffer that apply to any remaining amounts
that are held in the Segment through the Segment Maturity Date (or from the
Segment Start Date to the first Annual Lock Anniversary and thereafter from
each Annual Lock Anniversary to the next for Annual Lock Segments).
We reserve the right to offer any or all Segment Types more or less frequently
or to stop offering any or all of them or to suspend offering any or all of
them temporarily for some or all contracts. Please see "Suspension, termination
and changes to Segment Types" later in this section. All Segment Types may not
be available in all states. We may also add Segment Types in the future.
We may limit the total number of Segments that may be active on a contract at
any time.
INDICES
Each Segment Type references an Index that determines the performance of its
associated Segments. We currently offer Segment Types based on the performance
of (1) securities indices or (2) exchange-traded funds. Throughout this
Prospectus, we refer to these indices and exchange-traded funds using the term
"Index" or, collectively, "Indices." Not all Indices may be available under
your contract. Please see "Appendix II: State contract availability and/or
variations of certain features and benefits" later in this Prospectus.
SECURITIES INDICES. The following Securities Indices are currently available:
S&P 500 PRICE RETURN INDEX. The S&P 500 Price Return Index was established by
Standard & Poor's. The S&P 500 Price Return Index includes 500 leading
companies in leading industries of the U.S. economy, capturing 75% coverage of
U.S. equities. The S&P 500 Price Return Index does not include dividends
declared by any of the companies included in this Index.
RUSSELL 2000(R) PRICE RETURN INDEX. The Russell 2000(R) Price Return Index was
established by Russell Investments. The Russell 2000(R) Price Return Index
measures the performance of the small-cap segment of the U.S. equity universe.
The Russell 2000(R) Price Return Index is a subset of the Russell 3000(R) Index
representing approximately 10% of the total market capitalization of that
index. It includes approximately 2,000 of the smallest securities based on a
combination of their market cap and current index membership. The Russell
2000(R) Price Return Index does not include dividends declared by any of the
companies included in this Index.
EXCHANGE-TRADED FUNDS. The following exchange-traded funds are currently
available:
ISHARES(R) MSCI EAFE ETF. The iShares(R) MSCI EAFE ETF seeks investment results
that correspond generally to the performance of the MSCI EAFE Index, which is
the underlying index. The underlying index is composed of large and
mid-capitalization developed market equities including Europe, Australasia and
the Far East and excluding the United States and Canada. The iShares(R) MSCI
EAFE ETF is an exchange traded fund. The price of the iShares(R) MSCI EAFE ETF
will reflect expenses and fees that will reduce its relative performance.
Moreover, it is also possible that the iShares(R) MSCI EAFE ETF may not fully
replicate the performance of the underlying index, may underperform the
underlying index, or may, in certain circumstances, diverge significantly from
the performance of the underlying index. Because the return on your Segment
Investment (subject to the Performance Cap and downside Segment Buffer
protection) is linked to the performance of the iShares(R) MSCI EAFE ETF and
not the underlying index, the return on your Segment Investment may be less
than that of an alternative investment linked directly to the underlying index
or the components of the underlying index. The investment performance of the
iShares(R) MSCI EAFE ETF Segment is only based on the closing share price of
the Index Fund. The iShares(R) MSCI EAFE ETF Segment does not include dividends
and other distributions declared by the Index Fund.
Please see Appendix IV later in this Prospectus for important information
regarding the publishers of the Indices.
SEGMENT TYPE HOLDING ACCOUNTS
Any contribution or transfer designated for a Segment Type will be allocated to
the corresponding Segment Type Holding Account until the Segment Start Date.
The Segment Type Holding Accounts are part of the EQ/Money Market variable
investment option. The Segment Type Holding Accounts have the same rate of
return as the EQ/Money Market variable investment option. You must transfer or
contribute to the Segment Type Holding Account for the corresponding Segment
Type if you want to invest in a Segment; you cannot transfer or contribute
directly to a Segment.
You can transfer amounts from a Segment Type Holding Account into any of the
variable investment options, or another Segment Type Holding Account at any
time up to the close of business on the last business day before the Segment
Start Date.
SEGMENT START DATE
Each Segment will have a Segment Start Date. Segments generally start on the
first or third Thursday of each month. However, the Segment Start Date may
sometimes be a different day under certain circumstances. Please see "Setting
the Segment Maturity Date and Segment Start Date" below. Also, we may offer
Segments more or less frequently and on different days for some or all
contracts.
PERFORMANCE CAP RATE
The Performance Cap Rate determines the maximum Segment Rate of Return that
each Segment will be credited with on the Segment Maturity Date or the maximum
Annual Lock Yearly Rate of Return on each Annual Lock Anniversary. We will
declare a Performance Cap Rate for each Segment on the Segment Start Date. The
Performance Cap Rate for each Segment, including each Annual Lock Segments,
will not change throughout the Segment Duration. The Performance Cap Rate for
the same Segment may be higher or lower for owners who elect that Segment
during their first Contract Year than for owners who are in their second or
later Contract Year.
Because we declare the Performance Cap Rate for a Segment on its Segment Start
Date, you will not know the Performance Cap Rate for a new Segment until after
your account value has been transferred from the corresponding Segment Type
Holding Account into the Segment. You may not transfer out of a Segment before
the Segment Maturity Date. Please see "Transfers" below. For more information
regarding transfer restrictions, please see "Transferring your account value"
later in this Prospectus.
The Performance Cap Rate may limit your participation in any increases in the
underlying Index associated with a Segment. Our
26
CONTRACT FEATURES AND BENEFITS
minimum Performance Cap Rates for 6 year and 1 year Standard Segments is 12%
and 2%, respectively. Our minimum Performance Cap Rate for Annual Lock Segments
is 2%. We guarantee that for the life of your contract we will not open a
Segment with a Performance Cap Rate below the applicable minimum Performance
Cap Rate. In some cases, we may decide not to declare a Performance Cap Rate
for a Segment, in which case there is no maximum Segment Rate of Return for
that Segment and you will receive the Index Performance Rate for that Segment
subject to the Segment Buffer.
PLEASE NOTE THAT THE PERFORMANCE CAP RATE AND SEGMENT RATE OF RETURN ARE
CUMULATIVE RATES OF RETURN FROM THE SEGMENT START DATE TO THE SEGMENT MATURITY
DATE OR FROM THE SEGMENT START DATE TO THE FIRST ANNUAL LOCK ANNIVERSARY AND
THEREAFTER FROM EACH ANNUAL LOCK ANNIVERSARY TO THE NEXT FOR ANNUAL LOCK
SEGMENTS, NOT ANNUAL RATES, EVEN IF THE SEGMENT DURATION IS LONGER THAN ONE
YEAR. THE PERFORMANCE CAP RATE IS SET AT OUR SOLE DISCRETION.
SEGMENT PARTICIPATION REQUIREMENTS
Provided that all participation requirements are met, all amounts allocated to
a Segment Type that are in the associated Segment Type Holding Account as of
the close of business on the business day preceding the Segment Start Date,
plus any earnings on those amounts, will be transferred into the new Segment on
the Segment Start Date. However, amounts transferred into the Segment Type
Holding Account on the Segment Start Date itself will not be included in any
new Segment created that day. These amounts will remain in the Segment Type
Holding Account until they are transferred out or the next Segment Start Date
on which the participation requirements are met for the amounts to be
transferred into a new Segment.
The participation requirements are as follows: (1) Segment is available;
(2) Segment Maturity Date Requirement is met; and (3) Performance Cap Threshold
is met. If these requirements are met, your account value in the Segment Type
Holding Account will be transferred into a new Segment. This amount is your
initial Segment Investment. Once your account value has been swept from a
Segment Type Holding Account into a Segment, transfers into or out of that
Segment before its Segment Maturity Date are not permitted.
(1) SEGMENT IS AVAILABLE. The Segment must actually be created on the Segment
Start Date as scheduled. We may suspend or terminate any Segment Type, at our
sole discretion, at any time. If we terminate a Segment Type, no new Segments
of that Segment Type will be created, and the amount that would have been
transferred to the Segment will be transferred to the EQ/Money Market variable
investment option instead. If we suspend a Segment Type, no new Segments of
that Segment Type will be created until the suspension ends, and the amount
that would have been transferred to the Segment will remain in the Segment Type
Holding Account.
(2) SEGMENT MATURITY DATE REQUIREMENT IS MET. The Segment Maturity Date must
occur on or before the contract maturity date. If the Segment Maturity Date is
after the contract maturity date, your account value in the Segment Type
Holding Account will be transferred to the EQ/Money Market variable investment
option.
(3) PERFORMANCE CAP THRESHOLD IS MET. When you allocate a contribution or
transfer account value to a Segment Type, you may also specify a Performance
Cap Threshold. The Performance Cap Threshold represents the minimum Performance
Cap Rate you find acceptable for a particular Segment. As long as it remains in
effect, the Performance Cap Threshold will prevent your value in the Segment
Type Holding Account from being transferred into the corresponding Segment
unless the Performance Cap Threshold is equal to or exceeded by the Performance
Cap Rate we declare on the Segment Start Date, assuming the other participation
requirements are met. Performance Cap Thresholds are expressed as whole
percentage rates.
For example, for a given Segment Type, you may specify a Performance Cap
Threshold of 10%. If we set a Performance Cap Rate of 10% or higher for the
next available Segment of that Segment Type, then we will transfer your account
value in the applicable Segment Type Holding Account to the new Segment on the
Segment Start Date, provided all other participation requirements are met.
However, if we set the Performance Cap Rate at 9.9% for that Segment, your
account value will not be transferred to the new Segment.
A Performance Cap Threshold applies to a single Segment Type only. If you have
allocated amounts to multiple Segment Types, you may specify a different
Performance Cap Threshold for each Segment Type. Performance Cap Thresholds
will not apply to uncapped Segments. This means that if you allocate amounts to
a Segment Type Holding Account and we subsequently open an associated Segment
without specifying a Performance Cap Rate, those amounts will automatically be
transferred to that Segment on the Segment Start Date.
The Performance Cap Threshold operates in the same manner for Standard Segments
and Annual Lock Segments.
Performance Cap Thresholds help you manage the risk that your money will not be
invested in a Segment with a Performance Cap Rate that is lower than you find
acceptable.
If you do not specify a Performance Cap Threshold or your Performance Cap
Threshold has expired, we will transfer your account value from the Segment
Type Holding Account into a Segment if the other participation requirements are
met, regardless of the Performance Cap Rate that we set.
In order for a new Performance Cap Threshold to be effective for a forthcoming
Segment, you must set it at least one day prior to the Segment Start Date.
Similarly, while you can change an existing Performance Cap Threshold at any
time, the revised Performance Cap Threshold will only apply to a Segment if you
make the change at least one day prior to the Segment Start Date. This means
that if you set a new or change an existing Performance Cap Threshold on a
Segment Start Date, that new or revised Performance Cap Threshold will not
affect the participation requirements for any Segment created that day. For
example if you have a Performance Cap Threshold on file of 12%, but change it
to 15% on a Segment Start Date, any amounts in that Segment Type Holding
Account will be transferred into a new Segment of that Segment Type that we
create that day with a Participation Cap Rate of 13%, if the other
participation requirements are met.
PERFORMANCE CAP THRESHOLD DURATION
A Performance Cap Threshold will remain in effect until the PCT Expiry Date.
This means that if the declared Performance Cap Rate for a Segment has not
matched or exceeded your Performance Cap Threshold on any of the scheduled
Segment Start Dates before the
27
CONTRACT FEATURES AND BENEFITS
PCT Expiry Date, any amounts in the applicable Segment Type Holding Account
(including any funds transferred to that holding account after your election)
on the business day immediately preceding the next scheduled Segment Start Date
after the PCT Expiry Date will automatically be transferred into the Segment
created on that Segment Start Date, unless you specify a new Performance Cap
Threshold prior to that date. You must set a new Performance Cap Threshold
prior to the next scheduled Segment Start Date after your Performance Cap
Threshold expires to avoid having amounts automatically transferred into the
associated Segment, which may have a Performance Cap Rate that does not meet
your investment objectives.
In addition, if your Performance Cap Threshold was satisfied on a scheduled
Segment Start Date before the PCT Expiry Date and amounts in the applicable
Segment Type Holding Account were transferred into a Segment, the Performance
Cap Threshold will continue to apply to any amounts you subsequently transfer
into that Segment Type Holding Account until the PCT Expiry Date. A "scheduled
Segment Start Date" includes any date on which a Segment was scheduled to start
but was not offered as of that date. A suspension of the Segment Type will not
extend the PCT Expiry Date.
EXAMPLE 1: Assume you purchase your contract and set a Performance Cap
Threshold of 30% for the S&P 500 Price Return Index/6 year/-20% Standard
Segment Type on March 1 and allocate $25,000 to the holding account for that
Segment Type. If on each of the Segment Start Dates before the PCT Expiry Date
we declare Performance Cap Rates of less than 30%, your $25,000 allocation will
not be transferred to any of those Segments. Your Performance Cap Threshold
will then expire on May 4th and your $25,000 allocation will be transferred to
that Segment on the next Segment Start Date regardless of whether the
Performance Cap Rate we declare is higher, equal to or lower than 30%.
EXAMPLE 2: Assume you purchase your contract and set a Performance Cap
Threshold of 30% for the S&P 500 Price Return Index/6 year/-20% Standard
Segment Type on March 1 and allocate $25,000 to the holding account for that
Segment Type. If on the next Segment Start Date we declare a Performance Cap
Rate of 35% for the Segment, your $25,000 allocation will be transferred to
that Segment. Assume you then allocate another $10,000 to the holding account
for that Segment Type on March 20. Your existing Performance Cap Threshold of
30% remains in effect and will not expire until May 4th. If on the next Segment
Start Date after March 20th we declare a Performance Cap Rate of 28% for the
Segment, your $10,000 allocation will not be transferred to that Segment.
In all cases, if you complete a new Performance Cap Threshold election, it will
override any existing Performance Cap Threshold then in effect. Transferring
funds from a Segment Type Holding Account to one of the variable investment
options will not terminate a Performance Cap Threshold you may have set for the
Segment Type associated with that Segment Type Holding Account.
You can renew a Performance Cap Threshold by completing the appropriate form or
using Online Account Access. If you do not renew a Performance Cap Threshold
for a Segment, your account value in the associated Segment Type Holding
Account will be transferred into a Segment on the next Segment Start Date after
the PCT Expiry Date if the other participation requirements are met, even if
the Performance Cap Rate that we set does not meet your investment objectives.
You will receive confirmation of any Performance Cap Threshold you set that
indicates the date on which the Performance Cap Threshold expires. You can also
monitor your Performance Cap Thresholds, including their expiry dates, using
Online Account Access. We do not provide you with specific advance notice of
the expiry of a Performance Cap Threshold.
If you elect to invest in the Dollar Cap Averaging Program, you may not specify
a Performance Cap Threshold and any Performance Cap Threshold previously
established will no longer be valid. By making this election, you agree that
your investment will be transferred into your selected Segments at any declared
Performance Cap Rate, which could include Segments with Performance Cap Rates
that are not acceptable to you.
SEGMENT MATURITY DATE
Your Segment Maturity Date is the Segment Business Day on which a Segment ends.
You will receive advance notice of maturing Segments in which you are currently
invested in your quarterly statement. You will generally also receive a second
advance notice of maturing Segments in which you are currently invested. The
additional notice is available by mail or electronically and is generally
provided at least 30 days before a Segment Maturity Date. You can instruct us
to stop delivering this second notice to you at any time. We reserve the right
to discontinue this second notice at any time.
SEGMENT MATURITY INSTRUCTIONS. You may specify maturity instructions that tell
us how to allocate the Segment Maturity Value among the investment options and
you can change these instructions at any time. You may tell us either to follow
your instructions on file for new contributions, to withdraw all or part of
your Segment Maturity Value, or to transfer your Segment Maturity Value to the
next available Segment of the same Segment Type, provided the participation
requirements are met. While you may specify or change your maturity
instructions for maturing Segments at any time until the close of business on
the Segment Maturity Date, we recommend submitting new or revised instructions
at least five business days prior to the Segment Maturity Date.
As stated above, you may elect to have maturing Segments invested according to
your instructions on file, and those instructions may include allocations to
different Segment Types, or you may elect to transfer your Segment Maturity
Value to the next available Segment of the same Segment Type in which you are
currently invested. If you take either of these steps, then the designated
portion of your Segment Maturity Value will be transferred to the corresponding
Segment Type Holding Account, as of the close of business on the Segment
Maturity Date. Assuming that all participation requirements are met, the
designated amounts will be treated like any other amounts in a Segment Type
Holding Account. On the next Segment Start Date, the designated amounts in the
Segment Type Holding Account will be transferred into the corresponding
Segment. Typically, this means the designated amounts would be held in a
Segment Type Holding Account for at least one business day.
If you have not provided us with maturity instructions for a maturing Segment,
then by default the Segment Maturity Value will be transferred to the Segment
Type Holding Account for the same Segment Type as the maturing Segment. Your
Segment Maturity Value would then be transferred from that Segment Type Holding
28
CONTRACT FEATURES AND BENEFITS
Account into the next Segment of that Segment Type on the Segment Start Date
except that:
.. if the next Segment to be created in the Segment Type would not meet the
Segment Maturity Date Requirement or that Segment Type has been terminated,
we will instead transfer your Segment Maturity Value to the EQ/Money Market
variable investment option; and
.. if you designate a Performance Cap Threshold that is not met on the next
Segment Start Date or if the Segment Type has been suspended, your Segment
Maturity Value will remain in the Segment Type Holding Account.
.. If you are impacted by these delays, you may transfer your Segment Maturity
Value into another Segment Type Holding Account or any other variable
investment option at any time before the next Segment Start Date.
SEGMENT MATURITY VALUE
We calculate your Segment Maturity Value on the Segment Maturity Date. For
Standard Segments we use your Segment Investment and the Segment Rate of
Return. For Annual Lock Segments we use your Segment Investment and the Annual
Lock Yearly Rate of Return for the first Annual Lock Period and thereafter the
Annual Lock Anniversary Starting Amount and the applicable Annual Lock Yearly
Rate of Return.
For Standard Segments, the Segment Rate of Return is equal to the Index
Performance Rate (the percentage change in the value of the related Index from
the Segment Start Date to the Segment Maturity Date), subject to the
Performance Cap Rate and Segment Buffer, as follows:
-------------------------------------------------------------
YOUR SEGMENT RATE OF
IF THE INDEX PERFORMANCE RATE: RETURN WILL BE:
-------------------------------------------------------------
exceeds the positive, equal to the
Performance Cap Rate Performance Cap Rate
-------------------------------------------------------------
is positive but less than the positive, equal to the Index
Performance Cap Rate Performance Rate
-------------------------------------------------------------
is flat or negative by a equal to 0%
percentage equal to or less
than the Segment Buffer
-------------------------------------------------------------
is negative by a percentage negative, to the extent of
greater than the Segment the percentage exceeding the
Buffer Segment Buffer
-------------------------------------------------------------
For Annual Lock Segments, the Segment Rate of Return is equal to the cumulative
result of each successive Annual Lock Yearly Rate of Return. The Annual Lock
Yearly Rate of Return is equal to the Index Performance Rate (the percentage
change in the value of the related Index from the Segment Start Date to the
first Annual Lock Anniversary and thereafter from one Annual Lock Anniversary
to the next), subject to the Performance Cap Rate and Segment Buffer, as
follows:
-------------------------------------------------------------
YOUR ANNUAL LOCK YEARLY RATE
IF THE INDEX PERFORMANCE RATE OF RETURN FOR THAT ANNUAL
FOR THE ANNUAL LOCK PERIOD: LOCK PERIOD WILL BE:
-------------------------------------------------------------
exceeds the positive, equal to the
Performance Cap Rate Performance Cap Rate
-------------------------------------------------------------
is positive but less than the positive, equal to the Index
Performance Cap Rate Performance Rate
-------------------------------------------------------------
-------------------------------------------------------------
YOUR ANNUAL LOCK YEARLY RATE
IF THE INDEX PERFORMANCE RATE OF RETURN FOR THAT ANNUAL
FOR THE ANNUAL LOCK PERIOD: LOCK PERIOD WILL BE:
-------------------------------------------------------------
is flat or negative by a equal to 0%
percentage equal to or less
than the Segment Buffer
-------------------------------------------------------------
is negative by a percentage negative, to the extent of
greater than the Segment the percentage exceeding the
Buffer Segment Buffer
-------------------------------------------------------------
Your Segment Maturity Value is calculated as follows:
For Standard Segments: We multiply your Segment Investment by your Segment Rate
of Return to get your Segment Return Amount. Your Segment Maturity Value is
equal to your Segment Investment plus or minus your Segment Return Amount. Your
Segment Return Amount may be negative, in which case your Segment Maturity
Value will be less than your Segment Investment. All of these values are based
on the value of the relevant Index on the Segment Start Date and the Segment
Maturity Date. Any fluctuations in the value of the Index between those dates
is ignored in calculating the Segment Maturity Value.
For Annual Lock Segments: We multiply your Segment Investment by your Annual
Lock Yearly Rate of Return for the first year (first Annual Lock Period) to get
your Annual Lock Yearly Return Amount for that year (Annual Lock Period). Your
Annual Lock Anniversary Ending Amount for the first Annual Lock Period is equal
to your Segment Investment plus or minus your Annual Lock Yearly Return Amount
for that Annual Lock Period. Your Annual Lock Yearly Return Amount for that
period may be negative, in which case your Annual Lock Anniversary Ending
Amount for that period will be less than your Segment Investment. The Annual
Lock Anniversary Ending Amount on the first Annual Lock Anniversary is the
Annual Lock Anniversary Starting Amount for the second year (second Annual Lock
Period) that we multiply by the Annual Lock Yearly Rate of Return for that
Annual Lock Period and so on for the remaining Annual Lock Periods until the
Segment Maturity Date (sixth Annual Lock Anniversary). All of these amounts are
based on the change in the value of the relevant Index during the relevant
Annual Lock Period. Any fluctuation in the value of the Index between a Segment
Start Date and the first Annual Lock Anniversary (and between each successive
Annual Lock Anniversary thereafter) is ignored when calculating the Annual Lock
Anniversary Ending Amount.
Please note: (i) the Annual Lock Anniversary Starting Amount is adjusted for
any withdrawals from the Segment; (ii) the Annual Lock Anniversary Starting and
Ending Amounts are used solely to calculate the Segment Maturity Value for
Annual Lock Segments, and are not credited to the contract, are not the Segment
Interim Value, and cannot be received upon surrender or withdrawal; and (iii)
the Annual Lock Anniversary Ending Amount on the sixth Annual Lock Anniversary
is also the Segment Maturity Value.
STANDARD SEGMENT EXAMPLES
Assume that you invest $1,000 in an S&P 500 Price Return Index, 6-year Segment
with a -20% Segment Buffer, we set the Performance Cap Rate for that Segment at
45%, and you make no withdrawal from the Segment.
If the S&P 500 Price Return Index is 50% higher on the Segment Maturity Date
than on the Segment Start Date, you will receive a
29
CONTRACT FEATURES AND BENEFITS
45% Segment Rate of Return, and your Segment Maturity Value would be $1,450. We
reach that amount as follows:
.. The Index Performance Rate (50%) is greater than the Performance Cap Rate
(45%), so the Segment Rate of Return (45%) is equal to the Performance Cap
Rate.
.. The Segment Return Amount ($450) is equal to the Segment Investment
($1,000) multiplied by the Segment Rate of Return (45%).
.. The Segment Maturity Value ($1,450) is equal to the Segment Investment
($1,000) plus the Segment Return Amount ($450).
If the S&P Price Return Index is only 26% higher on the Segment Maturity Date
than on the Segment Start Date, then you will receive a 26% Segment Rate of
Return, and your Segment Maturity Value would be $1,260. We reach that amount
as follows:
.. The Index Performance Rate (26%) is less than the Performance Cap Rate
(45%), so the Segment Rate of Return (26%) is equal to the Index
Performance Rate.
.. The Segment Return Amount ($260) is equal to the Segment Investment
($1,000) multiplied by the Segment Rate of Return (26%).
.. The Segment Maturity Value ($1,260) is equal to the Segment Investment
($1,000) plus the Segment Return Amount ($260).
If the S&P Price Return Index is 10% lower on the Segment Maturity Date than on
the Segment Start Date, then you will receive a 0% Segment Rate of Return, and
your Segment Maturity Value would be $1,000. We reach that amount as follows:
.. The Index Performance Rate is -10% and the Segment Buffer absorbs the first
20% of negative performance, so the Segment Rate of Return is 0%.
.. The Segment Return Amount ($0) is equal to the Segment Investment ($1,000)
multiplied by the Segment Rate of Return (0%).
.. The Segment Maturity Value ($1,000) is equal to the Segment Investment
($1,000) plus the Segment Return Amount ($0).
If the S&P Price Return Index is 30% lower on the Segment Maturity Date than on
the Segment Start Date, then you will receive a -10% Segment Rate of Return,
and your Segment Maturity Value would be $900. We reach that amount as follows:
.. The Index Performance Rate is -30% and the Segment Buffer absorbs the first
20% of negative performance, so the Segment Rate of Return is -10%.
.. The Segment Return Amount (-$100) is equal to the Segment Investment
($1,000) multiplied by the Segment Rate of Return (-10%).
.. The Segment Maturity Value ($900) is equal to the Segment Investment
($1,000) plus the Segment Return Amount (-$100).
ANNUAL LOCK SEGMENT EXAMPLE
Assume that you invest $1,000 in an S&P 500 Price Return Index, 6-year Annual
Lock Segment with a -10% Segment Buffer, we set the Performance Cap Rate for
that Segment at 12%, and you make no withdrawal from the Segment.
Below is a table summarizing the various Index Performance Rates, Annual Lock
Yearly Rates of Return, Annual Lock Yearly Return Amounts and Annual Lock
Anniversary Starting and Ending Amounts for the Annual Lock example that is
described in greater detail immediately following the table.
---------------------------------------------------------------------------------
ANNUAL ANNUAL
ANNUAL LOCK ANNUAL LOCK
INDEX LOCK YEARLY ANNIVERSARY LOCK YEARLY ANNIVERSARY
PERFORMANCE RATE OF STARTING RETURN ENDING
YEAR RATE RETURN AMOUNT AMOUNT AMOUNT
---------------------------------------------------------------------------------
1 13% 12% $1,000.00* $120.00 $1,120.00
---------------------------------------------------------------------------------
2 -5% 0% $1,120.00 $ 0.00 $1,120.00
---------------------------------------------------------------------------------
3 10% 10% $1,120.00 $112.00 $1,232.00
---------------------------------------------------------------------------------
4 -12% -2% $1,232.00 -$ 24.64 $1,207.36
---------------------------------------------------------------------------------
5 11% 11% $1,207.36 $132.81 $1,340.17
---------------------------------------------------------------------------------
6 14% 12% $1,340.17 $160.82 $1,500.99**
---------------------------------------------------------------------------------
* This is also the Segment Investment.
**This is also the Segment Maturity Value.
If the S&P 500 Price Return Index is 13% higher on the first Annual Lock
Anniversary than on the Segment Start Date, you will receive a 12% Annual Lock
Yearly Rate of Return for that Annual Lock Period, and your Annual Lock
Anniversary Ending Amount would be $1,120. We reach that amount as follows:
.. The Index Performance Rate (13%) for the first Annual Lock Period is
greater than the Performance Cap Rate (12%), so the Annual Lock Yearly Rate
of Return (12%) for the first Annual Lock Period is equal to the
Performance Cap Rate.
.. The Annual Lock Yearly Return Amount ($120) for the first Annual Lock
Period is equal to the Segment Investment ($1,000), which is also the first
Annual Lock Anniversery Starting Amount, multiplied by the Annual Lock
Yearly Rate of Return (12%) for the first Annual Lock Period.
.. The Annual Lock Anniversary Ending Amount ($1,120) on the first Annual Lock
Anniversary is equal to the Segment Investment ($1,000) plus the Annual
Lock Yearly Return Amount ($120) for that Annual Lock Period.
.. The first Annual Lock Anniversary Ending Amount is also the second Annual
Lock Anniversary Starting Amount ($1,120).
If the S&P Price Return Index is 5% lower during the second Annual Lock Period,
then you will receive a 0% Annual Lock Yearly Rate of Return for that Annual
Lock Period, and your Annual Lock Anniversary Ending Amount on the second
Annual Lock Anniversary would be $1,120. We reach that amount as follows:
.. The Index Performance Rate (-5%) for the second Annual Lock Period is less
than the Segment Buffer which absorbs the first 10% of negative
performance, so the Annual Lock Yearly Rate of Return for that Annual Lock
Period is 0%.
.. The Annual Lock Yearly Return Amount for the Annual Lock Period ($0) is
equal to the second Annual Lock Anniversary Starting Amount ($1,120)
multiplied by the Annual Lock Yearly Rate of Return for that Annual Lock
Period (0%).
30
CONTRACT FEATURES AND BENEFITS
.. The Annual Lock Anniversary Ending Amount on the second Annual Lock
Anniversary ($1,120) is equal to the second Annual Lock Anniversary
Starting Amount ($1,120) plus the Annual Lock Yearly Return Amount for the
second Annual Lock Period ($0).
If the S&P Price Return Index is 10% higher during the third Annual Lock
Period, then you will receive a 10% Annual Lock Yearly Rate of Return for that
Annual Lock Period, and your Annual Lock Anniversary Ending Amount on the third
Annual Lock Anniversary would be $1,232. We reach that amount as follows:
.. The Index Performance Rate (10%) for the third Annual Lock Period is less
than the Performance Cap Rate (12%), so the Annual Lock Yearly Rate of
Return (10%) for that Annual Lock Period is equal to the Index Performance
Rate.
.. The Annual Lock Yearly Return Amount for that Annual Lock Period ($112) is
equal to the third Annual Lock Anniversary Starting Amount ($1,120)
multiplied by the Annual Lock Yearly Rate of Return for that Annual Lock
Period (10%).
.. The Annual Lock Anniversary Ending Amount on the third Annual Lock
Anniversary ($1,232) is equal to the third Annual Lock Anniversary Starting
Amount ($1,120) plus the Annual Lock Yearly Return Amount for the third
Annual Lock Period ($112).
If the S&P Price Return Index is 12% lower during the fourth Annual Lock
Period, then you will receive a -2% Annual Lock Yearly Rate of Return for that
Annual Lock Period, and your Annual Lock Anniversary Ending Amount on the
fourth Annual Lock Anniversary would be $1207.36. We reach that amount as
follows:
.. The Index Performance Rate (-12%) for the fourth Annual Lock Period is
greater than the Segment Buffer which absorbs the first 10% of negative
performance, so the Annual Lock Yearly Rate of Return for that Annual Lock
Period is -2%.
.. The Annual Lock Yearly Return Amount for that Annual Lock Period (-$24.64)
is equal to the fourth Annual Lock Anniversary Starting Amount ($1,232)
multiplied by the Annual Lock Yearly Rate of Return for that Annual Lock
Period (-2%).
.. The Annual Lock Anniversary Ending Amount on the fourth Annual Lock
Anniversary ($1,207.36) is equal to the fourth Annual Lock Anniversary
Starting Amount ($1,232) plus the Annual Lock Yearly Return Amount for the
fourth Annual Lock Period (-$24.64).
If the S&P Price Return Index is 11% higher during the fifth Annual Lock
Period, then you will receive a 11% Annual Lock Yearly Rate of Return for that
Annual Lock Period, and your Annual Lock Anniversary Ending Amount on the fifth
Annual Lock Anniversary would be $1,340.17. We reach that amount as follows:
.. The Index Performance Rate (11%) for the fifth Annual Lock Period is less
than the Performance Cap Rate (12%), so the Annual Lock Yearly Rate of
Return (11%) for that Annual Lock Period is equal to the Index Performance
Rate.
.. The Annual Lock Yearly Return Amount for that Annual Lock Period ($132.81)
is equal to the fifth Annual Lock Anniversary Starting Amount ($1,207.36)
multiplied by the Annual Lock Yearly Rate of Return for that Annual Lock
Period (11%).
.. The Annual Lock Anniversary Ending Amount on the fifth Annual Lock
Anniversary ($1,340.17) is equal to the fifth Annual Lock Anniversary
Starting Amount ($1,207.36) plus the Annual Lock Yearly Return Amount for
the fifth Annual Lock Period ($132.81).
If the S&P Price Return Index is 14% higher during the sixth Annual Lock
Period, then you will receive a 12% Annual Lock Yearly Rate of Return for that
Annual Lock Period, and your Annual Lock Anniversary Ending Amount on the sixth
Annual Lock Anniversary (which is also the Segment Maturity Date) would be
$1,500.99. We reach that amount as follows:
.. The Index Performance Rate (14%) for the sixth Annual Lock Period is
greater than the Performance Cap Rate (12%), so the Annual Lock Yearly Rate
of Return for that Annual Lock Period is 12%.
.. The Annual Lock Yearly Return Amount for that Annual Lock Period ($160.82)
is equal to the sixth Annual Lock Anniversary Starting Amount ($1,340.17)
multiplied by the Annual Lock Yearly Rate of Return for that Annual Lock
Period (12%).
.. The Annual Lock Anniversary Ending Amount on the sixth Annual Lock
Anniversary ($1,500.99) is equal to the sixth Annual Lock Anniversary
Starting Amount ($1,340.17) plus the Annual Lock Yearly Return Amount for
the sixth Annual Lock Period ($160.82).
.. The Annual Lock Anniversary Ending Amount on the sixth Annual Lock
Anniversary is also the Segment Maturity Value ($1,500.99).
.. The Segment Rate of Return for the above example is 50.1%.
Below is a table summarizing the various Index Performance Rates, Annual Lock
Yearly Rates of Return, Annual Lock Yearly Return Amounts and Annual Lock
Anniversary Starting and Ending Amounts for an Annual Lock example using
different Index Performance Rate assumptions.
--------------------------------------------------------------------------
ANNUAL ANNUAL ANNUAL ANNUAL
LOCK LOCK LOCK LOCK
INDEX YEARLY ANNIVERSARY YEARLY ANNIVERSARY
PERFORMANCE RATE OF STARTING RETURN ENDING
YEAR RATE RETURN AMOUNT AMOUNT AMOUNT
--------------------------------------------------------------------------
1 13% 12% $1,000.00* $120.00 $1,120.00
--------------------------------------------------------------------------
2 -5% 0% $1,120.00 $ 0.00 $1,120.00
--------------------------------------------------------------------------
3 8% 8% $1,120.00 $ 89.60 $1,209.60
--------------------------------------------------------------------------
4 -20% -10% $1,209.60 -$120.96 $1,088.64
--------------------------------------------------------------------------
5 -19% -9% $1,088.64 -$ 97.98 $ 990.66
--------------------------------------------------------------------------
6 -6% 0% $ 990.66 $ 0.00 $ 990.66**
--------------------------------------------------------------------------
* This is also the Segment Investment.
**This is also the Segment Maturity Value.
SETTING THE SEGMENT MATURITY DATE AND SEGMENT START DATE
There will generally be two or more Segment Maturity Dates and Segment Start
Dates each month that the contract is outstanding. The Segment Maturity Date
for Segments maturing and the Segment Start Date for new corresponding Segments
will generally be scheduled to occur on consecutive Business Days that are also
Segment Business Days.
31
CONTRACT FEATURES AND BENEFITS
If a Segment Maturity Date falls on a holiday, the Segment Maturity Date will
generally be the preceding Segment Business Day. If a Segment Start Date falls
on a holiday, the Segment Start Date will generally be the preceding Segment
Business Day unless that preceding Segment Business Day is not in the same
month. In these instances, no Segment will begin until the next scheduled
Segment Start Date. Please see Appendix V later in this prospectus for a
demonstration of the effects that scheduled holidays can have on the Segment
Maturity Date and the Segment Start Date.
EFFECT OF AN EMERGENCY CLOSE. Segments are scheduled to mature and start on
Segment Business Days. The Segment Maturity Date for Segments maturing and the
Segment Start Date for new corresponding Segments starting will generally occur
on consecutive Business Days that are also Segment Business Days. It is
possible that an Index could be affected by an emergency close on a Segment
Business Day, thereby affecting the Index's ability to publish a price and our
ability to mature or start Segments based on the affected Index. Emergency
closes can have two consequences.
1. If the New York Stock Exchange ("NYSE") experiences an emergency close and
cannot publish any prices, we will delay the maturity or start of all
Segments for all Indices.
2. If any Index other than the NYSE experiences an emergency close, we will
delay the maturity and start of the Segments using the affected Index and
mature or start Segments for all unaffected Indices.
The emergency closure of an INDEX OTHER THAN THE NYSE can have a different
effect if it occurs on a Segment Maturity Date rather than a Segment Start
Date. We do not currently offer any such Index, but may in the future.
.. IF AN EMERGENCY CLOSE OCCURS ON A SCHEDULED SEGMENT MATURITY DATE, then the
Segment Maturity Date for that Segment will be delayed until the next
Segment Business Day. The next Segment Business Day would be the Segment
Start Date. If the emergency close only lasted that one day, the Segment
Start Date and the Segment Maturity Date for the affected Segment would
occur on the same day.
.. IF AN EMERGENCY CLOSE OCCURS ON AN INDEX OTHER THAN THE NYSE ON A SCHEDULED
SEGMENT START DATE, then we would not create Segments that utilize the
affected Index. However, on that day we would create Segments that utilize
unaffected Indices. Consequently, Segment Maturity Values designated for
Segment Types that utilize an affected Index would not be allocated to
Segments and would remain in the corresponding Segment Type Holding Account.
If the conditions that cause an emergency close persist, we will use reasonable
efforts to calculate the Segment Maturity Value of any affected Segments. If
the affected Index cannot be priced within eight days, we will contact a
calculating agency, normally a bank we have a contractual relationship with,
which will determine a price to reflect a reasonable estimate of the Index
level.
SUSPENSION, TERMINATION AND CHANGES TO SEGMENT TYPES AND INDICES
We may decide at any time until the close of business on each Segment Start
Date whether to offer any or all of the Segment Types described in this
Prospectus on a Segment Start Date for a particular Segment. We may suspend a
Segment Type for a week, month or a period of several months, or we may
terminate a Segment Type entirely.
If a Segment Type is suspended, your account value will remain in the Segment
Type Holding Account until a Segment of that Segment Type is offered or you
transfer out of the Segment Type Holding Account. We will provide you with
written confirmation when money is not transferred from a Segment Type Holding
Account into a segment due to the suspension of a Segment Type.
If a Segment Type is terminated, your account value in the corresponding
Segment Type Holding Account will be defaulted into the EQ/Money Market
variable investment option on the date that would have been the Segment Start
Date.
We have the right to substitute an alternative index prior to Segment maturity
if the publication of one or more Indices is discontinued or at our sole
discretion we determine that our use of such Indices should be discontinued or
if the calculation of one or more of the Indices is substantially changed. In
addition, we reserve the right to use any or all reasonable methods to end any
outstanding Segments that use such Indices. We also have the right to add
additional Indices under the contract at any time. We would provide notice
about the use of additional or alternative Indices, as soon as practicable, in
a supplement to this Prospectus. If an alternative index is used, its
performance could impact the Index Performance Rate, Segment Rate of Return,
Segment Maturity Value, Annual Lock Yearly Rate of Return, Annual Lock
Anniversary Starting and Ending Amounts and Segment Interim Value. An
alternative index would not change the Segment Buffer or Performance Cap Rate
for an existing Segment. If a similar index cannot be found, we will end the
affected Segments prematurely by applying the Performance Cap Rate and Segment
Buffer that were established on the applicable Segment Start Date to the actual
gains or losses on the original Index as of the date of termination. We would
attempt to choose a substitute index that has a similar investment objective
and risk profile to the replaced index. For example, if the Russell 2000(R)
Index were not available, we might use the NASDAQ or the S&P 400 Price Return
Index.
We reserve the right to offer any or all Segment Types more or less frequently
than we have been or to stop offering any or all of them or to suspend offering
any or all of them temporarily for some or all contracts. If we stop offering
or suspend certain Segment Types, each existing Segment of those Segment Types
will remain invested until its respective Segment Maturity Date.
DOLLAR CAP AVERAGING PROGRAM
Our Dollar Cap Averaging Program ("Program") is an administrative service
designed to systematically invest in any of the available Segments over a
period of either three or six months. The Program invests in the dollar cap
averaging account, which is part of the EQ/Money Market variable investment
option. The dollar cap averaging account has the same rate of return as the
EQ/Money market variable investment option. The Program allows you to gradually
allocate amounts to available Segment Type Holding Accounts by periodically
transferring approximately the same dollar amount to your selected Segment Type
Holding Accounts. Regular allocations to the Segment Type Holding Accounts will
allow you to invest in the Segments at
32
CONTRACT FEATURES AND BENEFITS
different Performance Cap Rates. This plan of investing, however, does not
guarantee that you will earn a profit or be protected against losses. We may,
at any time, exercise our right to terminate transfers to any of the Segment
Type Holding Accounts, limit the number of Segments which you may elect or
discontinue offering the Program.
Under the Dollar Cap Averaging Program, the following applies:
.. The minimum initial contribution required to establish a Program is $25,000.
.. There is no minimum contribution requirement for subsequent contributions
to an existing Program. Subsequent contributions do not extend the time
period of the Program. Subsequent contributions will increase the amount of
each periodic transfer into the designated Segment Type Holding Account(s)
for the remainder of the Program.
.. The Program can be funded from both new contributions to your contract and
transfers from the investment options, including the EQ/Money Market
variable investment option.
.. If you elect to invest in the Program at contract issue, 100% of your
initial contribution must be allocated to the Program. In other words, your
initial contribution cannot be split between your Program and any other
investment option available under the contract.
.. Your allocation instructions for the Program must match your instructions
on file on the day the Program is established. If you change your
allocation instructions on file, the instructions for your Program will
change to match your new allocation instructions.
.. You may not specify a Performance Cap Threshold if you elect to invest in
the Program. This means you will invest in the Segment(s) based on the
Performance Cap Rate declared on the Segment Start Date, which could
include Segments with Performance Cap Rates that are not acceptable to you.
.. We offer time periods of 3 and 6 months. We may also offer other time
periods. You may only have one time period in effect at any time and once
you select a time period, you may not change it.
.. Currently, your account value will be transferred from the Program into
your designated Segment Type Holding Account(s) on a monthly basis (using
the first transfer into a Segment as the starting point for the monthly
transfers). For example, if the first Segment Start Date is the first
Thursday in June, each subsequent Dollar Cap Averaging transfer will
generally occur on the first Thursday of the month until the requested
duration is met. We may offer the Program in the future with transfers on a
different basis. You can learn more about the Program by contacting your
financial professional or our processing office.
.. Transfers from the dollar cap averaging account into the designated Segment
Type Holding Account(s) will occur the business day preceding the next
Segment Start Date. For example, if a contract is issued on January 10th
and the next Segment Start Date is January 16th and January 15th is a
Business Day, the first transfer from the dollar cap averaging account into
the designated Segment Type Holding Account(s) will generally occur on
January 15th.
.. Any transfers or withdrawals from the dollar cap averaging account will
terminate the Program. Upon termination, all funds will be transferred to
the investment options according to your allocation instructions. However,
any forced withdrawals from the dollar cap averaging account as a result of
an RMD will not terminate the Program.
.. If a Segment Type is suspended, any amount in the dollar cap averaging
account destined for that Segment will be transferred to the Segment Type
Holding Account. It will remain there until the next Segment Start Date on
which the Segment is not suspended. If one of the Segment Types is
terminated or discontinued, the value in the terminated Segment Type
Holding Account will be moved to the EQ/Money Market variable investment
option and the Program will continue.
If there are multiple Segments being transferred into as part of the Program
and on the first Segment Start Date one of the Segment Types is suspended,
the Suspended Segment Type will transfer on the next Segment Start Date and
all subsequent transfers will generally occur on the same Thursday of the
month established by the non-suspended transfers.
.. You may cancel your participation in the Program at any time by notifying
us in writing. If you terminate your Program, we will transfer any amount
remaining in the dollar cap averaging account to the investment options
according to your allocation instructions.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your contract, you may exercise
your cancellation right under the contract to receive a refund. To exercise
this cancellation right, you must notify us with a signed letter of instruction
electing this right, to our processing office within 10 days after you receive
your contract. If state law requires, this "free look" period may be longer.
Other state variations may apply. Please contact your financial professional
and/or see Appendix II to find out what applies in your state.
Generally, your refund will equal your account value under the contract on the
day we receive written notification of your decision to cancel the contract and
will reflect any investment gain or loss in the investment options (less the
daily charges we deduct) through the date we receive your contract. This
includes the Segment Interim Value for amounts allocated to existing Segments.
Some states, however, require that we refund the full amount of your
contribution (not reflecting investment gain or loss). In addition, in some
states, the amount of your refund (either your account value or the full amount
of your contributions), and the length of your "free look" period, depend on
whether you purchased the contract as a replacement. Please refer to your
contract or supplemental materials or contact us for more information. For any
IRA contract returned to us within seven days after you receive it, we are
required to refund the full amount of your contribution. When required by
applicable law to return the full amount of your contribution, we will return
the greater of your contribution or your contract's cash value.
33
CONTRACT FEATURES AND BENEFITS
We may require that you wait six months before you may apply for a contract
with us again if:
.. you cancel your contract during the free look period; or
.. you change your mind before you receive your contract whether we have
received your contribution or not.
Please see "Tax information" later in this Prospectus for possible consequences
of cancelling your contract.
If you fully convert an existing traditional IRA contract to a Roth IRA
contract, you may cancel your Roth IRA contract and return to a traditional IRA
contract. Our processing office, or your financial professional, can provide
you with the cancellation instructions.
In addition to the cancellation right described above, you have the right to
surrender your contract, rather than cancel it. Please see "Surrendering your
contract to receive its cash value" in "Accessing your money" later in this
Prospectus. Surrendering your contract may yield results different than
canceling your contract, including a greater potential for taxable income. In
some cases, your cash value upon surrender may be greater than your
contributions to the contract. Please see "Tax information," later in this
Prospectus.
34
CONTRACT FEATURES AND BENEFITS
4. Determining your contract's value
--------------------------------------------------------------------------------
YOUR ACCOUNT VALUE AND CASH VALUE
Your "account value" is the total of: (i) the values you have in the variable
investment options, (ii) the values you have in the Segment Type Holding
Accounts, (iii) the values you have in the Dollar Cap Averaging Program and
(iv) your Segment Interim Values.
Your contract also has a "cash value." At any time before annuity payments
begin, your contract's cash value is equal to the account value less any
applicable withdrawal charges. Please see "Surrender of your contract to
receive its cash value" in "Accessing your money" later in this Prospectus.
YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS, SEGMENT TYPE HOLDING
ACCOUNTS AND THE DOLLAR CAP AVERAGING ACCOUNT
Each variable investment option (including Segment Type Holding Accounts and
the dollar cap averaging account) invests in shares of a corresponding
portfolio. Your value in each variable investment option is measured by
"units." The value of your units will increase or decrease as though you had
invested it in the corresponding portfolio's shares directly. Your value,
however, will be reduced by the amount of the fees and charges that we deduct
under the contract.
--------------------------------------------------------------------------------
UNITS MEASURE YOUR VALUE IN EACH VARIABLE INVESTMENT OPTION.
--------------------------------------------------------------------------------
The unit value for each variable investment option depends on the investment
performance of that option minus daily charges for the variable investment
option fee. Each Segment Type Holding Account and the dollar cap averaging
account are part of the EQ/Money Market variable investment option. On any day,
your value in any variable investment option equals the number of units
credited to that option, adjusted for any units purchased for or deducted from
your contract under that option, multiplied by that day's value for one unit.
The number of your contract units in any variable investment option does not
change unless it is:
(i)increased to reflect additional contributions;
(ii)decreased to reflect a withdrawal (including applicable withdrawal
charges); or
(iii)increased to reflect a transfer into, or decreased to reflect a transfer
out of, a variable investment option.
A description of how unit values are calculated is found in the SAI.
YOUR CONTRACT'S VALUE IN THE STRUCTURED INVESTMENT OPTION
Your value in each Segment on the Segment Maturity Date is calculated as
described under "Segment Rate of Return" in "Contract Features and Benefits"
earlier in this Prospectus.
In setting the Performance Cap Rate that we use in calculating the Segment
Maturity Value or Annual Lock Anniversary Starting and Ending Amounts for
Annual Lock Segments, we assume that you are going to hold a Segment until the
Segment Maturity Date. However, you have the right under the contract to access
amounts in the Segments before the Segment Maturity Date under certain
circumstances. Therefore, we calculate a Segment Interim Value on each business
day, which is also a Segment Business Day, between the Segment Start Date and
the Segment Maturity Date. The method we use to calculate the Segment Interim
Value is different than the method we use to calculate the value of the Segment
on the Segment Maturity Date. Prior to the Segment Maturity Date, we use the
Segment Interim Value to calculate (1) your account value; (2) the amount your
beneficiary would receive as a death benefit; (3), the amount you would receive
if you make a withdrawal from a Segment; (4) the amount you would receive if
you surrender your contract; or (5) the amount you would receive if you cancel
your contract and return it to us for a refund within your state's "free look"
period (unless your state requires that we refund the full amount of your
contribution upon cancellation).
The Segment Interim Value is calculated based on a formula that provides a
treatment for an early distribution that is designed to be consistent with how
distributions at the end of a Segment are treated. Appendix III later in this
Prospectus sets forth the calculation formula as well as numerous hypothetical
examples. The formula is calculated by adding the fair value of three
components. These components provide us with a market value estimate of the
risk of loss and the possibility of gain at the end of a Segment. These
components are used to calculate the Segment Interim Value. The three
components are:
(1)Fair value of hypothetical fixed instruments; plus
(2)Fair value of hypothetical derivatives; plus
(3)Cap calculation factor.
We then compare the sum of the three components above with a limitation based
on the Performance Cap Rate. In particular, the Segment Interim Value is never
greater than the Segment Investment (or most recent Annual Lock Anniversary
Starting Amount, if applicable) multiplied by the portion of the Performance
Cap Rate corresponding to the portion of the Segment Duration (or Annual Lock
Period for Annual Lock Segments) that has elapsed. This limitation is imposed
to discourage owners from withdrawing from a Segment before the Segment
Maturity Date where there may have been significant increases in the relevant
Index early in the Segment Duration. For more information, please see Appendix
III.
EVEN IF THE CORRESPONDING INDEX HAS EXPERIENCED POSITIVE INVESTMENT PERFORMANCE
SINCE THE SEGMENT START DATE, BECAUSE OF THE FACTORS WE TAKE INTO ACCOUNT IN
THE CALCULATION ABOVE, YOUR SEGMENT INTERIM VALUE MAY BE LOWER THAN YOUR
SEGMENT INVESTMENT.
35
DETERMINING YOUR CONTRACT'S VALUE
5. Transferring your money among investment options
--------------------------------------------------------------------------------
TRANSFERRING YOUR ACCOUNT VALUE
At any time before the date annuity payments are to begin, you can transfer
some or all of your account value among the investment options, subject to the
following current limitations:
.. you may not transfer out of a Segment before its Segment Maturity Date.
.. you may not transfer out of a Segment Type Holding Account on a Segment
Start Date.
.. a contribution or transfer into a Segment Type Holding Account on a Segment
Start Date will not be transferred into the Segment that is created on that
Segment Start Date. Your money will be transferred into a Segment on the
next Segment Start Date, provided you meet the participation requirements.
.. you may not contribute or transfer money into a Segment Type Holding
Account and designate a Segment Start Date. The account value in the
Segment Type Holding Account will be transferred on the first Segment Start
date on which you meet the participation requirements.
.. you may not contribute or transfer into a Segment Type Holding Account if
the Segment Maturity Date of the Segment that will be created on the
Segment Start Date would be after the maturity date of your contract.
.. you may not transfer to a Segment if the total number of Segments that
would be active in your contract after such transfer would be greater than
136. If a transfer from a Segment Type Holding Account into a Segment will
cause a contract to exceed this limit, such transfers will be defaulted to
the EQ/Money Market variable investment option. If there are multiple
Segments scheduled to be established on a Segment Start Date, new Segments
will be established in the order of those that would have the largest
initial Segment Investment first until the limit is reached. Any remaining
amount that is not transferred into a Segment will then be defaulted to the
EQ/Money Market variable investment option.
.. transfers from a Segment Type Holding Account to a Segment will not occur
if you do not meet the participation requirements. See "Segment
Participation Requirements" in "Contract features and benefits" earlier in
this Prospectus.
Upon advance notice to you, via a client communication mailing, we may change
or establish additional restrictions on transfers among the investment options,
including limitations on the number, frequency, or dollar amount of transfers.
In addition, we may, at any time, exercise our right to limit or terminate
transfers into any of the variable investment options and to limit the number
of variable investment options which you may elect. We currently do not impose
any transfer restrictions among the variable investment options. A transfer
request does not change your allocation instructions on file. Our current
transfer restrictions are set forth in the "Disruptive transfer activity"
section below.
You may request a transfer in writing using the specified form or on line using
Online Account Access. You must send in all signed written requests directly to
our processing office. Transfer requests should specify:
(1)the contract number,
(2)the dollar amounts or percentage to be transferred, and
(3)the investment options to and from which you are transferring.
We will confirm all transfers in writing.
Please see "Allocating your contributions" in "Contract features and benefits"
for more information about your role in managing your allocations.
We may charge a transfer charge for any transfers among the variable investment
options in excess of 12 transfers in a contract year. We do not deduct a
transfer charge for any transfer made in connection with our Dollar Cap
Averaging Program. For more information, see "Transfer charge" in "Charges and
expenses" later in this Prospectus.
DISRUPTIVE TRANSFER ACTIVITY
You should note that the contract is not designed for professional "market
timing" organizations, or other organizations or individuals engaging in a
market timing strategy. The contract is not designed to accommodate programmed
transfers, frequent transfers or transfers that are large in relation to the
total assets of the underlying portfolio.
Frequent transfers, including market timing and other program trading or
short-term trading strategies, may be disruptive to the underlying portfolios
in which the variable investment options invest. Disruptive transfer activity
may adversely affect performance and the interests of long-term investors by
requiring a portfolio to maintain larger amounts of cash or to liquidate
portfolio holdings at a disadvantageous time or price. For example, when market
timing occurs, a portfolio may have to sell its holdings to have the cash
necessary to redeem the market timer's investment. This can happen when it is
not advantageous to sell any securities, so the portfolio's performance may be
hurt. When large dollar amounts are involved, market timing can also make it
difficult to use long-term investment strategies because a portfolio cannot
predict how much cash it will have to invest. In addition, disruptive transfers
or purchases and redemptions of portfolio investments may impede efficient
portfolio management and impose increased transaction costs, such as brokerage
costs, by requiring the portfolio manager to effect more frequent purchases and
sales of portfolio securities. Similarly, a portfolio may bear increased
administrative costs as a result of the asset level and investment volatility
that accompanies patterns of excessive or short-term trading. Portfolios that
invest a significant portion of their assets in foreign securities or the
securities of small- and mid-capitalization
36
TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS
companies tend to be subject to the risks associated with market timing and
short-term trading strategies to a greater extent than portfolios that do not.
Securities trading in overseas markets present time zone arbitrage
opportunities when events affecting portfolio securities values occur after the
close of the overseas market but prior to the close of the U.S. markets.
Securities of small- and mid-capitalization companies present arbitrage
opportunities because the market for such securities may be less liquid than
the market for securities of larger companies, which could result in pricing
inefficiencies. Please see the prospectuses for the underlying portfolios for
more information on how portfolio shares are priced.
We currently use the procedures described below to discourage disruptive
transfer activity. You should understand, however, that these procedures are
subject to the following limitations: (1) they primarily rely on the policies
and procedures implemented by the underlying portfolios; (2) they do not
eliminate the possibility that disruptive transfer activity, including market
timing, will occur or that portfolio performance will be affected by such
activity; and (3) the design of market timing procedures involves inherently
subjective judgments, which we seek to make in a fair and reasonable manner
consistent with the interests of all contract owners.
We offer investment options with underlying portfolios that are part of the EQ
Advisors Trust (the "trust"). The trust has adopted policies and procedures
regarding disruptive transfer activity. The trust discourages frequent
purchases and redemptions of portfolio shares and will not make special
arrangements to accommodate such transactions. The trust aggregates inflows and
outflows for each portfolio on a daily basis. On any day when a portfolio's net
inflows or outflows exceed an established monitoring threshold, the trust
obtains from us contract owner trading activity. The trust currently considers
transfers into and out of (or vice versa) the same variable investment option
within a five business day period as potentially disruptive transfer activity.
In most cases, the trust reserves the right to reject a transfer that it
believes, in its sole discretion, is disruptive (or potentially disruptive) to
the management of one of its portfolios. Please see the prospectuses for the
trust for more information.
When a contract owner is identified in connection with potentially disruptive
transfer activity for the first time, a letter is sent to the contract owner
explaining that there is a policy against disruptive transfer activity and that
if such activity continues certain transfer privileges may be eliminated. If
and when the contract owner is identified a second time as engaged in
potentially disruptive transfer activity under the contract, we currently
prohibit the use of voice, fax and automated transaction services. We currently
apply such action for the remaining life of each affected contract. We or a
trust may change the definition of potentially disruptive transfer activity,
the monitoring procedures and thresholds, any notification procedures, and the
procedures to restrict this activity. Any new or revised policies and
procedures will apply to all contract owners uniformly. We do not permit
exceptions to our policies restricting disruptive transfer activity.
It is possible that a trust may impose a redemption fee designed to discourage
frequent or disruptive trading by contract owners. As of the date of this
prospectus, the trusts had not implemented such a fee. If a redemption fee is
implemented by a trust, that fee, like any other trust fee, will be borne by
the contract owner.
Contract owners should note that it is not always possible for us and the
underlying trusts to identify and prevent disruptive transfer activity. In
addition, because we do not monitor for all frequent trading at the separate
account level, contract owners may engage in frequent trading which may not be
detected, for example, due to low net inflows or outflows on the particular
day(s). Therefore, no assurance can be given that we or the trusts will
successfully impose restrictions on all potentially disruptive transfers.
Because there is no guarantee that disruptive trading will be stopped, some
contract owners may be treated differently than others, resulting in the risk
that some contract owners may be able to engage in frequent transfer activity
while others will bear the effect of that frequent transfer activity. The
potential effects of frequent transfer activity are discussed above.
37
TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS
6. Accessing your money
--------------------------------------------------------------------------------
WITHDRAWING YOUR ACCOUNT VALUE
You have two ways to withdraw your account value before annuity payments begin.
The table below shows the methods available under each type of contract. More
information follows the table. For the tax consequences of taking withdrawals,
see "Tax information" later in this Prospectus.
METHOD OF WITHDRAWAL
---------------------------------------------------
LIFETIME
REQUIRED
MINIMUM
CONTRACT PARTIAL DISTRIBUTION
---------------------------------------------------
NQ Yes No
---------------------------------------------------
Traditional IRA Yes Yes
---------------------------------------------------
Roth IRA Yes No
---------------------------------------------------
QP/(1)/ Yes No
---------------------------------------------------
/(1)/All payments are made to the plan trust, as the owner of the contract. See
"Appendix VI: Purchase considerations for defined benefit and defined
contribution plans" later in this Prospectus.
Withdrawals may be subject to income tax and, unless the taxpayer is over age
59 1/2 or another exception applies, an additional 10% federal income tax
penalty, as described in "Tax information" later in this Prospectus.
--------------------------------------------------------------------------------
ALL REQUESTS FOR WITHDRAWALS MUST BE MADE ON A SPECIFIC FORM THAT WE PROVIDE.
PLEASE SEE "HOW TO REACH US" EARLIER IN THIS PROSPECTUS FOR MORE INFORMATION.
--------------------------------------------------------------------------------
PARTIAL WITHDRAWALS
You may take partial withdrawals from your account value at any time before
annuity payments begin. The minimum amount you may withdraw at any time is
$300. If you request a withdrawal that leaves you with an account value of less
than $500, we reserve the right to terminate the contract and pay you the cash
value. See "Surrender of your contract to receive its cash value" below.
Partial withdrawals in excess of the 10% free withdrawal amount may be subject
to a withdrawal charge (see "10% free withdrawal amount" in "Charges and
expenses" later in this Prospectus).
Partial withdrawals out of Segments are permitted, subject to certain
restrictions. See "How withdrawals are taken from your account value" later in
this section. A partial withdrawal from a Segment will reduce your Segment
Investment in that Segment and, therefore, your Segment Maturity Value for that
Segment. For Annual Lock Segments, a partial withdrawal will also reduce each
Annual Lock Anniversary Starting and Ending Amount. The reduction in the
Segment Investment and each Annual Lock Anniversary Starting and Ending Amount
may be greater than the dollar amount of your withdrawal. For more information,
see Appendix III.
LIFETIME REQUIRED MINIMUM DISTRIBUTION WITHDRAWALS
(TRADITIONAL IRA CONTRACTS ONLY -- SEE "TAX INFORMATION" LATER IN THIS
PROSPECTUS.)
We offer our "automatic required minimum distribution (RMD) service" to help
you meet lifetime required minimum distributions under federal income tax
rules. This is not the exclusive way for you to meet these rules. After
consultation with your tax adviser, you may decide to compute required minimum
distributions (we refer to them as "RMDs") yourself and request partial
withdrawals. In such a case, a withdrawal charge could apply. Before electing
this account-based withdrawal option, you should consider whether annuitization
might be better in your situation. Please refer to "Required minimum
distributions" under "Individual Retirement Arrangements ("IRAs")" in "Tax
information" later in this Prospectus.
This service is not available to qualified plan trust owned contracts.
You may elect this service in the calendar year in which you reach age 70 1/2
or in any later year (other than the first calendar year that your contract is
in force). The minimum amount we will pay out is $250. Currently, RMD payments
will be made annually each December.
We do not impose a withdrawal charge on the RMD payment taken through our
automatic RMD service even if, when added to a partial withdrawal previously
taken in the same contract year, the RMD payments exceed the free withdrawal
amount.
This service does not generate an automatic RMD payment during the first
contract year. Therefore, if you are making a rollover or transfer contribution
to the contract after age 70 1/2, you must take an RMD before the rollover or
transfer. If you do not, any withdrawals that you take during the first
contract year to satisfy your RMD amount may be subject to withdrawal charges,
if applicable, if they exceed the free withdrawal amount.
The RMD amount is based on your entire interest in your traditional IRA
contract whether your investments are allocated to one or more variable
investment options and/or one or more Segments. We will withdraw your RMD
amount from the variable investment options first on a pro rata basis. If there
is insufficient account value in the variable investment options, then we will
withdraw the balance of the RMD amount from the Segment Type Holding Accounts
on a pro rata basis. If there is insufficient value in the variable investment
options and the Segment Type Holding Accounts, we will withdraw amounts from
the Segments on a pro rata basis.
As you approach age 70 1/2 you should consider the effect of allocations to any
Segment. You should consider whether you have a sufficient amount allocated to
the variable investment options under this contract and/or sufficient liquidity
under other traditional IRAs that you maintain in order to satisfy your RMD for
this contract without affecting amounts allocated to a Segment under this
contract.
We will send to traditional IRA owners a form outlining the minimum
distribution options available in the year you reach age 70 1/2 (if you have
not begun your annuity payments before that time).
38
ACCESSING YOUR MONEY
HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE
WITHDRAWALS
Unless you specify otherwise, we will subtract your withdrawals on a pro rata
basis from your value in the variable investment options (excluding the Segment
Type Holding Accounts and dollar cap averaging account). If there is
insufficient value or no value in the variable investment options (excluding
the Segment Type Holding Accounts and dollar cap averaging account), any
additional amount of the withdrawal required or the total amount of the
withdrawal will be taken on a pro rata basis from the Segment Type Holding
Accounts. If there are insufficient funds in the Segment Type Holding Accounts,
any additional amount of the withdrawal required will be taken from the dollar
cap averaging account. If there is insufficient value in the dollar cap
averaging account, we will deduct all or a portion of the withdrawal from the
Segments on a pro rata basis. A partial withdrawal from the Dollar Cap
Averaging Program will terminate the program.
If you specify the investment options from which you want us to deduct your
withdrawal, the following restrictions apply: If the amount of your withdrawal
is equal to or less than your account value in the variable investment options
and Segment Type Holding Accounts, the entire withdrawal must come from the
account value in the variable investment options and Segment Type Holding
Accounts, and the withdrawal cannot be pro rata; you must specify the dollar
amount or percentage withdrawal for the variable investment options and Segment
Type Holding Accounts from which to take the withdrawal. In other words, you
cannot take a withdrawal from the Segments if there is any value remaining in
the variable investment options and Segment Type Holding Accounts.
After 100% of the value has been taken from the variable investment options and
Segment Type Holding Accounts, you can specify the dollar amount or percentage
of the withdrawal to be taken from any Segment.
If you have amounts in a Segment Type Holding Account and you make a withdrawal
on a Segment Start Date, that amount will not be transferred into the Segment
created on that date.
Withdrawals prior to your Segment Maturity Date reduce the Segment Investment
on a pro rata basis by the same proportion that the Segment Interim Value is
reduced on the date of the withdrawal. For Annual Lock Segments, each Annual
Lock Anniversary Ending Amount and Annual Lock Anniversary Starting Amount is
also recalculated. Below is a table summarizing the impact of a withdrawal
during the second Annual Lock Period of an Annual Lock Segment on the Annual
Lock Anniversary Starting Amount (which is equal to the Segment Investment) and
Annual Lock Anniversary Ending Amount that is described in greater detail
immediately following the table.
-----------------------------------------------------------------------------------
BEFORE WITHDRAWAL AFTER WITHDRAWAL
--------------------------- -------------------------
ANNUAL
LOCK ANNUAL ANNUAL
YEARLY LOCK LOCK
INDEX RATE ANNIVERSARY ANNIVERSARY
PERFORMANCE OF SEGMENT ENDING SEGMENT ENDING
YEAR RATE RETURN INVESTMENT* AMOUNT INVESTMENT* AMOUNT
-----------------------------------------------------------------------------------
1 13% 12% $1,000.00 $1,120.00 $900.00 $1,008.00
-----------------------------------------------------------------------------------
1.5 $110.00 withdrawal** (Segment Interim Value at time of
withdrawal is $1,100.00)
-----------------------------------------------------------------------------------
* The first Annual Lock Anniversary Starting Amount is equal to the Segment
Investment.
** $110 is the total amount withdrawn.
Assume $1,000.00 is invested in an Annual Lock Segment. The Index Performance
Rate for the first Annual Lock Period is 13% which is greater than the
Performance Cap Rate of 12%. Therefore, the first Annual Lock Anniversary
Ending Amount is $1,120.00 ($1,000.00 + ($1,000.00 * 12%)). If a withdrawal of
$110.00 is taken during the second Annual Lock Period and the Segment Interim
Value on the date of the withdrawal is $1,100.00) then the recalculated first
Annual Lock Anniversary Starting Amount (which is equal to the Segment
Investment) is $900.00 ($1,000.00 - ($1,000.00 * ($110.00/$1,100.00))). The
recalculated Annual Lock Anniversary Ending Amount is $1,008.00 ($900.00 +
($900.00 * 12%)).
You can request, in advance of your Segment Maturity Date, a withdrawal of your
Segment Maturity Value on the Segment Maturity Date, which is not subject to
the restrictions described above regarding the need to withdraw amounts in
variable investment options and Segment Type Holding Accounts before
withdrawing amounts from Segments. We will only accept a request to withdraw
your Segment Maturity Value if you submit the request within 12 months of the
Segment Maturity Date.
SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE
You may surrender your contract to receive its cash value at any time while an
owner is living (or for contracts with non-natural owners, while the annuitant
is living) and before you begin to receive annuity payments. For a surrender to
be effective, we must receive your written request and your contract at our
processing office. We will determine your cash value on the date we receive the
required information.
You may receive your cash value in a single sum payment or apply it to one or
more of the annuity payout options. See "Your annuity payout options" below.
For the tax consequences of surrenders, see "Tax information" later in this
Prospectus.
When a contract is surrendered in certain states, the free withdrawal amount is
not taken into account when calculating the amount of the withdrawal. See "10%
free withdrawal amount" under "Charges under the contract" in "Charges and
expenses" later in this Prospectus.
WITHDRAWALS TREATED AS SURRENDERS
If you withdraw more than 90% of a contract's current cash value, we will treat
it as a request to surrender the contract for its cash value. In addition, we
have the right to pay the cash value and terminate the contract if no
contributions are made during the last three completed contract years, and the
account value is less than $500, or if you make a withdrawal that would result
in a cash value of less than $500. For the tax consequences of withdrawals, see
"Tax information" later in this Prospectus.
WHEN TO EXPECT PAYMENTS
Generally, we will fulfill requests for payments out of the investment options
within seven calendar days after the date of the transaction to which the
request relates. These transactions may include payment of a death benefit,
payment of any amount you withdraw (less any withdrawal charge) and, upon
surrender or termination, payment of the cash value. We may postpone such
payments or applying proceeds for any period during which:
(1)the New York Stock Exchange is closed or restricts trading,
39
ACCESSING YOUR MONEY
(2)the SEC determines that an emergency exists as a result of which sales of
securities or determination of fair value of an investment option's assets
is not reasonably practicable, or
(3)the SEC, by order, permits us to defer payment to protect people remaining
in the variable investment options.
All payments are made by check and are mailed to you (or the payee named in a
tax-free exchange) by U.S. mail, unless you request that we use an express
delivery or wire transfer service at your expense.
YOUR ANNUITY PAYOUT OPTIONS
The following description assumes annuitization of your entire contract. For
partial annuitization, see "Partial annuitization" below.
Deferred annuity contracts such as Structured Capital Strategies(R) provide for
conversion to payout status at or before the contract's "maturity date." This
is called annuitization. When your contract is annuitized, your Structured
Capital Strategies(R) contract and all its benefits will terminate and will be
converted to a supplemental payout annuity contract ("payout option") that
provides for periodic payments for life or for a specified period of time. In
general, the periodic payment amount is determined by the account value or cash
value of your Structured Capital Strategies(R) contract at the time of
annuitization, the annuity payout option that you select, and the annuity
purchase factor to which that value is applied, as described below. We have the
right to require you to provide any information we deem necessary to provide an
annuity payout option. If an annuity payout is later found to be based on
incorrect information, it will be adjusted on the basis of the correct
information.
Your Structured Capital Strategies(R) contract guarantees that upon
annuitization, your account value will be applied to a guaranteed annuity
purchase factor for a life annuity payout option. We reserve the right, with
advance notice to you, to change your annuity purchase factor any time after
your fifth contract date anniversary and at not less than five year intervals
after the first change. Any change to the annuity purchase factor will only
apply to contributions made after the date of the change. (Please see your
contract and SAI for more information). In addition, you may apply your account
value or cash value, whichever is applicable, to any other annuity payout
option that we may offer at the time of annuitization. We may offer other
payout options not outlined here. Your financial professional can provide
details.
Structured Capital Strategies(R) currently offers you several choices of
annuity payout options.
You can choose from among the annuity payout options listed below. Restrictions
may apply, depending on the type of contract you own and the annuitant's age at
contract issue. We reserve the right to add, remove or change these annuity
payout options at any time.
ANNUITY PAYOUT OPTIONS
---------------------------------------------------------------------------------
Fixed annuity payout options . Life annuity
. Life annuity with period certain
. Life annuity with refund certain
---------------------------------------------------------------------------------
.. LIFE ANNUITY: An annuity that guarantees payments for the rest of the
annuitant's life. Payments end with the last monthly payment before the
annuitant's death. Because there is no continuation of benefits following
the annuitant's death with this payout option, it provides the highest
monthly payment of any of the life annuity options, so long as the
annuitant is living.
.. LIFE ANNUITY WITH PERIOD CERTAIN: An annuity that guarantees payments for
the rest of the annuitant's life. If the annuitant dies before the end of a
selected period of time ("period certain"), payments continue to the
beneficiary for the balance of the period certain. The period certain
cannot extend beyond the annuitant's life expectancy or the joint life
expectancy of the annuitant and the joint annuitant. A life annuity with
period certain is the form of annuity under the contracts that you will
receive if you do not elect a different payout option. In this case the
period certain will be based on the annuitant's age and will not exceed 10
years or the annuitant's life expectancy.
.. LIFE ANNUITY WITH REFUND CERTAIN: An annuity that guarantees payments for
the rest of the annuitant's life. If the annuitant dies before the amount
applied to purchase the annuity option has been recovered, payments to the
beneficiary will continue until that amount has been recovered.
The life annuity, life annuity with period certain, and life annuity with
refund certain payout options are available on a single life or joint and
survivor life basis. The joint and survivor life annuity guarantees payments
for the rest of the annuitant's life and, after the annuitant's death, payments
continue to the survivor.
With fixed annuities, we guarantee fixed annuity payments that will be based
either on the tables of guaranteed annuity purchase factors in your contract or
on our then current annuity purchase factors, whichever is more favorable for
you.
THE AMOUNT APPLIED TO PURCHASE AN ANNUITY PAYOUT OPTION
The amount applied to purchase an annuity payout option varies depending on the
payout option that you choose and the timing of your purchase as it relates to
any withdrawal charges that apply under your contract.
There is no withdrawal charge imposed if you select a life annuity, life
annuity with period certain or life annuity with refund certain. If we are
offering non-life contingent forms of annuities, the withdrawal charge will be
imposed.
PARTIAL ANNUITIZATION. Partial annuitization of nonqualified deferred annuity
contracts is permitted under certain circumstances. You may choose from the
life-contingent annuity payout options described here. We no longer offer a
period certain option for partial annuitization. We require you to elect
partial annuitization on the form we specify. For purposes of this contract we
will effect any partial annuitization as a withdrawal applied to a payout
annuity. See "How withdrawals are taken from your account value" earlier in
this section and also the discussion of "Partial annuitization" in "Tax
information" for more information.
SELECTING AN ANNUITY PAYOUT OPTION
When you select a payout option, we will issue you a separate written agreement
confirming your right to receive annuity payments. We require you to return
your contract before annuity payments begin. Unless you choose a different
payout option, we will pay annuity payments under a
40
ACCESSING YOUR MONEY
life annuity with a maximum period certain of 10 years. The contract owner and
annuitant must meet the issue age and payment requirements.
You can choose the date annuity payments are to begin, but generally it may not
be earlier than thirteen months from the Structured Capital Strategies(R)
contract date. You can change the date your annuity payments are to begin any
time. The date may not be later than your contract's maturity date. Your
contract's maturity date is the date by which you must either take a lump sum
withdrawal or select an annuity payout option. The maturity date is generally
the contract date anniversary that follows the annuitant's 98th birthday.
We will send you a notice with your contract statement one year prior to your
maturity date. Once you have selected an annuity payout option and payments
have begun, no change can be made. If you do not respond to the notice within
30 days following your maturity date, your contract will be annuitized
automatically.
We currently offer different payment frequencies on certain annuity payout
options. In general, the total annual payout will be lower for more frequent
payouts (such as monthly) because of the increased administrative expenses
associated with more frequent payouts. Also, in general, the longer the period
over which we expect to make payments, the lower will be your payment each year.
The amount of the annuity payments will depend on:
(1)the amount applied to purchase the annuity;
(2)the type of annuity chosen;
(3)in the case of a life annuity, the annuitant's age (or the annuitant's and
joint annuitant's ages); and
(4)in certain instances, the sex of the annuitant(s).
The amount applied to provide the annuity payments will be (1) the account
value for any life annuity form, or (2) the cash value for any annuity certain
(an annuity form that does not guarantee payments for a person's lifetime)
except that if the period certain is more than five years, the amount applied
will be no less than 95% of the account value.
If, at the time you elect a payout option, the amount to be applied is less
than $2,000 or the initial payment under the form elected is less than $20
monthly, we reserve the right to pay the account value in a single sum rather
than as payments under the payout option chosen.
Please see Appendix II later in this Prospectus for state variations.
ANNUITY MATURITY DATE
Your contract has a maturity date. The maturity date is based on the age of the
original annuitant at contract issue and cannot be changed other than in
conformance with applicable law, even if you name a new annuitant. The maturity
date is generally the contract date anniversary that follows the annuitant's
98th birthday (or older joint annuitant's, if your contract has joint
annuitants). The maturity date may not be less than thirteen months from your
contract date, unless otherwise stated in your contract. We will send a notice
with the contract statement one year prior to the maturity date. The notice
will include the date of maturity, describe the available annuity payout
options, state the availability of a lump sum payment option, and identify the
default payout option if you do not provide an election by the time of your
contract maturity date. The default payout option is a life annuity with a
maximum period certain of 10 years.
41
ACCESSING YOUR MONEY
7. Charges and expenses
--------------------------------------------------------------------------------
CHARGES THAT AXA EQUITABLE DEDUCTS
We deduct the following charge each day from the net assets of each variable
investment option (including the Segment Type Holding Account and dollar cap
averaging account). This charge is reflected in the unit values of each
variable investment option:
.. A variable investment option fee.
We deduct the following charges from your account value. When we deduct these
charges from your variable investment options, we reduce the number of units
credited to your contract:
.. at the time you make certain withdrawals or surrender your contract, or
your contract is terminated -- a withdrawal charge.
.. at the time annuity payments are to begin -- charges designed to
approximate certain taxes that may be imposed on us, such as premium taxes
in your state. An annuity administrative fee may also apply.
.. at the time you request a transfer in excess of 12 transfers in a contract
year -- a transfer charge (currently, there is no transfer charge).
More information about these charges appears below. We will not increase these
charges for the life of your contract, except as noted. We may reduce certain
charges under group or sponsored arrangements. See "Group or sponsored
arrangements" below.
To help with your retirement planning, we may offer other annuities with
different charges, benefits and features. Please contact your financial
professional for more information.
CHARGES UNDER THE CONTRACTS
VARIABLE INVESTMENT OPTION FEE
We deduct a daily charge from the net assets in each variable investment option
(including the Segment Type Holding Account and dollar cap averaging account)
to compensate us for administrative expenses, sales expenses and certain
expense risks we assume under the contracts. The daily charge shown as an
annual rate of the net assets in each variable investment option is 1.15%.
The expense risk we assume is the risk that our expenses in providing the
benefits and administering the contracts will be greater than we expect. To the
extent that the expense risk charges are not needed to cover the actual
expenses incurred, they may be considered an indirect reimbursement for certain
sales and promotional expenses relating to the contracts. This charge also
compensates us for administrative expenses and a portion of our sales expenses,
under the contract.
On a non-guaranteed basis, we may waive this fee under certain conditions. If
the return on the EQ/Money Market variable investment option on any day is
positive, but lower than the amount of this fee, then we will waive the
difference between the two, so that you do not receive a negative return. If
the return on the EQ/Money Market variable investment option on any day is
negative, we will waive this fee entirely for that day, although your account
value would be reduced by the negative performance of the EQ/Money Market
variable investment option itself. We reserve the right to change or cancel
this provision at any time.
This fee does not apply to amounts held in a Segment.
TRANSFER CHARGE
Currently, we do not charge for transfers among variable investment options
under the contract. However, we reserve the right to charge for any transfers
among variable investment options in excess of 12 per contract year. We will
provide you with advance notice if we decide to assess the transfer charge,
which will never exceed $35 per transfer. The transfer charge is designed to
compensate the company with respect to adminstering the transaction. The charge
is also designed to deter disruptive transfer activity. The transfer charge (if
applicable), will be assessed at the time that the transfer is processed. Each
time you request a transfer from one variable investment option to another, we
will assess the transfer charge (if applicable). Separate requests submitted on
the same day will each be treated as a separate transfer. Any transfer charge
will be deducted from the variable investment options from which the transfer
is made. We will not count transfers from Segment Type Holding Accounts into
Segments on a Segment Start Date, or the allocation of Segment Maturity Value
on a Segment Maturity Date in calculating the number of transfers subject to
this charge. We will also not charge for transfers made in connection with our
Dollar Cap Averaging Program.
SPECIAL SERVICES CHARGES
We deduct a charge for providing the special services described below. These
charges compensate us for the expense of processing each special service. For
certain services, we will deduct from your account value any withdrawal charge
that applies and the charge for the special service. Please note that we may
discontinue some or all of these services without notice.
WIRE TRANSFER CHARGE. We charge $90 for outgoing wire transfers. Unless you
specify otherwise, this charge will be deducted from the amount you request.
EXPRESS MAIL CHARGE. We charge $35 for sending you a check by express mail
delivery. This charge will be deducted from the amount you request.
DUPLICATE CONTRACT CHARGE. We charge $35 for providing a copy of your contract.
The charge for this service can be paid (i) using a credit card acceptable to
AXA Equitable, (ii) by sending a check to our processing office, or (iii) by
any other means we make available to you.
CHECK PREPARATION CHARGE. The standard form of payment for all withdrawals is
direct deposit. If direct deposit instructions are not provided, payment will
be made by check. Currently, we do not charge for check preparation, however,
we reserve the right to impose a charge, which would be deducted from the
amount you request following imposition of such a charge. We reserve the right
to charge a maximum of $85.
42
CHARGES AND EXPENSES
CHARGE FOR THIRD-PARTY TRANSFER OR EXCHANGE. Currently, we are waiving the $65
charge for each third-party transfer or exchange; this waiver may be
discontinued at any time, with or without notice. Absent this waiver, we deduct
a charge from the amount you request for direct rollovers or direct transfers
of amounts from your contract to a third party, such as in the case of a
trustee-to-trustee transfer for an IRA contract, or if you request that your
contract be exchanged for a contract issued by another insurance company. We
reserve the right to increase this charge to a maximum of $125.
WITHDRAWAL CHARGE
A withdrawal charge may apply in three circumstances: (1) you make one or more
withdrawals during a contract year; (2) you surrender your contract to receive
its cash value; or (3) we terminate your contract. The amount of the charge
will depend on whether the 10% free withdrawal amount applies, and the
availability of one or more exceptions.
The withdrawal charge equals a percentage of the contributions withdrawn. The
percentage that applies depends on how long each contribution has been invested
in the contract. We determine the withdrawal charge separately for each
contribution according to the following table:
--------------------------------------------------------------------
CONTRACT YEAR
--------------------------------------------------------------------
1 2 3 4 5 6 7+
--------------------------------------------------------------------
Percentage of contribution 6% 6% 5% 5% 4% 3% 0%
--------------------------------------------------------------------
For purposes of calculating the withdrawal charge, we treat the contract year
in which we receive a contribution as "contract year 1." Amounts withdrawn that
are not subject to the withdrawal charge are not considered withdrawals of any
contribution. We also treat contributions that have been invested the longest
as being withdrawn first. We treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge. However, federal income tax
rules treat earnings under most NQ contracts as withdrawn first. See "Tax
information" later in this Prospectus.
In order to give you the exact dollar amount of the withdrawal you request, we
deduct the amount of the withdrawal and the amount of the withdrawal charge
from your account value. Any amount deducted to pay withdrawal charges is also
subject to that same withdrawal charge percentage.
We deduct the withdrawal amount and the withdrawal charge pro rata from the
variable investment options (excluding the Segment Type Holding Accounts and
dollar cap averaging account). If those amounts are insufficient, we will
deduct all or a portion of the required amounts pro rata from the Segment Type
Holding Accounts. If the amounts in the Segment Type Holding Accounts are still
insufficient, we will deduct all or a portion of the required amounts from the
dollar cap averaging account. If the amount in the dollar cap averaging account
is still insufficient, we deduct all or a portion of the required amounts from
the Segments on a pro rata basis. If you specify that your withdrawal be taken
from specific investment options, the amount of the withdrawal charge will
first be taken from the investment options you specify. If there is
insufficient value in those options to pay the withdrawal charge after your
withdrawal is deducted, then the remainder of the withdrawal charge is deducted
as described above.
Withdrawals from a Segment or a Segment Type Holding Account are subject to the
same withdrawal charge calculations as a withdrawal from any other investment
option. Any withdrawal from a Segment will reduce the Segment Interim Value. A
withdrawal from a Segment Type Holding Account reduces the amount that will be
transferred to a Segment. For more information, see "Structured Investment
Option" in "Contract features and benefits," earlier in this Prospectus.
The withdrawal charge does not apply in the circumstances described below.
10% FREE WITHDRAWAL AMOUNT. Each contract year you can withdraw up to 10% of
your account value without paying a withdrawal charge. The 10% free withdrawal
amount is determined using your account value at the beginning of the contract
year. When a contract is surrendered in certain states, the free withdrawal
amount is not taken into account when calculating the amount of the withdrawal.
DEATH. The withdrawal charge does not apply if the owner dies and a death
benefit is payable to the beneficiary.
DISABILITY, TERMINAL ILLNESS, OR CONFINEMENT TO NURSING HOME. The withdrawal
charge also does not apply if:
(i)An owner (or older joint owner, if applicable) has qualified to receive
Social Security disability benefits as certified by the Social Security
Administration; or
(ii)We receive proof satisfactory to us (including certification by a licensed
physician) that an owner's (or older joint owner's, if applicable) life
expectancy is six months or less; or
(iii)An owner (or older joint owner, if applicable) has been confined to a
nursing home for more than 90 days (or such other period, as required in
your state) as verified by a licensed physician. A nursing home for this
purpose means one that is (a) approved by Medicare as a provider of
skilled nursing care service, or (b) licensed as a skilled nursing home by
the state or territory in which it is located (it must be within the
United States, Puerto Rico, or U.S. Virgin Islands) and meets all of the
following:
-- its main function is to provide skilled, intermediate, or custodial
nursing care;
-- it provides continuous room and board to three or more persons;
-- it is supervised by a registered nurse or licensed practical nurse;
-- it keeps daily medical records of each patient;
-- it controls and records all medications dispensed; and
-- its primary service is other than to provide housing for residents.
We reserve the right to impose a withdrawal charge, in accordance with your
contract and applicable state law, if the conditions described in (i), (ii) or
(iii) above existed at the time a contribution was remitted or if the condition
began within 12 months of the period following remittance. Some states may not
permit us to waive the withdrawal charge in the above circumstances, or may
limit the circumstances for which the withdrawal charge may be waived. Your
financial professional can provide more information or you may contact our
processing office.
43
CHARGES AND EXPENSES
CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES
We deduct a charge designed to approximate certain taxes that may be imposed on
us, such as premium taxes in your state. Generally, we deduct the charge from
the amount applied to provide an annuity pay out option. The current tax charge
that might be imposed varies by jurisdiction and ranges from 0% to 3.5%.
ADJUSTMENTS WITH RESPECT TO EARLY WITHDRAWALS FROM SEGMENTS
We calculate the Segment Interim Value when a withdrawal is taken, whether a
partial withdrawal or a full contract surrender, from a Segment prior to the
Segment Maturity Date. The Segment Interim Value is calculated based on a
formula that provides a treatment for an early distribution that is designed to
be consistent with how distributions at the end of a Segment are treated. For
more information on the calculation of the Segment Interim Value, please see
Appendix III.
CHARGES THAT THE TRUST DEDUCTS
The Trust deducts charges for the following types of fees and expenses:
.. Management fees.
.. 12b-1 fees.
.. Operating expenses, such as trustees' fees, independent auditors' fees,
legal counsel fees, administrative service fees, custodian fees, and
liability insurance.
.. Investment-related expenses, such as brokerage commissions.
These charges are reflected in the daily share price of each portfolio. Since
shares of the Trust are purchased at their net asset value, these fees and
expenses are, in effect, passed on to the variable investment options and are
reflected in their unit values. For more information about these charges,
please refer to the prospectuses for the Trusts.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal
charge or the variable investment option fee, or change the minimum
contribution requirements. We also may change the minimum death benefit or
offer variable investment options that invest in shares of a Trust that are not
subject to the 12b-1 fee. Group arrangements include those in which a trustee
or an employer, for example, purchases contracts covering a group of
individuals on a group basis. Group arrangements are not available for
traditional IRA and Roth IRA contracts. Sponsored arrangements include those in
which an employer allows us to sell contracts to its employees or retirees on
an individual basis.
Our costs for sales and administration generally vary with the size and
stability of the group or sponsoring organization, among other factors. We take
all these factors into account when reducing charges. To qualify for reduced
charges, a group or sponsored arrangement must meet certain requirements, such
as requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy contracts or that have been in
existence less than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in effect
when we approve a contract for issue. We may change these rules from time to
time. Any variation will reflect differences in costs or services and will not
be unfairly discriminatory.
Group or sponsored arrangements may be governed by federal income tax rules,
the Employee Retirement Income Security Act of 1974, or both. We make no
representations with regard to the impact of these and other applicable laws on
such programs. We recommend that employers, trustees, and others purchasing or
making contracts available for purchase under such programs seek the advice of
their own legal and benefits advisers.
OTHER DISTRIBUTION ARRANGEMENTS
We may reduce or eliminate charges when sales are made in a manner that results
in savings of sales and administrative expenses, such as sales through persons
who are compensated by clients for recommending investments and who receive no
commission or reduced commissions in connection with the sale of the contracts.
We will not permit a reduction or elimination of charges where it will be
unfairly discriminatory.
44
CHARGES AND EXPENSES
8. Payment of death benefit
--------------------------------------------------------------------------------
YOUR BENEFICIARY AND PAYMENT OF BENEFIT
You designate your beneficiary when you apply for your contract. You may change
your beneficiary during your lifetime and while the contract is in force. The
change will be effective on the date the written request for the change is
received in our processing office. We are not responsible for any beneficiary
change request that we do not receive. We will send you a written confirmation
when we receive your request. Any part of a death benefit for which there is no
named or designated beneficiary living at your death will be payable in a
single sum to your surviving spouse, if any; if there is no surviving spouse,
then to the surviving children in equal shares; if there are no surviving
children, then to your estate. Under jointly owned contracts, the surviving
owner is considered the beneficiary, and will take the place of any other
beneficiary. In a QP contract, the beneficiary must be the plan trust. If the
contract is owned by a qualified plan trust or other entity, the death benefit
is payable to the entity owner. Where an NQ contract is owned for the benefit
of a minor pursuant to the Uniform Gift to Minors Act or the Uniform Transfers
to Minors Act, the beneficiary must be the estate of the minor.
Subject to applicable laws and regulations, you may impose restrictions on the
timing and manner of the payment of the death benefit to your beneficiary. For
example, your beneficiary designation may specify the form of death benefit
payout (such as a life annuity), provided the payout you elect is one that we
offer both at the time of designation and when the death benefit is payable. In
general, the beneficiary will have no right to change the election. However,
you should be aware that (i) in accordance with current federal income tax
rules, we apply a predetermined death benefit annuity payout election only if
payment of the death benefit amount begins within one year following the date
of death, which payment may not occur if the beneficiary has failed to provide
all required information before the end of that period, (ii) we will not apply
the predetermined death benefit payout election if doing so would violate any
federal income tax rules or any other applicable law, and (iii) a beneficiary
or a successor owner who continues the contract under one of the continuation
options described below will have the right to change your annuity payout
election.
DEATH BENEFIT
The death benefit is equal to the account value as of the date we receive
satisfactory proof of the owner's death, any required instructions for the
method of payment, and all information and forms necessary to effect payment.
EFFECT OF THE OWNER'S DEATH
In general, if the owner dies while the contract is in force, the contract
terminates and the applicable death benefit is paid. If the contract is jointly
owned, the death benefit is payable upon the death of the older owner. If the
contract is owned by a non-natural person, the death of the primary annuitant
triggers rules regarding the death of an owner.
Once we have received notice of the owner's death, we will not make any
transfers from Segment Type Holding Accounts to Segments. Amounts in the
Segment Type Holding Accounts will be defaulted into the EQ/Money Market
variable investment option. When Segments mature, the Segment Maturity Value
will be transferred to the EQ/Money Market variable investment option.
There are various circumstances, however, in which the contract can be
continued by a successor owner or under a Beneficiary continuation option
("BCO"). For contracts with spouses who are joint owners, the surviving spouse
will automatically be able to continue the contract under the "Spousal
continuation" feature, or under our Beneficiary continuation option, as
discussed below. For contracts with non-spousal joint owners, the joint owner
will be able to continue the contract as a successor owner subject to the
limitations discussed below under "Non-spousal joint owner contract
continuation." If you are the sole owner and your spouse is the sole primary
beneficiary, your surviving spouse can continue the contract as a successor
owner, under "Spousal continuation" or under our Beneficiary continuation
option, as discussed below.
If the surviving joint owner is not the surviving spouse, or, for single owner
contracts, if the beneficiary is not the surviving spouse, federal income tax
rules generally require payments of amounts under the contract to be made
within five years of an owner's death (the "5-year rule"). In certain cases, an
individual beneficiary or non-spousal surviving joint owner may opt to receive
payments over his/her life (or over a period not in excess of his/her life
expectancy) if payments commence within one year of the owner's death. Any such
election must be made in accordance with our rules at the time of death.
NON-SPOUSAL JOINT OWNER CONTRACT CONTINUATION
Upon the death of either owner, the surviving joint owner becomes the sole
owner.
Any death benefit (if the older owner dies first) or cash value (if the younger
owner dies first) must be fully paid to the surviving joint owner within five
years, unless one of the exceptions described here applies. The surviving owner
may instead elect to take an installment payout or an annuity payout option we
may offer at the time under the contract, provided payments begin within one
year of the deceased owner's death. If an annuity or installment payout is
elected, the contract terminates and a supplemental contract is issued.
If the older owner dies first, the surviving owner can elect to (1) take a lump
sum payment; (2) take an installment payout or an annuity payout option we may
offer at the time under the contract within one year; (3) continue the contract
for up to five years; or (4) continue the contract under the Beneficiary
continuation option discussed below. If the contract continues, withdrawal
charges will no longer apply, and no additional contributions will be permitted.
If the younger owner dies first, the surviving owner can elect to (1) take a
lump sum payment; (2) take an installment payout or
45
PAYMENT OF DEATH BENEFIT
annuity within one year; (3) continue the contract for up to five years; or
(4) continue the contract under the Beneficiary continuation option discussed
below. If the contract continues, withdrawal charges will continue to apply and
no additional contributions will be permitted. The death benefit becomes
payable to the beneficiary if the older owner dies within five years after the
death of the younger owner.
SPOUSAL CONTINUATION
If you are the contract owner and your spouse is the sole primary beneficiary
or you jointly own the contract with your younger spouse, or if the contract
owner is a non-natural person and you and your younger spouse are joint
annuitants, your spouse may elect to continue the contract as successor owner
upon your death. Spousal beneficiaries (who are not also joint owners) must be
85 or younger as of the date of the deceased spouse's death in order to
continue the contract under Spousal continuation. The determination of spousal
status is made under applicable state law. However, in the event of a conflict
between federal and state law, we follow federal rules.
Upon your death, the younger spouse joint owner (for NQ contracts only) or the
spouse beneficiary (under a single owner contract) may elect to receive the
death benefit, continue the contract under our Beneficiary continuation option
(as discussed below in this section) or continue the contract, as follows:
.. In general, withdrawal charges will no longer apply to contributions made
before your death. Withdrawal charges will apply if additional
contributions are made.
.. If the deceased spouse was the annuitant, the surviving spouse becomes the
annuitant. If the deceased spouse was a joint annuitant, the contract will
become a single annuitant contract.
Where an NQ contract is owned by a Living Trust, as defined in the contract,
and at the time of the annuitant's death the annuitant's spouse is the sole
beneficiary of the Living Trust, the Trustee, as owner of the contract, may
request that the spouse be substituted as annuitant as of the date of the
annuitant's death. No further change of annuitant will be permitted.
Where an IRA contract is owned in a custodial individual retirement account,
and your spouse is the sole beneficiary of the account, the custodian may
request that the spouse be substituted as annuitant after your death.
For jointly owned NQ contracts, if the younger spouse dies first no death
benefit is paid, and the contract continues as follows:
.. If the deceased spouse was the annuitant, the surviving spouse becomes the
annuitant. If the deceased spouse was a joint annuitant, the contract will
become a single annuitant contract.
.. The withdrawal charge schedule remains in effect.
The transfer restrictions on amounts in Segments prior to election of Spousal
continuation remain in place. Any amounts in Segments may not be transferred
out of the Segments until their Segment Maturity Dates. The Segment Maturity
Value may be reinvested in other investment options. However, if the
beneficiary chooses the "5-year rule" they are not permitted to transfer any
account value to any Segment but instead can only transfer account value to a
variable investment option.
If you divorce, Spousal continuation does not apply.
BENEFICIARY CONTINUATION OPTION
This feature permits a designated individual, on the contract owner's death, to
maintain a contract with the deceased contract owner's name on it and receive
distributions under the contract, instead of receiving the death benefit in a
single sum. We make this option available to beneficiaries under traditional
IRA, Roth IRA and NQ contracts, subject to state availability. Please speak
with your financial professional or see Appendix II later in this Prospectus
for further information.
Where an IRA contract is owned in a custodial individual retirement account,
the custodian may reinvest the death benefit in an individual retirement
annuity contract, using the account beneficiary as the annuitant. Please speak
with your financial professional for further information.
BENEFICIARY CONTINUATION OPTION FOR TRADITIONAL IRA AND ROTH IRA CONTRACTS
ONLY. The beneficiary continuation option must be elected by September 30th of
the year following the calendar year of your death and before any other
inconsistent election is made. Beneficiaries who do not make a timely election
will not be eligible for this option.
Generally, payments will be made once a year to the beneficiary over the
beneficiary's life expectancy (determined in the calendar year after your death
and determined on a term certain basis). These payments must begin no later
than December 31st of the calendar year after the year of your death. For sole
spousal beneficiaries, payments may begin by December 31st of the calendar year
in which you would have reached age 70 1/2, if such time is later. For
traditional IRA contracts only, if you die before your Required Beginning Date
for Required Minimum Distributions, as discussed later in this Prospectus in
"Tax information" under "Individual retirement arrangements (IRAs)," the
beneficiary may choose the "5-year rule" option instead of annual payments over
life expectancy. The 5-year rule is always available to beneficiaries under
Roth IRA contracts. If the beneficiary chooses this option, the beneficiary may
take withdrawals as desired, but the entire account value must be fully
withdrawn by December 31st of the calendar year which contains the fifth
anniversary of your death. If the beneficiary chooses this option, they are not
permitted to transfer any account value to any Segment but instead can only
transfer account value to a variable investment option.
Under the beneficiary continuation option for IRA and Roth IRA contracts:
.. The contract continues with your name on it for the benefit of your
beneficiary.
.. The beneficiary replaces the deceased owner as annuitant.
.. This feature is only available if the beneficiary is an individual. Certain
trusts with only individual beneficiaries will be treated as individuals
for this purpose.
.. If there is more than one beneficiary:
-- each beneficiary's share will be separately accounted for. It will be
distributed over the beneficiary's own life expectancy, if payments over
life expectancy are chosen; and
46
PAYMENT OF DEATH BENEFIT
-- if any such beneficiary chooses the "5-year rule" they cannot allocate
any of the account value from the EQ/Money Market (or any other variable
investment option) to a Segment.
.. If there is one beneficiary, the transfer restrictions on amounts in
Segments prior to election of the beneficiary continuation option remain in
place. Any amounts in Segments may not be transferred out of the Segments
until their Segment Maturity Dates. The Segment Maturity Value may be
reinvested in other investment options. However, if the beneficiary has
chosen the "5-year rule," amounts may not be transferred to Segments.
.. A beneficiary who chooses to receive annual payments over his life
expectancy should consult his tax adviser about selecting Segments that
provide sufficient liquidity to satisfy the payout requirements under this
option.
.. The minimum amount that is required in order to elect the beneficiary
continuation option is $5,000 for each beneficiary.
.. The beneficiary may make transfers among the variable investment options
but no additional contributions will be permitted.
.. The beneficiary may choose at any time to withdraw all or a portion of the
account value and no withdrawal charges, if any, will apply.
.. Any partial withdrawal must be at least $300.
.. Your beneficiary will have the right to name a beneficiary to receive any
remaining interest in the contract.
.. Upon the death of your beneficiary, the beneficiary he or she has named has
the option to either continue taking required minimum distributions based
on the remaining life expectancy of the deceased beneficiary or to receive
any remaining interest in the contract in a lump sum. The option elected
will be processed when we receive satisfactory proof of death, any required
instructions for the method of payment and any required information and
forms necessary to effect payment.
BENEFICIARY CONTINUATION OPTION FOR NQ CONTRACTS ONLY. This feature may only be
elected when the NQ contract owner dies before the annuity maturity date,
whether or not the owner and the annuitant are the same person. For purposes of
this discussion, "beneficiary" refers to the successor owner or the surviving
joint owner who elects this feature. This feature must be elected within 9
months following the date of your death and before any other inconsistent
election is made. Beneficiaries who do not make a timely election will not be
eligible for this option.
Generally, payments will be made once a year to the beneficiary over the
beneficiary's life expectancy, determined on a term certain basis and in the
year payments start. These payments must begin no later than one year after the
date of your death and are referred to as "scheduled payments." The beneficiary
may choose the "5-year rule" instead of scheduled payments over life
expectancy. If the beneficiary chooses the 5-year rule, there will be no
scheduled payments. Under the 5-year rule, the beneficiary may take withdrawals
as desired, but the entire account value must be fully withdrawn by the fifth
anniversary of your death.
Under the beneficiary continuation option for NQ contracts:
.. This feature is only available if the beneficiary is an individual. It is
not available for any entity such as a trust, even if all of the
beneficiaries of the trust are individuals.
.. The beneficiary automatically replaces the existing annuitant.
.. The contract continues with your name on it for the benefit of your
beneficiary.
.. If there is more than one beneficiary:
-- each beneficiary's share will be separately accounted for. It will be
distributed over the respective beneficiary's own life expectancy, if
scheduled payments are chosen; and
-- if any such beneficiary chooses the "5-year rule" they cannot allocate
any of the account value from the EQ/Money Market (or any other variable
investment option) to a Segment.
.. If there is one beneficiary, the transfer restrictions on amounts in
Segments prior to the election of the beneficiary continuation option
remain in place. Any amounts in Segments may not be transferred out of the
Segments until their Segment Maturity Dates. The Segment Maturity Value may
be reinvested in other investment options. However, if the beneficiary has
chosen the "5-year rule," amounts may not be invested in Segments.
.. The minimum amount that is required in order to elect the beneficiary
continuation option is $5,000 for each beneficiary.
.. The beneficiary may make transfers among the variable investment options
but no additional contributions will be permitted.
.. If the beneficiary chooses the "5-year rule," withdrawals may be made at
any time. If the beneficiary instead chooses scheduled payments, the
beneficiary may also take withdrawals, in addition to scheduled payments,
at any time.
.. Any partial withdrawals must be at least $300.
.. Your beneficiary will have the right to name a beneficiary to receive any
remaining interest in the contract on the beneficiary's death.
.. Upon the death of your beneficiary, the beneficiary he or she has named has
the option to either continue taking scheduled payments based on the
remaining life expectancy of the deceased beneficiary (if scheduled
payments were chosen) or to receive any remaining interest in the contract
in a lump sum. We will pay any remaining interest in the contract in a lump
sum if your beneficiary elects the 5-year rule. The option elected will be
processed when we receive satisfactory proof of death, any required
instructions for the method of payment and any required information and
forms necessary to effect payment.
If the deceased is the owner or older joint owner:
.. No withdrawal charges will apply to any withdrawals by the beneficiary.
If the deceased is the younger non-spousal joint owner:
.. The contract's withdrawal charge schedule will continue to be applied to
any withdrawal or surrender other than scheduled
47
PAYMENT OF DEATH BENEFIT
payments; the contract's free withdrawal amount will continue to apply to
withdrawals but does not apply to surrenders.
.. We do not impose a withdrawal charge on scheduled payments except if, when
added to any withdrawals previously taken in the same contract year,
including for this purpose a contract surrender, the total amount of
withdrawals and scheduled payments exceed the free withdrawal amount. See
the "Withdrawal charges" in "Charges and expenses" earlier in this
Prospectus.
-------------------
A beneficiary should speak to his or her tax professional about which
continuation option is appropriate for him or her. Factors to consider include,
but are not limited to, the beneficiary's age, need for immediate income and a
desire to continue the contract.
48
PAYMENT OF DEATH BENEFIT
9. Tax information
--------------------------------------------------------------------------------
OVERVIEW
In this part of the Prospectus, we discuss the current federal income tax rules
that generally apply to Structured Capital Strategies(R) contracts owned by
United States individual taxpayers. The tax rules can differ, depending on the
type of contract, whether NQ, traditional IRA Roth IRA or QP, and the
characteristics of the owner. Therefore, we discuss the tax aspects of each
type of contract separately.
Federal income tax rules include the United States laws in the Internal Revenue
Code, and Treasury Department Regulations and IRS interpretations of the
Internal Revenue Code. These tax rules may change without notice. We cannot
predict whether, when, or how these rules could change. Any change could affect
contracts purchased before the change. Congress may also consider proposals to
comprehensively reform or overhaul the United States tax and retirement
systems, which if enacted, could affect the tax benefits of a contract. We
cannot predict what, if any, legislation will actually be proposed or enacted.
We cannot provide detailed information on all tax aspects of the contracts.
Moreover, the tax aspects that apply to a particular person's contract may vary
depending on the facts applicable to that person. We do not discuss state
income and other state taxes, federal income tax and withholding rules for
non-U.S. taxpayers, or federal gift and estate taxes. We also do not discuss
the Employee Retirement Income Security Act of 1974 (ERISA). Transfers of the
contract, rights or values under the contract, or payments under the contract,
for example, amounts due to beneficiaries, may be subject to federal or state
gift, estate or inheritance taxes. You should not rely only on this document,
but should consult your tax adviser before your purchase.
FATCA
Even though this section in the Prospectus discusses consequences to United
States individuals you should be aware that the Foreign Account Tax Compliance
Act ("FATCA") which applies to certain U.S.-source payments may require AXA
Equitable and its affiliates to obtain specified documentation of an entity's
status before payment is made in order to avoid punitive 30% FATCA
withholding. The FATCA rules are initially directed at foreign entities, and
may presume that various U.S. entities are "foreign" unless the U.S. entity has
documented its U.S. status by providing Form W-9. Also, FATCA and related rules
may require us to document the status of certain contractholders, as well as
report contract values and other information for such contractholders. For this
reason AXA Equitable and its affiliates intend to require appropriate status
documentation at purchase, change of ownership, and affected payment
transactions including death benefit payments. FATCA and its related guidance
is extraordinarily complex and its effect varies considerably by type of payor,
type of payee and type of recipient.
BUYING A CONTRACT TO FUND A RETIREMENT ARRANGEMENT
Generally, there are two types of funding vehicles that are available for
Individual Retirement Arrangements ("IRAs"): an individual retirement annuity
contract such as the ones offered in this Prospectus, or an individual
retirement custodial or trusteed account. Annuity contracts can also be
purchased in connection with retirement plans qualified under Section 401(a) of
the Code. How these arrangements work, including special rules applicable to
each, are noted in the specific sections for each type of arrangement, below.
You should be aware that the funding vehicle for a tax-qualified arrangement
does not provide any tax deferral benefit beyond that already provided by the
Code for all permissible funding vehicles. Before choosing an annuity contract,
therefore, you should consider the annuity's features and benefits compared
with the features and benefits of other permissible funding vehicles and the
relative costs of annuities and other such arrangements. You should be aware
that cost may vary depending on the features and benefits made available and
the charges and expenses of the investment options you elect.
TRANSFERS AMONG INVESTMENT OPTIONS
If permitted under the terms of the contract, you can make transfers among
investment options inside the contract without triggering taxable income.
TAXATION OF NONQUALIFIED ANNUITIES
CONTRIBUTIONS
You may not deduct the amount of your contributions to a nonqualified annuity
contract.
CONTRACT EARNINGS
Generally, you are not taxed on contract earnings until you receive a
distribution from your contract, whether as a withdrawal or as an annuity
payment. However, earnings are taxable, even without a distribution:
.. if a contract fails investment diversification requirements as specified in
federal income tax rules (these rules are based on or are similar to those
specified for mutual funds under securities laws);
.. if you transfer a contract, for example, as a gift to someone other than
your spouse (or former spouse);
.. if you use a contract as security for a loan (in this case, the amount
pledged will be treated as a distribution); and
.. if the owner is other than an individual (such as a corporation,
partnership, trust, or other non-natural person). This provision does not
apply to a trust which is a mere agent or nominee for an individual, such
as a typical grantor trust.
Federal tax law requires that all nonqualified deferred annuity contracts that
AXA Equitable and its affiliates issue to you during the same calendar year be
linked together and treated as one contract for calculating the taxable amount
of any distribution from any of those contracts.
49
TAX INFORMATION
ANNUITY PAYMENTS
The following applies to an annuitization of the entire contract. In certain
cases, the contract can be partially annuitized. See "Partial annuitization"
below.
Annuitization under a Structured Capital Strategies(R) contract occurs when
your entire interest under the contract is or has been applied to one or more
payout options intended to amortize amounts over your life or over a period
certain generally limited by the period of your life expectancy. (We do not
currently offer a period certain option without life contingencies.) Annuity
payouts can also be determined on a joint life basis. After annuitization, no
further contributions to the contract may be made, the annuity payout amount
must be paid at least annually, and annuity payments cannot be stopped except
by death or surrender (if permitted under the terms of the contract).
Once annuity payments begin, a portion of each payment is taxable as ordinary
income. You get back the remaining portion without paying taxes on it. This is
your unrecovered investment in the contract. Generally, your investment in the
contract equals the contributions you made, less any amounts you previously
withdrew that were not taxable.
For fixed annuity payments, the tax-free portion of each payment is determined
by (1) dividing your investment in the contract by the total amount you are
expected to receive out of the contract, and (2) multiplying the result by the
amount of the payment. For variable annuity payments, your tax-free portion of
each payment is your investment in the contract divided by the number of
expected payments. If you have a loss on a variable annuity payout in a taxable
year, you may be able to adjust the tax-free amount in subsequent years.
Once you have received the amount of your investment in the contract, all
payments after that are fully taxable. If payments under a life annuity stop
because the annuitant dies, there is an income tax deduction for any
unrecovered investment in the contract.
Your rights to apply amounts under this Structured Capital Strategies(R)
contract to an annuity payout option are described elsewhere in this
Prospectus. If you hold your contract to the maximum maturity age under the
contract we require that a choice be made between taking a lump sum settlement
of any remaining account value or applying any such account value to an annuity
payout option we may offer at the time under the contract. If no affirmative
choice is made, we will apply any remaining account value or interest in the
contract to the default option under the contract at such age. While there is
no specific federal tax guidance as to whether or when an annuity contract is
required to mature, or as to the form of the payments to be made upon maturity,
we believe that this Structured Capital Strategies(R) contract constitutes an
annuity contract under current federal tax rules.
PARTIAL ANNUITIZATION
The consequences described above for annuitization of the entire contract apply
to the portion of the contract which is partially annuitized. A nonqualified
deferred annuity contract is treated as being partially annuitized if a portion
of the contract is applied to an annuity payout option on a life-contingent
basis or for a period certain of at least 10 years. In order to get annuity
payment tax treatment for the portion of the contract applied to the annuity
payout, payments must be made at least annually in substantially equal amounts,
the payments must be designed to amortize the amount applied over life or the
period certain, and the payments cannot be stopped, except by death or
surrender (if permitted under the terms of the contract). The investment in the
contract is split between the partially annuitized portion and the deferred
amount remaining based on the relative values of the amount applied to the
annuity payout and the deferred amount remaining at the time of the partial
annuitization. Also, the partial annuitization has its own annuity starting
date. We do not currently offer a period certain option without life
contingencies.
WITHDRAWALS MADE BEFORE ANNUITY PAYMENTS BEGIN
If you make withdrawals before annuity payments begin under your contract, they
are taxable to you as ordinary income if there are earnings in the contract.
Generally, earnings are your account value less your investment in the
contract. If you withdraw an amount which is more than the earnings in the
contract as of the date of the withdrawal, the balance of the distribution is
treated as a reduction of your investment in the contract and is not taxable.
Collateral assignments are taxable to the extent of any earnings in the
contract at the time any portion of the contract's value is assigned as
collateral. Therefore, if you assign your contract as collateral for a loan
with a third party after the contract is issued, you may have taxable income
even though you receive no payments under the contract. AXA Equitable will
report any income attributable to a collateral assignment on Form 1099-R. Also,
if AXA Equitable makes payments or distributions to the assignee pursuant to
directions under the collateral assignment agreement, any gains in such
payments may be taxable to you and reportable on Form 1099-R even though you do
not receive them.
1035 EXCHANGES
You may purchase a nonqualified deferred annuity through an exchange of another
contract. Normally, exchanges of contracts are taxable events. The exchange
will not be taxable under Section 1035 of the Internal Revenue Code if:
.. the contract that is the source of the funds you are using to purchase the
nonqualified deferred annuity contract is another nonqualified deferred
annuity contract or life insurance or endowment contract.
.. the owner and the annuitant are the same under the source contract and the
contract issued in exchange. If you are using a life insurance or endowment
contract the owner and the insured must be the same on both sides of the
exchange transaction.
In some cases you may make a tax-deferred 1035 exchange from a nonqualified
deferred annuity contract to a "qualified long-term care contract" meeting all
specified requirements under the Code or an annuity contract with a "qualified
long-term care contract" feature (sometimes referred to as a "combination
annuity" contract).
The tax basis, also referred to as your investment in the contract, of the
source contract carries over to the contract issued in exchange.
An owner may direct the proceeds of a partial withdrawal from one nonqualified
deferred annuity contract to purchase or contribute to another nonqualified
deferred annuity contract on a tax-deferred basis. If requirements are met, the
owner may also directly transfer amounts from a nonqualified deferred annuity
contract to a "qualified long-term care contract" or "combination annuity" in
such a partial
50
TAX INFORMATION
1035 exchange transaction. Special forms, agreement between the carriers, and
provision of cost basis information may be required to process this type of an
exchange.
If you are purchasing your contract through a Section 1035 exchange, you should
be aware that AXA Equitable cannot guarantee that the exchange from the source
contract to the contract you are applying for will be treated as a Section 1035
exchange; the insurance company issuing the source contract controls the tax
information reporting of the transaction as a Section 1035 exchange. Because
information reports are not provided and filed until the calendar year after
the exchange transaction, the insurance company issuing the source contract
shows its agreement that the transaction is a 1035 exchange by providing to us
the cost basis of the exchanged source contract when it transfers the money to
us on your behalf.
Even if the contract owner and the insurance companies agree that a full or
partial 1035 exchange is intended, the IRS has the ultimate authority to review
the facts and determine that the transaction should be recharacterized as
taxable in whole or in part.
Section 1035 exchanges are generally not available after the death of the
owner. The destination contract must meet specific post-death payout
requirements to prevent avoidance of the death of owner rules. See "Payment of
death benefit".
SURRENDERS
If you surrender or cancel the contract, the distribution is taxable as
ordinary income (not capital gain) to the extent it exceeds your investment in
the contract.
DEATH BENEFIT PAYMENTS MADE TO A BENEFICIARY AFTER YOUR DEATH
For the rules applicable to death benefits, see "Payment of death benefit"
earlier in this Prospectus. The tax treatment of a death benefit taken as a
single sum is generally the same as the tax treatment of a withdrawal from or
surrender of your contract. The tax treatment of a death benefit taken as
annuity payments is generally the same as the tax treatment of annuity payments
under your contract.
Under the Beneficiary continuation option, the tax treatment of a withdrawal
after the death of the owner taken as a single sum or taken as withdrawals
under the 5-year rule is generally the same as the tax treatment of a
withdrawal from or surrender of your contract.
EARLY DISTRIBUTION PENALTY TAX
If you take distributions before you are age 59 1/2, a penalty tax of 10% of
the taxable portion of your distribution applies in addition to the income tax.
Some of the available exceptions to the pre-age 59 1/2 penalty tax include
distributions made:
.. on or after your death; or
.. because you are disabled (special federal income tax definition); or
.. in the form of substantially equal periodic payments made at least annually
over your life (or your life expectancy) or over the joint lives of you and
your beneficiary (or your joint life expectancies) using an IRS-approved
distribution method.
Please note that it is your responsibility to claim the penalty exception on
your own income tax return and to document eligibility for the exception to the
IRS.
ADDITIONAL TAX ON NET INVESTMENT INCOME
Taxpayers who have modified adjusted gross income ("MAGI") over a specified
amount and who also have specified net investment income in any year may have
to pay an additional surtax of 3.8%. (This tax has been informally referred to
as the "Net Investment Income Tax" or "NIIT"). For this purpose net investment
income includes distributions from and payments under nonqualified annuity
contracts. The threshold amount of MAGI varies by filing status: $200,000 for
single filers; $250,000 for married taxpayers filing jointly, and $125,000 for
married taxpayers filing separately. The tax applies to the lesser of a) the
amount of MAGI over the applicable threshold amount or b) the net investment
income. You should discuss with your tax adviser the potential effect of this
tax.
INVESTOR CONTROL ISSUES
Under certain circumstances, the IRS has stated that you could be treated as
the owner (for tax purposes) of the assets of Separate Account No. 49. If you
were treated as the owner, you would be taxed on income and gains attributable
to the shares of the underlying portfolios.
The circumstances that would lead to this tax treatment would be that, in the
opinion of the IRS, you could control the underlying investment of Separate
Account No. 49. Recently, the IRS has said that the owners of variable
annuities will not be treated as owning the separate account assets provided
the underlying portfolios are restricted to variable life and annuity assets.
The variable annuity owners must have the right only to choose among the
portfolios, and must have no right to direct the particular investment
decisions within the portfolios.
Also we do not believe that these rules apply to the assets of Separate Account
No. 68, because contract owners have no interest in the performance of those
assets.
Although we believe that, under current IRS guidance, you would not be treated
as the owner of the assets of Separate Account No. 49, there are some issues
that remain unclear. For example, the IRS has not issued any guidance as to
whether having a larger number of portfolios available, or an unlimited right
to transfer among them, could cause you to be treated as the owner. We do not
know whether the IRS will ever provide such guidance or whether such guidance,
if unfavorable, would apply retroactively to your contract. Furthermore, the
IRS could reverse its current guidance at any time. We reserve the right to
modify your contract as necessary to prevent you from being treated as the
owner of the assets of Separate Account No 49.
INDIVIDUAL RETIREMENT ARRANGEMENTS ("IRAS")
GENERAL
"IRA" stands for individual retirement arrangement. There are two basic types
of such arrangements, individual retirement accounts and individual retirement
annuities. In an individual retirement account, a trustee or custodian holds
the assets funding the account for the benefit of the IRA owner. The assets
typically include mutual funds and/or individual stocks and securities in a
custodial account, and bank certificates of deposit in a trusteed account. In
an individual retirement annuity, an insurance company issues an annuity
contract that serves as the IRA.
There are two basic types of IRAs, as follows:
.. traditional IRAs, typically funded on a pre-tax basis; and
51
TAX INFORMATION
.. Roth IRAs, funded on an after-tax basis.
Regardless of the type of IRA, your ownership interest in the IRA cannot be
forfeited. You or your beneficiaries who survive you are the only ones who can
receive the IRA's benefits or payments. All types of IRAs qualify for tax
deferral, regardless of the funding vehicle selected.
You can hold your IRA assets in as many different accounts and annuities as you
would like, as long as you meet the rules for setting up and making
contributions to IRAs. However, if you own multiple IRAs, you may be required
to combine IRA values or contributions for tax purposes. For further
information about individual retirement arrangements, you can read Internal
Revenue Service Publications 590-A ("Contributions to Individual Retirement
Arrangements (IRAs)") and 590-B ("Distributions from Individual Retirement
Arrangements (IRAs)"). These publications are usually updated annually, and can
be obtained by contacting the IRS or from the IRS website (www.irs.gov).
AXA Equitable designs its IRA contracts to qualify as "individual retirement
annuities" under Section 408(b) of the Internal Revenue Code. We offer the
Structured Capital Strategies(R) contract in both traditional IRA and Roth IRA
versions.
This Prospectus contains the information that the IRS requires you to have
before you purchase an IRA. The first section covers some of the special tax
rules that apply to traditional IRAs. The next section covers
Roth IRAs. The disclosure generally assumes direct ownership of the individual
retirement annuity contracts. For contracts owned in a custodial individual
retirement account, the disclosure will apply only if you terminate your
account or transfer ownership of the contract to yourself.
We describe the amount and types of charges that may apply to your
contributions under "Charges and expenses" earlier in this Prospectus. We
describe the method of calculating payments under "Accessing your money"
earlier in this Prospectus. We do not guarantee or project growth in variable
income annuitization option payments (as opposed to payments from a fixed
income annuitization option).
We have not applied for opinion letters approving the respective forms of the
traditional IRA and Roth IRA contracts for use as a traditional and Roth IRA,
respectively. This IRS approval is a determination only as to the form of the
annuity. It does not represent a determination of the merits of the annuity as
an investment.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
You can cancel either version of the Structured Capital Strategies(R) IRA
contract (traditional IRA or Roth IRA) by following the directions under "Your
right to cancel within a certain number of days" in "Contract features and
benefits" earlier in this Prospectus. If you cancel a traditional IRA, or Roth
IRA contract, we may have to withhold tax, and we must report the transaction
to the IRS. A contract cancellation could have an unfavorable tax impact.
TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES ("TRADITIONAL IRAS")
CONTRIBUTIONS TO TRADITIONAL IRAS. Individuals may make three different types
of contributions to purchase a traditional IRA or as subsequent contributions
to an existing IRA:
.. "regular" contributions out of earned income or compensation; or
.. tax-free "rollover" contributions; or
.. direct custodian-to-custodian transfers from other traditional IRAs
("direct transfers").
When you make a contribution to your IRA, we require you to tell us whether it
is a regular contribution, rollover contribution, or direct transfer
contribution, and to supply supporting documentation in some cases.
Because the minimum initial contribution AXA Equitable requires to purchase
this contract is larger than the maximum regular contribution you can make to
an IRA for a taxable year, this contract must be purchased through a rollover
or direct transfer contribution.
REGULAR CONTRIBUTIONS TO TRADITIONAL IRAS
LIMITS ON CONTRIBUTIONS. The "maximum regular contribution amount" for any
taxable year is the most that can be contributed to all of your IRAs
(traditional and Roth) as regular contributions for the particular taxable
year. The maximum regular contribution amount depends on age, earnings, and
year, among other things. Generally, $5,500 is the maximum amount that you may
contribute to all IRAs (traditional IRAs and Roth IRAs) for 2017, after
adjustment for cost-of-living changes. When your earnings are below $5,500,
your earned income or compensation for the year is the most you can contribute.
This limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into a traditional IRA. You cannot make
regular traditional IRA contributions for the taxable year in which you reach
age 70 1/2 or any taxable year after that.
If you are at least age 50 at any time during the taxable year for which you
are making a regular contribution to your IRA, you may be eligible to make
additional "catch up contributions" of up to $1,000 to your traditional IRA.
SPECIAL RULES FOR SPOUSES. If you are married and file a joint federal income
tax return, you and your spouse may combine your compensation to determine the
amount of regular contributions you are permitted to make to traditional IRAs
(and Roth IRAs discussed below). Even if one spouse has no compensation, or
compensation under $5,500, married individuals filing jointly can contribute up
to $11,000 per year to any combination of traditional IRAs and Roth IRAs. Any
contributions to Roth IRAs reduce the ability to contribute to traditional IRAs
and vice versa. The maximum amount may be less if earned income is less and the
other spouse has made IRA contributions. No more than a combined total of
$5,500 can be contributed annually to either spouse's traditional and Roth
IRAs. Each spouse owns his or her traditional IRAs and Roth IRAs even if the
other spouse funded the contributions. A working spouse age 70 1/2 or over can
contribute up to the lesser of $5,500 or 100% of "earned income" to a
traditional IRA for a nonworking spouse until the year in which the nonworking
spouse reaches age 70 1/2. Catch-up contributions may be made as described
above for spouses who are at least age 50 but under age 70 1/2 at any time
during the taxable year for which the contribution is being made.
DEDUCTIBILITY OF CONTRIBUTIONS. The amount of traditional IRA contributions
that you can deduct for a taxable year depends on whether you are covered by an
employer-sponsored-tax-favored retirement plan, as defined under special
federal income tax rules. Your Form W-2 will indicate whether or not you are
covered by such a retirement plan.
The federal tax rules governing contributions to IRAs made from current
compensation are complex and are subject to numerous technical
52
TAX INFORMATION
requirements and limitations which vary based on an individual's personal
situation (including his/her spouse). IRS Publication 590-A, ("CONTRIBUTIONS TO
INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAS)") which is updated annually and is
available at www.irs.gov, contains pertinent explanations of the rules
applicable to the current year. The amount of permissible contributions to
IRAs, the amount of IRA contributions which may be deductible, and the
individual's income limits for determining contributions and deductions all may
be adjusted annually for cost of living.
NONDEDUCTIBLE REGULAR CONTRIBUTIONS. If you are not eligible to deduct part or
all of the traditional IRA contribution, you may still make nondeductible
contributions on which earnings will accumulate on a tax-deferred basis. The
combined deductible and nondeductible contributions to your traditional IRA (or
the nonworking spouse's traditional IRA) may not, however, exceed the maximum
$5,000 per person limit for the applicable taxable year ($5,500 for 2017 after
adjustment). The dollar limit is $1,000 higher for people eligible to make age
50-70 1/2 "catch-up" contributions ($6,500 for 2017). You must keep your own
records of deductible and nondeductible contributions in order to prevent
double taxation on the distribution of previously taxed amounts. See
"Withdrawals, payments and transfers of funds out of traditional IRAs" below.
If you are making nondeductible contributions in any taxable year, or you have
made nondeductible contributions to a traditional IRA in prior years and are
receiving distributions from any traditional IRA, you must file the required
information with the IRS. Moreover, if you are making nondeductible traditional
IRA contributions, you must retain all income tax returns and records
pertaining to such contributions until interests in all traditional IRAs are
fully distributed.
WHEN YOU CAN MAKE REGULAR CONTRIBUTIONS. If you file your tax returns on a
calendar year basis like most taxpayers, you have until the April 15 return
filing deadline (without extensions) of the following calendar year to make
your regular traditional IRA contributions for a tax year. Make sure you
designate the year for which you are making the contribution.
ROLLOVER AND DIRECT TRANSFER CONTRIBUTIONS TO TRADITIONAL IRAS
Rollover contributions may be made to a traditional IRA from these "eligible
retirement plans":
.. qualified plans;
.. governmental employer 457(b) plans;
.. 403(b) plans; and
.. other traditional IRAs.
Direct transfer contributions may only be made directly from one traditional
IRA to another.
Any amount contributed to a traditional IRA after you reach age 70 1/2 must be
net of your required minimum distribution for the year in which the rollover or
direct transfer contribution is made.
ROLLOVERS FROM "ELIGIBLE RETIREMENT PLANS" OTHER THAN TRADITIONAL IRAS
Your plan administrator will tell you whether or not your distribution is
eligible to be rolled over. Spousal beneficiaries and spousal alternate payees
under qualified domestic relations orders may roll over funds on the same basis
as the plan participant.
There are two ways to do rollovers:
.. Do it yourself:
You receive a distribution that can be rolled over and you roll it over to a
traditional IRA within 60 days after the date you receive the funds. The
distribution from your eligible retirement plan will be net of 20% mandatory
federal income tax withholding. If you want, you can replace the withheld
funds yourself and roll over the full amount.
.. Direct rollover:
You tell the trustee or custodian of the eligible retirement plan to send
the distribution directly to your traditional IRA issuer. Direct rollovers
are not subject to mandatory federal income tax withholding.
All distributions from a qualified plan, 403(b) plan or governmental employer
457(b) plan are eligible rollover distributions, unless the distributions are:
.. "required minimum distributions" after age 70 1/2 or retirement from
service with the employer; or
.. substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you
and your designated beneficiary; or
.. substantially equal periodic payments made for a specified period of 10
years or more; or
.. hardship withdrawals; or
.. corrective distributions that fit specified technical tax rules; or
.. loans that are treated as distributions; or
.. death benefit payments to a beneficiary who is not your surviving spouse; or
.. qualified domestic relations order distributions to a beneficiary who is
not your current spouse or former spouse.
You should discuss with your tax adviser whether you should consider rolling
over funds from one type of tax qualified retirement plan to another, because
the funds will generally be subject to the rules of the recipient plan. For
example, funds in a governmental employer 457(b) plan are not subject to the
additional 10% federal income tax penalty for premature distributions, but they
may become subject to this penalty if you roll the funds to a different type of
eligible retirement plan, such as a traditional IRA, and subsequently take a
premature distribution.
Rollovers from an eligible retirement plan to a traditional IRA are not subject
to the "one-per-year limit" noted later in this section.
ROLLOVERS OF AFTER-TAX CONTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN
TRADITIONAL IRAS
Any non-Roth after-tax contributions you have made to a qualified plan or
403(b) plan (but not a governmental employer 457(b) plan) may be rolled over to
a traditional IRA (either in a direct rollover or a rollover you do yourself).
When the recipient plan is a traditional IRA, you are responsible for
recordkeeping and calculating the taxable amount of any distributions you take
from that traditional IRA. See "Taxation of payments" later in this Prospectus
under "Withdrawals, payments and transfers of funds out of traditional IRAs."
After-tax contributions in a traditional IRA cannot be rolled over from your
traditional IRA into, or back into, a qualified plan, 403(b) plan or
governmental employer 457(b) plan.
53
TAX INFORMATION
ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS
You may roll over amounts from one traditional IRA to one or more of your other
traditional IRAs if you complete the transaction within 60 days after you
receive the funds. You may make such a rollover only once in every 12-month
period for the same funds. We call this the "one-per-year limit." It is the IRA
owner's responsibility to determine if this rule is met. Trustee-to-trustee or
custodian-to-custodian direct transfers are not rollover transactions. You can
make these more frequently than once in every 12-month period.
SPOUSAL ROLLOVERS AND DIVORCE-RELATED DIRECT TRANSFERS
The surviving spouse beneficiary of a deceased individual can roll over funds
from, or directly transfer funds from, the deceased spouse's traditional IRA to
one or more other traditional IRAs. Also, in some cases, traditional IRAs can
be transferred on a tax-free basis between spouses or former spouses as a
result of a court-ordered divorce or separation decree.
EXCESS CONTRIBUTIONS TO TRADITIONAL IRAS
Excess contributions to IRAs are subject to a 6% excise tax for the year in
which made and for each year after until withdrawn. The following are excess
contributions to IRAs:
.. regular contributions of more than the maximum regular contribution amount
for the applicable taxable year; or
.. regular contributions to a traditional IRA made after you reach age 70 1/2;
or
.. rollover contributions of amounts which are not eligible to be rolled over,
for example, minimum distributions required to be made after age 70 1/2.
You can avoid or limit the excise tax by withdrawing an excess contribution
(rollover or regular). See Publications 590-A and 590-B for further details.
RECHARACTERIZATIONS
Amounts that have been contributed as traditional IRA funds may subsequently be
treated as Roth IRA funds. Special federal income tax rules allow you to change
your mind again and have amounts that are subsequently treated as Roth IRA
funds, once again treated as traditional IRA funds. You do this by using the
forms we prescribe. This is referred to as having "recharacterized" your
contribution.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS
NO FEDERAL INCOME TAX LAW RESTRICTIONS ON WITHDRAWALS. You can withdraw any or
all of your funds from a traditional IRA at any time. You do not need to wait
for a special event like retirement.
TAXATION OF PAYMENTS. Amounts distributed from traditional IRAs are not subject
to federal income tax until you or your beneficiary receive them. Taxable
payments or distributions include withdrawals from your contract, surrender of
your contract and annuity payments from your contract. Death benefits are also
taxable.
We report all payments from traditional IRA contracts on IRS Form 1099-R. You
are responsible for reporting these amounts correctly on your individual income
tax return and keeping supporting records. Except as discussed below, the total
amount of any distribution from a traditional IRA must be included in your
gross income as ordinary income.
If you have ever made nondeductible (after-tax) IRA contributions to any
traditional IRA (it does not have to be to this particular traditional IRA
contract), those contributions are recovered tax-free when you get
distributions from any traditional IRA. It is your responsibility to keep
permanent tax records of all of your nondeductible contributions to traditional
IRAs so that you can correctly report the taxable amount of any distribution on
your own tax return. At the end of any year in which you have received a
distribution from any traditional IRA, you calculate the ratio of your total
nondeductible traditional IRA contributions (less any amounts previously
withdrawn tax free) to the total account balances of all traditional IRAs you
own at the end of the year plus all traditional IRA distributions made during
the year. Multiply this by all distributions from the traditional IRA during
the year to determine the nontaxable portion of each distribution.
A distribution from a traditional IRA is not taxable if:
.. the amount received is a withdrawal of certain excess contributions, as
described in IRS Publications 590-A and 590-B; or
.. the entire amount received is rolled over to another traditional IRA or
other eligible retirement plan which agrees to accept the funds. (See
"Rollovers from eligible retirement plans other than traditional IRAs"
under "Rollover and direct transfer contributions to traditional IRAs"
earlier in this section for more information.)
The following are eligible to receive rollovers of distributions from a
traditional IRA: a qualified plan, a 403(b) plan or a governmental employer 457
plan. After-tax contributions in a traditional IRA cannot be rolled from your
traditional IRA into, or back into, a qualified plan, 403(b) plan or
governmental employer 457 plan. Before you decide to roll over a distribution
from a traditional IRA to another eligible retirement plan, you should check
with the administrator of that plan about whether the plan accepts rollovers
and, if so, the types it accepts. You should also check with the administrator
of the receiving plan about any documents required to be completed before it
will accept a rollover.
Distributions from a traditional IRA are not eligible for favorable ten-year
averaging and long-term capital gain treatment available under limited
circumstances for certain distributions from qualified plans. If you might be
eligible for such tax treatment from your qualified plan, you may be able to
preserve such tax treatment even though an eligible rollover from a qualified
plan is temporarily rolled into a "conduit IRA" before being rolled back into a
qualified plan. See your tax adviser.
IRA DISTRIBUTIONS DIRECTLY TRANSFERRED TO CHARITY. Specified distributions from
IRAs directly transferred to charitable organizations may be tax-free to IRA
owners age 70 1/2 or older. You can direct AXA Equitable to make a distribution
directly to a charitable organization you request whether or not such
distribution might be eligible for favorable tax treatment. Since an IRA owner
is responsible for determining the tax consequences of any distribution from an
IRA, we report the distribution to you on Form 1099-R. After discussing with
your own tax advisor, it is your responsibility to report any distribution
qualifying as a tax-free charitable direct transfer from your IRA on your own
tax return.
54
TAX INFORMATION
REQUIRED MINIMUM DISTRIBUTIONS
BACKGROUND ON REGULATIONS -- REQUIRED MINIMUM DISTRIBUTIONS
Distributions must be made from traditional IRAs according to rules contained
in the Code and Treasury Regulations. Certain provisions of the Treasury
Regulations require that the actuarial present value of additional annuity
contract benefits must be added to the dollar amount credited for purposes of
calculating certain types of required minimum distributions from individual
retirement annuity contracts. For this purpose additional annuity contract
benefits may include, but are not limited to, various guaranteed benefits. This
could increase the amount required to be distributed from the contracts if you
take annual withdrawals instead of annuitizing. Currently we believe that these
provisions would not apply to Structured Capital Strategies(R) contracts
because of the type of benefits provided under the contracts. However, if you
take annual withdrawals instead of annuitizing, please consult your tax adviser
concerning applicability of these complex rules to your situation.
LIFETIME REQUIRED MINIMUM DISTRIBUTIONS. You must start taking annual
distributions from your traditional IRAs for the year in which you turn age
70 1/2.
WHEN YOU HAVE TO TAKE THE FIRST LIFETIME REQUIRED MINIMUM DISTRIBUTION. The
first required minimum distribution is for the calendar year in which you turn
age 70 1/2. You have the choice to take this first required minimum
distribution during the calendar year you actually reach age 70 1/2, or to
delay taking it until the first three-month period in the next calendar year
(January 1 - April 1). Distributions must start no later than your "Required
Beginning Date," which is April 1st of the calendar year after the calendar
year in which you turn age 70 1/2. If you choose to delay taking the first
annual minimum distribution, then you will have to take two minimum
distributions in that year -- the delayed one for the first year and the one
actually for that year. Once minimum distributions begin, they must be made at
some time each year.
HOW YOU CAN CALCULATE REQUIRED MINIMUM DISTRIBUTIONS. There are two approaches
to taking required minimum distributions -- "account-based" or "annuity-based."
ACCOUNT-BASED METHOD. If you choose an account-based method, you divide the
value of your traditional IRA as of December 31st of the past calendar year by
a number corresponding to your age from an IRS table. This gives you the
required minimum distribution amount for that particular IRA for that year. If
your spouse is your sole beneficiary and more than 10 years younger than you,
the dividing number you use may be from another IRS table and may produce a
smaller lifetime required minimum distribution amount. Regardless of the table
used, the required minimum distribution amount will vary each year as the
account value, the actuarial present value of additional annuity contract
benefits, if applicable, and the divisor change. If you initially choose an
account-based method, you may later apply your traditional IRA funds to a life
annuity-based payout with any certain period not exceeding remaining life
expectancy, determined in accordance with IRS tables.
If you choose an account-based method, the RMD amount for your Structured
Capital Strategies(R) traditional IRA contract is calculated with respect to
your entire interest in the contract, including your allocations to one or more
variable investment options and one or more of the Segments in the Structured
Investment Option.
ANNUITY-BASED METHOD. If you choose an annuity-based method, you do not have to
do annual calculations. You apply the account value to an annuity payout for
your life or the joint lives of you and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies, determined in
accordance with IRS tables.
DO YOU HAVE TO PICK THE SAME METHOD TO CALCULATE YOUR REQUIRED MINIMUM
DISTRIBUTIONS FOR ALL OF YOUR TRADITIONAL IRAS AND OTHER RETIREMENT PLANS? No.
If you want, you can choose a different method for each of your traditional
IRAs and other retirement plans. For example, you can choose an annuity payout
from one IRA, a different annuity payout from a qualified plan, and an
account-based annual withdrawal from another IRA.
WILL WE PAY YOU THE ANNUAL AMOUNT EVERY YEAR FROM YOUR TRADITIONAL IRA BASED ON
THE METHOD YOU CHOOSE? We will only pay you automatically if you affirmatively
select an annuity payout option or an account-based withdrawal option such as
our "automatic required minimum distribution (RMD) service." Even if you do not
enroll in our service, we will calculate the amount of the required minimum
distribution withdrawal for you, if you so request in writing. However, in that
case you will be responsible for asking us to pay the required minimum
distribution withdrawal to you.
Also, if you are taking account-based withdrawals from all of your traditional
IRAs, the IRS will let you calculate the required minimum distribution for each
traditional IRA that you maintain, using the method that you picked for that
particular IRA. You can add these required minimum distribution amount
calculations together. As long as the total amount you take out every year
satisfies your overall traditional IRA required minimum distribution amount,
you may choose to take your annual required minimum distribution from any one
or more traditional IRAs that you own.
If you are at an age where you are required to take lifetime required minimum
distributions from traditional IRAs you should consider the effect of
allocations to the Structured Investment Option under a Structured Capital
Strategies(R) traditional IRA contract. You should consider whether you have a
sufficient amount allocated to the Variable Investment Options under this
contract and/or sufficient liquidity under other traditional IRAs that you
maintain in order to satisfy your RMD for this contract without affecting
amounts allocated to the Structured Investment Option under this contract.
Particularly if you hold any portion of your Structured Capital Strategies(R)
IRA account value in Segments, you should make sure to have money invested in
the variable investment options and/or other traditional IRAs in order to have
enough liquidity in the contract or elsewhere to satisfy your RMD withdrawals
without dipping into a Segment.
WHAT IF YOU TAKE MORE THAN YOU NEED TO FOR ANY YEAR? The required minimum
distribution amount for your traditional IRAs is calculated on a year-by-year
basis. There are no carry-back or carry-forward provisions. Also, you cannot
apply required minimum distribution amounts you take from your qualified plans
to the amounts you have to take from your traditional IRAs and vice versa.
WHAT IF YOU TAKE LESS THAN YOU NEED TO FOR ANY YEAR? Your IRA could be
disqualified, and you could have to pay tax on the entire value. Even if your
IRA is not disqualified, you could have to pay a 50% penalty tax on the
shortfall (required amount for traditional IRAs less amount actually taken). It
is your responsibility to meet the
55
TAX INFORMATION
required minimum distribution rules. We will remind you when our records show
that you are within the age group which must take lifetime required minimum
distributions. If you do not select a method with us, we will assume you are
taking your required minimum distribution from another traditional IRA that you
own.
WHAT ARE THE REQUIRED MINIMUM DISTRIBUTION PAYMENTS AFTER YOU DIE? These could
vary depending on whether you die before or after your Required Beginning Date
for lifetime required minimum distribution payments, and the status of your
beneficiary. The following assumes that you have not yet elected an
annuity-based payout at the time of your death. If you elect an annuity-based
payout, payments (if any) after your death must be made at least as rapidly as
when you were alive.
INDIVIDUAL BENEFICIARY. Regardless of whether your death occurs before or after
your Required Beginning Date, an individual death beneficiary calculates annual
post-death required minimum distribution payments based on the beneficiary's
life expectancy using the "term certain method." That is, he or she determines
his or her life expectancy using the IRS-provided life expectancy tables as of
the calendar year after the owner's death and reduces that number by one each
subsequent year.
If you die before your Required Beginning Date, the rules permit any individual
beneficiary, including a spousal beneficiary, to elect instead to apply the
"5-year rule." Under this rule, instead of annual payments having to be made
beginning with the first in the year following the owner's death, the entire
account must be distributed by the end of the calendar year which contains the
fifth anniversary of the owner's death. No distribution is required before that
fifth year.
SPOUSAL BENEFICIARY. If you die after your Required Beginning Date, and your
death beneficiary is your surviving spouse, your spouse has a number of
choices. Post-death distributions may be made over your spouse's single life
expectancy. Any amounts distributed after that surviving spouse's death are
made over the spouse's life expectancy calculated in the year of his/her death,
reduced by one for each subsequent year. In some circumstances, your surviving
spouse may elect to become the owner of the traditional IRA and halt
distributions until he or she reaches age 70 1/2, or roll over amounts from
your traditional IRA into his/her own traditional IRA or other eligible
retirement plan.
If you die before your Required Beginning Date, and the death beneficiary is
your surviving spouse, the rules permit the spouse to delay starting payments
over his/her life expectancy until the year in which you would have attained
age 70 1/2.
NON-INDIVIDUAL BENEFICIARY. If you die after your Required Beginning Date, and
your death beneficiary is a non-individual, such as the estate, the rules
permit the beneficiary to calculate post-death required minimum distribution
amounts based on the owner's life expectancy in the year of death. HOWEVER,
NOTE THAT WE NEED AN INDIVIDUAL ANNUITANT TO KEEP AN ANNUITY CONTRACT IN FORCE.
IF THE BENEFICIARY IS NOT AN INDIVIDUAL, WE MUST DISTRIBUTE AMOUNTS REMAINING
IN THE ANNUITY CONTRACT AFTER THE DEATH OF THE ANNUITANT.
If you die before your Required Beginning Date for lifetime required minimum
distribution payments, and the death beneficiary is a non-individual, such as
the estate, the rules continue to apply the 5-year rule discussed above under
"Individual beneficiary." PLEASE NOTE THAT WE NEED AN INDIVIDUAL ANNUITANT TO
KEEP AN ANNUITY CONTRACT IN FORCE. IF THE BENEFICIARY IS NOT AN INDIVIDUAL, WE
MUST DISTRIBUTE AMOUNTS REMAINING IN THE ANNUITY CONTRACT AFTER THE DEATH OF
THE ANNUITANT.
SPOUSAL CONTINUATION
If the contract is continued under Spousal continuation, the required minimum
distribution rules are applied as if your surviving spouse is the contract
owner.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
IRA death benefits are taxed the same as IRA distributions.
BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS
You cannot get loans from a traditional IRA. You cannot use a traditional IRA
as collateral for a loan or other obligation. If you borrow against your IRA or
use it as collateral, its tax-favored status will be lost as of the first day
of the tax year in which this prohibited event occurs. If this happens, you
must include the value of the traditional IRA in your federal gross income.
Also, the early distribution penalty tax of 10% may apply if you have not
reached age 59 1/2 before the first day of that tax year.
EARLY DISTRIBUTION PENALTY TAX
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a traditional IRA made before you reach age 59 1/2. Some of
the available exceptions to the pre-age 59 1/2 penalty tax include
distributions:
.. made on or after your death; or
.. made because you are disabled (special federal income tax definition); or
.. used to pay for certain extraordinary medical expenses (special federal
income tax definition); or
.. used to pay medical insurance premiums for unemployed individuals (special
federal income tax definition); or
.. used to pay certain first-time home buyer expenses (special federal income
tax definition -- there is a $10,000 lifetime total limit for these
distributions from all your traditional and Roth IRAs); or
.. used to pay certain higher education expenses (special federal income tax
definition); or
.. in the form of substantially equal periodic payments made at least annually
over your life (or your life expectancy), or over the joint lives of you
and your beneficiary (or your joint life expectancies) using an
IRS-approved distribution method.
Please note that it is your responsibility to claim the penalty exception on
your own income tax return and document eligibility for the exception to the
IRS.
ROTH INDIVIDUAL RETIREMENT ANNUITIES ("ROTH IRAS")
This section of the Prospectus covers some of the special tax rules that apply
to Roth IRAs. If the rules are the same as those that apply to the traditional
IRA, we will refer you to the same topic under "traditional IRAs."
The Structured Capital Strategies(R) Roth IRA contracts are designed to qualify
as Roth individual retirement annuities under Sections 408A(b) and 408(b) of
the Internal Revenue Code.
56
TAX INFORMATION
CONTRIBUTIONS TO ROTH IRAS
Individuals may make four different types of contributions to a Roth IRA:
.. regular after-tax contributions out of earnings; or
.. taxable rollover contributions from traditional IRAs or other eligible
retirement plans ("conversion" rollover contributions); or
.. tax-free rollover contributions from other Roth individual retirement
arrangements (or designated Roth accounts under defined contribution
plans); or
.. tax-free direct custodian-to-custodian transfers from other Roth IRAs
("direct transfers").
If you use the forms we require, we will also accept traditional IRA funds
which are subsequently recharacterized as Roth IRA funds following special
federal income tax rules.
Because the minimum initial contribution AXA Equitable requires to purchase
this contract is larger than the maximum regular contribution you can make to
an IRA for a taxable year, this contract must be purchased through a rollover
or direct transfer contribution.
REGULAR CONTRIBUTIONS TO ROTH IRAS
LIMITS ON REGULAR CONTRIBUTIONS. The "maximum regular contribution amount" for
any taxable year is the most that can be contributed to all of your IRAs
(traditional and Roth) as regular contributions for the particular taxable
year. The maximum regular contribution amount depends on age, earnings, and
year, among other things. Generally, $5,500 is the maximum amount that you may
contribute to all IRAs (traditional IRAs and Roth IRAs) for 2017, after
adjustment for cost-of-living changes. This limit does not apply to rollover
contributions or direct custodian-to-custodian transfers into a Roth IRA. Any
contributions to Roth IRAs reduce the ability to contribute to traditional IRAs
and vice versa. When your earnings are below $5,500, your earned income or
compensation for the year is the most you can contribute. If you are married
and file a joint income tax return, you and your spouse may combine your
compensation to determine the amount of regular contributions you are permitted
to make to Roth IRAs and traditional IRAs. See the discussion above under
"Special rules for spouses" earlier in this section under traditional IRAs.
If you or your spouse are at least age 50 at any time during the taxable year
for which you are making a regular contribution, you may be eligible to make
additional catch-up contributions of up to $1,000.
With a Roth IRA, you can make regular contributions when you reach
70 1/2, as long as you have sufficient earnings. The amount of permissible
contributions to Roth IRAs for any year depends on the individual's income
limits and marital status. For example, if you are married and filing
separately for any year your ability to make regular Roth IRA contributions is
greatly limited. The amount of permissible contributions and income limits may
be adjusted annually for cost of living. Please consult IRS Publication 590-A,
("CONTRIBUTIONS TO INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAS)") for the rules
applicable to the current year.
WHEN YOU CAN MAKE CONTRIBUTIONS. Same as traditional IRAs.
DEDUCTIBILITY OF CONTRIBUTIONS. Roth IRA contributions are not tax deductible.
ROLLOVER AND DIRECT TRANSFER CONTRIBUTIONS TO ROTH IRAS
WHAT IS THE DIFFERENCE BETWEEN ROLLOVER AND DIRECT TRANSFER TRANSACTIONS? The
difference between a rollover transaction and a direct transfer transaction is
the following: in a rollover transaction you actually take possession of the
funds rolled over, or are considered to have received them under tax law in the
case of a change from one type of plan to another. In a direct transfer
transaction, you never take possession of the funds, but direct the first Roth
IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly
to the recipient Roth IRA custodian, trustee or issuer. You can make direct
transfer transactions only between identical plan types (for example, Roth IRA
to Roth IRA). You can also make rollover transactions between identical plan
types. However, you can only make rollovers between different plan types (for
example, traditional IRA to Roth IRA).
You may make rollover contributions to a Roth IRA from these sources only:
.. another Roth IRA;
.. a traditional IRA, including a SEP-IRA or SIMPLE IRA (after a two-year
rollover limitation period for SIMPLE IRA funds), in a taxable conversion
rollover ("conversion rollover");
.. a "designated Roth contribution account" under a 401(k) plan, 403(b) plan
or governmental employer Section 457(b) plan (direct or 60-day); or
.. from non-Roth accounts under another eligible retirement plan as described
below under "Conversion rollover contributions to Roth IRAs."
You may make direct transfer contributions to a Roth IRA only from another Roth
IRA.
You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to
Roth IRA direct transfer transactions. This can be accomplished on a completely
tax-free basis. However, you may make Roth IRA to Roth IRA rollover
transactions only once in any 12-month period for the same funds. We call this
the "one-per-year limit." It is the Roth IRA owner's responsibility to
determine if this rule is met. Trustee-to-trustee or custodian-to-custodian
direct transfers can be made more frequently than once a year. Also, if you
send us the rollover contribution to apply it to a Roth IRA, you must do so
within 60 days after you receive the proceeds from the original IRA to get
rollover treatment.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited Roth IRA to one or more other Roth IRAs. In some
cases, Roth IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court-ordered divorce or separation decree.
CONVERSION ROLLOVER CONTRIBUTIONS TO ROTH IRAS
In a conversion rollover transaction, you withdraw (or are considered to have
withdrawn) all or a portion of funds from a traditional IRA you maintain and
convert it to a Roth IRA within 60 days after you receive (or are considered to
have received) the traditional IRA proceeds. Amounts can also be rolled over
from non-Roth accounts under another eligible retirement plan, including a Code
Section 401(a) qualified plan, a 403(b) plan, and a governmental employer
Section 457(b) plan.
57
TAX INFORMATION
Unlike a rollover from a traditional IRA to another traditional IRA, a
conversion rollover transaction from a traditional IRA or other eligible
retirement plan to a Roth IRA is not tax-free. Instead, the distribution from
the traditional IRA or other eligible retirement plan is generally fully
taxable. If you are converting all or part of a traditional IRA, and you have
ever made nondeductible regular contributions to any traditional IRA -- whether
or not it is the traditional IRA you are converting -- a pro rata portion of
the distribution is tax-free. Even if you are under age 59 1/2, the early
distribution penalty tax does not apply to conversion rollover contributions to
a Roth IRA.
Conversion rollover contributions to Roth IRAs are not subject to the
"one-per-year limit" noted earlier in this section.
You cannot make conversion contributions to a Roth IRA to the extent that the
funds in your traditional IRA or other eligible retirement plan are subject to
the lifetime annual required minimum distribution rules.
You cannot convert and reconvert an amount during the same taxable year, or if
later, during the 30-day period following a recharacterization. If you
reconvert during either of these periods, it will be a failed Roth IRA
conversion.
The IRS and Treasury have issued Proposed and Temporary Treasury Regulations
addressing the valuation of annuity contracts funding traditional IRAs in the
conversion to Roth IRAs. Although these Regulations are not clear, they could
require an individual's gross income on the conversion of a traditional IRA to
a Roth IRA to be measured using various actuarial methods and not as if the
annuity contract funding the traditional IRA had been surrendered at the time
of conversion. This could increase the amount of income reported in certain
circumstances.
RECHARACTERIZATIONS
You may be able to treat a contribution made to one type of IRA as having been
made to a different type of IRA. This is called recharacterizing the
contribution.
HOW TO RECHARACTERIZE. To recharacterize a contribution, you generally must
have the contribution transferred from the first IRA (the one to which it was
made) to the second IRA in a deemed trustee-to-trustee transfer. If the
transfer is made by the due date (including extensions) for your tax return for
the year during which the contribution was made, you can elect to treat the
contribution as having been originally made to the second IRA instead of to the
first IRA. It will be treated as having been made to the second IRA on the same
date that it was actually made to the first IRA. You must report the
recharacterization, and must treat the contribution as having been made to the
second IRA, instead of the first IRA, on your tax return for the year during
which the contribution was made.
The contribution will not be treated as having been made to the second IRA
unless the transfer includes any net income allocable to the contribution. You
can take into account any loss on the contribution while it was in the IRA when
calculating the amount that must be transferred. If there was a loss, the net
income you must transfer may be a negative amount.
No deduction is allowed for the contribution to the first IRA and any net
income transferred with the recharacterized contribution is treated as earned
in the second IRA. The contribution will not be treated as having been made to
the second IRA to the extent any deduction was allowed with respect to the
contribution to the first IRA.
For recharacterization purposes, a distribution from a traditional IRA that is
received in one tax year and rolled over into a Roth IRA in the next year, but
still within 60 days of the distribution from the traditional IRA, is treated
as a contribution to the Roth IRA in the year of the distribution from the
traditional IRA.
Roth IRA conversion contributions from a SEP-IRA or SIMPLE IRA can be
recharacterized to a SEP-IRA or SIMPLE IRA (including the original
SEP-IRA or SIMPLE IRA). You cannot recharacterize back to the original plan a
contribution directly rolled over from an eligible retirement plan which is not
a traditional IRA.
The recharacterization of a contribution is not treated as a rollover for
purposes of the 12-month limitation period described above. This rule applies
even if the contribution would have been treated as a rollover contribution by
the second IRA if it had been made directly to the second IRA rather than as a
result of a recharacterization of a contribution to the first IRA.
To recharacterize a contribution you must use our forms.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS
NO FEDERAL INCOME TAX LAW RESTRICTIONS ON WITHDRAWALS. You can withdraw any or
all of your funds from a Roth IRA at any time; you do not need to wait for a
special event like retirement.
DISTRIBUTIONS FROM ROTH IRAS
Distributions include withdrawals from your contract, surrender and termination
of your contract and annuity payments from your contract. Death benefits are
also distributions.
You must keep your own records of regular and conversion contributions to all
Roth IRAs to assure appropriate taxation. You may have to file information on
your contributions to and distributions from any Roth IRA on your tax return.
You may have to retain all income tax returns and records pertaining to such
contributions and distributions until your interests in all Roth IRAs are
distributed.
Like traditional IRAs, taxable distributions from a Roth IRA are not entitled
to the special favorable ten-year averaging and long-term capital gain
treatment available in limited cases to certain distributions from qualified
plans.
The following distributions from Roth IRAs are free of income tax:
.. rollovers from a Roth IRA to another Roth IRA;
.. direct transfers from a Roth IRA to another Roth IRA;
.. qualified distributions from a Roth IRA; and
.. return of excess contributions or amounts recharacterized to a traditional
IRA.
QUALIFIED DISTRIBUTIONS FROM ROTH IRAS. Qualified distributions from Roth IRAs
made because of one of the following four qualifying events or reasons are not
includable in income:
.. you are age 59 1/2 or older; or
.. you die; or
58
TAX INFORMATION
.. you become disabled (special federal income tax definition); or
.. your distribution is a "qualified first-time homebuyer distribution"
(special federal income tax definition; $10,000 lifetime total limit for
these distributions from all of your traditional and Roth IRAs).
You also have to meet a five-year aging period. A qualified distribution is any
distribution made after the five-taxable year period beginning with the first
taxable year for which you made any contribution to any Roth IRA (whether or
not the one from which the distribution is being made).
NONQUALIFIED DISTRIBUTIONS FROM ROTH IRAS. Nonqualified distributions from Roth
IRAs are distributions that do not meet both the qualifying event and five-year
aging period tests described above. If you receive such a distribution, part of
it may be taxable. For purposes of determining the correct tax treatment of
distributions (other than the withdrawal of excess contributions and the
earnings on them), there is a set order in which contributions (including
conversion contributions) and earnings are considered to be distributed from
your Roth IRA. The order of distributions is as follows:
(1)Regular contributions
(2)Conversion contributions, on a first-in-first-out basis (generally, total
conversions from the earliest year first). These conversion contributions
are taken into account as follows:
(a)Taxable portion (the amount required to be included in gross income
because of conversion) first, and then the
(b)Nontaxable portion.
(3)Earnings on contributions.
Rollover contributions from other Roth IRAs are disregarded for this purpose.
To determine the taxable amounts distributed, distributions and contributions
are aggregated or grouped and added together as follows:
(1)All distributions made during the year from all Roth IRAs you maintain --
within any custodian or issuer -- are added together.
(2)All regular contributions made during and for the year (contributions made
after the close of the year, but before the due date of your return) are
added together. This total is added to the total undistributed regular
contributions made in prior years.
(3)All conversion contributions made during the year are added together.
Any recharacterized contributions that end up in a Roth IRA are added to the
appropriate contribution group for the year that the original contribution
would have been taken into account if it had been made directly to the Roth IRA.
Any recharacterized contribution that ends up in an IRA other than a Roth IRA
is disregarded for the purpose of grouping both contributions and
distributions. Any amount withdrawn to correct an excess contribution
(including the earnings withdrawn) is also disregarded for this purpose.
REQUIRED MINIMUM DISTRIBUTIONS
Lifetime minimum distribution requirements do not apply.
REQUIRED MINIMUM DISTRIBUTIONS AT DEATH
Same as traditional IRA under "What are the required minimum distribution
payments after you die?", assuming death before the Required Beginning Date.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
Distributions to a beneficiary generally receive the same tax treatment as if
the distribution had been made to you.
BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS
Same as traditional IRA.
EXCESS CONTRIBUTIONS
Generally the same as traditional IRA, except that regular contributions made
after age 70 1/2 are not "excess contributions."
Excess rollover contributions to Roth IRAs are contributions not eligible to be
rolled over.
You can withdraw or recharacterize any contribution to a Roth IRA before the
due date (including extensions) for filing your federal income tax return for
the tax year. If you do this, you must also withdraw or recharacterize any
earnings attributable to the contribution.
EARLY DISTRIBUTION PENALTY TAX
Same as traditional IRA.
FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING
We must withhold federal income tax from distributions from annuity contracts
and specified tax-favored savings or retirement plans or arrangements. You may
be able to elect out of this income tax withholding in some cases. Generally,
we do not have to withhold if your distributions are not taxable. The rate of
withholding will depend on the type of distribution and, in certain cases, the
amount of your distribution. Any income tax withheld is a credit against your
income tax liability. If you do not have sufficient income tax withheld or do
not make sufficient estimated income tax payments, you may incur penalties
under the estimated income tax rules.
You must file your request not to withhold in writing before the payment or
distribution is made. Our processing office will provide forms for this
purpose. You cannot elect out of withholding unless you provide us with your
correct Taxpayer Identification Number and a United States residence address.
You cannot elect out of withholding if we are sending the payment out of the
United States.
You should note the following special situations:
.. we might have to withhold and/or report on amounts we pay under a free look
or cancellation.
.. we are required to withhold on the gross amount of a distribution from a
Roth IRA to the extent it is reasonable for us to believe that a
distribution is includable in your gross income. This may result in tax
being withheld even though the Roth IRA distribution is ultimately not
taxable.
Special withholding rules apply to United States citizens residing outside of
the United States, foreign recipients, and certain U. S. entity recipients
which are treated as foreign because they fail to document
59
TAX INFORMATION
their U.S. status before payment is made. We do not discuss these rules here in
detail. However, we may require additional documentation in the case of
payments made to United States persons living abroad and non-United States
persons (including U.S. entities treated as foreign) prior to processing any
requested transaction.
Certain states have indicated that state income tax withholding will also apply
to payments from the contracts made to residents. Generally, an election out of
federal withholding will also be considered an election out of state
withholding. In some states, you may elect out of state withholding, even if
federal withholding applies. In some states, the income tax withholding is
completely independent of federal income tax withholding. If you need more
information concerning a particular state or any required forms, call our
processing office at the toll-free number.
FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS
Federal tax rules require payers to withhold differently on "periodic" and
"non-periodic" payments. Payers are to withhold from periodic annuity payments
as if the payments were wages. The annuity contract owner is to specify marital
status and the number of withholding exemptions claimed on an IRS Form W-4P or
similar substitute election form. If the owner does not claim a different
number of withholding exemptions or marital status, the payer is to withhold
assuming that the owner is married and claiming three withholding exemptions.
If the owner does not provide the owner's correct Taxpayer Identification
Number a payer is to withhold from periodic annuity payments as if the owner
were single with no exemptions.
A contract owner's withholding election remains effective unless and until the
owner revokes it. The contract owner may revoke or change a withholding
election at any time.
FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS (WITHDRAWALS)
Non-periodic distributions include partial withdrawals, total surrenders and
death benefits. Payers generally withhold federal income tax at a flat 10% rate
from (i) the taxable amount in the case of nonqualified contracts, and (ii) the
payment amount in the case of traditional IRAs and Roth IRAs, where it is
reasonable to assume an amount is includable in gross income.
IMPACT OF TAXES TO AXA EQUITABLE
The contracts provide that we may charge Separate Account No. 49 for taxes. We
do not now, but may in the future set up reserves for such taxes.
We are entitled to certain tax benefits related to the investment of company
assets, including assets of the separate account. These tax benefits, which may
include the foreign tax credit and the corporate dividends received deduction,
are not passed back to you, since we are the owner of the assets from which tax
benefits may be derived.
60
TAX INFORMATION
10. More information
--------------------------------------------------------------------------------
ABOUT SEPARATE ACCOUNT NO. 49
Each variable investment option is a subaccount of Separate Account No. 49. We
established Separate Account No. 49 in 1996 under special provisions of the New
York Insurance Law. These provisions prevent creditors from any other business
we conduct from reaching the assets we hold in our variable investment options
for owners of our variable annuity contracts. We are the legal owner of all of
the assets in Separate Account No. 49 and may withdraw any amounts that exceed
our reserves and other liabilities with respect to variable investment options
under our contracts. For example, we may withdraw amounts from Separate Account
No. 49 that represent our investments in Separate Account No. 49 or that
represent fees and charges under the contracts that we have earned. Also, we
may, at our sole discretion, invest Separate Account No. 49 assets in any
investment permitted by applicable law. The results of Separate Account
No. 49's operations are accounted for without regard to AXA Equitable's other
operations. The amount of some of our obligations under the contracts is based
on the assets in Separate Account No. 49. However, the obligations themselves
are obligations of AXA Equitable.
Separate Account No. 49 is registered under the Investment Company Act of 1940
and is registered and classified under that act as a "unit investment trust."
The SEC, however, does not manage or supervise AXA Equitable or Separate
Account No. 49. Although Separate Account No. 49 is registered, the SEC does
not monitor the activity of Separate Account No. 49 on a daily basis. AXA
Equitable is not required to register, and is not registered, as an investment
company under the Investment Company Act of 1940.
Each subaccount (variable investment option) within Separate Account No. 49
invests in shares issued by the corresponding Portfolio of its Trust.
We reserve the right subject to compliance with laws that apply:
(1)to add variable investment options to, or to remove variable investment
options from, Separate Account No. 49, or to add other separate accounts;
(2)to combine any two or more variable investment options;
(3)to transfer the assets we determine to be the shares of the class of
contracts to which the contracts belong from any variable investment option
to another variable investment option;
(4)to operate Separate Account No. 49 or any variable investment option as a
management investment company under the Investment Company Act of 1940 (in
which case, charges and expenses that otherwise would be assessed against an
underlying mutual fund would be assessed against Separate Account No. 49 or
a variable investment option directly);
(5)to deregister Separate Account No. 49 under the Investment Company Act of
1940;
(6)to restrict or eliminate any voting rights as to Separate Account No. 49;
(7)to cause one or more variable investment options to invest some or all of
their assets in one or more other trusts or investment companies;
(8)to limit or terminate contributions or transfers into any variable
investment option; and
(9)to limit the number of variable investment options you may select.
If the exercise of these rights results in a material change in the underlying
investment of Separate Account No. 49, you will be notified of such exercise,
as required by law.
ABOUT SEPARATE ACCOUNT NO. 68
We hold assets in a "non-unitized" separate account we have established under
the New York Insurance Law to support our obligations under the Structured
Investment Option. We own the assets of the separate account, as well as any
favorable investment performance on those assets. You do not participate in the
performance of the assets held in this separate account. We are obligated to
pay all money we owe under the contract. If the obligation exceeds the assets
of Separate Account No. 68, funds will be transferred to Separate Account No.
68 from the general account. We may, subject to state law that applies,
transfer all assets allocated to the separate account to our general account.
We guarantee all benefits relating to your value in the Structured Investment
Option, regardless of whether assets supporting the Structured Investment
Option are held in a separate account or our general account. An owner should
look to the financial strength of AXA Equitable for its claims-paying ability.
For more information, see "About the general account" below.
Our current plans are to invest separate account assets in fixed-income
obligations, including corporate bonds, mortgage-backed and asset-backed
securities, and government and agency issues. We may also invest in interest
rate swaps. Although the above generally describes our plans for investing the
assets supporting our obligations under the Structured Investment Option, we
are not obligated to invest those assets according to any particular plan
except as we may be required to by state insurance laws.
ABOUT THE TRUST
The Trust is registered under the Investment Company Act of 1940. It is
classified as an "open-end management investment company," more commonly called
a mutual fund. The Trust issues different shares relating to each of its
portfolios.
The Trust does not impose sales charges or "loads" for buying and selling its
shares. All dividends and other distributions on the Trust's shares are
reinvested in full. The Board of Trustees of the Trust serves for the benefit
of the Trust's shareholders. The Board of Trustees may take many actions
regarding the Portfolios (for example, the Board of
61
MORE INFORMATION
Trustees can establish additional Portfolios or eliminate existing Portfolios;
change Portfolio investment objectives; and change Portfolio investment
policies and strategies). In accordance with applicable law, certain of these
changes may be implemented without a shareholder vote and, in certain
instances, without advanced notice. More detailed information about certain
actions subject to notice and shareholder vote for each Trust, and other
information about the Portfolios, including portfolio investment objectives,
policies, restrictions, risks, expenses, its Rule 12b-1 plan and other aspects
of its operations, appears in the prospectuses for the Trust, which generally
accompany this prospectus, or in their respective SAIs, which are available
upon request.
ABOUT THE GENERAL ACCOUNT
This contract is offered to customers through various financial institutions,
brokerage firms and their affiliate insurance agencies. No financial
institution, brokerage firm or insurance agency has any liability with respect
to a contract's account value or the Structured Investment Option with which
the contract was issued. AXA Equitable is solely responsible to the contract
owner for the contract's account value and the Structured Investment Option.
The general obligations and the Structured Investment Option under the contract
are supported by AXA Equitable's general account and are subject to AXA
Equitable's claims paying ability. An owner should look to the financial
strength of AXA Equitable for its claims-paying ability. Assets in the general
account are not segregated for the exclusive benefit of any particular contract
or obligation. General account assets are also available to the insurer's
general creditors and the conduct of its routine business activities, such as
the payment of salaries, rent and other ordinary business expenses. For more
information about AXA Equitable's financial strength, you may review its
financial statements and/or check its current rating with one or more of the
independent sources that rate insurance companies for their financial strength
and stability. Such ratings are subject to change and have no bearing on the
performance of the variable investment options. You may also speak with your
financial representative.
The general account is subject to regulation and supervision by the New York
State Department of Financial Services and to the insurance laws and
regulations of all jurisdictions where we are authorized to do business.
Interests in the Structured Investment Option under the contracts in the
general account are issued by AXA Equitable and are registered under the
Securities Act of 1933. The general account is not required to register as an
investment company under the Investment Company Act of 1940 and it is not
registered as an investment company under the Investment Company Act of 1940.
The contract is a "covered security" under the federal securities laws.
We have been advised that the staff of the SEC has not reviewed the portions of
this Prospectus that relate to the general account. The disclosure with regard
to the general account, however, may be subject to certain provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
ABOUT OTHER METHODS OF PAYMENT
WIRE TRANSMITTALS AND ELECTRONIC TRANSACTIONS
We accept initial and subsequent contributions sent by wire to our processing
office by agreement with certain broker-dealers. Such transmittals must be
accompanied by information we require to allocate your contribution. Wire
orders not accompanied by complete information may be retained as described
under "How you can make your contributions" under "Contract features and
benefits" earlier in this Prospectus.
Even if we accept the wire order and essential information, a contract
generally will not be issued until we receive and accept a properly completed
application. In certain cases we may issue a contract based on information
provided through certain broker-dealers with which we have established
electronic facilities. In any such cases, you must sign our Acknowledgement of
Receipt form.
Where we require a signed application, the above procedures do not apply and no
transactions will be permitted until we receive the signed application and have
issued the contract. Where we issue a contract based on information provided
through electronic facilities, we require an Acknowledgement of Receipt Form.
We may also require additional information. Until we receive the
Acknowledgement of Receipt Form, (i.e. withdrawals and surrenders) financial
transactions will not be permitted unless you request them in writing, sign the
request and have it signature guaranteed. After your contract has been issued,
additional contributions may be transmitted by wire.
In general, the transaction date for electronic transmissions is the date on
which we receive at our regular processing office all required information and
the funds due for your contribution. We may also establish same-day electronic
processing facilities with a broker-dealer that has undertaken to pay
contribution amounts on behalf of its customers. In such cases, the transaction
date for properly processed orders is the business day on which the
broker-dealer inputs all required information into its electronic processing
system. You can contact us to find out more about such arrangements.
After your contract has been issued, subsequent contributions may be
transmitted by wire.
DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR
We describe below the general rules for when, and at what prices, events under
your contract will occur. Other portions of this Prospectus describe
circumstances that may cause exceptions. We generally do not repeat those
exceptions below.
BUSINESS DAY
Our "business day" is generally any day the NYSE is open for regular trading
and generally ends at 4:00 p.m. Eastern Time (or as of an earlier close of
regular trading). If the Securities and Exchange Commission determines the
existence of emergency conditions on any day, and consequently, the NYSE does
not open, then that day is not a business day. Contributions will be applied
and any other transaction requests will be processed when they are received
along with all the required information unless another date applies as
indicated below.
.. If your contribution, transfer or any other transaction request containing
all the required information reaches us on any of the following, we will
use the next business day:
-- on a non-business day;
-- after 4:00 p.m. Eastern Time on a business day; or
-- after an early close of regular trading on the NYSE on a business day.
62
MORE INFORMATION
.. If your transaction is set to occur on the same day of the month as the
contract date and that date is the 29th, 30th or 31st of the month, then
the transaction will occur on the 1st day of the next month.
.. When a charge is to be deducted on a contract date anniversary that is a
non-business day, we will deduct the charge on the next business day.
.. If we have entered into an agreement with your broker-dealer for automated
processing of contributions and/or transfers uponreceipt of customer order,
your contribution and/or transfer will be considered received at the time
your broker-dealer receives your contribution and/or transfer and all
information needed to process your application, along with any required
documents. Your broker-dealer will then transmit your order to us in
accordance with our processing procedures. However, in such cases, your
broker-dealer is considered a processing office for the purpose of
receiving the contribution and/or transfer. Such arrangements may apply to
initial contributions, subsequent contributions and/or transfers, or both,
and may be commenced or terminated at any time without prior notice. If
required by law, the "closing time" for such orders will be earlier than
4:00 p.m., Eastern Time.
CONTRIBUTIONS, TRANSFERS, WITHDRAWALS AND SURRENDERS
.. Contributions allocated to the variable investment options (including the
Segment Type Holding Accounts and dollar cap averaging account) are
invested at the unit value next determined after the receipt of the
contribution.
.. Transfers to or from the variable investment options (including the Segment
Type Holding Accounts and dollar cap averaging account) will be made at the
unit value next determined after the receipt of the transfer request.
.. Requests for withdrawals or surrenders from the variable investment options
(including the Segment Type Holding Accounts and dollar cap averaging
account) will be made at the unit value next determined on the business day
that we receive the information that we require.
ABOUT YOUR VOTING RIGHTS
As the owner of shares of the Trusts we have the right to vote on certain
matters involving the portfolios, such as:
.. the election of trustees;
.. the formal approval of independent auditors selected for each Trust; or
.. any other matters described in the Prospectus for the Trust or requiring a
shareholders' vote under the Investment Company Act of 1940.
We will give contract owners the opportunity to instruct us how to vote the
number of shares attributable to their contracts if a shareholder vote is
taken. If we do not receive instructions in time from all contract owners, we
will vote the shares of a portfolio for which no instructions have been
received in the same proportion as we vote shares of that portfolio for which
we have received instructions. We will also vote any shares that we are
entitled to vote directly because of amounts we have in a portfolio in the same
proportions that contract owners vote. One effect of proportional voting is
that a small number of contract owners may determine the outcome of a vote.
The Trust sells its shares to AXA Equitable separate accounts in connection
with AXA Equitable's variable annuity and/or life insurance products, and to
separate accounts of insurance companies, both affiliated and unaffiliated with
AXA Equitable. EQ Advisors Trust also sells its shares to the trustee of a
qualified plan for AXA Equitable. We currently do not foresee any disadvantages
to our contract owners arising out of these arrangements. However, the Board of
Trustees or Directors of the Trust intend to monitor events to identify any
material irreconcilable conflicts that may arise and to determine what action,
if any, should be taken in response. If we believe that a Board's response
insufficiently protects our contract owners, we will see to it that appropriate
action is taken to do so.
SEPARATE ACCOUNT NO. 49 VOTING RIGHTS
If actions relating to Separate Account No. 49 require contract owner approval,
contract owners will be entitled to one vote for each unit they have in the
variable investment options. Each contract owner who has elected a variable
annuity payout option may cast the number of votes equal to the dollar amount
of reserves we are holding for that annuity in a variable investment option
divided by the annuity unit value for that option. We will cast votes
attributable to any amounts we have in the variable investment options in the
same proportion as votes cast by contract owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this Prospectus are created under applicable
federal securities laws. To the extent that those laws or the
regulations published under those laws eliminate the necessity to submit
matters for approval by persons having voting rights in separate accounts of
insurance companies, we reserve the right to proceed in accordance with those
laws or regulations.
STATUTORY COMPLIANCE
We have the right to change your contract without the consent of any other
person in order to comply with any laws and regulations that apply, including
but not limited to changes in the Internal Revenue Code, in Treasury
Regulations or in published rulings of the Internal Revenue Service and in
Department of Labor regulations.
Any change in your contract must be in writing and made by an authorized
officer of AXA Equitable. We will provide notice of any contract change.
The benefits under your contract will not be less than the minimum benefits
required by any state law that applies.
ABOUT LEGAL PROCEEDINGS
AXA Equitable and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings would be considered material with respect
to a contract owner's interest in Separate Account No. 49, nor would any of
these proceedings be likely to have a material adverse effect upon Separate
Account No. 49, our ability to meet our obligations under the contracts, or the
distribution of the contracts.
FINANCIAL STATEMENTS
The financial statements of Separate Account No. 49, as well as the
consolidated financial statements of AXA Equitable, are in the SAI. The SAI is
part of the registration statement filed on Form N-4. The
63
MORE INFORMATION
financial statements of AXA Equitable have relevance to the contracts only to
the extent that they bear upon the ability of AXA Equitable to meet its
obligations under the contracts. The SAI is available free of charge. You may
request one by writing to our processing office or calling 1-800-789-7771.
TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING
You can transfer ownership of an NQ contract at any time before annuity
payments begin, subject to our acceptance. We will continue to treat you as the
owner until we receive written notification of any change at our processing
office. In some cases, an assignment or change of ownership may have adverse
tax consequences. See "Tax information" earlier in this Prospectus.
We may refuse to process a change of ownership of an NQ contract to an entity
without appropriate documentation of status on IRS Form W-9 (or, if IRS Form
W-9 cannot be provided because the entity is not a U.S. entity, on the
appropriate type of Form W-8).
Following a change of ownership, the existing beneficiary designations will
remain in effect until the new owner provides new designations.
You cannot assign or transfer ownership of a traditional IRA or Roth IRA
contract except by surrender to us. This rule also generally applies to QP
contracts.
You cannot assign your contract as collateral or security for a loan. Loans are
also not available under your contract. For limited transfers of ownership
after the owner's death see "Beneficiary continuation option" in "Payment of
death benefit" earlier in this Prospectus. You may direct the transfer of the
values under your traditional IRA or Roth IRA contract to another similar
arrangement under federal income tax rules. In the case of such a transfer,
which involves a surrender of your contract, we will impose a withdrawal charge
if one applies.
ABOUT CUSTODIAL IRAS
For certain custodial IRA accounts, after your contract has been issued, we may
accept transfer instructions by telephone, mail, facsimile or electronically
from a broker-dealer, provided that we or your broker-dealer have your written
authorization to do so on file. Accordingly, AXA Equitable will rely on the
stated identity of the person placing instructions as authorized to do so on
your behalf. AXA Equitable will not be liable for any claim, loss, liability or
expenses that may arise out of such instructions. AXA Equitable will continue
to rely on this authorization until it receives your written notification at
its processing office that you have withdrawn this authorization. AXA Equitable
may change or terminate telephone or electronic or overnight mail transfer
procedures at any time without prior written notice and restrict facsimile,
internet, telephone and other electronic transfer services because of
disruptive transfer activity.
DISTRIBUTION OF THE CONTRACTS
The contracts are distributed by both AXA Advisors, LLC ("AXA Advisors") and
AXA Distributors, LLC ("AXA Distributors") (together, the "Distributors"). The
Distributors serve as principal underwriters of Separate Account No. 49. The
offering of the contracts is intended to be continuous.
AXA Advisors is an affiliate of AXA Equitable, and AXA Distributors is an
indirect wholly owned subsidiary of AXA Equitable. The Distributors are under
the common control of AXA Financial, Inc. Their principal business address is
1290 Avenue of the Americas, New York, NY 10104. The Distributors are
registered with the SEC as broker-dealers and are members of the Financial
Industry Regulatory Authority, Inc. ("FINRA"). Both broker-dealers also act as
distributors for other AXA Equitable life and annuity products.
The contracts are sold by financial professionals of AXA Advisors and its
affiliates. The contracts are also sold by financial professionals of
unaffiliated broker-dealers that have entered into selling agreements with the
Distributors ("Selling broker-dealers").
AXA Equitable pays compensation to both Distributors based on contracts sold.
AXA Equitable may also make additional payments to the Distributors, and the
Distributors may, in turn, make additional payments to certain Selling
broker-dealers. All payments will be in compliance with all applicable FINRA
rules and other laws and regulations.
Although AXA Equitable takes into account all of its distribution and other
costs in establishing the level of fees and charges under its contracts, none
of the compensation paid to the Distributors or the Selling broker-dealers
discussed in this section of the Prospectus are imposed as separate fees or
charges under your contract. AXA Equitable, however, intends to recoup amounts
it pays for distribution and other services through the fees and charges of the
contract and payments it receives for providing administrative, distribution
and other services to the Portfolios. For information about the fees and
charges under the contract, see "Fee table" and "Charges and expenses" earlier
in this Prospectus.
AXA ADVISORS COMPENSATION. AXA Equitable pays compensation to AXA Advisors
based on contributions made on the contracts sold through AXA Advisors
("contribution-based compensation"). The contribution-based compensation will
generally not exceed 8.5% of total contributions. AXA Advisors, in turn, may
pay a portion of the contribution-based compensation received from AXA
Equitable to the AXA Advisors financial professional and/or the Selling
broker-dealer making the sale. In some instances, a financial professional or a
Selling broker-dealer may elect to receive reduced contribution-based
compensation on a contract in combination with ongoing annual compensation of
up to 1.0% of the account value of the contract sold ("asset-based
compensation"). Total compensation paid to a financial professional or a
Selling broker-dealer electing to receive both contribution-based and
asset-based compensation could, over time, exceed the total compensation that
would otherwise be paid on the basis of contributions alone. The compensation
paid by AXA Advisors varies among financial professionals and among Selling
broker-dealers. AXA Advisors also pays a portion of the compensation it
receives to its managerial personnel. AXA Advisors also pays its financial
professionals and managerial personnel other types of compensation including
service fees, expense allowance payments and health and retirement benefits.
AXA Advisors also pays its financial professionals, managerial personnel and
Selling broker-dealers sales bonuses (based on selling certain products during
specified periods) and persistency bonuses. AXA Advisors may offer sales
incentive programs to financial professionals and Selling broker-dealers who
meet specified production levels for the sales of both AXA Equitable contracts
and contracts offered by other companies. These incentives provide non-cash
compensation such as stock
64
MORE INFORMATION
options awards and/or stock appreciation rights, expense-paid trips,
expense-paid education seminars and merchandise.
When a contract is sold by a Selling broker-dealer, the Selling broker-dealer,
not AXA Advisors, determines the compensation paid to the Selling
broker-dealer's financial professional for the sale of the contract. Therefore,
you should contract your financial professional for information about the
compensation he or she receives and any related incentives, as described
immediately below.
AXA Advisors may receive compensation, and, in turn, pay its financial
professionals a portion of such fee, from third party investment advisors to
whom its financial professionals refer customers for professional management of
the assets within their contract.
DIFFERENTIAL COMPENSATION. In an effort to promote the sale of AXA Equitable
products, AXA Advisors may pay its financial professionals and managerial
personnel a greater percentage of contribution-based compensation and/or
asset-based compensation for the sale of an AXA Equitable contract than it pays
for the sale of a contract or other financial product issued by a company other
than AXA Equitable. AXA Advisors may pay higher compensation on certain
products in a class than others based on a group or sponsored arrangement, or
between older and newer versions or series of the same contract. This practice
is known as providing "differential compensation." Differential compensation
may involve other forms of compensation to AXA Advisors personnel. Certain
components of the compensation paid to managerial personnel are based on
whether the sales involve AXA Equitable contracts. Managers earn higher
compensation (and credits toward awards and bonuses) if the financial
professionals they manage sell a higher percentage of AXA Equitable contracts
than products issued by other companies. Other forms of compensation provided
to its financial professionals include health and retirement benefits, expense
reimbursements, marketing allowances and contribution-based payments, known as
"overrides." For tax reasons, AXA Advisors financial professionals qualify for
health and retirement benefits based solely on their sales of AXA Equitable
contracts and products sponsored by affiliates.
The fact that AXA Advisors financial professionals receive differential
compensation and additional payments may provide an incentive for those
financial professionals to recommend an AXA Equitable contract over a contract
or other financial product issued by a company not affiliated with AXA
Equitable. However, under applicable rules of FINRA, AXA Advisors financial
professionals may only recommend to you products that they reasonably believe
are suitable for you based on the facts that you have disclosed as to your
other security holdings, financial situation and needs. In making any
recommendation, financial professionals of AXA Advisors may nonetheless face
conflicts of interest because of the differences in compensation from one
product category to another, and because of differences in compensation among
products in the same category. For more information, contact your financial
professional.
AXA DISTRIBUTORS COMPENSATION. AXA Equitable pays contribution-based and
asset-based compensation (together "compensation") to AXA Distributors.
Contribution-based compensation is paid based on AXA Equitable contracts sold
through AXA Distributors' Selling broker-dealers. Asset-based compensation is
paid based on the aggregate account value of contracts sold through certain of
AXA Distributors' Selling broker-dealers. Contribution-compensation will
generally not exceed 7.0% of the total contributions made under the contracts.
AXA Distributors, in turn, pays the contribution-based compensation it receives
on the sale of a contract to the Selling broker-dealer making the sale. In some
instances, the Selling broker-dealer may elect to receive reduced
contribution-based compensation on the sale of the contract in combination with
annual asset-based compensation of up to 1.0% of the account value of the
contract sold. If a Selling broker-dealer elects to receive reduced
contribution-based compensation on a contract, the contribution-based
compensation which AXA Equitable pays to AXA Distributors will be reduced by
the same amount, and AXA Equitable will pay AXA Distributors asset-based
compensation on the contract equal to the asset-based compensation which AXA
Distributors pays to the Selling broker-dealer. Total compensation paid to a
Selling broker-dealer electing to receive both contribution-based and
asset-based compensation could over time exceed the total compensation that
would otherwise be paid on the basis of contributions alone. The
contribution-based and asset-based compensation paid by AXA Distributors varies
among Selling broker-dealers.
The Selling broker-dealer, not AXA Distributors, determines the compensation
paid to the Selling broker-dealer's financial professional for the sale of the
contract. Therefore, you should contact your financial professional for
information about the compensation he or she receives and any related
incentives, such as differential compensation paid for various products.
AXA Equitable also pays AXA Distributors compensation to cover its operating
expenses and marketing services under the terms of AXA Equitable's distribution
agreements with AXA Distributors.
ADDITIONAL PAYMENTS BY AXA DISTRIBUTORS TO SELLING BROKER-DEALERS. AXA
Distributors may pay, out of its assets, certain Selling broker-dealers and
other financial intermediaries additional compensation in recognition of
services provided or expenses incurred. AXA Distributors may also pay certain
Selling broker-dealers or other financial intermediaries additional
compensation for enhanced marketing opportunities and other services (commonly
referred to as "marketing allowances"). Services for which such payments are
made may include, but are not limited to, the preferred placement of AXA
Equitable products on a company and/or product list; sales personnel training;
product training; business reporting; technological support; due diligence and
related costs; advertising, marketing and related services; conference; and/or
other support services, including some that may benefit the contract owner.
Payments may be based on ongoing sales, on the aggregate account value
attributable to contracts sold through a Selling broker-dealer or such payments
may be a fixed amount. For certain selling broker-dealers, AXA Distributors
increases the marketing allowance as certain sales thresholds are met. AXA
Distributors may also make fixed payments to Selling broker-dealers, for
example in connection with the initiation of a new relationship or the
introduction of a new product.
Additionally, as an incentive for the financial professionals of Selling
broker-dealers to promote the sale of AXA Equitable products, AXA Distributors
may increase the sales compensation paid to the Selling broker-dealer for a
period of time (commonly referred to as "compensation enhancements"). AXA
Distributors also has entered into agreements with certain selling
broker-dealers in which the selling broker-dealer agrees to sell certain AXA
Equitable contracts exclusively.
65
MORE INFORMATION
These additional payments may serve as an incentive for Selling broker-dealers
to promote the sale of AXA Equitable contracts over contracts and other
products issued by other companies. Not all Selling broker-dealers receive
additional payments, and the payments vary among Selling broker-dealers. The
list below includes the names of Selling broker-dealers that we are aware (as
of December 31, 2016) received additional payments. These additional payments
ranged from $1,472.14 to $5,557,015.32. AXA Equitable and its affiliates may
also have other business relationships with Selling broker-dealers, which may
provide an incentive for the Selling broker-dealers to promote the sale of AXA
Equitable contracts over contracts and other products issued by other
companies. The list below includes any such Selling broker-dealer. For more
information, ask your financial professional.
1st Global Capital Corporation
Allstate Financial Services, LLC
American Portfolios Financial Services
Ameriprise Financial Services
AXIO
BBVA Compass Investment Solutions, Inc.
Cambridge Investment Research
Capital Investment Group
Centaurus Financial, Inc.
Cetera Advisors, LLC
Cetera Advisors Networks, LLC
Cetera Financial Specialists, LLC
Cetera Investment Services, LLC
CFD Investments, Inc.
Citigroup Global Markets, Inc.
Commonwealth Financial Network
CUNA Brokerage Services
Cuso Financial Services, L.P.
Farmer's Financial Solution
First Allied Securities Inc.
First Tennessee Brokerage Inc.
Girard Securities, Inc.
Gradient Securities, LLC
H.D. Vest Investment Securities, Inc.
Harbour Investments
Hilltop Securities
Independent Financial Group, LLC
Investors Capital Corporation
Janney Montgomery Scott LLC
Kestra Investments, LLC
Key Investment Services LLC
Ladenburg Thalmann Advisor Network, LLC
Legend Equities
Lincoln Financial Advisors Corp.
Lincoln Financial Services Corp
Lincoln Investment Planning
LPL Financial Corporation
Lucia Securities, LLC
Merrill Lynch Life Agency, Inc.
MetLife Securities, Inc.
Morgan Stanley Smith Barney
Mutual of Omaha Investment Services, Inc.
National Planning Corporation
Parkland Securities, LLC (part of Sigma)
PlanMember
PNC Investments
Primerica Financial Services
Questar Capital Corporation
Raymond James Insurance Group
RBC Capital Markets Corporation
Robert W Baird & Company
Santander Securities Corporation
SIGMA Financial Corporation
Signator Investors, Inc.
Summit Brokerage Services, Inc.
SunTrust Investments
The Advisor Group
U.S. Bancorp Investments, Inc.
UBS Financial Services, Inc.
Valmark Securities, Inc.
Voya Financial Advisors
VSR Financial Services Inc.
Wells Fargo Wealth Brokerage Insurance Agency
66
MORE INFORMATION
11. Incorporation of certain documents by reference
--------------------------------------------------------------------------------
AXA Equitable's Annual Report on Form 10-K for the period ended December 31,
2016 (the "Annual Report") is considered to be part of this Prospectus because
it is incorporated by reference, as are AXA Equitable's Quarterly Report on
Form 10-Q (filed on May 15, 2017) and AXA Equitable's Current Reports on Form
8-K (filed on February 17, 2017; May 5, 2017 and May 18, 2017).
AXA Equitable files reports and other information with the SEC, as required by
law. You may read and copy this information at the SEC's public reference
facilities at Room 1580, 100 F Street, NE, Washington, DC 20549, or by
accessing the SEC's website at www.sec.gov. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Under the Securities Act of 1933, AXA Equitable has filed with
the SEC a registration statement relating to the Structured Investment Option
(the "Registration Statement"). This Prospectus has been filed as part of the
Registration Statement and does not contain all of the information set forth in
the Registration Statement.
After the date of this Prospectus and before we terminate the offering of the
securities under the Registration Statement, all documents or reports we file
with the SEC under the Securities Exchange Act of 1934 ("Exchange Act"), will
be considered to become part of this Prospectus because they are incorporated
by reference.
Any statement contained in a document that is or becomes part of this
Prospectus, will be considered changed or replaced for purposes of this
Prospectus if a statement contained in this Prospectus changes or is replaced.
Any statement that is considered to be a part of this Prospectus because of its
incorporation will be considered changed or replaced for the purpose of this
Prospectus if a statement contained in any other subsequently filed document
that is considered to be part of this Prospectus changes or replaces that
statement. After that, only the statement that is changed or replaced will be
considered to be part of this Prospectus.
We file the Registration Statement and our Exchange Act documents and reports,
including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q,
electronically according to EDGAR under CIK No. 0000727920. The SEC maintains a
website that contains reports, proxy and information statements, and other
information regarding registrants that file electronically with the SEC. The
address of the site is www.sec.gov.
Upon written or oral request, we will provide, free of charge, to each person
to whom this Prospectus is delivered, a copy of any or all of the documents
considered to be part of this Prospectus because they are incorporated herein.
In accordance with SEC rules, we will provide copies of any exhibits
specifically incorporated by reference into the text of the Exchange Act
reports (but not any other exhibits). Requests for documents should be directed
to AXA Equitable Life Insurance Company, 1290 Avenue of the Americas, New York,
New York 10104. Attention: Corporate Secretary (telephone: (212) 554-1234). You
can access our website at www.axa.com.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements of AXA Equitable Life Insurance Company
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 2016 have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, an independent registered public
accounting firm, given on the authority of said firm as experts in auditing and
accounting.
PricewaterhouseCoopers LLP provides independent audit services and certain
other non-audit services to AXA Equitable as permitted by the applicable SEC
independence rules, and as disclosed in AXA Equitable's Form 10-K.
PricewaterhouseCoopers LLP's address is 300 Madison Avenue, New York, New York
10017.
67
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Appendix I: Condensed financial information
--------------------------------------------------------------------------------
The variable investment option fee of 1.15% was not offered as of December 31,
2016 for contracts offered by this prospectus, therefore condensed financial
information is not available that reflects that variable investment option fee.
I-1
APPENDIX I: CONDENSED FINANCIAL INFORMATION
Appendix II: State contract availability and/or variations of certain features
and benefits
--------------------------------------------------------------------------------
The following information is a summary of the states where the Structured
Capital Strategies(R) contract or certain features and/or benefits are either
not available as of the date of this Prospectus or vary from the contract's
features and benefits as previously described in this Prospectus. Certain
features and/or benefits may have been approved in your state after your
contract was issued and cannot be added. Please contact your financial
professional for more information about availability in your state.
STATES WHERE CERTAIN STRUCTURED CAPITAL STRATEGIES(R) FEATURES AND/OR BENEFITS
ARE NOT AVAILABLE OR VARY:
----------------------------------------------------------------------------
STATE FEATURES AND BENEFITS AVAILABILITY OR VARIATION
----------------------------------------------------------------------------
ARIZONA See "Your right to cancel within If you reside in the state of
a certain number of days" in Arizona and you purchased
"Contract features and benefits" your contract as a
replacement for a different
variable annuity contract or
you are age 65 or older at
the time the contract is
issued, you may return your
variable annuity contract
within 30 days from the date
you receive it and receive a
refund of account value. This
is also referred to as the
"free look" period.
----------------------------------------------------------------------------
CALIFORNIA See "We require that the You are not required to use
following types of our forms when making a
communications be on specific transaction request. If a
forms we provide for that written request contains all
purpose" in "How to reach us" the information required to
process the request, we will
honor it.
See "Contract features and If you reside in California
benefits" -- "Your right to and you are age 60 or older
cancel within a certain number at the time the contract is
of days" issued, you may return your
variable annuity contract
within 30 days from the date
that you receive it and
receive a refund as described
below.
If you allocate your entire
initial contribution to the
EQ/Money Market option, the
amount of your refund will be
equal to your contribution,
unless you make a transfer,
in which case the amount of
your refund will be equal to
your account value on the
date we receive your request
to cancel at our processing
office. This amount could be
less than your initial
contribution. If you allocate
any portion of your initial
contribution to the variable
investment options (other
than the EQ/Money Market
option), your refund will be
equal to your account value
on the date we receive your
request to cancel at our
processing office.
"RETURN OF CONTRIBUTION" FREE
LOOK TREATMENT AVAILABLE
THROUGH CERTAIN SELLING
BROKER-DEALERS
Certain selling
broker-dealers offer an
allocation method designed to
preserve your right to a
return of your contributions
during the free look period.
At the time of application,
you will instruct your
financial professional as to
how your initial contribution
and any subsequent
contributions should be
treated for the purpose of
maintaining your free look
right under the contract.
Please consult your financial
professional to learn more
about the availability of
"return of contribution" free
look treatment.
If you choose "return of
contribution" free look
treatment of your contract,
we will allocate your entire
contribution and any
subsequent contributions made
during the 30 day period
following the Contract Date,
to the EQ/Money Market
investment option. In the
event you choose to exercise
your free look right under
the contract, you will
receive a refund equal to
your contributions.
----------------------------------------------------------------------------
II-1
APPENDIX II: STATE CONTRACT AVAILABILITY AND/OR VARIATIONS OF CERTAIN
FEATURES AND BENEFITS
-----------------------------------------------------------------------------
STATE FEATURES AND BENEFITS AVAILABILITY OR VARIATION
-----------------------------------------------------------------------------
CALIFORNIA If you choose the "return of
(CONTINUED) contribution" free look
treatment and your contract
is still in effect on the
30th day (or next business
day) following the Contract
Date, we will automatically
reallocate your account value
to the investment options
chosen on your application.
Any transfers made prior to
the expiration of the 30 day
free look will terminate your
right to "return of
contribution" treatment in
the event you choose to
exercise your free look right
under the contract. Any
transfer made prior to the
30th day following the
Contract Date will cancel the
automatic reallocation on the
30th day (or next business
day) following the Contract
Date described above. If you
do not want AXA Equitable to
perform this scheduled
one-time reallocation, you
must call one of our customer
service representatives at 1
(877) 899-3743 before the
30th day following the
Contract Date to cancel.
If you purchased your
contract from a financial
professional whose firm
submits applications to AXA
Equitable electronically, the
Dollar Cap Averaging Program
may not be available at the
time your contract is issued.
If this is the case and you
wish to participate in the
program after your contract
has been issued, you must
make your election on the
applicable paper form and
submit it to us separately.
Depending on when we receive
your form, you may miss the
first available date on which
your account value would
otherwise be transferred to
your designated Segment Type
Holding Accounts.
See "Dollar Cap Averaging If you elect to invest in the
Program" and "Your right to Dollar Cap Averaging Program,
cancel within a certain number you will not be eligible for
of days" in "Contract features the "return of contribution"
and benefits" free look treatment. By
electing the Dollar Cap
Averaging Program, you would
only be eligible to receive a
return of account value if
you free look your contract.
See "Charges and expenses" -- Items (i)-(iii) under this
"Disability, terminal illness, section are deleted in their
or confinement to a nursing home" entirety and replaced with:
(i)We receive proof
satisfactory to us
(including certification
by a U.S. licensed
physician) that the Owner
has a chronic illness as
defined pursuant to either
(a) or (b) below;
(a)unable to perform two
activities of daily
living (bathing,
continence, dressing,
eating, toileting and
transferring), meaning
the Owner needs human
assistance, or needs
continual substantial
supervision; or
(b)impairment of cognitive
ability, meaning a
deterioration or loss
of intellectual
capacity due to mental
illness or disease,
including Alzheimer's
disease or related
illnesses, that
requires con- tinual
supervision to protect
oneself or others.
(ii)We receive proof
satisfactory to us
(including certification
by a U.S. licensed
physician) that the
Owner's life expectancy
is twelve months or less.
-----------------------------------------------------------------------------
II-2
APPENDIX II: STATE CONTRACT AVAILABILITY AND/OR VARIATIONS OF CERTAIN
FEATURES AND BENEFITS
-----------------------------------------------------------------------------
STATE FEATURES AND BENEFITS AVAILABILITY OR VARIATION
-----------------------------------------------------------------------------
CALIFORNIA (iii)The Owner is receiving,
(CONTINUED) as prescribed by a
physician, registered
nurse, or licensed
social worker, home care
or community-based
services (including
adult day care, personal
care, homemaker
services, hospice
services or respite
care) or, is confined in
a skilled nursing
facility, convalescent
nursing home, or
extended care facility,
which shall not be
defined more
restrictively than as in
the Medicare program, or
is confined in a
residential care
facility or residential
care facility for the
elderly, as defined in
the Health and Safety
Code. Out-of-state
providers of services
shall be defined as
comparable in licensure
and staffing
requirements to
California providers.
See "More information" -- You can transfer ownership of
"Transfers of ownership, an NQ contract at any time
collateral assignments, loans, before annuity payments
and borrowing" begin. You may assign your
contract, unless otherwise
restricted for tax
qualification purposes.
-----------------------------------------------------------------------------
CONNECTICUT See "Charges for each additional The charge for transfers does
transfer in excess of 12 not apply.
transfers per contract year" in
"Fee table" and "Transfer
charge" in "Charges and expenses"
See "Special services charges" The maximum charge for check
in "Fee table" and under preparation is $9 per
"Charges and expenses" occurrence.
The charge for third-party
transfers or exchanges does
not apply.
See "Charges and expenses -- Waiver (i) is not available.
Disability, terminal illness, or
confinement to a nursing home"
-----------------------------------------------------------------------------
FLORIDA See "How you can purchase and In the third paragraph of
contribute to your contract" in this section, item (i) now
"Contract features and benefits" reads: "(i) contributions
under a Structured Capital
Strategies(R) contract would
then total more than
$1,500,000;" and item (ii)
regarding the $2,500,000
limitation on contributions
is deleted. The remainder of
this section is unchanged.
See "Your right to cancel within If you reside in the state of
a certain number of days" in Florida, you may cancel your
"Contract features and benefits" variable annuity contract and
return it to us within 21
days from the date that you
receive it. You will receive
an unconditional refund equal
to the greater of the cash
surrender value provided in
the annuity contract, plus
any fees or charges deducted
from the contributions or
imposed under the contract,
or a refund of all
contributions paid.
See "Selecting an annuity payout The following sentence
option" under "Your annuity replaces the first sentence
payout options" in "Accessing of the second paragraph in
your money" this section:
You can choose the date
annuity payments are to
begin, but it may not be
earlier than twelve months
from the contract date.
See "Special service charges" We will not impose a charge
under "Charges and expenses" for third-party transfers or
exchanges.
See "Withdrawal charge" in If you are age 65 or older at
"Charges and expenses" the time your contract is
issued, the applicable
withdrawal charge will not
exceed 10% of the amount
withdrawn.
-----------------------------------------------------------------------------
HAWAII See "Your right to cancel within If you live in Hawaii, you
a certain number of days" in will receive a refund of your
"Contract features and benefits" contributions.
-----------------------------------------------------------------------------
IDAHO See "Your right to cancel within If you reside in the state of
a certain number of days" under Idaho, you may return your
"Contract features and benefits" contract within 20 days from
the date that you receive it
and receive a refund of your
initial contribution.
-----------------------------------------------------------------------------
ILLINOIS See "Selecting an annuity payout You can choose the date
option" under "Your annuity annuity payments are to
payout options" in "Accessing begin, but it may not be
your money" earlier than twelve months
from the contract date.
-----------------------------------------------------------------------------
II-3
APPENDIX II: STATE CONTRACT AVAILABILITY AND/OR VARIATIONS OF CERTAIN
FEATURES AND BENEFITS
-------------------------------------------------------------------------------
STATE FEATURES AND BENEFITS AVAILABILITY OR VARIATION
-------------------------------------------------------------------------------
MARYLAND Contract exchanges Withdrawal charges will not
apply if an eligible AXA
Equitable contract is
exchanged for a Structured
Capital Strategies(R)
contract.
-------------------------------------------------------------------------------
MASSACHUSETTS See "Disability, terminal This section is deleted in
illness or confinement to its entirety.
nursing home" under "Withdrawal
charge" in "Charges and expenses"
-------------------------------------------------------------------------------
NEW HAMPSHIRE See "Disability, terminal Waiver (iii) regarding the
illness, or confinement to a definition of a nursing home
nursing home" under "Withdrawal is deleted, and replaced with
charge" in "Charges and expenses" the following:
You are confined to a nursing
home for more than 90 days
(or such other period, as
required in your state) as
verified by a licensed
physician. A nursing home for
this purpose means one that
is (a) approved by Medicare
as a provider of skilled
nursing care services, or
qualified to receive approval
of Medicare benefits, or (b)
operated pursuant to law as a
skilled nursing home by the
state or territory in which
it is located (it must be
within the United States,
Puerto Rico, U.S. Virgin
Islands, or Guam) and meets
all of the following:
. its main function is to
provide skilled,
intermediate, or
custodial nursing care;
. it provides continuous
room and board;
. it is supervised by a
registered nurse or
licensed practical nurse;
. it keeps daily medical
records of each patient;
. it controls and records
all medications
dispenses; and
. its primary service is
other than to provide
housing for residents.
-------------------------------------------------------------------------------
NEW JERSEY See "Owner and annuitant Joint owners or joint
requirements" in "Contract annuitants are not required
features and benefits" to be spouses.
See "Withdrawals treated as We will not terminate a
surrenders" under "Accessing contract if there have been
your money" no contributions made during
the last three completed
contract years and the
account value is less than
$500.
-------------------------------------------------------------------------------
NORTH DAKOTA See "Your right to cancel within To exercise your cancellation
a certain number of days" in right, you must return the
"Contract features and benefits" certificate directly to our
processing office within 20
days after you receive it.
-------------------------------------------------------------------------------
PENNSYLVANIA Contributions Your contract refers to
See "Your right to cancel within contributions as premiums.
a certain number of days" in To exercise your cancellation
"Contract features and benefits" right, you must return the
certificate directly to our
processing office within 20
days after you receive it.
Terminal illness Your contract refers to
"terminal illness" as
"6-month life expectancy".
Required disclosure for Any person who knowingly and
Pennsylvania customers with intent to defraud any
insurance company or other
person files an application
for insurance or statement of
claim containing any
materially false information
or conceals for the purpose
of misleading, information
concerning any fact material
thereto commits a fraudulent
insurance act, which is a
crime and subjects such
person to criminal and civil
penalties.
-------------------------------------------------------------------------------
II-4
APPENDIX II: STATE CONTRACT AVAILABILITY AND/OR VARIATIONS OF CERTAIN
FEATURES AND BENEFITS
----------------------------------------------------------------------------
STATE FEATURES AND BENEFITS AVAILABILITY OR VARIATION
----------------------------------------------------------------------------
TEXAS See "How you can purchase and In the third paragraph of
contribute to your contract" in this section, item (i) now
"Contract features and benefits" reads: "(i) contributions
under a Structured Capital
Strategies(R) contract would
then total more than
$1,500,000." The $2,500,000
limitation on the sum of all
contributions under all AXA
Equitable annuity
accumulation contracts with
the same owner or annuitant
does not apply.
See "Your right to cancel within If you reside in the state of
a certain number of days" under Texas, you may return your
"Contract features and benefits" contract within 20 days from
the date that you receive it
and receive a refund of your
initial contribution.
See "Disability, terminal There is no 12 month waiting
illness or confinement to period following a
nursing home" in "Charges and contribution for the Six
expenses" Month Life Expectancy Waiver.
The withdrawal charge can be
waived even if the condition
begins within 12 months of
the remittance of the
contribution.
The first sentence in Waiver
(iii) regarding the
definition of a nursing home
is deleted and replaced with
the following: You are
confined to a nursing home as
verified by a licensed
physician.
----------------------------------------------------------------------------
UTAH See "Your right to cancel within If you reside in the state of
a certain number of days" under Utah, and you purchased your
"Contract features and benefits" contract as a replacement,
you may return your contract
within 30 days from the date
that you receive it.
See "Transfers of ownership, Unless restricted for tax
collateral assignments, loans or purposes, your contract may
borrowing" in "More information" be assigned.
----------------------------------------------------------------------------
WASHINGTON See "10% free withdrawal amount" The 10% free withdrawal
under "Withdrawal charge" in amount applies to full
"Charges and expenses" surrenders.
See "When to expect payments" in For any payment upon
"Accessing your money" surrender we defer more than
30 days, we will pay interest
from the date we receive your
surrender request to the date
of payment.
See "Disability, terminal The owner (or older joint
illness, or confinement to owner, if applicable) has
nursing home" in "Charges and qualified to receive Social
expenses" Security disability benefits
as certified by the Social
Security Administration or a
statement from an independent
U.S. licensed physician
stating that the owner (or
older joint owner, if
applicable) meets the
definition of total
disability for at least 6
continuous months prior to
the notice of claim. Such
disability must be
re-certified every 12 months.
----------------------------------------------------------------------------
II-5
APPENDIX II: STATE CONTRACT AVAILABILITY AND/OR VARIATIONS OF CERTAIN
FEATURES AND BENEFITS
Appendix III: Segment Interim Value
--------------------------------------------------------------------------------
We calculate the Segment Interim Value for each Segment on each Segment
Business Day that falls between the Segment Start Date and Segment Maturity
Date. The calculation is a formula designed to measure the fair value of your
Segment Investment on the particular interim date, and is based on the downside
protection provided by the Segment Buffer, the limit on participation in
investment gain provided by the Performance Cap Rate, and an adjustment for the
effect of a withdrawal prior to the Segment Maturity Date. The formula we use,
in part, derives the fair value of hypothetical investments in fixed
instruments and derivatives. These values provide us with protection from the
risk that we will have to pay out account value related to a Segment prior to
the Segment Maturity Date. The hypothetical put option provides us with a
market value of the potential loss at Segment Maturity, and the hypothetical
call options provide us with a market value of the potential gain at Segment
Maturity. This formula provides a treatment for an early distribution that is
designed to be consistent with how distributions at the end of a Segment are
treated. We are not required to hold such investments in relation to Segments
and may or may not choose to do so. You are not affected by the performance of
any of our investments (or lack thereof) relating to Segments. The formula also
includes an adjustment relating to the Cap Calculation Factor. This is a
positive adjustment of the percentage of the estimated expenses corresponding
to the portion of the Segment Duration that has not elapsed. Appendix III sets
forth the actual calculation formula, an overview of the purposes and impacts
of the calculation, and detailed descriptions of the specific inputs into the
calculation. You should note that even if a corresponding Index has experienced
positive growth, the calculation of your Segment Interim Value may result in an
amount lower than your Segment Investment. We have included examples of
calculations of Segment Interim Values under various hypothetical situations at
the end of this Appendix.
CALCULATION FORMULA
Your Segment Interim Value is equal to the lesser of (A) or (B).
(A)equals the sum of the following three components:
(1)Fair Value of hypothetical Fixed Instruments; plus
(2)Fair Value of hypothetical Derivatives; plus
(3)Cap Calculation Factor.
(B)equals the Segment Investment (or the most recent Annual Lock Anniversary
Starting Amount for an Annual Lock Segment) multiplied by (1 + the
Performance Cap Rate limiting factor).
OVERVIEW OF THE PURPOSES AND IMPACTS OF THE CALCULATION
FAIR VALUE OF HYPOTHETICAL FIXED INSTRUMENTS. The Segment Interim Value formula
includes an element designed to compensate us for the fact that when we have to
pay out account value related to a Segment before the Segment Maturity Date, we
forgo the opportunity to earn interest on the Segment Investment from the date
of withdrawal or surrender until the Segment Maturity Date. We accomplish this
estimate by calculating the present value of the Segment Investment using an
investment rate widely used in financial markets.
FAIR VALUE OF HYPOTHETICAL DERIVATIVES. For Standard Segments we use
hypothetical put and call options that are designated for each Segment to
estimate the market value, at the time the Segment Interim Value is calculated,
of the risk of loss and the possibility of gain at the end of the Segment. This
calculation reflects the value of the downside protection that would be
provided at maturity by the Segment Buffer as well as the upper limit that
would be placed on gains at maturity due to the Performance Cap Rate. For
Annual Lock Segments, we use a hypothetical derivatives contract where the
final payout equals the compounded Annual Lock Yearly Rate of Return (i.e., the
Index Performance Rate for each successive Annual Lock Period, subject to the
Performance Cap Rate and Segment Buffer), to estimate the market value of the
Segment at the time the Segment Interim Value is calculated. This hypothetical
derivatives contract reflects the value of the downside protection that would
be provided at each Annual Lock Anniversary by the Segment Buffer as well as
the upper limit that would be placed on gains at each Annual Lock Anniversary
due to the Performance Cap Rate. When valuing the hypothetical Derivatives as
part of the Segment Interim Value calculation, we use inputs that are
consistent with market prices that reflect the estimated cost of exiting the
hypothetical Derivatives before Segment Maturity. See the "Fair Value of
Hypothetical Derivatives" in "Detailed Descriptions of Specific Inputs to the
Calculation" below. Our fair market value methodology, including the market
standard model we use to calculate the fair value of the hypothetical
Derivatives for each particular Segment, may result in a fair value that is
higher or lower than the fair value other methodologies and models would
produce. Our fair value may also be higher or lower than the actual market
price of the identical derivatives. As a result, the Segment Interim Value you
receive may be higher or lower than what other methodologies and models would
produce.
At the time the Segment Interim Value is determined, the Fair Value of
Hypothetical Derivatives for Standard Segments is calculated using three
different hypothetical options. These hypothetical options are designated for
each Segment and are described in more detail later in this Appendix.
AT-THE-MONEY STANDARD SEGMENT CALL OPTION (STRIKE PRICE EQUALS THE INDEX VALUE
AT SEGMENT INCEPTION). For Standard Segments, the potential for gain is
estimated using the value of this hypothetical option.
III-1
APPENDIX III: SEGMENT INTERIM VALUE
OUT-OF-THE-MONEY CALL OPTION (STRIKE PRICE EQUALS THE INDEX INCREASED BY THE
PERFORMANCE CAP RATE ESTABLISHED AT SEGMENT INCEPTION). The potential for gain
in excess of the Performance Cap Rate is estimated using the value of this
hypothetical option.
.. For Standard Segments, the net amount of the At-the-Money Standard Segment
Call Option less the value of the Out-of-the-Money Call Option is an
estimate of the market value of the possibility of gain at the end of the
Segment as limited by the Performance Cap Rate.
OUT-OF-THE-MONEY PUT OPTION (STRIKE PRICE EQUALS THE INDEX DECREASED BY THE
SEGMENT BUFFER). The risk of loss is estimated using the value of this
hypothetical option.
.. IT IS IMPORTANT TO NOTE THAT THIS PUT OPTION VALUE WILL ALMOST ALWAYS
REDUCE THE PRINCIPAL YOU RECEIVE, EVEN WHERE THE INDEX IS HIGHER AT THE
TIME OF THE WITHDRAWAL THAN AT THE TIME OF THE ORIGINAL INVESTMENT. This is
because the risk that the Index could have been lower at the end of a
Segment is present to some extent whether or not the Index has increased at
the earlier point in time that the Segment Interim Value is calculated.
CAP CALCULATION FACTOR. In setting the Performance Cap Rate, we take into
account that we incur expenses in connection with a contract, including
insurance and administrative expenses. The Segment Interim Value formula
includes item (A)(3) above, the Cap Calculation Factor, which is designed to
reflect the fact that we will not incur those expenses for the entire duration
of the Segment if you withdraw your investment prior to the Segment Maturity
Date. Therefore, the Cap Calculation Factor is always positive and declines
during the course of the Segment.
PERFORMANCE CAP RATE LIMITING FACTOR. The formula provides that the Segment
Interim Value is never greater than (B) above, which is the portion of the
Performance Cap Rate corresponding to the portion of the Segment Duration that
has elapsed. This limitation is imposed to discourage owners from withdrawing
from a Segment before the Segment Maturity Date where there may have been
significant increases in the relevant Index early in the Segment Duration (or
Annual Lock Period). Although the Performance Cap Rate limiting factor
pro-rates the upside potential on amounts withdrawn early, there is no similar
adjustment to pro-rate the downside protection. THIS MEANS, IF YOU SURRENDER OR
CANCEL YOUR CONTRACT, DIE OR MAKE A WITHDRAWAL FROM A SEGMENT BEFORE THE
SEGMENT MATURITY DATE, THE SEGMENT BUFFER WILL NOT NECESSARILY APPLY TO THE
EXTENT IT WOULD ON THE SEGMENT MATURITY DATE (OR EACH ANNUAL LOCK ANNIVERSARY),
AND ANY UPSIDE PERFORMANCE WILL BE LIMITED TO A PERCENTAGE LOWER THAN THE
PERFORMANCE CAP RATE.
DETAILED DESCRIPTIONS OF SPECIFIC INPUTS TO THE CALCULATION
(A)(1) FAIR VALUE OF HYPOTHETICAL FIXED INSTRUMENTS. The Fair Value of
Hypothetical Fixed Instruments in a Segment is currently based on the
investment rate associated with the Segment's remaining time to maturity.
Investment rates are interest rates associated with investment grade fixed
income instruments which can be used to back the Segment. The investment rate
will seek to approximate the bond yields which are used in the fixed instrument
strategy (e.g., pricing, hedging) for this product. The investment rate will be
determined based on an investment grade index selected to approximately
correspond to the quality profile of bonds used in the fixed instrument
strategy for this product. To apply the investment grade index values to the
Fair Value of Hypothetical Fixed Instruments component of Segment Interim Value
calculation, the spread over risk-free rates for selected investment grade
index maturity points will be added to the risk-free rates used in other
components of the Segment Interim Value calculation.
The Fair Value of Hypothetical Fixed Instruments is defined as its present
value, as expressed in the following formula:
(Segment Investment)/(1 + rate)/(time to maturity)/
The Company's decision to use investment rates, which are generally higher than
swap rates, to calculate the Fair Value of Hypothetical Instruments component
of the Segment Interim Value will result in a lower value for that component
relative to using swap rates to calculate that component and, all other things
being equal, will result in a lower recalculated Segment Investment if a
partial withdrawal is taken from a Segment or a lower withdrawal amount if a
full withdrawal is taken from a Segment. The time to maturity is expressed as a
fraction, in which the numerator is the number of days remaining in the Segment
Duration and the denominator is the average number of days in each year of the
Segment Duration for that Segment.
(A)(2) FAIR VALUE OF HYPOTHETICAL DERIVATIVES. We utilize a fair market value
methodology to determine the Fair Value of Hypothetical Derivatives.
For each Standard Segment, we designate and value three hypothetical options,
each of which is tied to the performance of the Index underlying the Segment in
which you are invested. For Standard Segments, these are: (1) the At-the-Money
Standard Segment Call Option, (2) the Out-of-the-Money Call Option and (3) the
Out-of-the-Money Put Option. At Segment Maturity, the Put Option is designed to
value the loss below the buffer, while the call options are designed to provide
gains up to the Performance Cap Rate. These options are described in more
detail below. For each Annual Lock Segment, we designate and value a
hypothetical derivatives contract which is tied to the compounded performance
of the Index underlying the Segment in which you are invested.
In addition to the inputs discussed above, the Fair Value of Hypothetical
Derivatives is also affected by the time remaining until the Segment Maturity
Date (or each remaining Annual Lock Anniversary). More information about the
designated hypothetical options is set forth below:
(1)AT-THE-MONEY STANDARD SEGMENT CALL OPTION: This is an option to buy a
position in the relevant Index equal to the Segment Investment on the
scheduled Segment Maturity Date, at the price of the Index on the Segment
Start Date. At any time during the Segment Duration, the fair value of the
Standard Segment At-the-Money Call Option represents the market value of the
potential to receive an amount in excess of the
III-2
APPENDIX III: SEGMENT INTERIM VALUE
Segment Investment on the Segment Maturity Date equal to the percentage
growth in the Index between the Segment Start Date and the Segment Maturity
Date, multiplied by the Segment Investment.
(2)OUT-OF-THE-MONEY CALL OPTION: This is an option to sell a position in the
relevant Index equal to the Segment Investment on the scheduled Segment
Maturity Date, at the price of the Index on the Segment Start Date increased
by a percentage equal to the Performance Cap Rate. At any time during the
Segment Duration, the fair value of the Out-of-the-Money Call Option
represents the market value of the potential to receive an amount in excess
of the Segment Investment equal to the percentage growth in the Index
between the Segment Start Date and the Segment Maturity Date in excess of
the Performance Cap Rate, multiplied by the Segment Investment. The value of
this option is used to offset the value of the AT-THE-MONEY STANDARD SEGMENT
CALL OPTION (for Standard Segments), thus recognizing in the Interim Segment
Value a ceiling on gains at Segment Maturity imposed by the Performance Cap
Rate.
(3)OUT-OF-THE-MONEY PUT OPTION: This is an option to sell a position in the
relevant Index equal to the Segment Investment on the scheduled Segment
Maturity Date, at the price of the Index on the Segment Start Date decreased
by a percentage equal to the Segment Buffer. At any time during the Segment
Duration, the fair value of the Out-of-the-Money Put Option represents the
market value of the potential to receive an amount equal to the excess of
the negative return of the Index between the Segment Start Date and the
Segment Maturity Date beyond the Segment Buffer, multiplied by the Segment
Investment. The value of this option reduces the Interim Segment Value, as
it reflects losses that may be incurred in excess of the Segment Buffer at
Segment Maturity.
For Standard Segments, the Fair Value of Derivatives is equal to (1) minus
(2) minus (3), as defined above.
We determine the fair value of each of the three designated hypothetical
options for a Standard Segment using a market standard model for valuing a
European option on the Index, assuming a continuous dividend yield or net
convenience value, with inputs that are consistent with market prices that
reflect the estimated cost of exiting the hypothetical Derivatives prior to
Segment Maturity (e.g., the estimated ask price). If we did not take into
account the estimated exit price, your Segment Interim Value would be greater.
In addition, the estimated fair value price used in the Segment Interim Value
calculation may vary higher or lower from other estimated prices and from what
the actual selling price of identical derivatives would be at any time during
each Segment. If our estimated fair value price is lower than the price under
other fair market estimates or for actual transactions, then your Segment
Interim Value will be less than if we used those other prices when calculating
your Segment Interim Value. Any variance between our estimated fair value price
and other estimated or actual prices may be different from Segment Type to
Segment Type and may also change from day to day. Each hypothetical option has
a notional value on the Segment Start Date equal to the Segment Investment on
that date. The notional value is the price of the underlying Index at the
inception of the contract. In the event that a number of options, or a
fractional number of options, are being valued, the notional value would be the
number of hypothetical options multiplied by the price of the Index at
inception. For an Annual Lock Segment we determine the fair value of the
hypothetical derivatives contract tied to the compounded performance of the
Index underlying the Annual Lock Segment using a market standard model for
valuing an extended exotic option that periodically settles and resets in
strike price on the Index using the assumptions, inputs and values discussed
above but applied to the hypothetical derivatives contract instead of the
hypothetical options.
We use the following model inputs:
(1)Implied Volatility of the Index -- This input varies with (i) how much time
remains until the Segment Maturity Date of the Segment, which is determined
by using an expiration date for the designated option that corresponds to
that time remaining and (ii) the relationship between the strike price of
that option and the level of the Index at the time of the calculation
(including the potential for resets each Annual Lock Period).
This relationship is referred to as the "moneyness" of the option described
above, and is calculated as the ratio of current price to the strike price.
Direct market data for these inputs for any given early distribution are
generally not available, because options on the Index that actually trade in
the market have specific maturity dates and moneyness values that are
unlikely to correspond precisely to the Segment Maturity Date (or remaining
Annual Lock Periods) and moneyness of the designated option that we use for
purposes of the calculation.
Accordingly, we use the following method to estimate the implied volatility
of the Index. We use daily quotes of implied volatility from independent
third-parties using the model described above and based on the market prices
for certain options. Specifically, implied volatility quotes are obtained
for options with the closest maturities above and below the actual time
remaining in the Segment at the time of the calculation and, for each
maturity, for those options having the closest moneyness value above and
below the actual moneyness of the designated option, given the level of the
Index at the time of the calculation. In calculating the Segment Interim
Value, we will derive a volatility input for your Segment's time to maturity
(including each remaining Annual Lock Period time to maturity) and strike
price by linearly interpolating between the implied volatility quotes that
are based on the actual adjacent maturities and moneyness values described
above, as follows:
(a)We first determine the implied volatility of an option that has the same
moneyness as the designated option but with the closest available time to
maturity shorter than your Segment's remaining time to maturity
(including each remaining Annual Lock Period time to maturity). This
volatility is derived by linearly interpolating between the implied
volatilities of options having the times to the applicable maturity that
are above and below the moneyness value of the hypothetical option.
(b)We then determine the implied volatility of an option that has the same
moneyness as the designated option but with the closest available time to
maturity longer than your Segment's remaining time to the applicable
maturity (including each remaining Annual Lock Period time to maturity).
This volatility is derived by linearly interpolating between the implied
volatilities of options having the times to maturity that are above and
below the moneyness value of the designated option.
III-3
APPENDIX III: SEGMENT INTERIM VALUE
(c)The volatility input for your Segment's time to maturity (including each
remaining Annual Lock Period time to maturity) will then be determined by
linearly interpolating between the volatilities derived in steps (a) and
(b).
(2)Swap Rate -- We use key derivative swap rates obtained from information
provided by independent third-parties which are recognized financial
reporting vendors. Swap rates are obtained for maturities adjacent to the
actual time remaining in the Segment at the time of the early distribution.
We use linear interpolation to derive the exact remaining duration rate
needed as the input.
(3)Index Dividend Yield -- On a daily basis, we use the projected annual
dividend yield across the entire Index obtained from information provided by
independent third-party financial institutions. This value is a widely used
assumption and is readily available from recognized financial reporting
vendors.
Generally, a put option has an inverse relationship with its underlying Index,
while a call option has a direct relationship. In addition to the inputs
discussed above, the Fair Value of Derivatives is also affected by the time to
the Segment Maturity Date (including each Annual Lock Period remaining to
maturity).
(A)(3) CAP CALCULATION FACTOR. In setting the Performance Cap Rate, we take
into account that we incur expenses in connection with a contract, including
insurance and administrative expenses. If you withdraw your investment prior to
the Segment Maturity Date, we will not incur expenses for the entire duration
of the Segment. Therefore, we provide a positive adjustment as part of the
calculation of Segment Interim Value, which we call the Cap Calculation Factor.
The Cap Calculation Factor represents a return of estimated expenses for the
portion of the Segment Duration that has not elapsed. For example, if the
estimated expenses for a one year Segment are calculated by us to be $10, then
at the end of 146 days (with 219 days remaining in the Segment), the Cap
Calculation Factor would be $6, because $10 x 219/365 = $6. A Segment is not a
variable investment option with an underlying portfolio, and therefore the
percentages we use in setting the performance caps do not reflect a daily
charge against assets held on your behalf in a separate account.
(B) PRO RATA SHARE OF PERFORMANCE CAP RATE. In setting the Performance Cap
Rate, we assume that you are going to hold the Segment for the entire Segment
Duration. If you hold a Segment until its Segment Maturity Date, the Segment
Return will be calculated subject to the Performance Cap Rate. For Standard
Segments, prior to the Segment Maturity Date, your Segment Interim Value will
be limited by the portion of the Performance Cap Rate corresponding to the
portion of the Segment Duration that has elapsed. For example, if the
Performance Cap Rate for a one-year Standard Segment is 10%, then at the end of
146 days, the Pro Rata Share of the Performance Cap Rate would be 4%, because
10% x 146/365 = 4%; as a result, the Segment Interim Value at the end of the
146 days could not exceed 104% of the Segment Investment. Likewise, if the
Performance Cap Rate for a 6-year Standard is 40%, then at the end of 1096
days, the Pro Rata Share of the Performance Cap Rate would be 20%, because 40%
x 1096/2192 = 20%; as a result, the Segment Interim Value and the end of 1096
days could not exceed 120% of the Segment Investment. For Annual Lock Segments,
prior to the Segment Maturity Date, your Segment Interim Value will be limited
by the portion of the Performance Cap Rate corresponding to the portion of the
current Annual Lock Period that has elapsed. For example, if the Performance
Cap Rate for a 6-year Annual Lock Segment is 10%, then at the end of 73 days in
the third Annual Lock Period, the Pro Rata Share of the Performance Cap Rate
would be 2%, because 10% x 73/365 = 2%; as a result, the Interim Value at the
end of the 73 days in the third Annual Lock Period could not exceed 102% of the
third Annual Lock Anniversary Starting Amount.
EXAMPLES: SEGMENT INTERIM VALUE -- STANDARD SEGMENTS
----------------------------------------------------------------------------------
ITEM 6-YEAR SEGMENT 6-YEAR SEGMENT
----------------------------------------------------------------------------------
Segment Duration (in months) 72 72
Valuation Date (Months since Segment Start
Date) 9 69
Segment Investment $1,000 $1,000
Segment Buffer -30% -30%
Performance Cap Rate 35% 35%
Time to Maturity (in months) 63 3
----------------------------------------------------------------------------------
ASSUMING THE CHANGE IN THE INDEX VALUE IS -40% (FOR EXAMPLE FROM 100.00 TO 60.00)
----------------------------------------------------------------------------------
Fair Value of Hypothetical Fixed Instrument $918.15 $998.29
Fair Value of Hypothetical Derivatives ($180.11) ($109.29)
Cap Calculation Factor $94.54 $4.49
Sum of above $832.58 $893.49
Segment Investment multiplied by prorated
Performance Cap Rate $1,043.63 $1,135.46
Segment Interim Value $832.58 $893.49
----------------------------------------------------------------------------------
III-4
APPENDIX III: SEGMENT INTERIM VALUE
----------------------------------------------------------------------------------
ITEM 6-YEAR SEGMENT 6-YEAR SEGMENT
----------------------------------------------------------------------------------
ASSUMING THE CHANGE IN THE INDEX VALUE IS -10% (FOR EXAMPLE FROM 100.00 TO 90.00)
----------------------------------------------------------------------------------
Fair Value of Hypothetical Fixed Instrument $918.15 $998.29
Fair Value of Hypothetical Derivatives ($40.12) $13.57
Cap Calculation Factor $94.54 $4.49
Sum of above $972.56 $1,016.35
Segment Investment multiplied by prorated
Performance Cap Rate $1,043.63 $1,135.46
Segment Interim Value $972.56 $1,016.35
----------------------------------------------------------------------------------
ASSUMING THE CHANGE IN THE INDEX VALUE IS 10% (FOR EXAMPLE FROM 100.00 TO 110.00)
----------------------------------------------------------------------------------
Fair Value of Hypothetical Fixed Instrument $918.15 $998.29
Fair Value of Hypothetical Derivatives $28.82 $112.30
Cap Calculation Factor $94.54 $4.49
Sum of above $1,041.51 $1,115.08
Segment Investment multiplied by prorated
Performance Cap Rate $1,043.63 $1,335.46
Segment Interim Value $1,041.51 $1,115.35
----------------------------------------------------------------------------------
ASSUMING THE CHANGE IN THE INDEX VALUE IS 40% (FOR EXAMPLE FROM 100.00 TO 140.00)
----------------------------------------------------------------------------------
Fair Value of Hypothetical Fixed Instrument $918.15 $998.29
Fair Value of Hypothetical Derivatives $106.44 $291.92
Cap Calculation Factor $94.54 $4.49
Sum of above $1,119.13 $1,294.70
Segment Investment multiplied by prorated
Performance Cap Rate $1,043.63 $1,335.46
Segment Interim Value $1,043.63 $1,294.70
----------------------------------------------------------------------------------
The input values to the market standard model that have been utilized to
generate the hypothetical examples above are as follows:
(1)Implied volatility of 28.3% is assumed.
(2)Swap rate corresponding to remainder of Segment term is assumed 1.63% (63
months to maturity) and 0.69% (3 month to maturity).
(3)Index dividend yield is assumed 1.95% annually.
(4)One-half estimated Bid-Ask Spread of 15 bps is assumed.
EXAMPLES: EFFECT OF WITHDRAWALS ON SEGMENT INTERIM VALUE -- STANDARD SEGMENTS
-------------------------------------------------------------
ITEM 6-YEAR SEGMENT
-------------------------------------------------------------
Segment Duration (in months) 72
Valuation Date (Months since
Segment Start Date) 9
Segment Investment $1,000
Segment Buffer -30%
Performance Cap Rate 35%
Time to Maturity (in months) 63
Amount Withdrawn/(1)/ $100
-------------------------------------------------------------
ASSUMING THE CHANGE IN THE INDEX VALUE IS -40% (FOR EXAMPLE
FROM 100.00 TO 60.00)
-------------------------------------------------------------
Segment Interim Value/(2)/ $833.27
Percent Withdrawn/(3)/ 12.00%
New Segment Investment/(4)/ $879.99
New Segment Interim Value/(5)/ $733.27
-------------------------------------------------------------
ASSUMING THE CHANGE IN THE INDEX VALUE IS -10% (FOR EXAMPLE
FROM 100.00 TO 90.00)
-------------------------------------------------------------
Segment Interim Value/(2)/ $980.15
Percent Withdrawn/(3)/ 10.20%
New Segment Investment/(4)/ $897.97
New Segment Interim Value/(5)/ $880.15
-------------------------------------------------------------
III-5
APPENDIX III: SEGMENT INTERIM VALUE
-------------------------------------------------------------
ITEM 6-YEAR SEGMENT
-------------------------------------------------------------
ASSUMING THE CHANGE IN THE INDEX VALUE IS 10% (FOR EXAMPLE
FROM 100.00 TO 110.00)
-------------------------------------------------------------
Segment Interim Value/(2)/ $1,051.79
Percent Withdrawn/(3)/ 9.51%
New Segment Investment/(4)/ $904.92
New Segment Interim Value/(5)/ $951.79
ASSUMING THE CHANGE IN THE INDEX VALUE IS 40% (FOR EXAMPLE
FROM 100.00 TO 140.00)
-------------------------------------------------------------
Segment Interim Value/(2)/ $1,052.36
Percent Withdrawn/(3)/ 9.50%
New Segment Investment/(4)/ $904.98
New Segment Interim Value/(5)/ $952.36
-------------------------------------------------------------
(1)Amount withdrawn is net of applicable withdrawal charge.
(2)Segment Interim Value immediately before withdrawal.
(3)Percent Withdrawn is equal to Amount Withdrawn divided by Segment Interim
Value.
(4)New Segment Investment is equal to the original Segment Investment ($1,000)
multiplied by (1 - Percent Withdrawn).
(5)New Segment Interim Value is equal to the calculated Segment Interim Value
based on the new Segment Investment. It will also be equal to the Segment
Interim Value multiplied by (1 - Percent Withdrawn).
EXAMPLE: SEGMENT INTERIM VALUE -- ANNUAL LOCK SEGMENTS
--------------------------------------------------------------------------------------------
ITEM 6-YEAR SEGMENT
--------------------------------------------------------------------------------------------
Segment Duration (in months) 72
Valuation Date Annual Lock Anniversary
Segment Investment $1,000
Segment Buffer -10%
Performance Cap Rate 12%
Time to Maturity (in months) 60
--------------------------------------------------------------------------------------------
ASSUMING THE CHANGE IN THE INDEX VALUE DURING THE FIRST ANNUAL LOCK PERIOD THE
SIV CALCULATION IS OCCURRING IS 13% (FOR EXAMPLE FROM 100.00 TO 113.00)
--------------------------------------------------------------------------------------------
Fair Value of Hypothetical
Fixed Instrument $878.00
Fair Value of Hypothetical
Derivatives $127.00
Cap Calculation Factor $100.00
Sum of above $1,105.00
Annual Lock Anniversary
Starting Amount multiplied
by prorated Performance Cap
Rate $1,120.00
Segment Interim Value $1,105.00
--------------------------------------------------------------------------------------------
The input values to the market standard model that have been utilized to
generate the hypothetical examples above are as follows:
(1)Implied volatility surface used for calibration of pricing model.
(2)Swap rate corresponding to remainder of Segment term is assumed 1.671%
annually at inception.
(3)Index dividend yield is assumed 1.826% annually.
(4)One-half estimated Bid-Ask Spread of 112.5 bps is assumed.
EXAMPLES: EFFECT OF WITHDRAWALS ON SEGMENT INTERIM VALUE, SEGMENT INVESTMENT
AND ANNUAL LOCK ANNIVERSARY STARTING AMOUNT -- ANNUAL LOCK SEGMENTS
---------------------------------------------------------------------------------------------------------------------------
1/ST/ ANNUAL LOCK 2/ND/ ANNUAL LOCK WITHDRAWAL
ITEM ANNIVERSARY ANNIVERSARY OCCURS
---------------------------------------------------------------------------------------------------------------------------
Segment Duration (in months) 72 72 72
Valuation Date (Months since
Segment Start Date) 12 24 30
Segment Investment $1,000 $1,000 $1,000
Segment Buffer -10% -10% -10%
Performance Cap Rate 12% 12% 12%
Time to Maturity (in months) 60 48 42
Amount Withdrawn/(1)/ $0 $0 $110
III-6
APPENDIX III: SEGMENT INTERIM VALUE
---------------------------------------------------------------------------------------------------------------------------
CHANGE IN INDEX VALUE +13% -5% +2%
---------------------------------------------------------------------------------------------------------------------------
Segment Interim Value $1,100.00/(2)/
Annual Lock
Anniversary Starting Amount $1,120.00 $1,120.00
Percent Withdrawn/(3)/ 10.00%
New Segment Investment/(4)/ $900.00
New Segment Interim Value/(5)/ $990.00
New Annual Lock Anniversary
Starting Amount $1,008.00 $1,008.00
---------------------------------------------------------------------------------------------------------------------------
(1)Amount withdrawn is net of applicable withdrawal charge.
(2)Value immediately before withdrawal.
(3)Percent Withdrawn is equal to Amount Withdrawn divided by Segment Interim
Value.
(4)New Segment Investment is equal to the original Segment Investment ($1,000)
multiplied by (1 - Percent Withdrawn).
(5)New Segment Interim Value is equal to the calculated Segment Interim Value
based on the new Segment Investment. It will also be equal to the Segment
Interim Value multiplied by (1 - Percent Withdrawn).
III-7
APPENDIX III: SEGMENT INTERIM VALUE
Appendix IV: Index Publishers
--------------------------------------------------------------------------------
The Structured Investment Option of the Structured Capital Strategies(R)
contract tracks certain Securities Indices and Index Funds that are published
by third parties. AXA Equitable uses these Securities Indices and Index Funds
under license from the Indices' and Index Funds respective publishers. The
following information about the Indices and Index Funds is included in this
Prospectus in accordance with AXA Equitable's license agreements with the
publishers of the Indices and Index Funds:
S&P Dow Jones Indices LLC requires that the following disclaimer be included in
the Prospectus:
The S&P 500 Price Return Index (the "Index") is a product of S&P Dow Jones
Indices LLC ("SPDJI"), and has been licensed for use by AXA Equitable. Standard
& Poor's(R) and S&P(R) are registered trademarks of Standard & Poor's Financial
Services LLC ("S&P"); and these trademarks have been licensed for use by SPDJI
and sublicensed for certain purposes by AXA Equitable. The Structured Capital
Strategies(R) contract is not sponsored, endorsed, sold or promoted by SPDJI,
Dow Jones, S&P or any of their respective affiliates (collectively, "S&P Dow
Jones Indices"). S&P Dow Jones Indices makes no representation or warranty,
express or implied, to the owners of the Structured Capital Strategies(R)
contract or any member of the public regarding the advisability of investing in
securities generally or in the Structured Capital Strategies(R) contract
particularly or the ability of the Indexes to track general market performance.
S&P Dow Jones Indices' only relationship to AXA Equitable with respect to the
Index is the licensing of the Index and certain trademarks, service marks
and/or trade names of S&P Dow Jones Indices and/or its licensors. The Indexes
are determined, composed and calculated by S&P Dow Jones Indices without regard
to AXA Equitable or the Structured Capital Strategies(R) contract. S&P Dow
Jones Indices have no obligation to take the needs of AXA Equitable or the
owners of the Structured Capital Strategies(R) contract into consideration in
determining, composing or calculating the Index. S&P Dow Jones Indices are not
responsible for and have not participated in the determination of the prices,
and amount of the Structured Capital Strategies(R) contract or the timing of
the issuance or sale of such contract or in the determination or calculation of
the equation by which such contract is to be converted into cash, surrendered
or redeemed, as the case may be. S&P Dow Jones Indices have no obligation or
liability in connection with the administration, marketing or trading of AXA
Equitable's products. There is no assurance that investment products based on
the Indexes will accurately track index performance or provide positive
investment returns. S&P Dow Jones Indices LLC is not an investment advisor.
Inclusion of a security within an index is not a recommendation by S&P Dow
Jones Indices to buy, sell, or hold such security, nor is it considered to be
investment advice.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS
AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY
COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION
(INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES
INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS,
OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY AXA
EQUITABLE, OWNERS OF THE STRUCTURED CAPITAL STRATEGIES(R) CONTRACT, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA
RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER
SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF
PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED
OF THE POSSIBLITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY,
OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR
ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND AXA EQUITABLE, OTHER THAN THE
LICENSORS OF S&P DOW JONES INDICES.
The name "S&P 500 Price Return Index" is a trademark of Standard & Poor's and
has been licensed for use by AXA Equitable.
Frank Russell Company requires that the following disclosure be included in
this Prospectus:
The Structured Capital Strategies(R) contract is not sponsored, endorsed, sold
or promoted by Frank Russell Company ("Russell"). Russell makes no
representation or warranty, express or implied, to the owners of the Structured
Capital Strategies(R) contract or any member of the public regarding the
advisability of investing in securities generally or in the Product(s)
particularly or the ability of the Russell 2000(R) Price Return Index to track
general stock market performance or a segment of the same. Russell's
publication of the Russell 2000(R) Price Return Index in no way suggests or
implies an opinion by Russell as to the advisability of investment in any or
all of the securities upon which the Russell 2000(R) Price Return Index is
based. Russell's only relationship to AXA Equitable is the licensing of certain
trademarks and trade names of Russell and of the Russell 2000(R) Price Return
Index which is determined, composed and calculated by Russell without regard to
AXA Equitable or the Structured Capital Strategies(R) contract. Russell is not
responsible for and has not reviewed the Structured Capital Strategies(R)
contract nor any associated literature or publications and Russell makes no
representation or warranty express or implied as to their accuracy or
completeness, or otherwise. Russell reserves the right, at any time and without
notice, to alter, amend, terminate or in any way change the the Structured
Capital Strategies(R) contract. Russell has no obligation or liability in
connection with the administration, marketing or trading of the Structured
Capital Strategies(R) contract.
RUSSELL DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE RUSSELL
2000(R) PRICE RETURN INDEX OR ANY DATA INCLUDED THEREIN AND RUSSELL SHALL HAVE
NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. RUSSELL MAKES
IV-1
APPENDIX IV: INDEX PUBLISHERS
NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY AXA EQUITABLE,
INVESTORS, OWNERS OF THE PRODUCT(S), OR ANY OTHER PERSON OR ENTITY FROM THE USE
OF THE RUSSELL 2000(R) PRICE RETURN INDEX OR ANY DATA INCLUDED THEREIN. RUSSELL
MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO
THE RUSSELL 2000(R) PRICE RETURN INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL RUSSELL HAVE ANY LIABILITY FOR
ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
MSCI Inc. requires that the following disclosure be included in this Prospectus:
THIS PRODUCT IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI INC.
("MSCI"), ANY OF ITS AFFILIATES, ANY OF ITS INFORMATION PROVIDERS OR ANY OTHER
THIRD PARTY INVOLVED IN, OR RELATED TO, COMPILING, COMPUTING OR CREATING ANY
MSCI INDEX (COLLECTIVELY, THE "MSCI PARTIES"). THE MSCI INDEXES ARE THE
EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES ARE SERVICE MARK(S)
OF MSCI OR ITS AFFILIATES AND HAVE BEEN LICENSED FOR USE FOR CERTAIN PURPOSES
BY [LICENSEE]. NONE OF THE MSCI PARTIES MAKES ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, TO THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON
OR ENTITY REGARDING THE ADVISABILITY OF INVESTING IN PRODUCTS GENERALLY OR IN
THIS PRODUCT PARTICULARLY OR THE ABILITY OF ANY MSCI INDEX TO TRACK
CORRESPONDING STOCK MARKET PERFORMANCE. MSCI OR ITS AFFILIATES ARE THE
LICENSORS OF CERTAIN TRADEMARKS, SERVICE MARKS AND TRADE NAMES AND OF THE MSCI
INDEXES WHICH ARE DETERMINED, COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO
THIS PRODUCT OR THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR
ENTITY. NONE OF THE MSCI PARTIES HAS ANY OBLIGATION TO TAKE THE NEEDS OF THE
ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR ENTITY INTO
CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE MSCI INDEXES. NONE
OF THE MSCI PARTIES IS RESPONSIBLE FOR OR HAS PARTICIPATED IN THE DETERMINATION
OF THE TIMING OF, PRICES AT, OR QUANTITIES OF THIS PRODUCT TO BE ISSUED OR IN
THE DETERMINATION OR CALCULATION OF THE EQUATION BY OR THE CONSIDERATION INTO
WHICH THIS PRODUCT IS REDEEMABLE. FURTHER, NONE OF THE MSCI PARTIES HAS ANY
OBLIGATION OR LIABILITY TO THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER
PERSON OR ENTITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR OFFERING
OF THIS PRODUCT. ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR
USE IN THE CALCULATION OF THE MSCI INDEXES FROM SOURCES THAT MSCI CONSIDERS
RELIABLE, NONE OF THE MSCI PARTIES WARRANTS OR GUARANTEES THE ORIGINALITY,
ACCURACY AND/OR THE COMPLETENESS OF ANY MSCI INDEX OR ANY DATA INCLUDED
THEREIN. NONE OF THE MSCI PARTIES MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY THE ISSUER OF THE PRODUCT, OWNERS OF THE PRODUCT, OR
ANY OTHER PERSON OR ENTITY, FROM THE USE OF ANY MSCI INDEX OR ANY DATA INCLUDED
THEREIN. NONE OF THE MSCI PARTIES SHALL HAVE ANY LIABILITY FOR ANY ERRORS,
OMISSIONS OR INTERRUPTIONS OF OR IN CONNECTION WITH ANY MSCI INDEX OR ANY DATA
INCLUDED THEREIN. FURTHER, NONE OF THE MSCI PARTIES MAKES ANY EXPRESS OR
IMPLIED WARRANTIES OF ANY KIND, AND THE MSCI PARTIES HEREBY EXPRESSLY DISCLAIM
ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH
RESPECT TO EACH MSCI INDEX AND ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL ANY OF THE MSCI PARTIES HAVE ANY LIABILITY
FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES
(INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
No purchaser, seller or holder of this product, or any other person or entity,
should use or refer to any MSCI trade name, trademark or service mark to
sponsor, endorse, market or promote this security without first contacting MSCI
to determine whether MSCI's permission is required. Under no circumstances may
any person or entity claim any affiliation with MSCI without the prior written
permission of MSCI.
S&P does not guarantee the accuracy and/or completeness of the S&P 500 or any
data included therein.
S&P makes no warranty, express or implied, as to results to be obtained by the
Index Compilation Agent, the Trust, owners of the product, or any other person
or entity from the use of the S&P 500 or any data included therein in
connection with the rights licensed under the license agreement or for any
other use. S&P makes no express or implied warranties, and hereby expressly
disclaims all warranties of merchantability or fitness for a particular purpose
with respect to the S&P 500 or any data included therein. Without limiting any
of the foregoing, in no event shall S&P have any liability for any special,
punitive, indirect or consequential damages (including lost profits), even if
notified of the possibility of such damages.
The shares are not sponsored or promoted by either the Index Calculation Agent
or the Index Compilation Agent.
Although BofA Merrill Lynch -- as the Index Compilation Agent -- shall obtain
and provide information to S&P -- as the Index Calculation Agent -- from
sources which it considers reliable, the Index Compilation Agent and the Index
Calculation Agent do not guarantee the accuracy and/or the completeness of any
Select Sector Index or any data included therein. The Index Compilation Agent
and the Index Calculation Agent make no warranty, express or implied, as to
results to be obtained by the Trust as licensee, licensee's customers and
counterparties, owners of the shares, or any other person or entity from the
use of the Select Sector Indexes or any data included therein in connection
with the rights licensed as described herein or for any other use. The Index
Compilation Agent and the Index Calculation Agent make no express or implied
warranties, and each hereby expressly disclaims all warranties of
merchantability or fitness for a particular purpose with respect to the Select
Sector Indexes or any data included therein. Without limiting any of the
foregoing, in no event shall the Index Compilation Agent and the Index
Calculation Agent have any liability for any direct, indirect, special,
punitive, consequential or any other damages (including lost profits) even if
notified of the possibility of such damages.
IV-2
APPENDIX IV: INDEX PUBLISHERS
Appendix V: Segment Maturity Date and Segment Start Date examples
--------------------------------------------------------------------------------
The Segment Maturity Date for Segments maturing and the Segment Start Date for
new corresponding Segments will generally be scheduled to occur on consecutive
business days that are also Segment Business Days. However, as described
earlier in this Prospectus, the Segment Maturity Date and Segment Start Date
may sometimes occur on other dates.
Set forth below are representative examples of how the Segment Maturity Date
and Segment Start Date may be moved to a different date due to holidays, which
are not Segment Business Days.
Assume that the scheduled Segment Maturity Date falls on a holiday, and the
preceding and following days are both Segment Business Days:
--------------------------------------------------------------------------------------------
IF THE SCHEDULED SEGMENT THEN THE SEGMENT AND THE CORRESPONDING SEGMENT
MATURITY DATE IS A HOLIDAY: MATURITY DATE IS: START DATE IS:
--------------------------------------------------------------------------------------------
Wednesday the 16th Tuesday the 15th Thursday the 17th
--------------------------------------------------------------------------------------------
Assume that the scheduled Segment Start Date falls on a holiday, and the
preceding two days are both Segment Business Days:
--------------------------------------------------------------------------------------------
IF THE SCHEDULED SEGMENT THEN THE SEGMENT AND THE CORRESPONDING SEGMENT
START DATE IS A HOLIDAY: MATURITY DATE IS: START DATE IS:
--------------------------------------------------------------------------------------------
Thursday the 1st Wednesday the 31st no Segment will start until
the next scheduled Segment
Start Date
--------------------------------------------------------------------------------------------
Thursday the 17th Tuesday the 15th Wednesday the 16th
--------------------------------------------------------------------------------------------
V-1
APPENDIX V: SEGMENT MATURITY DATE AND SEGMENT START DATE EXAMPLES
Appendix VI: Purchase considerations for defined benefit and defined
contribution plans
--------------------------------------------------------------------------------
We offer the QP contract as a funding vehicle for defined benefit and defined
contribution plans. In certain states the QP contract is not offered. In those
states defined benefit and defined contribution plans may purchase NQ contracts
as a plan funding vehicle. The plan and trust, if properly qualified, contain
the requisite provisions of the Internal Revenue Code to maintain their tax
exempt status. The most significant difference between the use of the QP
contract and the NQ contract as a funding vehicle is that the QP contract may
be converted into an IRA contract for the benefit of a plan participant under
specified circumstances; an NQ contract cannot be so converted. The advantage
of the IRA conversion feature is that the participant's benefit amount remains
invested: no amounts need to be withdrawn from Segments prior to maturity, the
investment options remain available to the participant, and the aging of
contributions for purposes of contingent withdrawal charges remains intact. If
the plan's funding vehicle is an NQ contract, a withdrawal must be made from
the NQ contract in order for the plan to pay the rollover distribution to the
plan participant for application to an IRA, or directly to an IRA provider at
the direction of the plan participant.
Trustees who are considering the purchase of a Structured Capital Strategies(R)
contract as a plan funding vehicle should discuss with their tax and ERISA
advisers whether such a contract is an appropriate investment vehicle for the
employer's plan. Whether the contract is a QP contract or an NQ contract in
certain states, there are significant issues in the purchase of Structured
Capital Strategies(R) contract for a qualified plan. The QP contract (or the NQ
contract in certain states) and this Prospectus should be reviewed in full, and
the following factors, among others, should be noted. Trustees should consider
whether the plan provisions permit the investment of plan assets in the QP or
NQ contract, and the payment of death benefits in accordance with the
requirements of the federal income tax rules. Assuming continued plan
qualification and operation, earnings on qualified plan assets will accumulate
value on a tax-deferred basis even if the plan is not funded by Structured
Capital Strategies(R) QP or NQ contract, or any other annuity contract.
Therefore, plan trusts should purchase a Structured Capital Strategies(R) QP or
NQ contract to fund a plan for the contract's features and benefits and not for
tax deferral, after considering the relative costs and benefits of annuity
contracts and other types of arrangements and funding vehicles. Trustees should
consider the liquidity needs of the plan (defined contribution or defined
benefit) because Segments in the Structured Investment Option may not be mature
at the time plan benefits or required minimum distributions must be paid.
Finally, because of the method of purchasing the contract, including the large
initial contribution and the requirement that contributions may only be in the
form of transfers from existing funds of the qualified plan trust, plan
trustees should discuss with their advisers whether the purchase of the QP
contract would cause the plan to engage in prohibited discrimination in
contributions, benefits or otherwise.
POOLING PLAN ASSETS
We do not permit plans to pool plan assets attributable to the benefits of
multiple plan participants in one Structured Capital Strategies(R) QP contract,
because of the IRA conversion possibility for the QP contract noted in the
first paragraph of this Appendix. Therefore we require that a separate QP
contract be purchased for each covered plan participant. In states where only
the NQ contract is available as a funding vehicle, defined benefit plans and
defined contribution plans may invest plan assets attributable to the benefits
of multiple plan participants in one Structured Capital Strategies(R) NQ
contract. There is no requirement to apply for multiple Structured Capital
Strategies(R) NQ contracts.
CONTRIBUTIONS
We accept only transfer contributions from the existing funds of the qualified
plan trust, regardless of the type of contract used as the funding vehicle. No
contributions will be accepted directly from the employer sponsoring the plan.
We will not accept ongoing payroll contributions. For 401(k) plans, no employee
after-tax contributions are accepted. A "designated Roth contribution account"
is not available in either the QP contract or the NQ contract in certain
states. Checks written on accounts held in the name of the employer instead of
the plan or the trust will not be accepted. Except for NQ contracts, only one
additional transfer contribution may be made per contract year. If amounts
attributable to an excess or mistaken contribution must be withdrawn,
withdrawal charges may apply.
PAYMENTS
Trustees considering the purchase of a Structured Capital Strategies(R)
contract as a qualified plan funding vehicle should also consider the following:
.. There is no loan feature offered under the Structured Capital Strategies(R)
contract (whether the funding vehicle is a QP contract or an NQ contract in
certain states), so if the plan provides for loans and a participant takes
a loan from the plan, other plan assets must be used as the source of the
loan and any loan repayments must be credited to other investment vehicles
and/or accounts available under the plan. If the plan's other funding
vehicle has insufficient assets to make any loan, amounts withdrawn from
the NQ or QP contract will be subject to the Segment Interim Value
calculation and may be subject to contingent withdrawal charges.
.. The plan trust must be designated as the beneficiary and payment of death
benefits from the contract must be distributed in accordance with the
requirements of the federal income tax rules. Under a QP contract (but not
under an NQ contract in certain states) after the plan participant's death,
but before the death benefit is paid, the plan may substitute the
beneficiary under the plan at death as the beneficiary under the contract.
.. All payments under an NQ contract will be made to the plan trust owner. All
payments under a QP contract will be made to the plan trust owner until
such time as the plan trust owner changes ownership to the plan participant
as part of an IRA conversion.
VI-1
APPENDIX VI: PURCHASE CONSIDERATIONS FOR DEFINED BENEFIT AND DEFINED
CONTRIBUTION PLANS
CONSIDERATIONS FOR DEFINED BENEFIT PLAN PURCHASES
SPLIT FUNDING REQUIREMENT. The maximum percentage of the value of the plan's
total assets that should be invested in a Structured Capital Strategies(R)
contract at any time is 80%. Whether the funding vehicle is a QP contract or an
NQ contract in certain states, at least 20% of the plan's assets should be
invested in one or more other funding vehicles to provide liquidity for the
plan because Segments in the Structured Investment Option may not be mature at
the time plan benefits become payable.
IF THE DEFINED BENEFIT PLAN PURCHASES A QP CONTRACT. In order to purchase the
QP contract for a defined benefit plan, the plan's actuary will be required to
determine a current dollar value of each plan participant's accrued benefit so
that individual contracts may be established for each plan participant. We do
not permit defined benefit plans to pool plan assets attributable to the
accrued benefits of multiple plan participants.
The value under a QP contract may at any time be more or less than the lump sum
actuarial equivalent of the accrued benefit for a defined benefit plan
participant. AXA Equitable does not guarantee that the account value under a QP
contract will at any time equal the actuarial value of 80% of a
participant/employee's accrued benefit. If amounts attributable to an excess or
mistaken contribution must be withdrawn, withdrawal charges may apply. If in a
defined benefit plan the plan's actuary determines that an overfunding in the
QP contract has occurred, then any transfers from the QP contract may also
result in withdrawal charges.
The plan's fiduciaries are responsible for ensuring that the plan has enough
liquidity to pay benefits when required and should discuss anticipated
liquidity needs with the plan's actuary. Any withdrawal from the Structured
Capital Strategies(R) QP contract to pay benefits, or to address plan
overfunding, excess or mistaken contributions, any required minimum
distribution requirement, or for any other plan or benefit purpose will be
treated as a normal withdrawal for purposes of withdrawal charges and all other
contractual provisions.
While the contract is owned by the plan trust, all payments under the contract
will be made to the plan trust owner. If the plan rolls over a contract into an
IRA for the benefit of a former plan participant through a contract conversion,
it is the plan's responsibility to adjust the value of the contract to the
actuarial equivalent of the participant's benefit, prior to the contract
conversion.
IF THE DEFINED BENEFIT PLAN PURCHASES AN NQ CONTRACT. Defined benefit plans may
pool plan assets attributable to the accrued benefits of multiple plan
participants in one NQ contract. The Structured Capital Strategies(R) contract
is merely a funding vehicle and is not "benefit sensitive" like some contracts
or other funding vehicles that may be offered to qualified plan sponsors.
The plan's fiduciaries are responsible for ensuring that the plan has enough
liquidity to pay benefits when required and should discuss anticipated
liquidity needs with the plan's actuary. Amounts must be withdrawn from the
contract or the contract must be liquidated to pay benefits; benefits payable
under the plan cannot be satisfied through a transfer of ownership of the NQ
contract to any person or entity. Any withdrawal from the Structured Capital
Strategies(R) NQ contract to pay benefits, or to address plan overfunding,
excess or mistaken contributions, any required minimum distribution
requirement, or for any other plan or benefit purpose will be treated as a
normal withdrawal for purposes of withdrawal charges and all other contractual
provisions.
NQ CONTRACT AS A FUNDING VEHICLE IN CERTAIN STATES
If the plan's funding vehicle is an NQ contract, a withdrawal must be made from
the NQ contract or the contract must be liquidated in order to roll over to an
IRA or other eligible retirement plan. There may be significant tax
consequences if the plan transfers ownership of the NQ contract to an employee
after the employee separates from service.
FUNDING VEHICLE ONLY
AXA Equitable's only role is that of the issuer of the contract. AXA Equitable
is not the plan administrator. AXA Equitable will not perform or provide any
plan administrative, recordkeeping or actuarial valuation services with respect
to plan assets invested in Structured Capital Strategies(R) contracts, whether
QP (or NQ in certain states). The plan's administrator will be solely
responsible for performing or providing for all such services.
VI-2
APPENDIX VI: PURCHASE CONSIDERATIONS FOR DEFINED BENEFIT AND DEFINED
CONTRIBUTION PLANS
Statement of additional information
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
Who is AXA Equitable? 2
Unit Values 2
Custodian and independent registered public accounting firm 2
Distribution of the contracts 2
Financial statements 2
HOW TO OBTAIN A STRUCTURED CAPITAL STRATEGIES(R) PLUS STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 49
Send this request form to:
Retirement Service Solutions
P.O. Box 1547
Secaucus, NJ 07096-1547
----------------------------------------------------------------------------------
Please send me a Structured Capital Strategies(R) PLUS Statement of
Additional Information dated June 1, 2017.
----------------------------------------------------------------------------------
Name
----------------------------------------------------------------------------------
Address
----------------------------------------------------------------------------------
City State Zip
302301
Structured Capital Strategies(R) PLUS
A combination variable and index-linked deferred annuity contract
STATEMENT OF ADDITIONAL INFORMATION
JUNE 1, 2017
AXA EQUITABLE LIFE INSURANCE COMPANY
1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104
--------------------------------------------------------------------------------
This Statement of Additional Information ("SAI") is not a Prospectus. It should
be read in conjunction with the related Structured Capital Strategies(R) PLUS
most current Prospectus. That Prospectus provides detailed information
concerning the contract and the variable investment options and/or in one or
more of the Segments comprising the Structured Investment Option. Each variable
investment option is a subaccount of AXA Equitable's Separate Account No. 49.
Definitions of special terms used in the SAI are found in the Prospectus.
A copy of the Prospectus is available free of charge by writing the processing
office (Retirement Service Solutions -- Post Office Box 1547, Secaucus, NJ
07096-1547), by calling 1-800-889-3743 toll free, or by contacting your
financial professional.
TABLE OF CONTENTS
Who is AXA Equitable? 2
Unit Values 2
Custodian and Independent Registered Public Accounting Firm 2
Distribution of the Contracts 2
Financial statements 2
Copyright 2017 AXA Equitable Life Insurance Company.
All rights reserved. Structured Capital Strategies(R) is a registered mark of
AXA Equitable Life Insurance Company.
SCS PLUS
#302301
WHO IS AXA EQUITABLE?
We are AXA Equitable Life Insurance Company ("AXA Equitable") a New York stock
life insurance corporation. We have been doing business since 1859. AXA
Equitable Life Insurance Company is an indirect wholly owned subsidiary of AXA
Financial, Inc., which is an indirect wholly owned subsidiary of AXA S.A.
("AXA"), a French holding company for an international group of insurance and
related financial services companies. As the ultimate sole shareholder of AXA
Equitable, AXA exercises significant influence over the operations and capital
structure of AXA Equitable. No company other than AXA Equitable, however, has
any legal responsibility to pay amounts that AXA Equitable owes under the
contracts.
UNIT VALUES
Unit values are determined at the end of each valuation period for each of the
variable investment options. We may offer other annuity contracts and
certificates which will have their own unit values for the variable investment
options. They may be different from the unit values for the Structured Capital
Strategies(R) PLUS.
The unit value for a variable investment option for any valuation period is
equal to: (i) the unit value for the preceding valuation period multiplied by
(ii) the net investment factor for that option for that valuation period. A
valuation period is each business day together with any preceding non-business
days. The net investment factor is:
a
( ----) -- c
b
where:
(a)is the value of the variable investment option's shares of the corresponding
portfolio at the end of the valuation period. Any amounts allocated to or
withdrawn from the option for the valuation period are not taken into
account. For this purpose, we use the share value reported to us by the
Trusts (as described in the Prospectus), as applicable.
(b)is the value of the variable investment option's shares of the corresponding
portfolio at the end of the preceding valuation period. (Any amounts
allocated or withdrawn for that valuation period are taken into account.)
(c)is the variable investment option fee, times the number of calendar days in
the valuation period. These daily charges are at an effective annual rate
not to exceed 1.15%. Your charges may be less.
CUSTODIAN AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AXA Equitable is the custodian for the shares of the Trusts owned by Separate
Account No. 49.
The financial statements of the Separate Account at December 31, 2016 and for
each of the two years in the period ended December 31, 2016, and the
consolidated financial statements of AXA Equitable at December 31, 2016 and
2015 and for each of the three years in the period ended December 31, 2016 are
included in this SAI in reliance on the reports of PricewaterhouseCoopers LLP,
an independent registered public accounting firm, given on the authority of
said firm as experts in auditing and accounting.
PricewaterhouseCoopers LLP provides independent audit services and certain
other non-audit services to AXA Equitable as permitted by the applicable SEC
independence rules, and as disclosed in AXA Equitable's Form 10-K.
PricewaterhouseCoopers LLP's address is 300 Madison Avenue, New York, New York
10017.
DISTRIBUTION OF THE CONTRACTS
Under a distribution agreement between AXA Distributors, LLC, AXA Equitable and
certain of AXA Equitable's separate accounts, including Separate Account
No. 49, AXA Equitable paid AXA Distributors, LLC, distribution fees of
$507,645,857 in 2016, $490,800,838 in 2015 and $516,811,792 in 2014, as the
distributor of certain contracts, including these contracts, and as the
principal underwriter of several AXA Equitable separate accounts, including
Separate Account No. 49. Of these amounts, for each of these three years, AXA
Distributors, LLC retained $7,262,669, $0 and $0, respectively.
Pursuant to a Distribution and Servicing Agreement between AXA Advisors, AXA
Equitable and certain of AXA Equitable's separate accounts, including Separate
Account No. 49, AXA Equitable paid AXA Advisors a fee of $0 in 2016, $0 in 2015
and $325,380 in 2014. AXA Equitable paid AXA Advisors, as the distributors of
certain contracts, including these contracts, and as the principal underwriter
of several AXA Equitable separate accounts, including Separate Account No. 49,
$542,160,541 in 2016, $560,399,960 in 2015 and $571,445,806 in 2014. Of these
amounts, AXA Advisors retained $281,641,950, $285,764,982 and $305,637,317,
respectively.
FINANCIAL STATEMENTS
The consolidated financial statements of AXA Equitable included herein should
be considered only as bearing upon the ability of AXA Equitable to meet its
obligations under the contracts.
The financial statements of Separate Account No. 49 list variable investment
options not currently offered under this contract.
2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
ESTIMATED
ITEM OF EXPENSE EXPENSE
--------------- -----------
Registration fees $116,015.90
Federal taxes N/A
State taxes and fees (based on 50 state average) N/A
Trustees' fees N/A
Transfer agents' fees N/A
Printing and filing fees $50,000*
Legal fees N/A
Accounting fees N/A
Audit fees $20,000*
Engineering fees N/A
Directors and officers insurance premium paid by Registrant N/A
--------
* Estimated expense.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The by-laws of AXA Equitable Life Insurance Company ("AXA Equitable")
provide, in Article VII, as follows:
7.4 Indemnification of Directors, Officers and Employees. (a) To
the extent permitted by the law of the State of New York and
subject to all applicable requirements thereof:
(i) any person made or threatened to be made a party to any
action or proceeding, whether civil or criminal, by
reason of the fact that he or she, or his or her
testator or intestate, is or was a director, officer or
employee of the Company shall be indemnified by the
Company;
(ii) any person made or threatened to be made a party to any
action or proceeding, whether civil or criminal, by
reason of the fact that he or she, or his or her
testator or intestate serves or served any other
organization in any capacity at the request of the
Company may be indemnified by the Company; and
(iii) the related expenses of any such person in any of said
categories may be advanced by the Company.
(b) To the extent permitted by the law of the State of
New York, the Company may provide for further
indemnification or advancement of expenses by resolution
of shareholders of the Company or the Board of
Directors, by amendment of these By-Laws, or by
agreement. {Business Corporation Law ss.ss. 721-726;
Insurance Law ss.1216}
The directors and officers of AXA Equitable are insured under
policies issued by X. L. Insurance Company, Arch Insurance Company, Endurance
Insurance Company, U.S. Specialty Insurance, St. Paul Travelers, Chubb
Insurance Company, AXIS Insurance Company and Zurich Insurance Company. The
annual limit on such policies is $105 million, and the policies insure the
officers and directors against certain liabilities arising out of their conduct
in such capacities.
ITEM 16. EXHIBITS
Exhibits No.
(1) (a) Distribution Agreement dated as of January 1, 1998 among The
Equitable Life Assurance Society of the United States (now AXA
Equitable Life Insurance Company) for itself and as depositor
on behalf of certain Separate Accounts, and Equitable
Distributors, Inc. (now AXA Distributors, LLC), incorporated
herein by reference to the Registration Statement on Form N-4
(File No. 333-64749), filed on August 5, 2011.
(i) First Amendment dated January 1, 2001 to Distribution
Agreement dated January 1, 1998, incorporated herein by
reference to the Registration Statement on Form N-4
(File No. 333-64749), filed on August 5, 2011.
(ii) Second Amendment dated January 1, 2012 to Distribution
Agreement dated January 1, 1998, incorporated herein by
reference to Registration Statement on Form N-4 (File
No. 333-05593) filed on April 24, 2012.
(iii) Third Amendment dated November 1, 2014 to Distribution
Agreement dated January 1, 1998, incorporation herein by
reference to Registration Statement on Form N-4 (File
No. 2-30070) filed on April 19, 2016.
(b) Distribution and Servicing Agreement dated as of May 1, 1994,
among Equico Securities (now AXA Advisors, LLC), The Equitable
Life Assurance Society of the United States, and Equitable
Variable Life Insurance Company, incorporated herein by
reference to Exhibit 3(c) to the Registration Statement on Form
N-4 (File No. 2-30070), refiled electronically July 10, 1998.
(i) Letter of Agreement dated April 20, 1998 for
Distribution Agreement, among The Equitable Life
Assurance Society of the United States and EQ Financial
Consultants, Inc. (now AXA Advisors, LLC), incorporated
herein by reference to Exhibit No. 3(c) to Registration
Statement (File No. 33-83750), filed on May 1, 1998.
(c) Distribution Agreement for services by The Equitable Life
Assurance Society of the United States to AXA Network, LLC and
its subsidiaries dated January 1, 2000 incorporated herein by
reference to Exhibit 3(d) to Registration Statement (File No.
33-83750) filed April 19, 2001.
(d) Transition Agreement for services by AXA Network, LLC and its
subsidiaries to The Equitable Life Assurance Society of the
United States dated January 1, 2000 incorporated herein by
reference to Exhibit 3(e) to Registration Statement (File No.
33-83750) filed April 19, 2001.
(e) General Agent Sales Agreement dated January 1, 2000 between The
Equitable Life Assurance Society of the United States and AXA
Network, LLC and its subsidiaries, incorporated herein by
reference to Exhibit 3(h) to the Registration Statement on Form
N-4, (File No. 2-30070), filed April 19, 2004.
(i) First Amendment dated January 1, 2003 to General Agent
Sales Agreement dated January 1, 2000 between The
Equitable Life Assurance Society of the
II-2
United States and AXA Network, LLC and its subsidiaries,
incorporated herein by reference to the Registration
Statement on Form N-4, (File No. 333-05593), filed
April 24, 2012.
(ii) Second Amendment dated as of January 1, 2004 to General
Agent Sales Agreement dated January 1, 2000 between The
Equitable Life Assurance Society of the United States
and AXA Network, LLC and its subsidiaries, incorporated
herein by reference to the Registration Statement on
Form N-4, (File No. 333-05593), filed April 24, 2012.
(iii) Third Amendment dated as of July 19,2004 to General
Agent Sales Agreement dated as of January 1, 2000 by and
between The Equitable Life Assurance Society of the
United States and AXA Network, LLC and its subsidiaries
incorporated herein by reference to Registration
Statement on Form N-4 (File No. 333-127445), filed on
August 11, 2005.
(iv) Fourth Amendment dated as of November 1, 2004 to General
Agent Sales Agreement dated as of January 1, 2000 by and
between The Equitable Life Assurance Society of the
United States and AXA Network, LLC and its subsidiaries
incorporated herein by reference to Registration
Statement on Form N-4 (File No. 333-127445), filed on
August 11, 2005.
(v) Fifth Amendment dated as of November 1, 2006, to General
Agent Sales Agreement dated as of January 1, 2000 by and
between The Equitable Life Assurance Society of the
United States and AXA Network, LLC and its subsidiaries
incorporated herein by reference to Registration
Statement on Form N-4 (File No. 333-05593), filed on
April 24, 2012.
(vi) Sixth Amendment dated as of February 15, 2008, to
General Agent Sales Agreement dated as of January 1,
2000 by and between AXA Equitable Life Insurance Company
(formerly known as The Equitable Life Assurance Society
of the United States) and AXA Network, LLC and its
subsidiaries, incorporated herein by reference to
Registration Statement on Form N-4 (File No. 333-05593)
filed on April 24, 2012.
(vii) Seventh Amendment dated as of February 15, 2008, to
General Agent Sales Agreement dated as of January 1,
2000 by and between AXA Equitable Life Insurance Company
(formerly known as The Equitable Life Assurance Society
of the United States) and AXA Network, LLC and its
subsidiaries, incorporated herein by reference to
Registration Statement on Form N-4 (File No. 2-30070) to
Exhibit 3(r), filed on April 20, 2009.
(viii) Eighth Amendment dated as of November 1, 2008, to
General Agent Sales Agreement dated as of January 1,
2000 by and between AXA Equitable Life Insurance Company
(formerly known as The Equitable Life Assurance Society
of the United States) and AXA Network, LLC and its
subsidiaries, incorporated herein by reference to
Registration Statement on Form N-4 (File No. 2-30070) to
Exhibit 3(s), filed on April 20, 2009.
(ix) Ninth Amendment dated as of November 1, 2011 to General
Agent Sales Agreement dated as of January 1, 2000 by and
between AXA Life Insurance Company (formerly known as
The Equitable Life Assurance Society of the United
States) and AXA Network, LLC and its subsidiaries,
incorporated herein by reference to Registration
Statement on Form N-4 (File No. 333-05593) filed on
April 24, 2012.
(x) Tenth Amendment dated as of November 1, 2013, to General
Agent Sales Agreement dated as of January 1, 2000, by
and between AXA Equitable Life Insurance Company
(formerly known as The Equitable Life Assurance Society
of the United States) and AXA Network, LLC and its
subsidiaries, incorporated herein by reference to
Registration Statement on Form N-4 (File No. 333-178750)
filed on October 16, 2014.
(xi) Eleventh Amendment dated as of November 1, 2013, to
General Agent Sales Agreement dated as of January 1,
2000, by and between AXA Equitable Life Insurance
Company (formerly known as The Equitable Life Assurance
Society of the United States) and AXA Network, LLC and
its subsidiaries, incorporated herein by reference to
Registration Statement on Form N-4 (File No. 333-178750)
filed on October 16, 2014.
(xii) Twelfth Amendment dated as of November 1, 2013, to
General Agent Sales Agreement dated as of January 1,
2000, by and between AXA Equitable Life Insurance
Company (formerly known as The Equitable Life Assurance
Society of the United States) and AXA Network, LLC and
its subsidiaries, incorporated herein by reference to
Registration Statement on Form N-4 (File No. 333-178750)
filed on October 16, 2014.
(xiii) Thirteenth Amendment dated as of October 1, 2014 to
General Agent Sales Agreement dated as of January 1,
2000, by and between AXA Equitable Life Insurance
Company (formerly known as The Equitable Life Assurance
Society of the United States) and AXA Network, LLC and
its subsidiaries, incorporated herein by reference to
the Registration Statement on Form N-4
(File No. 333-202147), filed on September 9, 2015.
(xiv) Fourteenth Amendment dated as of August 1, 2015 to
General Agent Sales Agreement dated as of January 1,
2000, by and between AXA Equitable Life Insurance
Company (formerly known as The Equitable Life Assurance
Society of the United States) and AXA Network, LLC and
its subsidiaries, incorporated herein by reference to
this Registration Statement on Form N-4
(File No. 2-30070), filed on April 19, 2016.
(e)(xv)Sixteenth Amendment dated May 1, 2016 to the General
Agent Sales Agreement dated as of January 1, 2000 by and
between AXA Equitable Life Insurance Company, (formerly
known as The Equitable Life Assurance Society of the
United States) and AXA Network, LLC, incorporated herein
by reference to Registration Statement on Form N-4 (File
No. 2-30070) filed on April 18, 2017.
(f) Form of Brokerage General Agent Sales Agreement with Schedule
and Amendment to Brokerage General Agent Sales Agreement among
[Brokerage General Agent] and AXA Distributors, LLC, AXA
Distributors Insurance Agency, LLC, AXA Distributors Insurance
Agency of Alabama, LLC, and AXA Distributors Insurance Agency
of Massachusetts, LLC, incorporated herein by reference to
Exhibit No. 3.(i) to Registration Statement (File No.
333-05593) on Form N-4, filed on April 20, 2005.
(g) Form of Wholesale Broker-Dealer Supervisory and Sales Agreement
among [Broker-Dealer] and AXA Distributors, LLC, incorporated
herein by reference to Exhibit No. 3.(j) to Registration
Statement (File No. 333-05593) on Form N-4, filed on April 20,
2005.
II-3
(h) Amended and Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable Life Insurance Company ("AXA Equitable"),
AXA Distributors and AXA Advisors dated July 15, 2002 is
incorporated herein by reference to Post-Effective Amendment
No. 25 to the EQ Advisor's Trust Registration Statement on Form
N-1A (File No. 333-17217 and 811-07953), filed on February 7,
2003.
(i) Amendment No. 1, dated May 2, 2003, to the Amended and
Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 28 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on February 10, 2004.
(ii) Amendment No. 2, dated July 9, 2004, to the Amended and
Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 35 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on October 15, 2004.
(iii) Amendment No. 3, dated October 1, 2004, to the Amended
and Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 35 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on October 15, 2004.
(iv) Amendment No. 4, dated May 1, 2005, to the Amended and
Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 37 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on April 7, 2005.
(v) Amendment No. 5, dated September 30, 2005, to the
Amended and Restated Participation Agreement among EQ
Advisors Trust, AXA Equitable, AXA Distributors and AXA
Advisors dated July 15, 2002 incorporated herein by
reference to Post-Effective Amendment No. 44 to the EQ
Advisor's Trust Registration Statement (File No.
333-17217) on Form N-1A filed on April 5, 2006.
(vi) Amendment No. 6, dated August 1, 2006, to the Amended
and Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 51 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on February 2, 2007.
(vii) Amendment No. 7, dated May 1, 2007, to the Amended and
Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 53 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on April 27, 2007.
(viii) Amendment No. 8, dated January 1, 2008, to the Amended
and Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 56 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on December 27, 2007.
(ix) Amendment No. 9, dated May 1, 2008, to the Amended and
Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 61 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on February 13, 2009.
(x) Amendment No. 10, dated January 1, 2009, to the Amended
and Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 64 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on March 16, 2009.
(xi) Amendment No. 11, dated May 1, 2009, to the Amended and
Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 67 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on April 15, 2009.
(xii) Amendment No. 12, dated September 29, 2009, to the
Amended and Restated Participation Agreement among EQ
Advisors Trust, AXA Equitable, AXA Distributors and AXA
Advisors dated July 15, 2002 incorporated herein by
reference to Post-Effective Amendment No. 70 to the EQ
Advisor's Trust Registration Statement (File No.
333-17217) on Form N-1A filed on January 21, 2010.
II-4
(xiii) Amendment No. 13, dated August 16, 2010, to the Amended
and Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
Post-Effective Amendment No. 77 To the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on February 3, 2011.
(xiv) Amendment No. 14, dated December 15, 2010, to the
Amended and Restated Participation Agreement among EQ
Advisors Trust, AXA Equitable, AXA Distributors and AXA
Advisors dated July 15, 2002 incorporated herein by
reference to Post-Effective Amendment No. 77 To the EQ
Advisor's Trust Registration Statement (File No.
333-17217) on Form N-1A filed on February 3, 2011.
(xv) Amendment No. 15, dated June 7, 2011, to the Amended and
Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable, AXA Distributors and AXA Advisors
dated July 15, 2002 incorporated herein by reference to
and/or previously filed with Post-Effective Amendment
No. 84 to EQ Advisor's Trust Registration Statement
(File No. 333-17217) on Form N-1A filed on
August 17, 2011.
(xvi) Amendment No. 16, dated April 30, 2012, to the Amended
and Restated Participation Agreement among EQ Advisors
Trust, AXA Equitable and AXA Distributors dated
July 15,2002 incorporated herein by reference to
Post-Effective Amendment No. 96 to the EQ Advisor's
Trust Registration Statement (File No. 333-17217) on
Form N-1A filed on February 7, 2012.
(i)(a) Second Amended and Restated Participation Agreement
among the Trust, AXA Equitable, FMG LLC and AXA
Distributors dated May 23, 2012, incorporated herein by
reference to EQ Advisors Trust Registration Statement on
Form N-1A (File No. 333-17217) filed on July 22, 2013.
(a)(i) Amendment No. 1 dated as of June 4, 2013 to the Second
Amended and Restated Participation Agreement among the
Trust, AXA Equitable, FMG LLC and AXA Distributors dated
May 23, 2012, incorporated herein by reference to EQ
Advisors Trust Registration Statement on Form N-1A (File
No. 333-17217) filed on July 22, 2013.
(a)(ii)Amendment No. 2 dated as of October 21, 2013 to the
Second Amended and Restated Participation Agreement
among the Trust, AXA Equitable, FMG LLC and AXA
Distributors dated May 23, 2012, incorporated herein by
reference to EQ Advisors Trust Registration Statement on
Form N-1A (File No. 333-17217) filed on July 22, 2013.
(a)(iii)Amendment No. 3, dated as of April 4, 2014 ("Amendment
No. 3"), to the Second Amended and Restated
Participation Agreement, dated as of May 23, 2012, as
amended ("Agreement"), by and among EQ Advisors Trust
("Trust"), AXA Equitable Life Insurance Company, AXA
Equitable Funds Management Group, LLC and AXA
Distributors, LLC (collectively, the "Parties"),
incorporated herein by reference to EQ Advisors Trust
Registration Statement on Form N-1A (File No. 333-17217)
filed on April 30, 2014.
(a)(iv)Amendment No. 4, dated as of June 1, 2014 ("Amendment
No. 4"), to the Second Amended and Restated
Participation Agreement, dated as of May 23, 2012, as
amended ("Agreement"), by and among EQ Advisors Trust
("Trust"), AXA Equitable Life Insurance Company, AXA
Equitable Funds Management Group, LLC and AXA
Distributors, LLC (collectively, the "Parties"),
incorporated herein by reference to EQ Advisors Trust
Registration Statement on Form N-1A (File No. 333-17217)
filed on April 30, 2014.
(a)(v) Amendment No. 5, dated as of July 16, 2014 ("Amendment
No. 5"), to the Second Amended and Restated
Participation Agreement, dated as of May 23, 2012, as
amended ("Agreement"), by and among EQ Advisors Trust
("Trust"), AXA Equitable Life Insurance Company, AXA
Equitable Funds Management Group, LLC and AXA
Distributors, LLC (collectively, the "Parties") "),
incorporated herein by reference to EQ Advisors Trust
Registration Statement on Form N-1A (File No. 333-17217)
filed on February 5, 2015.
(a)(vi)Amendment No.6, dated as of April 30, 2015 ("Amendment
No. 6"), to the Second Amended and Restated
Participation Agreement, dated as of May 23, 2012, as
amended ("Agreement"), by and among EQ Advisors Trust
("Trust"), AXA Equitable Life Insurance Company, AXA
Equitable Funds Management Group, LLC and AXA
Distributors, LLC (collectively, the "Parties"),
incorporated herein by reference to EQ Advisors Trust
Registration Statement on Form N-1A (File No. 333-17217)
filed on April 17, 2015.
(a)(vii)Amendment No. 7 dated as of December 21, 2015
("Amendment No. 7"), to the Second Amended and Restated
Participation Agreement, dated as of May 23, 2012, as
amended ("Agreement"), by and among EQ Advisors Trust
("Trust"), AXA Equitable Life Insurance Company, AXA
Equitable Funds Management Group, LLC and AXA
Distributors, LLC (collectively, the "Parties")
incorporated herein by reference to EQ Advisors Trust
Registration Statement on Form 485(a) (File
No. 333-17217) filed on February 11, 2016.
(a)(viii)Amendment No. 8 dated as of December 9, 2016 ("Amendment
No. 8"), to the Second Amended and Restated
Participation Agreement, dated as of May 23, 2012, as
amended ("Agreement"), by and among EQ Advisors Trust
("Trust"), AXA Equitable Life Insurance Company, AXA
Equitable Funds Management Group, LLC and AXA
Distributors, LLC (collectively, the "Parties")
incorporated herein by reference to EQ Advisors Trust
Registration Statement on Form 485(a) (File
No. 333-17217) filed on January 31, 2017.
(2) Not applicable
(4) (a) Form of Flexible Premium Deferred Variable and Index Linked
Annuity Contract, 2017SCSBASE-I-PL-A, previously filed with
this registration statement (File No. 333-216083) on
February 15, 2017.
(b) Form of Flexible Premium Deferred Variable and Index Linked
Annuity Contract, 2017SCSBASE-I-PL-B, previously filed with
this registration statement (File No. 333-216083) on
February 15, 2017.
(c) Form of Data Pages, 2017SCS-DP-PL, previously filed with this
registration statement (File No. 333-216083) on February 15,
2017.
(d) Form of Endorsement Applicable to Traditional IRA,
2017IRA-SCS-I, previously filed with this registration
statement (File No. 333-216083) on February 15, 2017.
(e) Form of Endorsement Applicable to Non-Qualified Contracts,
2017NQ-SCS-I, previously filed with this registration statement
(File No. 333-216083) on February 15, 2017.
(f) Form of Endorsement Applicable to Roth IRA, 2017ROTH-SCS-I,
previously filed with this registration statement (File No.
333-216083) on February 15, 2017.
(g) Form of Endorsement Applicable to Qualified Defined
Contribution Plans, 2016QPDC-SCS-I, incorporated herein by
reference to Registration Statement No. 333-207256 on Form N-4
filed on December 23, 2015.
(h) Form of Endorsement Applicable to Qualified Defined Benefit
Plans, 2016QPDB-SCS-I, incorporated herein by reference to
Registration Statement File No. 333-207256 on Form N-4 filed on
December 23, 2015.
(5) Opinion of Shane Daly, Vice President and Associate General
Counsel, filed herewith.
(8) Not applicable.
(12) Not applicable.
(15) Not applicable.
(23) Consent of PricewaterhouseCoopers LLC, filed herewith.
(24) Powers of Attorney, filed herewith.
(25) Not applicable.
(26) Not applicable.
II-5
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment
to this registration statement:
(i) to include any prospectus required by
section 10(a)(3) of the Securities Act
of 1933;
(ii) to reflect in the prospectus any facts
or events arising after the effective
date of the registration statement (or
the most recent post-effective
amendment thereof) which, individually
or in the aggregate represent a
fundamental change in the information
set forth in the registration
statement. Notwithstanding the
foregoing, any increase or decrease in
volume of securities offered (if the
total dollar value of securities
offered would not exceed that which was
registered) and any deviation from the
low or high end of the estimated
maximum offering range may be reflected
in the form of prospectus filed with
the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in
volume and price represent no more than
20% change in the maximum aggregate
offering price set forth in the
"Calculation of Registration Fee" table
in the effective registration statement;
(iii)to include any material information
with respect to the plan of
distribution not previously disclosed
in the registration statement or any
material change to such information in
the registration statement;
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and
(a)(1)(iii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of
the Securities Act of 1934 that are incorporated by reference
in the registration statement, or is contained in a form of
prospectus filed pursuant to Rule 424(b) that is part of this
Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933,
each such post-effective amendment shall be
deemed to be a new registration statement
relating to the securities offered therein,
and the offering of such securities at that
time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the
securities being registered which remain
unsold at the termination of the offering.
(4) That, for the purpose of determining
liability under the Securities Act of 1933 to
any purchaser, each prospectus filed
II-6
pursuant to Rule 424(b) as part of a
registration statement relating to an
offering, other than registration statements
relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A,
shall be deemed to be part of and included in
the registration statement as of the date it
is first used after effectiveness. Provided,
however, that no statement made in a
registration statement or prospectus that is
part of the registration statement or made in
a document incorporated or deemed
incorporated by reference into the
registration statement or prospectus that is
part of the registration statement will, as
to a purchaser with a time of contract of
sale prior to such first use, supersede or
modify any statement that was made in the
registration statement or prospectus that was
part of the registration statement or made in
any such document immediately prior to such
date of first use.
(5) That, for the purpose of determining
liability of the Registrant under the
Securities Act of 1933 to any purchaser in
the initial distribution of the securities:
The undersigned Registrant undertakes that in
a primary offering of securities of the
undersigned Registrant pursuant to this
registration statement, regardless of the
underwriting method used to sell the
securities to the purchaser, if the
securities are offered or sold to such
purchaser by means of any of the following
communications, the undersigned Registrant
will be a seller to the purchaser and will be
considered to offer or sell such securities
to such purchaser: (i) Any preliminary
prospectus or prospectus of the undersigned
Registrant relating to the offering required
to be filed pursuant to Rule 424; (ii) Any
free writing prospectus relating to the
offering prepared by or on behalf of the
undersigned Registrant or used or referred to
by the undersigned Registrant; (iii) The
portion of any other free writing prospectus
relating to the offering containing material
information about the undersigned Registrant
or its securities provided by or on behalf of
the undersigned Registrant; and (iv) Any
other communication that is an offer in the
offering made by the undersigned Registrant
to the purchaser.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-7
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City and State of New York, on
this 1st day of June, 2017.
AXA EQUITABLE LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Shane Daly
----------------------------------------
Shane Daly
Vice President and Associate General
Counsel
AXA Equitable Life Insurance Company
As required by the Securities Act of 1933, this amendment to the
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
PRINCIPAL EXECUTIVE OFFICER:
*Mark Pearson Chairman of the Board, Chief Executive Officer,
Director and President
PRINCIPAL FINANCIAL OFFICER:
*Anders B. Malmstrom Senior Executive Director
and Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
*Andrea M. Nitzan Executive Director, Chief Accounting Officer
and Controller
*DIRECTORS:
Thomas Buberl Mark Pearson
Barbara Fallon-Walsh Bertram L. Scott
Daniel G. Kaye George Stansfield
Kristi A. Matus Richard C. Vaughan
Ramon de Oliveira
*By: /s/ Shane Daly
--------------------------
Shane Daly
Attorney-in-Fact
June 1, 2017
EXHIBIT INDEX
EXHIBIT NO. TAG VALUE
(5) Opinion and Consent of Shane Daly EX-99.5
(23) Consent of PricewaterhouseCoopers LLP EX-99.23
(24) Powers of Attorney EX-99.24